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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I've now been retired for just more than two years and thus far I've removed 9 percent of my original investment in order to live. This leaves my portfolio up by about 46 percent since retiring. I'm happy but concerned. This market has been just a mad climb into the financial stratosphere since I left my job in January of 2009.
Nothing goes up forever and I'm wondering when the stock market correction will hit. A good friend, and a wise investor, has been selling off his stock holdings over the past month. He wants his cash readily available in the coming months. I'm still holding tight.
I have started converting my non-dividend paying investments into cash in order to take advantage of any big dip. If there is a dip, I can buy low; If there is no dip, but the market just charges on, then I'll withdraw the cash to live and leave my big dividend producers to enjoy some extra growth thanks to the DRIPs (DRPs - Dividend Reinvestment Plans).
If you have followed this blog at all, you will know that I have an ongoing love affair with the TD Monthly Income fund. I've been a little unfaithful as I have also dabbled in the CIBC Monthly Income fund. These two funds anchor my portfolio and supply me with a big chunk of my income in retirement.
My goal is to have about 15 percent of my portfolio in each of these income producing funds. I also have about 6 percent in REITS in the form of XRE and another 6 percent or more hidden in real estate investments tucked into some of the ETFs I own.
Clearly I have a lot of my money riding on the success of the Canadian banks and financial section --- probably more than is theoretically wise. That said, these investments have done quite well and I feel comfortable holding shares in both the Royal Bank and the Scotia Bank. The Scotia folk just upped their dividend. Now, I'm waiting for the stock to climb a little more and maybe split.
I had a lot of Inter Pipeline (IPL) but when it got above $15, I lightened up. I still have about 3 percent of my portfolio in IPL and feel comfortable with that amount. I like the solid monthly income.
Energy (oil and natural gas) both seemed like commodities with lots of growth in the their futures. To that end I hold a bit more than 3 percent of my portfolio in Crescent Point Energy and almost 2 percent in Penn West Petroleum. I bought Progress Energy Resources some years ago and it still accounts for 1.5 percent of my portfolio. Surely natural gas will come back someday. Progress pays a nice dividend while I twiddle my thumbs and wait. I dumped my Trinidad Drilling just recently and I'm out of Suncor Energy as soon as I see a bit of a bump.
Almost all of my U.S. investments are in ETFs. I've got FDL, PEY, PID, SDY, DWX, VNQ,DTN, DRW and DVY. I'm especially fond of DRW but I would never be so bold as to advise anyone to buy it. Do your homework and see what you think. The yield has been so good that soon it won't matter what it does; I'll have reaped a nice reward for my support. I also have three mutual funds that invest in the States. These funds, like a few others in my portfolio, are left over from my mutual fund days. I have about 15 percent of my portfolio in American stuff.
I also own some International investments: PGJ, EWH, EWS, TD International Index Currency Neutral-e and some mutual funds. The only mutual fund that I own and like is Mawer World Investment. It has been a real powerhouse in my portfolio. It will be my last international mutual fund to be sold as I age and consolidate my portfolio.
As you may have guessed, I own the classic ETF for a Canadian ETF based portfolio: XIC. I have about 6 percent in XIC and another approximately 3 percent in XMD. Some of my other Canadian investments are the Brompton VIP Income Fund, Claymore S&P TSX Preferred ETF and Sceptre Equity Growth.
I own one GIC which I will be cashing come fall. I own no bonds except for those that are tucked into my monthly income funds. When interest rates climb and regain their normal place in the financial universe, I'll be buying some bond-based ETFs but for now I'll take my chances with stocks.
If all that seems a bit confusing, you're right. I keep wondering: Why can't I just sell all but my monthly income funds? I'd put half in the TD Monthly Income and the other half in the CIBC Monthly Income. These are both nicely balanced and have good histories for not dropping in lock step with the market.
Check out today's art. It shows what would have happened if you'd have put $400,000 in the TD Monthly Income on the day it was born and removed 5 percent each year on the anniversary of your investment. I figure one could have removed as much as 8.85 percent of the original investment every year and today still had the original investment. Note: this does not take inflation into account. Your original investment would not have the same buying power today by a long shot.
Anyway, take a look. If you click on the image it will be bigger and easier to view.
Cheers!
If you want to play with the calculator that I used, you may find it here. I say may because who knows when the TD Bank will change its Website. TD Asset Management mutual fund calculator.
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