utilities increasing dividends

Energy distributor, Inter Pipeline Fund (IPL.UN) and telecommunications firm Telus (T.A) have both  hiked their dividends.  Telus by 5% and Inter Pipeline by about 7%.  These two companies are both considered utilities.  It is very nice to receive every increasing cash dividends from these two stable firms. 

free money from my online broker

I have used BMO InvestorLine to trade equities for about six years now.  Over the time that I have held my account I have seen vast improvements in their site interface, research, and functionality.  I would highly recommend InvestorLine to anyone considering opening a an investment account or switching from another broker.

If you open a minimum $10,000 account right now and use my referral code 978804481, you can receive $50 or even $100 bonus cash after you open your account! 

how rich people think

How Rich People Think is a 205 page book by Steve Siebold that I enjoyed very much.  The book basically puts forth 100 ideas on how rich people (the World Class) differ from the middle class in their way of thinking and actions.  For example:

Middle Class waits for their ship to come in...World Class builds their own ship.

Each of these comparisons are then explained in a one to two page summary after the comparision, making up a chapter.  The book is nothing if not motivating, inspiring, and forces one to begin to think outside of the box that many of us find ourselves in while enduring the rat race.  The ideas are based on a quarter century of interviews with millionaires.  If you feel that you are stuck in a rut, and are looking for some motivation whether you want to take your career in another direction, start a business, grow your business, or simply make a large investment this book might help you get into the proper mind set to do so.  You only live once so don't settle; strive for your dreams!

sold two names to raise cash

To raise some cash for a business venture I sold my entire stakes in the following stocks this week.

Saputo (SAP) - The Canadian Food producer had run up so far from my adjusted cost base that it seemed like an obvious choice to take a nice profit.  The stock is now trading at a P/E of over 18x, which strikes me as a little rich.

Scotts Miracle Gro (SMG) - This stock never really fit into my dividend growth model and the stock has run up very nicely in recent months.  The stock likely has more room to run however it seemed like an ideal time to take a profit and exit the name for the time being.

Posting on the moneygardener should pick up over the next little while as I realize I have been nowhere to be found lately.

Leon's hikes dividend / Scotts doubles dividend

Canadian furniture and electronics retailer Leons (LNF) has raised it's dividend by 29% to $0.09 per share.  The raise came on  a nice earnings announcement where Leon's beat expectations quite handily growing their earnings per share 42% from last year.

US Lawn & Garden manufacturer Scotts Miracle Gro (SMG) doubled it's dividend on the back of a very solid earnings report.  Scotts reported an earnings increase of 12.5% versus the same quarter last year.  This news beat expectations and propelled the share price higher.

Owning both stocks, I've been having good luck with dividends lately...

The Instant Millionaire

Do the very wealthy think differently than the rest of us?

The Instant Millionaire by Mark Fisher is a fable which has been re-released in this new second edition by the New World Library.  The book describes an amateur / mentor confrontation over a few days and conveys the lessons that the mentor teaches in an interesting way.  The old wise millionaire mentor attempts to teach the young ambitious, yet naive amateur how to get into the mindset of a millionaire in training. 

If you are looking for strategy on getting rich including specifics on wealth building, this book is not for you.  This is one of those books that you will be tempted to read multiple times and I must admit that I plan to read it again.  It is an easy read at about 120 pages, however the book will leave you thinking for days after you turn the last page.  Several of the principles, habits and, life approaches that the mentor describes are thought provoking and had me wondering how I could adapt them in whole or in part in my own life.  The book is nothing if not inspiring but yet it remains so abstract that it will leave most readers wanting more like a good movie with a short ending.

Overall I recommend this fable and it makes me want to read others like it including The Richest Man in Babylon and Think And Grow Rich.

The Instant Millionaire by Mark Fisher

Saputo grows dividend

Dairy and grocery products producer Saputo Inc. (SAP) has increased it's quarterly dividend by 10.3% to $0.16 per share.  This increase came on the heels of a 32% increase in basic earnings per share for the quarter.

