Wednesday, May 20, 2015

My Withdrawal Experience

Yesterday, I talked about the 4% rule for withdrawals from a portfolio in retirement. I stopped working and have been living on my dividend income from 1999. When making my financial plans for using my portfolio to live off of, I started off using the 8%, 4% rule. The 8%, 4% rule means that you should count on making 8% a year on your investments and you should count on spending 4% a year from your investments.

However, I changed my mind in 2001 after having my portfolio ravaged by the stock crash. At that time I thought it might be best to change my plans to try and only take out money equal to my income. I realized that would leave an estate but I did not want to be old and have no money. I did not plan to work again and I was not at retirement age, so I thought this would be best.

My plan of attack was to do some switching to stocks with higher dividends, control increases to my budget let dividend growth stocks do the thing they do best, that is grow dividends. Dividend growth stocks tend to growth dividends overall at a faster rate than inflation.

By 2006, I was taking out slightly less money from my portfolio than I was earning. I am taking money from my RRSP accounts and in these accounts I have moved to higher dividends by cashing in stocks that have the lowest relative yield for money to be used in withdrawals.

I went from using 140% of the income to using 85% of my income in 2014. I expect 2015 to be the same. However, when I turn 71 the amount I need to take from my RRSP accounts turned RRIF accounts will be high as will be my taxes. To ensure I have enough cash for withdrawals will cost me income as interest rates are low. So I expect that in the future my income will go down.

On my other blog I am today writing about Thomson Reuters Corp. (TSX-TRI, NYSE-TRI) ... continue...

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Tuesday, May 19, 2015

The 4% Rule

When I stopped working and decided to live off the dividends from my portfolio, I did some research and one thing I came across was the 8%, 4% rule. This rule was meant to see retirees through a long term retirement without running out of money.

The 8%, 4% rule means that you should count on making 8% a year on your investments and you should count on spending 4% a year from your investments. This also means that what you have to spend each year goes up by 4%.

So, roughly, if you have at retirement a portfolio worth $1,000,000, you would hope to make $80,000 total return and spend $40,000. The next year you will start with $1,040,000 and expect to earn $83,200 and can take out $41,600. An expectation under this was that the portfolio would be a balance portfolio of stocks and bonds.

This recent article in the New York Times talks about the 4% Withdrawal Rule. The title is "New Math for Retirees and the 4% Withdrawal Rule". Basically the article thinks that we have to rethink the 4% rule because of low interest rates that are likely to persist for some time.

If you are near retirement and plan to live wholly or partially off a portfolio, this would be a very good article to read.

On my other blog I am today writing about Thomson Reuters Corp. (TSX-TRI, NYSE-TRI) ... continue...

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Wednesday, May 13, 2015

My Investment Accounts

I currently have my Investment or Trading Accounts with the TD Bank currently call TD Direct Investing. I first set up a Trading Account with TD in 1986 so this is some 29 years ago. I have had few issues with this bank over the years and generally I have had good service.

What I like about this bank is that my trading statements are clean and easy to understand as is the information on their web site. Their web site has been constantly upgraded over the years to provide more and more information. They provide a number of reports on Canadian and US stocks.

Buying and selling on their site is easy. If you have to phone the trading desk the people manning the desk are always polite and I get a positive result.

Another thing I like is their weekly Webcasts. These can be viewed by anyone and are available here. These webcasts are short at 8 to 10 minutes and are on some current subject related to investing. Generally their format is for an interviewer to interview one of TD's investment managers or economists.

On my other blog I am today writing about Veresen Inc. (TSX-VSN, OTC- FCGYF) ... continue...

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my site for an index to these blog entries and for stocks followed. Follow me on Twitter

Monday, May 11, 2015

Austerity

I have never seen any proof that austerity works in times of high debt loads. Greece went that route and it seems that the economy is destroyed and to what end? They still cannot pay backs their loans. Ireland also went to austerity and they seem to be improving but these policies seems to have done a lot of damage to the economy and people's lives in the meantime.

The US had bigger debt problems after the Second World War. What they did was build the interstate highway system. Their economy took off and the government collected a lot more in taxes and the debt problem was resolved.

Japan knew about this and when they got into financial trouble they did some building of infrastructure. However, they build a lot of bridges connecting a number of islands. The problem was that not many people lived on these islands so really they built bridges to nowhere. Their economy was not helped at all.

What we hear about today is the incredible congestion on roads in cities. Maybe our version of the US interstate system is to build public transportation, like subways to help our economy, relieve congestion and perhaps also pay off some of our debt if we can generate new tax revenue.

Another thing is that Governments should get on board with new ways of doing things. The young are left out of jobs but are coming up with ways of making money from Uber, to Airbnb to crowd sourcing. We should not stop innovation.

