Retirement income portfolio update

On June 25, I created a million dollar retirement portfolio with the goal of providing both monthly income and capital growth. My attempt has done better than I could have ever hoped. It has gained $50,893.30 in less than a month. The bulk of the gain is unrealized but $5503.65 is dividend income. The portfolio records the dividend income the moment the x-date has been reached. In reality, the actual cash payment would follow.

I based my imaginary retirement portfolio on the lessons that I have learned since retiring some 14 years ago. As I don't get a lot of hits, I will leave you to click the link and check out my posted portfolio. If I get a few comments and questions, I will return and complete this post. I will, of course, answer your questions, if any. Until then, have a good day and wishing you good luck with your investing. 

This add was made on December 24th. My imaginary retirement portfolio fell on tough times shortly after it hit $50 thousand plus in gains. It fell tens of thousands in the red. Today, in December, it is up a bit more than $30,000 while it has pumped out $3,333.33 per month in dividend cash to cover living expenses.

Look for an early January post bringing my readers completely up-to-date on how this portfolio is performing. The link below will take you to the original post creating the retirement portfolio.

My latest crack at a retirement portfolio.

What me worry?

According to Wikipedia Alfred E. Neuman, of Mad Magazine fame, first appeared in late 19th-century advertisements for painless dentistry – the origin of his "What, me worry?" motto. Today an investor could do worse than take Neuman's worry-free attitude to heart. 

When stock prices fall and investing looks bleak, that is often the time to buy. Telus was well down from its high of the past year and all the telecoms as a group were out of favour with investors; I saw an opportunity and bought.

Almost immediately bad news concerning Telus made big news. Telus took an immediate hit. Within a day or two, the Telus stock price had stabilized and was showing signs of recovery. It was time to buy more.

Today my Telus holdings are in the plus column and my dividend income is up in a four digit amount.

Buy some stock with the goal of selling

When I buy a stock, I buy it because I firmly believe it will go up in value. I am always surprised when a purchase falls in value but this is not uncommon. It is impossible to time the market and buy at the ultimate low stock price.

Averaging down: That said, a good idea is to add to one's holdings when a stock you have complete faith in tumbles after being purchased. For instance, I bought some TD bank in the high $80s. It then fell to the low $80s. I bought more. Then it fell to the mid $70s. I should have bought more again. I didn't. It is now off its lows by more than $9. If I had bought another few hundred shares, I could sell today and realize a gain of thousands. That said, nothing is a sure thing and some caution is never all that bad. As it is, I am up a few thousand.

As a buy and hold senior, realizing capital gains is tough but growing one's core investment funds it a big plus. Right now I hold more CIBC, more TD and more Telus than my allocation plan requires. When these stocks are all well into the plus column, I will sell off the extra and put that cash aside for future purchases. In this way I can boost my dividend income.

Thoughts on investing

I'm old and retired but my days of investing for the long term are not over. To a great extent, my wife and I live on the dividends from our investments. We like companies with long histories of honouring dividend commitments. The big five Canadian banks all meet this criteria. And the big utilities, like Fortis and Emera, are also in this league.

My wife and I treat our retirement portfolio like a vegetable garden except our financial garden produces money. Take Fortis, the giant Canadian utility, it has not missed a dividend payment in almost 50 years. In fact, Fortis has raised its dividend in each of the past 49 years.

Does that mean an investor could not lose money investing in Fortis? No! Recently, Fortis hit $62. Now, one can pick up a share for less than $57. Clearly, there are investors who have lost a good chunk of their recent investment in Fortis and if they sell today they will realize that loss. But, if they don't sell they can enjoy the growing dividend and at some point they will realize a capital gain with the recovery of the share price. And it will recover. Of that, there is absolutely no doubt.

Which brings me to two recent stocks that attracted my attention and I acted on that attraction: Telus and TC Energy. Both dropped in value soon after I increased my exposure. I had owned some shares of both. I even wrote posts proclaiming that these stocks were buys; a relative acted on the advice and bought. He and his wife have lost a lot and I worry they might lose faith and sell. Gosh, I hope they can hold on. I still believe both stocks will prove to be good, long-term buys.

With Telus, I am not alone at seeing a buying opportunity. When I check the Analyst Consensus page on WebBroker, I find Telus rated a Strong Buy. I could not agree more.

The 6% dividend not only looks secure, many believe it will increase in the coming year. With a target of more than $29, I happy to own Telus.

Now, look at TC Energy. TRP is almost 30% off its high of the past year. That puts the stock firmly in bear market territory and yet Morningstar only rates TRP a 4**** (four star) stock. Bottom feeders may want to wait but I am happy buying today. Why? Well, for one thing, I immediately begin enjoying the TRP 7.3% dividend. That is the kind of safe dividend that every retiree covets. 

Thanks to dividend paying stocks like Telus and TC Energy, plus the Canadian banks, the large Canadian utilities and a big, smattering of North American REITs, my wife and I withdraw more four percent or more annually from out retirement portfolio without worry. Do we worry about running out of money? Maybe we should but we don't as our portfolio is about twice as large today as it was when I retired some fourteen years ago.

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 Graphing Tool: Compare TD mutual funds and more

Telus: Still a buy today

This morning, before the market (TSX) opened, bad news hit the air waves concerning Telus, or more accurately about Telus International (TIXT). The important thing to remember is that Telus (T) is not TIXT, nor is it a wholly owned subsidiary. I bought shares of Telus yesterday at $25.20. Now it is down $.49 from that price but this is not the whole story.

The target price for Telus has dropped a little but the anticipated gain for the coming year is still excellent and investors are being rewarded for their patience with a dividend of approximately 5.8%. The dividend growth rate of about 7% still seems reasonable.

If the market panics and the Telus price continues to weaken, I see myself as a buyer and not a seller.

Telus: the story just gets better

 

I saw Telus as a buy a few days ago. I added to my position. This morning, watching BNN, I noticed Telus (T) was down even more today than it was yesterday. And yesterday it was awfully attractive.

I immediately booted up my computer and logged onto TD WebBroker. I picked up another few hundred shares of Telus at a truly fine price. Telus is now yielding 5.77%. This stock is a keeper in the short term and a core holding in the long term. I am one happy retired investor.

I can see a very nice profit at the end of the Telus rainbow.

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Telus has gone up nicely since I made my last purchase. It appears that lots of other investors agree with me, Telus is worth trading today. Its trading volume is well up for the day.