Sunday, December 14, 2014

Holding D.UN in a declining market

D.UN was a stock-picker's darling just a few short months ago. I bought 500 shares for a tax free savings account. D.UN didn't go up much but it did add a few dollars thanks to its generous dividend. Once a month the account benefited from the deposit of $93.33.

Then all began to change. D.UN lost its sheen and fell to a buy and then quickly moved to hold status on many lists. As the price of oil tumbled, the value of the D.UN stock fell off a cliff. The REIT has a lot of Western Canada exposure. I checked a chart and D.UN is still in free fall. Where it will go after market opening Monday is anyone's guess. It may well continue to lose value.

Am I worried? Yes. Am I selling? No. I wanted a dividend and I got an dividend. At the moment that TFSA is earning an annual yield of 7.7% calculated on the original investments. Ignore the loss for the moment. I believe the loss is temporary but it the downturn may linger longer than one would like. Eventually its grip will weaken and the stock will begin to rebound.

My wife and I need to see at least 4% from our investments to balance our books in retirement. D.UN can cut its dividend dramatically and the dividend income for this TFSA will still be 4% or better.

This REIT is about 20 years old. It is a respected name. I don't worry about it being here in the future. It will do just fine over time. It is me that I worry about. With my heart, I am a much poorer bet when it comes to the future than D.UN. Send a dividend and my wife and I will live worry free.

If D.UN drops farther or stays down as I think it might, I will add another 100 shares. At that point, I  will have made my maximum commitment to D.UN.

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