What I really like about Saputo is that their product lines represent products which are very resilient to consumer discretion but yet they seem intent on growth and are not afraid to make acquisitions to get there.  Here is how my investment in Saputo looks at the moment:

Adjusted Cost Base (average cost) = $21.34 (2 purchases made)
Yield on Cost = 3.0%
Stock's Current Yield = 2.0%
Stock's Current Price = $31.30
Total Appreciation Including Dividends = +51%

budgeting sustainably for real life

Drawing up a useful, sustainable monthly budget for your family does not have to be a complicated, or difficult exercise.  The primary goal for putting a budget to paper in our case is saving money and living well within our means.  This will enable us to save enough money so that we can maximize investment growth, capital stability, and be financially secure for years down the road.  You can tailor your budget to serve as a tool for meeting your financial goals.

If you have some basic Microsoft Excel skills you can draw up a useful budget that can serve your tracking needs for years.  I'm not referring to an advanced budget that they might teach you in an online MBA program; just a simple budget.  First you should check your pay stub and your partner's pay stub to determine exactly what your net income is. 

(I use the net amount that we bring home in employment income after RRSP contributions, taxes, etc.  The reason that I do it this way is that our RRSP contributions are fixed and they are deducted automatically so that we never really see this money.  I know what our RRSP contributions are and if I wanted to I could calculate these savings as extra to our budget later on.  For now I just choose to exclude them and know that we are setting aside at least 10% of our income before we even get started here.)

This will be your INCOME section.  Use your net employment income and any other income you receive along with any government child care benefits.  Enter the monthly values in Excel and get to a total income number.

(I choose not to include investment income here because I save 100% of these funds and they get reinvested. I don't consider this as flexible, liquid funds such as employment income as the money really never leaves our portfolios)

Next you need to create your EXPENSES section.  This involves categorizing and filling in all of your monthly expenses from mortgage payments to gym fees.  Try to think of everything and try to be conservative for fuzzy ones.  For some fixed costs such as property tax you will be able to enter an exact amount and for some categories such as entertainment you will need to ballpark what you spend in this area in an average month.  Total up this area as well.

Then take your total from your INCOME section and subtract your EXPENSES section.  Hopefully you get a positive value.  Your will arrive at a figure which I call my "TOTAL NON-REGISTERED SAVINGS PER MONTH". 

How To Use Your Budget
Creating your budget is only one third of the battle.  How you are going to use it is the second piece of the puzzle.  Instead of holding us to only spend $40 per month on haircuts I don't pay particular attention to these small details once they are part of my budget calculator.  The way I use the budget tool is that I key in on our TOTAL NON-REGISTERED SAVINGS PER MONTH.  This is our pass or fail mark.  If this guide number is $1,000 and a month goes by where we saved only $500, I usually know why this has occurred.  Could have been that the dishwasher needed replacing, or it perhaps we went on a small vacation.  If I don't know why, I better re-visit the budget. 

Obviously the third piece of the puzzle is actually matching your life to what you you have entered on this Excel calculator. If you are regularly spending $500 per month on clothes then don't enter $50 per month in your clothes category.  You will certainly need your partner to be a team player throughout this entire process

I find this to be a pretty useful way to budget.  You don't have to watch your nickels and dimes and track every penny.  Just pay attention to how much money you are actually saving versus what your budget says that you should be and you will be well on your way to achieving your financial goals.

would you like to purchase a warranty?

I am always interested in the innovative ways that companies try to grow their bottom line in dealing with consumers.  The promotions, warranties, freebies, bogos, and 'don't pay' sales often have me scratching my head at the stupidity of retailers or their naive customers.

I happened to come across an interesting one last night at Sears when I was purchasing a major appliance.  As is typical the sales associate wound up with the usual warranty offering, usually as this is occurring I am glazed over and getting ready to politely refuse.  However the Sears warranty threw in an interesting twist this time, which I have to admit, is clever and likely works well for them.  If you purchase the warranty for $110 and nothing goes wrong with the item within the 3 year time frame of coverage you receive a $110 gift card for Sears.  I still refused the offer as I want my precious $110 for myself for the next 3 years for obvious reasons to anyone who reads this blog.  Also who's to say that I'll happen to want to buy something at Sears in 3 years time.  That being said, I would imagine that many customers who typically waiver about warranties usually come over to join the protected now that this offer is presented.

