Saturday, September 17, 2011

Not recommending these but I own 'em.


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.

These are not recommendations but they are investments that I have in my retirement portfolio.

CIB512 (CIBC Monthly Income) yielding 5.6%, Brompton VIP ETF yielding 9.8%, CPG yielding 6.5%, IPL.UN yielding 6%, PWT yielding 6%, XRE yielding 5%, ZUT yielding 5.2%, REM yielding 10.8%, DRW yielding 12.5%, DWX yielding 11%, and AUSE yielding 6.9%.

Although the following are not paying above the magic yield point of 5%, I love owning them anyway. Scotia Bank yielding 4%, Royal Bank yielding 4.7% [If this drops a little lower, I would not hesitate to buy more.] and CPD 4.8% [When interest rates begin to climb, this is worth a look. The yield should climb as the price drops.].

And although it is only yielding 3.2%, this may change after the December dividend, I am still quite enamoured with the TD Monthly Income as a core holding. I have 14.9% of my portfolio in TDB622 and each time my holdings drop below 15% of my portfolio daily value, I buy more.


p.s. If one thinks of a correction as a loss of at least ten percent, based on that number my retirement portfolio has not corrected this year. Much of my portfolio's diminished value is a result of removing funds in order to live.

Friday, September 16, 2011

For retirement start saving early and save lots

I read the following in the Globe and Mail today:

"[a declining market] is a rare opportunity to be treasured, if you can build a retirement portfolio of strong companies with dividend yields of 5 per cent or more. If you have had good advice or been smart yourself, you may just be able to take advantage of these investments in the coming weeks and months. If it is built right and timed right, you may just start your retirement with one of the best pensions around."

This is good advice. Until you actually retire, you will not know how much income you will need. There are lots of sites on the Web with estimates of how much you will need. These estimates are usually expressed as a percentage of your final annual income.

The estimates vary greatly and reality varies even more.

I live in a rambling, three bedroom bungalow. It is a perfect home for a retired fellow with a heart condition. Perfect that is until something needs repair. This summer my wife and I had to have a new roof. This cost $15,000. Ouch!

And behind our home we have large hill with a retaining wall going right across our rather wide, suburban lot. The original wall was made from stacked and interlocking railway ties but after 25 years it was completely rotted. We had to have a new wall --- about 55 feet long and six feet high built. I haven't got the total bill but I'm sure it will be another good one. Ouch again!

And it wasn't in the budget, but I had to buy a new car. I got a 2011 Volkswagen Jetta TDI. On the bright side the payments are only about fifty dollars more than what I had been paying for my old Saturn Ion and the new beast is delivering more than 40 mpg in the city. Still it wasn't in the budget. Ouch, yet again!

What I'm getting at is that one not only has to have money to cover day to day expenses but enough money to cover the emergencies that crop up with some regularity in life: furnace repairs, air conditioner maintenance, washer and dryer repairs, snow tires and rims, etc.

Don't be cheap when planning for retirement. If you do manage to save too much, you can always take a cruise to celebrate. If you don't save enough, not taking a vacation will be the least of your worries.

FYI: Keep a record of your annual expenses. If you use Excel you can easily average your annual records. It is really not that time consuming and you will be surprised at how much it actually costs you to live. I credit my careful records for giving me a good handle on what retirement was going to cost.

Monday, September 12, 2011

A rough week coming up

Can't sleep and so I got up and checked the Web. I learned that the markets in both Asia and Europe are down and down a lot. The Greek default situation has flared up again - big time.

I'm mentally preparing myself for some big losses in the coming days.

Before all this global financial stuff began unraveling I created a spreadsheet to estimate of my maximum losses in what I would term a financial meltdown. I am nowhere close to those absolutely horrid numbers but another potential daily hit of possibly two percent or more is frightening.

Oh well, it is too late to bail. I'm going to just try and ride this out. It is the 12th of the month today and by Friday I will have a nice bundle of dividends swelling my cash accounts. The 15th of each month as well as month ends are my paydays. This month, September, is a special treat as some investments only pay dividends every three months. September is one of those months.

And December, the end of the year, is only about three months away. December is my biggest month for income. As the dividends roll in, I'm going to keep putting them into what I see as good dividend paying investments. Buying low, or at least believing that I am buying low, should ease some of the financial pain I am about to endure.

If the markets have stabilized by December, maybe even recovered somewhat, I'll be even happier. Maybe I'll even sleep better and not be up blogging well before dawn.

Good luck in the coming week!

Wednesday, September 7, 2011

Portfolio yielding about a six percent

Let's take a look at some of my recent buys mentioned in my posts: ZUT is up 6.73%, yielding 5.2%; CPD is up 1.09%, yielding 4.79%; PWT is up about 1%, yielding about 6%; REM is up .22%, yielding 10.74%; AUSE is up .27%, yielding 6.45%. The lesson to take from this is that if one picks a down day to buy, almost anything you buy may well be a winner --- at least, in the short term.

As long as interest rates keep refusing to lift, CPD should perform as expected. It should provide a bit of portfolio solidity in an unstable financial world while, at the same time, delivering a nice dividend. PWT may yet revisit the under $17 price arena. If it does, it offers good value with a steady monthly dividend. Can oil, and even gas, stay down for long?

I bought all the mentioned ETFs and stock. I take my own advice. My portfolio is yielding about six percent in this down market. If it continues to show weakness, I will continue to buy more ETFs and some stock with my dividend flow. I might as well increase my income while I've got a chance.