Also, we do need to understand that austerity measures do damage to an economy. When an economy has growth and some room to maneuver, then some austerity measures can be instituted as long as the economy is only damaged less than the growth rate so there is still some growth. This is how our Canadian Prime Minister Chretien handled our past heavy debt load.

So a government can slowly back off spending and repay debt if it can still allow for some growth. The problem with Greece was that the economy was heavily damaged and this does no one any good. I think that the bond holders should suffer also. The reason for interest on bonds is the possibility that the bonds will not be paid in full. I think that bond holders of Greece should suffer more losses than they already have.

I know that no one really talks about Greece defaulting on current bonds. However, when you extend the repayment date for bonds, this is in fact a default. There needs to be more help for Greece. There is no way that Greece can pay their current debt. The sooner this is admitted the sooner will we be able to come up with a way out of debt for Greece.

On my other blog I am today writing about Canadian Natural Resources (TSX-CNQ, NYSE-CNQ) ... continue...

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Wednesday, May 6, 2015

Something to Buy May 2015

There is always something to buy in the stock market. On Monday, I put out a list of the stocks that I covered and showed what stock might be a good deal based on dividend yield. Now I am trying to categorize what sorts of stocks may be a good deal based on dividend yield.

The advantages to using dividend yield to judge how cheap or expensive a stock is, is that you are not using estimates or old data (like last reported quarter’s data). You are using today’s stock price and today’s dividend yield.

For other testing, like using P/E Ratios and Price/Graham Price Ratios, you use EPS estimates or from the last reported financial quarter. When using P/S Ratios, P/CF Ratios or P/BV Ratios you are using data from the last reported financial quarter.

However, no system is perfect. But if you are interested in buy a stock a list of stocks cheap or reasonable using dividend yield data might be a good place to start.

Categorizing stocks is not as simple as it might seem. Every site you go to has categorized stocks a bit differently. I try to keep this as simple as possible. See my spreadsheet at here. As in other spreadsheets, you can highlight a line or a number of lines for better viewing.

Of the consumer discretionary stocks, Newfoundland Capital Corp (TSX-NCC.A) and Leon's Furniture (TSX-LNF) are showing as cheap by the historical average dividend yield. Consumer discretionary stocks showing as cheap by the historical median and 5 year median dividend yields is Goodfellow Inc. (TSX-GDL) and Newfoundland Capital Corp (TSX-NCC.A). Also Leon's Furniture (TSX-LNF) is showing as cheap by the historical median dividend yield. This has not changed from last month.

Some Consumer Staple stocks are showing as relatively cheap. Jean Coutu Group Inc. (TSX-PJC.A) and Loblaw Companies (TSX-L) are showing as cheap only by the historical median dividend yield. Rogers' Sugar (TSX-RSI) is cheap using the 5 year median dividend yield.

Of the US Health Care stocks I follow Johnson and Johnson (NYSE-JNJ) and Medtronic Inc. (NYSE-MDT) are both relatively cheap by the historical average and historical median dividend yields.

Of the Real Estate Stocks, Granite Real Estate (TSX-GRT.UN) and Melcor Developments Inc. (TSX-MRD) are showing relatively cheap by the historical average and the historical median dividend yields. Artis REIT (TSX-AX.UN) is shown as cheap by the historical median dividend yield. Allied Properties (TSX-AP.UN), Granite Real Estate (TSX-GRT.UN) and Melcor Developments Inc. (TSX-MRD) are showing as relatively cheap by the 5 year median dividend yield.

The Canadian banks of Bank of Nova Scotia (TSX-BNS) National Bank of Canada (TSX-NA), and Toronto Dominion Bank (TSX-TD) are showing as relatively cheap by the historical median and the 5 year median dividend yields. Bank of Nova Scotia (TSX-BNS) and Toronto Dominion Bank (TSX-TD) are also showing as cheap by the historical average dividend yield.

Of the Financial Services stocks, AGF Management (TSX-AGF), CI Financial (TSX-CIX), DirectCash Payments Inc. (TSX-DCI), Gluskin Sheff & Associates Inc. (TSX-GS), Home Capital Group (TSX-HCG), IGM Financial (TSX-IGM) and Power Corp (TSX-POW) are showing as relatively cheap by the historical median dividend yield. Of these, only CI Financial (TSX-CIX), Home Capital Group (TSX-HCG), IGM Financial (TSX-IGM) and Power Corp (TSX-POW) are showing as cheap by the historical average dividend yield.

Of the above Financial Services stocks DirectCash Payments Inc. (TSX-DCI), Gluskin Sheff & Associates Inc. (TSX-GS), and Home Capital Group (TSX-HCG) are showing as relatively cheap by the 5 year median dividend yield.