quadrupled Bank of America position

It was nice to see my adjusted cost base plummet today as I quadrupled my stake in US Bank, Bank of America (BAC).  The stock is trading around $14.25 per share.  The dividend was all but wiped out during the financial crisis but I believe that it will come back with a vengeance over time.  Bank of America is very well positioned to reap the benefits of a slow US economic recovery, which is probably in the works.  The risk/reward on Bank of America trading at these levels seems very attractive as they own several valuable franchises, have great market share in US deposits, and have paid back their TARP funds.  The bank is currently trading at a multiple on around $1.00/share of earnings which I believe has the potential to expand to $2 without much trouble.  This would put the stock price easily into the $20s which is a signficant jump from here.

The dividend will come back as they years go on as inventors will want income from their investment in this large bank and the bank will no longer be tied down with the lingering issues of 2008.  This stock is rated a strong buy by 70% of analysts that cover it.  Earnings will come back as well albeit slowly and probably won't get to 2006-2007 levels anytime soon.

This is one of those trades where I felt like I needed to do the Warren Buffet thing and buy when others are selling; when the stock does not look attractive.  This industry is still in the toilet, their balance sheet is still recovering, and the economy is still pretty bad.  This is a good time to lower my cost base from my purchase years ago.  One of those 'close your eyes and click submit' trades.

GE - party like it's 1999

Well General Electric (GE) who cut their dividend from $0.31 per share to $0.10 per share in early 2009 has now boosted their pay out to $0.12 per share.  This 20% increase brings their dividend back to levels last visited in before the turn of the century.  Yes, GE shareholders including myself are partying like it's 1999.

This increase came earlier than expected as GE had mentioned that they were looking to a dividend hike in 2011.  They also announced an extension of their share repurchase program as they are sitting on loads of cash.  I'll take a dividend increase any way that I can get one and I remain confident in GE's future.  I especially like their involvement with alternative energy and developing market infrastructure.  Their high weighting in financial services really hurt them during the financial crisis.

market snapshot

Economically sensitive seems to be a good thing this earnings season as the following companies blew through earnings expectations and dwarfed last year's results:

CN Rail: EPS = $1.13 versus $0.76 last year
UPS: EPS = $0.84 versus $0.44 last year
CAT: EPS = $1.09 versus $0.72 last year
3M: EPS = $1.54 versus $1.20 last year

These stocks are about as dependant on the economy as it gets.  There is a strange feeling in the markets lately.  There seems to be a large divide between how main street is looking and how corporations are performing.  Earnings are looking quite good but yet unemployment remains high, housing is still in the toilet, and consumer confidence is weak.  Costs that companies cut during the financial crisis are probably really paying off now as revenues come back to levels above 2009 but below prior years.  The fact that most analysts and onlookers are worried and bearish is probably a sign that markets will rise from here.  Typically in times like this the market climbs the wall of worry as expectations are low and upside surprise is more common.  As usual it is hard to say where the market will go from here but stocks usually trade in line with earnings and for the time being earnings seem fine. 

I will obviously continue to pick away at stocks that are already part of my portfolio but seem to be trading very cheap.  I've noticed the following opportunities lately:

Walgreen (WAG) - I added on June 29 at $26.50.  The stock has since recovered to $29.41.

Sun Life Financial (SLF) - Dividend investors have taken note recently as the shares traded down to under $26 yesterday resulting in a yield of about 5.5%.

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.

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.

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.

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%

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.

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.

Aahhhh.......it 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.

BP, dividend hikes, & mobile banking

BP Needs To Tell Whining Americans To Take a Hike

Caterpillar (CAT) raises dividend 4.8%, Target (TGT) raises 47%.

TD Launches Mobile Banking App for BlackBerry.

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.

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%.

Canadian Pacific dividend raise

Canadian Railway, Canadian Pacific (CP) has raised their dividend for the first time since early 2008. The increase was from $0.2475 to $0.27 per share, representing a hike of 9%. The stock yields about 1.9% on todays closing price.

Another increase for our portfolio; that's two in one week! I really like CP as an investment long term as China reaches for Canadian resources.

