Monday, July 19, 2010

saving money is simple & fun

I like saving money.  No, I mean I really love saving money.  You know that feeling that you get when you get something accomplished that you've been working at for days; or the rush that you get after a good run or workout at the gym?  Saving money gives me that feeling.  I don't mean to sound corny at all but I consider it fun when I electronically move money into investment portfolios from our chequing account.

We recently refinanced our residential mortgage in order to lump in our home equity line of credit, which was the result of borrowing money to invest during the financial crisis in late 2008, early 2009.  At the same time we increased our amortization to 35 years and changed our payment frequency to monthly instead of accelerated bi-weekly.  My plan with this strategy is to do what I love to do and save more money.  Since interest rates are currently low, we will be lowering the priority on paying our mortgage off while socking the extra funds in dividend paying investments.  Our mortgage rate of prime less 0.60% (currently 1.90%) will enable us to save more capital and invest it.  At any time we have the freedom to switch gears and make larger payments toward our mortgage if the circumstances change.  For now though saving is the priority and I plan to ramp it up!

One of the main reasons why I like saving money now is that it really pays off years down the road.  I am 31 years old; I want to put dollars to work now so that they can pay us in spades later in life.  I don't need too much stuff right now to be happy in life, and coincidentally I have big plans for any extra funds that don't contribute to that happiness.   A $500,000 portfolio of dividend paying stocks can easily pay out $25,000 per year in income.  Wouldn't it be nice to make an extra $25,000 a year before dividend taxation?

Having saving on my mind every time I log in to my banking site is something that lends itself to my saving prowess.  Moving money around is easy and it gets it out of the way, and out of my sight which inhibits wasteful spending.  I don't like seeing money just laying around, I like putting it to work.

Thursday, July 15, 2010

net worth July, 10

It's time to report my bimonthly net worth. It's been a pretty stagnant two months.

Net worth results for the 2 Months Ended July 15, 2010:
  • Debt/Asset ratio stayed at a record low of 0.44
  • Net Worth rose 0.6% (to a record high)
  • Total Assets rose 0.7% (to a record high)
  • Total Liabilities increased by 0.8%
  • House Value/Total Assets fell to 58.5% (a record low)
  • Non-Registered Portfolio grew 0.4% (to a record high)

2010 Calendar Year to Date Gain/Loss: +9.4%

It's been a fairly flat to down two months on the stock markets. Personally we have refinanced our mortgage by lumping in our home equity line of credit, legal fees, and a little bit more which caused our liabilities to rise slightly. This mortgage adjustment should enable us to ramp up our asset growth going forward as we have extended our amortization to 35 years. We saved a decent amount of money over the last 60 days and most accounts experienced slight increases in value.

Wednesday, July 14, 2010

Walgreen doubling dividend every 3 years

U.S. drugstore chain, and a stock that I have recently added to, Walgreen (WAG) has just raised their quarterly dividend 27.3% to $0.175 / share.

"This increase reinforces our commitment to provide meaningful returns to our shareholders and extends our track record of annual dividend growth" said CEO Greg Wasson

He was not joking about their track record. Walgreen has increased their quarterly dividend for 35 consecutive years. The company has also growth their dividend at a compound rate of 24.3% over the past six years.

Last year I blogged about how they nearly doubled their dividend since 2006. While in 2008 they raised it by 18%.

Walgreen shares are still pretty cheap trading at $29.30 (a P/E of 14x). I picked up some shares recently for about $26.50 (P/E of 12.7x). Interestingly enough Walgreen has not historically been known as a good dividend payer to hold as the yield on the stock was always well south of 2%. Given this latest increase the stock is now yielding about 2.4%, on my purchase the stock was yielding 2.6%, and on the financial crisis lows of March 6, 2009 the stock yielded a whopping 3.2% considering today's increase.

Thursday, July 1, 2010

Haagen-Dazs maker sweetens payout

The maker of Cheerios, Yoplait Yogurt, & Green Giant Corn among several other popular food brands has raised their dividend an impressive 17%. General Mills (GIS) is now paying $0.28 per share and the stock currently yields 3.2%. The company also laid out a 5 year growth plan that includes growing their earnings by 45% from current levels. They are counting on sales in emerging markets such as Russia, China, and India for some of that growth.

Considered a defensive stock, the company generates returns on equity of 28% and has grown their dividend and earnings very consistently over the past ten years. Their net profit margins have also held up fairly well over the years. A reduction in debt levels might make the company even more attractive going forward. Needless to say General Mills is definitely my type of stock.

happy Canada Day!

I'd like to wish all of my Canadian readers a Happy Canada Day!