Of the Insurance group Great-West Lifeco Inc. (TSX-GWO, Manulife Financial Corp (TSX-MFC), Power Financial Corp (TSX-PWF) and Sun Life Financial (TSX-SLF) are showing as relatively cheap by the historical median dividend yield. Power Financial Corp (TSX-PWF) is also showing as cheap by the historical average dividend yield.

Of the industrials, the stocks showing as cheap historically are Canadian National Railway (TSX-CNR), Canyon Services Group (TSX-FRC), Finning International Inc. (TSX-FTT), Hammond Power Solutions Inc. (TSX-HPS), McCoy Global Inc. (TSX-MCB), Mullen Group (TSX-MTL), Pason Systems Inc. (TSX-PSI), PFB Corp (TSX-PFB), Russel Metals (TSX-RUS), SNC-Lavalin (TSX-SNC), Toromont Industries Ltd. (TSX-TIH) and Transcontinental Inc. (TSX-TCL) are showing as cheap by the historical median dividend yields.

Of the above stocks, only Finning International Inc. (TSX-FTT), Hammond Power Solutions Inc. (TSX-HPS), Mullen Group (TSX-MTL), Pason Systems Inc. (TSX-PSI), PFB Corp (TSX-PFB), SNC-Lavalin (TSX-SNC), and Transcontinental Inc. (TSX-TCL) are showing as cheap by the historical average dividend yields. Also, Pulse Seismic Inc. (TSX-PSD) is showing as cheap by historical average, but not historical median dividend yield.

Of the industrials, Canyon Services Group (TSX-FRC), Exchange Income Corp (TSX-EIF), Finning International Inc. (TSX-FTT), Hammond Power Solutions Inc. (TSX-HPS), HNZ Group Inc. (TSX-HNZ.A), McCoy Global Inc. (TSX-MCB), Mullen Group (TSX-MTL), Pason Systems Inc. (TSX-PSI), Pulse Seismic Inc. (TSX-PSD), Russel Metals (TSX-RUS), SNC-Lavalin (TSX-SNC), Stantec Inc. (TSX-STN) and Toromont Industries Ltd. (TSX-TIH) is showing as cheap by 5 year median dividend yield.

There are not many companies in the Tech sector, but Calian Technologies Ltd (TSX-CTY) and Evertz Technologies (TSX-ET) are showing as relatively cheap by the historical median dividend yield, by the historical average dividend yield and by the 5 year median dividend yield.

A number of energy stocks also seem cheap. Canadian Natural Resources (TSX-CNQ), Cenovus Energy Inc. (TSX-CVE), Ensign Energy Services (TSX-ESI) and Suncor Energy (TSX-SU) are still showing as relatively cheap historically.

Crescent Point Energy Corp (TXS-CPG) is showing as cheap by the historical average dividend yields and by the5 year median dividend yield. Encana Corp (TSX-ECA) is only showing as cheap by the historical median dividend yield. Husky Energy (TSX-HSE) is showing as cheap by the historical median and the historical average dividend yields.

I have two materials stocks. Teck Resources Ltd (TSX-TCK.B) is showing as relatively cheap by the by the 5 year median dividend yield.

Of the infrastructure type utility companies only AltaGas Ltd (TSX-ALA) is showing relatively cheap by the 5 year median.

Of the Telecom Stocks WiLan Inc. (TSX-WIN) is showing as relatively cheap historically. BCE (TSX-BCE), Manitoba Telecom (TSX-MBT) and Shaw Communications Inc. (TSX-SJR.B) are showing as relatively cheap by the historical average and the historical median dividend yields. Manitoba Telecom (TSX-MBT) and Shaw Communications Inc. (TSX-SJR.B) are showing as relatively cheap by the 5 year median dividend yield.

The utility company TransAlta Corp (TSX-TA) is showing as relatively cheap by the historical average and the historical median dividend yields. ATCO Ltd (TSX-ACO.X) is showing relatively cheap by the historical median and 5 year median dividend yields. Canadian Utilities (TSX-CU) is showing as cheap by the 5 year median dividend yield.

On my other blog I am today writing about Pembina Pipelines Corp. (TSX-PPL, NYSE-PBA) ... continue...

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Monday, May 4, 2015

Dividend Stocks May 2015

The theory is that you should use the dividend yield to see if a dividend stock is selling at a stock price that is relatively cheap. A stock price is considered cheap if it is selling at a dividend yield higher than the historical high yield or higher than the historical average yield or historical median yield. See my spreadsheet at dividend growth stocks that I just updated for May 2015.