Clorox ups dividend

Consumer products firm Clorox (CLX) has hiked it's quarterly dividend 10% to $0.55 per share. This is another dividend hike for our non-registered portfolio. Our income from investments continues it's climb into new records.

Lately we have recieved raises from:

Clorox
Johnson & Johnson
Procter & Gamble
Diageo
Telus
Canadian Oil Sands Trust
Sysco
and hints from...
Scotts Miracle Gro
GE

net worth, may '10

It's time to report my bimonthly net worth. This particular report (May) is what I call my 'fiscal year', as I began tracking net worth in May of 2006.

Net worth results for the 2 Months Ended May 15, 2010:

• Debt/Asset ratio dropped to 0.46 from 0.44 (a record low)
  
• Net Worth rose 3.3% (to a record high)
  
• Total Assets rose 0.6% (to a record high)
  
• Total Liabilities shrunk by 2.6%
  
• House Value/Total Assets fell to 58.9% (a record low)
  
• Non-Registered Portfolio grew 4.5% (to a record high)

*note results may not make sense with my last report as I revalued our home to a recently appraised value.

2010 Calendar Year to Date Gain/Loss: +8.8%

2009 Fiscal Year Gain/Loss: +29.1%

So now it has been 4 full years since I started tracking our net worth and we have come a long way. Here are our net worth increases through the years:

2006 = 96.8%

2007 = 39.9%

2008 = 4.8% (the markets crashed but we still managed to eek out a gain)

2009 = 29.1%

This brings us to today where our all of our metrics are sitting at record levels with the exception of our liabilities which are only $3,000 from a record level. The single metric that I probably pay the most attention to is our debt/asset ratio which started out at a whopping 0.77 in 2006 and now sits at 0.44. Our debt is now at a very manageable level when compared to our assets and incomes, which is a good feeling. Going forward we will be putting even greater emphasis on growing assets and less emphasis on reducing debt as we reduce our mortgage payments and continue to invest a good deal of our savings.

Scotts to grow dividend

Scotts Miracle Gro (SMG) is a company which dominates their industry probably more than any other firm that I can think of. I don't post much about the stock which makes up a very small percentage of my portfolio, but their recent earnings report is worth noting and it came with a special bonus.

Scotts reported EPS of $1.80 compared with a the street's expectation of $1.46 and last year's $1.25. They also raised their full year guidance to $3.25+ from previous guidance of $3.00-$3.10. The special bonus was that the company stated on a call with analysts that they have a bias toward a share repurchase program and a dividend increase later in the year. This is great news for shareholders as Scotts' dividend has been at the same level since they introduced it in 2005. The stock only yields 1% currently.

The company seems to be on a roll recently as a major competitor left the market and North Americans have prioritized their lawns & gardens in the last year as money has become tight. I see gardening as a long term trend that will only become more popular as demographics change. Scotts Miracle Gro's strength lies in their savvy marketing, category domination, and decisive management.

wtf

Whatever happened at around 2:45pm on Thursday, May 6 was definitely interesting for anyone who follows the stock markets closely. I got back in my office after a birthday gathering for a coworker, and the first thing I noticed was that the Canadian utility Fortis (FTS), which is part of my portfolio, was down about 35%!

My first thought was that Google Finance was acting up as I have seen before. Next I noticed that Inter Pipeline Fund (IPL.UN) which I also hold was down by a catastrophic amount as well. After I saw this I quickly browsed over the the Financial Webring Forum where my fellow investors were already chatting about the Fortis situation. I then signed into my account at BMO Investorline to see if I could buy Fortis at $17/share, but the stock was up to $26. The day's low did read around $16 so this made me think that this drop was actually legit which boggled my mind. I then started seeing the reports on Google Finance and the Financial Webring about how this event was erroneous and trades will probably be cancelled. Kinda makes me glad that I don't believe in stop losses.

An interesting video clip to watch is CNBC personality Jim Cramer live seeing Procter & Gamble fall to $45 per share and calling it as a market error.

http://www.youtube.com/watch?v=2BQ0-194Igs

telus upgrades dividend

Canadian telecommunications company Telus (T.A) has increased their dividend by 5.3% to 0.50 per share. This came as a bit of a surprise as the company missed increasing their dividend at the usual time and has been investing heavily in business infrastructure recently. I do DRIP shares of the firm so I welcome the bump. They also beat earnings epectations.

