Just bought some CPD and DRW

This post is for entertainment purposes only. No part of this post should be construed to constitute investment advice. The author is not an investment professional and assumes no responsibility for any investment activities you undertake. Prior to undertaking any financial decisions, you should contact an investment professional.
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This info was added Dec. 28, 2011. As of today it appears that DRW will miss paying its fourth quarter dividend. Ouch! The overall dividend yield for the year was more than 10 percent but still I was expecting about $400 come the end of December.


What happened? I found this explanation on the Net:

"DRW holds PFICs (Passive Foreign Investment Companies) in its portfolio. PFICs must mark to market each year (in Q4) and realize a gain or loss in those PFIC shares. PFIC loses are offset against PFIC gains, and then against portfolio income. The PFIC losses for DRW this year wiped out the gains and Q4 dividend income, therefore, no dividend distribution . . . "

I'm holding my position. I'm not overexposed and feel little concern. We'll wait to see what the yield is delivered at the end of the first quarter of 2012 and we'll hope the value of this ETF doesn't continue to lose ground. This missed dividend payment does add a whole new wrinkle to owning DRW.
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Now that we've got the above out of the way, I've been moving out of investments that are not paying their way --- or should I say are not paying my way. As a retired fellow, I need income. If a stock, mutual fund or ETF doesn't pay a dividend or isn't at least on a growth roll it is history.

I like two ETFs enough to buy the one, CPD (Claymore S&P TSX Cdn. Preferred Share ETF), and to add to my holdings with another, DRW (Wisdom Tree International Real Estate Sector Fund.)

Morningstar rates CPD as a 5 Star ETF. It carries low risk in its category teamed with a high rate of return. I hope to pocket a yield of almost 5 percent. Morningstar rates DRW only as a 2 Star ETF but I have done nicely with it and have enjoyed a nice yield that is returning 3 percent at the moment. (Today is Sept. 27, 2010.) DRW is rated average risk and that is good enough for me in the Global Real Estate category.

I'd say more but I am only a successful investor and my success could be as much luck as skill. I don't want to lead anyone astray. Yet, my portfolio is up about 27.5 percent since retiring around January 9, 2009. And that is after removing tens of thousands of dollars to help finance my lifestyle. My wife and I spent almost six weeks on the road travelling about North America in my vintage automobile, a '60s Morgan Plus 4.

Now, google CPD and DRW and, if you like what you find, maybe you've found a couple of investments for the long haul.

Cheers!