On this list,
  • I have 6 stocks with a dividend yield higher than the historical high dividend yield,
  • I have 34 stocks with a dividend yield higher than the historical average dividend yield
  • I have 52 stocks with a dividend yield higher than the historical median dividend yield and
  • 38 stocks with a dividend yield higher than the 5 year average dividend yield.
When I did my list last month,
  • I have 9 stocks with a dividend yield higher than the historical high dividend yield,
  • I have 35 stocks with a dividend yield higher than the historical average dividend yield
  • I have 53 stocks with a dividend yield higher than the historical median dividend yield and
  • 42 stocks with a dividend yield higher than the 5 year average dividend yield.
When I did my list in January 2014,
  • I had 9 stocks with a dividend yield higher than the historical high dividend yield,
  • I had 45 stocks with a dividend yield higher than the historical average dividend yield and
  • 39 stocks with a dividend yield higher than the 5 year average dividend yield.
Of the stock that I follow 6 stocks have raised their dividends since last month. Dividends raises are denoted in green. They are:

AltaGas Ltd (TSX-ALA)
Emera Inc. (TSX-EMA)
Brookfield Asset Mgt. (TSX-BAM.A)
Johnson and Johnson (NYSE-JNJ)
Methanex Corp. (TSX-MX)

Molson Coors Canada (TSX-TPX.B)

Of the stock that I follow 1 stock has decreased their dividends since last month. Dividends decreased are denoted in red. The stock is Teck Resources Ltd. (TSX-TCK.B). Also Keyera Corp (TSX-KEY) did a stock split of 2 to 1. This is denoted in blue.

I am showing whether a stock is relatively cheap based on historical high dividend yields (P/Hi), historical average dividend yields (P/Ave), historical median dividend yields (P/Med) or on 5 year median dividend yields (P/5Yr). See these fields on the right side of the file. You can highlight a particular stock using your cursor to highlight the appropriate line.

There are always some stocks to buy because they are priced reasonably. There are always stocks to currently avoid because they are overpriced. Looking at dividend growth stocks that are selling at stock prices that give them a dividend yield above the historical average dividend yield are probably the best bet.

The stocks that are selling at prices that give them a dividend yield above the historical high yield could be good stocks to buy. However, these stocks may be selling so cheap because of current troubles, especially financial troubles and should be treated with caution. Do not forget that I have all the stocks I follow on this spreadsheet and some are much better investments than others.

However, you should always investigate a stock before you buy. Sometimes different stocks in certain sectors are just out of favour or the stock market is just in one of its declines. However, a stock may be relatively cheap because it has problems. That is why you should always investigate a stock before buying.

Looking at stock this way is equivalent to a stock filter. A main problem I know of is for the old income trusts. These companies have generally lowered their dividend yields forever and they will probably never get back to the old dividend yield highs they made as an income trust company. For these stocks, you might be better comparing the current dividend yield to the 5 year median dividend yield.

Also, on some stocks I have a lot more information years in my spreadsheets than for other stocks. So, finding a stock on the list as "cheap" is only the first step in finding a stock to buy. This is the same with any other sort of stock filters that you can use.

The last thing to remember is that I have entering figures into a spreadsheet. I could put them in incorrectly, I can transpose figures and I can misread figures. This is another great reason why you should check a stock out before investing. As this is just a filter, it works better on some stocks than on others.

See my entry on my methodology in establishing the historical dividend yield highs and lows for the stocks that I cover. I have an entry on my introduction to Dividend Growth. You might want to look at my original entry on Dividend Growth Stocks. I have also written about why I like Dividend Growth companies.

On my other blog I am today writing about Leon's Furniture Ltd. (TSX-LNF, OTC-LEFUF) ... continue...

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Wednesday, April 29, 2015

Shopping Online

My son wanted something on Amazon so I agreed to shop there. The last time I did that it was sent by a delivery service where because I was not home when they called I had to go to some out of the way place on the Lakeshore to get the package. This was a number of years ago and I had not shopped online in the meantime.

I did the order and it was sent by Purolator. I again was not home when the package was delivered and I got a notice that I had to pick the parcel up at 800 Kipling. According to Google the office was just south of the Kipling station. However, when I was at Kipling it was not easy finding an exit to the street. I asked 4 people before someone could tell me where there was an exit.

When I finally got to the Purolator office, I told the clerk that I was never shopping at Amazon again; she said that I could have phoned to reschedule a delivery. She said she did not know why the Purolator delivery man did not give me this info.

You hear a lot about Online Shopping being easy and how great it is. I still think that going to a shop for shopping is a lot easier. I am still not impressed with online shopping.

My son shops online and most things seem to be delivered by Canadian Post Office. However, we never seem to get a phone call when we are home and items have to be picked up at our Post Office. I pass two post office outlets each day, but our post office is in an inconvenient spot and my son always has to make a special trip to get his items. Just how is this convenient?

On my other blog I am today writing about Barclays PLC ADR (NYSE-BCS, LSE-BARC) ... continue...

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.