I don't expect much out of my investment in Telus; just consistent but small earnings and dividend increases as more Canadian citizens, employees, and businesses need smart phones, connectivity and other IT systems.

added to SunLife position

I added to my existing position in Canadian financial services firm SunLife Financial (SLF) today at $29.00/share. My rationale for the acquisition was simply that the stock looked like pretty good value in a recent market where several stocks look rich. Let's look at the numbers:

SunLife just reported first quarter earnings today after the closing bell of $0.72/share. This eclipsed the street's expectations by 11%. Earnings expectations for the company for 2010 were $2.89 per share before the release today. Assuming SunLife earns $2.89 this year the stock was trading at 10x 2010 estimated earnings when I made the purchase. I feel that this is a very reasonable valuation given their potential for earnings growth.

Another reason why this valuation was attractive was that at $29 per share SunLife was yielding 5% in dividends. Assuming that the company does not cut their dividend, which I don't believe that they will, this is a guaranteed 5% return. Combining this with a valuation of 10x earnings this seemed like a good point to add to my SunLife holding.

SunLife makes up about 7% of my non-registered portfolio.

asset diversification update

When accumulating wealth as we grow older I am a believer in diversification. I want to be able to grow our asset base at good average rates year after year. In order to accomplish this and at the same time build flexibility into our finances we set out to push down the percentage of our assets that our home value makes up. I believe that it only makes good wealth building sense to diversify and not be over concentrated in real estate assets like many North Americans are.

I check up every other month on our net worth and at the same time I look at a percentage which I call: HOUSE VALUE AS A PERCENTAGE OF TOTAL ASSETS. This is simply the appraised value of our residence as a percentage of our total assets. Total assets include our home, registered and non-registered investments, cash, vehicles, etc.

Below is our progress on this since May of 2006. Over the past four years we've driven down this percentage from 83% to about 59% today.

weird distribution increase at canadian oil sands

The largest owner involved in the Syncrude Oil Sands Project, Canadian Oil Sands Trust (COS.UN) has increased their distributions by 43% to $0.50 quarterly per unit. Higher oil prices have benefited the company in a large way as oil has rebounded since the financial crisis
($43 per barrel - $79 per barrel)

The kicker, and what makes this a weird increase, is that the company is outright stating that the distribution level is probably not sustainable and part of the reason they raised it is to maximize their tax position going into conversion into a corporation for 2011. During 2010 the trust is planning to pay out more in distributions than cash from operations less capital expenditures. Go figure...

Investors in this trust quickly need to get used to changes in dividend levels as the company has historically just adjusted the payout with rising or falling crude prices.

J&J; dividend rises & shares should be bought

Ho hum...Johnson & Johnson (JNJ) has increased it's dividend for 2010 by 10.2%. The stock has essentially gone nowhere over the past 8 years - since 2002. However:

Earnings per share have doubled over this period.

Dividends per share have tripled over this period.

J&J used to trade at a P/E multiple of 26x back in 2002 and now trades close to 13x. Net profit margins are actually higher now than they were in 2002, and return on equity has been fairly flat in the mid to high twenties. The company's debt position has grown slightly since 2002, however it sits at a very manageable level currently.

Pharmaceuticals are a tricky business as drugs come off patent and new drugs are hard to come by but J&J is only about 40% pharma. Consumer healthcare and medical devices provide more stable earnings to bolster the company year after year. The stock looks attractive right now at historic low P/Es.

personal finance activities

Like any other family our personal finances are under a constant state of flux. We are in the process of or have recently completed the following changes to our financial situation:

1. Paid off a 4 year old vehicle in full. We ended up saving some interest on this open loan.
I was just sick of this payment and I felt that it would be nice to be payment free for my wife's maternity leave.

2. Renewing our mortgage; choosing a variable rate, changing our amortization to 35 years & lumping our HELOC balance into our first mortgage.
Going variable was an easy choice due to the current rate options and my view on the economy and Canadian rates going forward. Increasing the amortization just means that our mortgage is manageable and I'd prefer to put it on the back burner and enjoy lower rates during this period. The money not deployed here will be invested. The HELOC was lumped in to get a better interest rate on the HELOC portion.