Not only does Canada Day mark a time to celebrate living in a wonderful country it also marks the halfway point in the year. This makes it a good time to look at our investment portfolios.

So far this year:

S&P 500 Index ($USD) = DOWN 7.6%
S&P/TSX Index ($CAD) = DOWN 3.9%
Our Non Registered Portfolio in $CAD including dividends = UP 0.1%

Wednesday, June 30, 2010

good time to add to Walgreen

I added to my position in the large US drugstore chain Walgreen (WAG) yesterday. I have held this position for a few years now and I saw the recent severe weakness in the stock as an opportunity to lower my adjusted cost base.

Walgreen is down over 28% year to date versus 6.5% for the S&P 500 index. The stock is trading at a 52 week low sporting a P/E ratio of 12.7x earnings and a price to sales ratio of 0.40. This is a low debt, high return on equity company who in my opinion is catering to the right demographic. Drug cycles etc. will always effect their profitability but in the long term they will reap the rewards of being a convenient choice for an aging population.

Monday, June 28, 2010

globe & mail mention / new look!

The best newspaper in Canada chose to feature my boring story once again. I was in the Globe & Mail almost 3 years ago telling the same old lame dividend growth story. They might as well write the story now for publishing in three years time again because it likely won't change. never gets old......

Also some things do change as I've changed the design of the website. Please let me know what you think of our new look. Thanks.

Sunday, June 6, 2010

capitalism, a love story review

Finally last night I was able to see the Michael Moore documentary Capitalism, A Love Story. Going into the movie I obviously knew that I would disagree with his stance but I was looking forward to being entertained and at least considering his point of view. I have enjoyed some of Moore's prior pieces such as Bowling for Columbine, and Sicko. While I don't always agree with him he usually gets his points across eloquently and makes a good case, until now....

Moore really dropped the ball with this one and from the opening scene this movie lacked any kind of direction and failed to make one sound point against a capitalist system. Many of the long drawn out points that Moore made such as corporations taking out insurance policies against employee deaths really did nothing to prove the thesis. I found myself thinking to myself 'So What' after many of the points. Interviewing priests to let them lambaste capitalism is really going straight to the lowest common denominator. No offence to the religious but are Catholic priests really the authority on what financial system works best? I wouldn't ask my dry cleaner for real estate legal advice. This is just an insult of the viewer's intelligence.

Yes, everyone and their dog had their home taken from under them by the evil banks. Some companies were forced to close their doors because they couldn't make a profit or banks stopped lending them money to lose. A few select companies employ a democratic system where everyone has a stake in the company and decisions are made by committee. All this comes as little surprise and proves nothing. If one can't pay their mortgage for an extended period should they really get to keep their house? What would forgiving this solve? Some companies have discovered a way to keep everyone engaged and driven to earn a collective profit. How is this not capitalism? Why do they come to work each day?

Another huge 'So What' point is one that was made at length about pilots being underpaid. If this is truly the case then people will stop becoming pilots. Eventually they will start getting paid more because they will be in demand graduates. Should we artificially provide them subsidies in order for them to earn more? Should we tax these high earning Taco Bell managers more?

Also, many of the points made in the movie have since been weakened by recent events. Case in point the U.S. government actually made money on the bank bailout investments that they made. Also American, General Motors and Ford are now profitable companies and are both looking pretty solid against Japanese, Toyota who has stepped on themselves recently. These ebbs and flows are what Capitalism is all about. The drive to make money, succeed, and raise your quality of life has led to most of the greatest discoveries and human achievements in history. So the guy who discovered a polio vaccine shared it with the masses instead of profiting from it, good from him but again so what!

This movie was neither thought provoking nor entertaining and in my opinion it failed to make one solid point against a system that has made the great countries of today great.

Thursday, June 3, 2010

Reitmans wears an 11% higher dividend

I am starting to get used to all of these dividend increases within our non-registered portfolio. After announcing strong earnings that beat expectations, Canadian clothing retailer Reitmans (RET.A) also declared an 11% dividend increase. I have held shares in Reitmans since December of 2007, which was just after their last dividend increase. It is nice to see them break the dry spell as their earnings have perked up again after the financial crisis.

I initiated my position in Reitmans as mentioned in December of 2007, just after their dividend raise to $0.18 per share. I bought the shares at $18.18. I also added during January of 2008 when I felt that the shares were dirt cheap at $15.57. In November of 2008 I also added some more shares at $12.00 as the credit crisis struck. I was a bit early as the shares did trade down to a ridiculous $8.61 the next month. Overall my adjusted cost base on the stock is $15.07. The shares currently trade at $18.27 and yield 4.4%.