3. Opening a second RESP with TD e-funds for our second son.
I've been very pleased with TD's online portal and the fund fees are hard to beat. I'll continue to focus on using the $200 per month UCCB as the base to fund the RESPs. We will add aditional money when appropriate to take advantage of the full grant.

Procter & Gamble pays more

Consumer products giant, and often misspelled, Procter & Gamble (PG) has raised it's dividend by 9.5%.

Here is a glance at Procter's recent dividend history:
2007 = $1.36
2008 = $1.55
2009 = $1.72
2010 = $1.89 (EST)

This represents a compound annual growth rate of the dividend of almost 12%. Industry leading firms with iconic brands that raise their dividends annually can really pay off if you hold them for the long term.

Here is a brief list of other companies that fit this bill and would be worth having a look at:

McDonalds (MCD)
Johnson & Johnson (JNJ)
Diageo (DEO)
Intel (INTC)
Microsoft (MSFT)
Pepsico (PEP)
Coca Cola (KO)
Clorox (CLX)
Colgate Palmolive (CL)
3M (MMM)
Kimberly Clark (KMB)

banks have finger on dividend button

Canadian bank CEOs have been going out of their way in the last few weeks to hint at upcoming dividend increases. The top brass at Royal Bank of Canada (RY), National Bank of Canada (NA), and even high pay out ratio, Bank of Montreal (BMO) have been expressing their thoughts on dividend raises lately. All three CEO's have essentially hinted at dividend raises in the near future. While regulation is holding them back a bit I am looking forward to the resumption of dividend growth in Canadian banks very soon. These canuck banks are overcapitalized! Share the wealth...

Here are the current dividend yields:

Royal = 3.4%
National = 4.0%
BMO = 4.5%
TD = 3.2%*
Bank of Nova Scotia = 3.9%
CIBC = 4.7%

*TD is my favourite bank and they make up the greatest portion of my portfolio (about 12%). It is interesting to note that they have actually trademarked the word 'WOW' in the US. They are very customer service focused in Canada and the US. The stock has given me a return on investment of over 39% including dividends since April of 2008.

dividend income rises to a record

We've likely all suffered dividend cuts in our portfolio and and some companies that have been consistent dividend raisers over the years have frozen dividend payments since early 2008. Recently our dividend income has finally gone back into record territory. The funny thing is that the record just eclipsed the amount of dividend income we were receiving way back in December of 2008. At that time when the market was plunging our portfolio was yielding a whopping 6.2%. I guess it was primed for a drop in income just like a high yielding stock.

Fast forward to today where our portfolio is yielding 4.1% and has grown considerably from 2008. We've endured dividend cuts from Manulife Financial (MFC), General Electric (GE), Yellow Pages Income Fund (YLO.UN), Husky Energy (HSE), and Bank of America (BAC) all of which I still hold and expect great things from in the future. Aside from income trust conversions from Yellow Pages and Canadian Oil Sands I don't expect any more negative dividend action over the next year or two so I look forward to really starting to grow our dividend income through purchases and dividend hikes.

doubled Canadian Oil Sands position

Yesterday I doubled my position in Canadian Oil Sands Trust (COS.UN).

To reiterate my reasons for purchase:

• looking to increase exposure to resources in this portfolio
• good way to get paid on the fate of oil with large potential capital appreciation in the future
• distributions (interest income) will become dividends next year and they have large tax pools to offset some tax
• well positioned company in a politically sound country
• I believe oil prices will be strong for the next 20 years, China will be a good customer
• Potential buyers should crop up over the years
• Will add to position from time to time when it looks attractive for the long term

bullish dividends

"If 'buy & hold' is dead, then I am the embalming fluid"

So is buy & hold still dead? Lil' Wayne and I never thought so.

The S&P 500 is up 53% over the past year...

Dividends are being raised all over the place by firms like Coke (KO), Wal-Mart (WMT), Pepsico (PEP), Rogers (RCI.B), Abbott (ABT), and the most bullish of all..........HOME DEPOT (HD).

Why GE's Dividend Increase Matters (please note GE had not raised it's dividend yet)

The patience that all of us long term investors have exhibited over the past 2 years is really starting to pay off. Buying during the depths of the financial crisis is looking more and more like a wise decision.

simplest ways to ensure financial difficulty your entire life

Classic moneygardener; Revisiting an old post from September 12, 2007.....

List compiled with inspiration from young, (age 25 - 35), friends and relatives (ie they helped me compile this list without realizing they did so)

1. Buy a vehicle without looking at total cost of ownership (financing, gas, insurance,maintenance)

2. Buy a home for your maximum lender pre-approval amount.

3. Do not start an RRSP because you have debts to pay off.

4. Do not make proper (higher interest to lower interest) debt repayment a priority.

5. Maintain a short-term view of your finances.

6. Fail to coherently plan finances around life events.

7. Fail to work as a team with your partner when it comes to your household finances.

8. Fail to realize that how you spend and manage money matters more than how much money you make.

net worth update March '10

It's time to report my bimonthly net worth. I report my net worth on the moneygardener or around the 15th of May, July, September, November, January, and March.

Net worth results for the 2 Months Ended March 15, 2010:

• Debt/Asset ratio dropped to 0.44 from 0.46 (record low)
• Net Worth gained 6.7% (record high)
• Total Assets rose 3.2% (record high)
• Total Liabilities dropped by 0.9%
• House Value/Total Assets fell to 60.6% (record low)
• Non-Registered Portfolio grew 5.7% (record high)

Another strong gain in net worth and we are looking good in all categories. Records were set across the board with the exception of our liabilities where we still above early 2009 levels. We're curbing expenses lately as we deal with less employment income. We are also hoping to continue to save money this year and we're determined to find ways to get it done as we reduce fixed costs and consider more frugal options.

dropping the weight of consumer debt

I've held a dirty little secret for the past 4 years and I am going to come forward with it now.

Consumer debt is probably one of the worst items that can appear on the balance sheet of someone trying to grow their net worth and achieve financial freedom. Money that was borrowed to purchase a car, vacation, furniture, or some other asset other than an investment or a home; and the interest associated with it will drag you down hard. The problem is that when it comes to vehicles, it is almost unavoidable to take on consumer debt unless one pays cash upfront which is not really wise considering the time-value of money. If you can find a very low financing rate I would argue that you are better off going that route instead of paying cash because of what you could do with that money investment-wise in the meantime.

In early 2006 we purchased a vehicle and financed it over 60 months. This has been a drag on our net worth and monthly cash flow ever since. The problem with vehicles is that they are essentially money pits and whether you buy them with cash, finance or lease them you can't really win. We've made the decision to now use some extra funds to pay off the vehicle before it is due in order to save the monthly payment's impact on our cash flow while my wife enters maternity leave next month. This move will not save us any interest, but it will allow some more flexibility within our budget and create a spike straight to our net worth as that debt line will vanish into thin air.

Shoppers Drug will be ok

Well back in the summer I exclaimed Shoppers Drug Mart should increase their dividend! They did just that today as they hiked their payout 5%. Apparently this was in line with their earnings growth this year and makes their pay out ratio of 33% 'sector leading'. That is a higher pay out ratio than US chain Walgreen (WAG), which we own, at 27%, however WAG increased their dividend by 22% in 2009.

Shoppers Drug Mart's earnings growth has been slowing over the past few years however I fully expect them to return to double digit earnings growth in the next few years. They run an excellent business, their new stores are very well located and laid out, and they are in the sweet spot of demographic trends in Canada. More of us popping pills, trying to look younger, and getting lazy about big box stores will help this chain succeed going forward. While Shoppers is currently languishing because of an unresolved Ontario government issue and weaker earnings performance recently, I believe they will pull through this to be a part of the future of dividend growth in Canadian investments. I would consider anywhere south of the current level to be a reasonable entry point for the stock. At a P/E of 13-15x the stock looks like pretty good value considering their market position and potential earnings growth ahead.

first trades of 2010 - chips & heavy oil

So I made my first few trades of 2010 today:

Bought Intel (INTC) for my wife's RRSP.
- trading at just 12x 2010 forecasted earnings
- yield is over 3% and dividend was just raised recently
- good dividend growth history
- dominate their industry in an oligopoly
- turn over should increase with Microsoft's Windows 7 looking good
- we are light in the tech. sector in all of our portfolios
- financially sound company with low debt and loads of cash

Bought Canadian Oil Sands Trust (COS.UN) for our non-registered portfolio
- looking to increase exposure to resources in this portfolio
- good way to get paid on the fate of oil with large potential capital appreciation in the future
- distributions (interest income) will become dividends next year and they have large tax pools to offset some tax
- well positioned company in a politically sound country
- I believe oil prices will be strong for the next 20 years, China will be a good customer
- Potential buyers should crop up over the years
- Will add to position from time to time when it looks attractive for the long term

Colgate & UPS provide raises

Consumer products firm Colgate Palmolive (CL) has hiked it's dividend by 20%, citing a positive outlook. They have doubled their dividend since 2004.

Global shipping firm UPS (UPS) has raised it's dividend by 4.4%. That is their first raise since the end of 2007. UPS expects to earn $2.70 - $3.05 for 2010. The shares are currently trading at 20x these 2010 earnings, which seems like a rich valuation.

freight and food make investors richer

CN Rail (CNR) has increased it's dividend by 7% to $0.27 per common share. That marks 14 consecutive dividend increases since the company went public in 1995. CN's 4th quarter revenue and adjusted earnings were both down from 2008.

Canadian grocer, Metro (MRU.A) has increased it's quarterly dividend by 23.6%! Metro now yields 1.7%. Adjusted fully diluted net earning were up 8% in the first quarter of fiscal 2010.

net worth update, jan '10

It's time to report my bimonthly net worth. I report my net worth on the moneygardener or around the 15th of May, July, September, November, January, and March.

Net worth results for the 2 Months Ended January 15, 2010:

• Debt/Asset ratio dropped to 0.46 from 0.47 (record low)
• Net Worth gained 3.0% (record high)
• Total Assets rose 1.8% (record high)
• Total Liabilities rose by 0.4%
• House Value/Total Assets fell to 61.7% (record low)
• Non-Registered Portfolio grew 5.3% (record high)

Our net worth growth keeps chugging along since bottoming out in March of 2009. Savings have still been a bit depressed but I see this picking up in February and March. We are still doing all the right things by living well within our means, saving regularly for investments in our future, and holding and adding to shares of dividend growing corporations.

Fortis powers dividend up

For the 37th consecutive year, Canada-based power distributor Fortis (FTS) has hiked their dividend. This increase came in at 7.7% from $0.26 to $0.28 per share.

This holding of mine represents a good example of how dividend increases and a timely purchase can add up to a profitable situation over time.

I purchased Fortis at an attractive price during the credit crisis and my adjusted cost base (ACB) is $21.73/share. Due to the fact that Fortis has been increasing their dividend regularly and that the share price has risen, my yield on cost (the yield that I am receiving on my intial investment) is 5.2% while the actual yield on Fortis shares today is only 3.9%. So someone purchasing Fortis shares today will receive 3.9% of their total investment in cash annually while I am garnering 5.2% of mine.

2009 net worth results

Well, with 2009 becoming a distant memory it's time to look back at how net worth held up here and with our usual suspects.

First off our net worth rose about 33% for 2009 calendar. That sounds much better than it truly is though, as our net worth was actually at a higher level in May of 2008 than it was in March of 2009. A milestone for 2010 would be to see our house value get to the point where it makes up 50% of our total assets. It currently sits at about 62%.

The Maritime Super-Blogger, at Million Dollar Journey posted a 29% increase in net worth over 2009 reaching the $400,000 mark. The 30 year old is 40% of the way to his goal of a $1,000,000 net worth by age 35.

Tim at Canadian Dream increased his net worth by 39% in 2009. During the year he focused on building his market investments. His net worth stands at $304,500.

If any other bloggers have calculated their net worth increase for 2009 please drop me a comment with your results or a link to your blog, and I will post your results with a link in a follow up post to this one.