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Thursday, May 13, 2010

More dividend money to come

Yesterday, the TSX gain some valuable points and it had a positive effect on my portfolio. I updated my investment portfolio and I close May 12 at a fantastic 88 709.51$. I also bring some changes to my blog. If you blog using the Blogger platform, you may have notice that bloggers can now bring pages to their blog. I did created mines. It makes the whole thing lot better than having all the data compress on my right column. I find it better this way.

Anyhow, I can say that I fully recover from the Dark Friday lost (of May 7). I read that the crash may had been caused by a Citigroup employee and that Barack Obama had opened an investigation to make sure than no other crash of this nature happen. Opening an investigation is a good idea because in my case, it almost took me a full week to recover from the Friday money loss. A crash like the one of May 7 is certainly not good for the stock market. And it’s certainly not good for myself as for small investors. And for everyone else.

My last paycheck received today bring my savings to 1 230.45$. And as you can imagine, I did what I was supposed just to do in June: I transferred money into my broker account!

I bring in 1 130$ into my TD credit line, which bring to 1280$ the money I now have available for investment. I just need to transfer the money into my broker account. And voilà, I am ready for another trade! Yeah! So now, what am I going to do with 1 280$? I know I had talked about CDL.A, but that once is for June. In June, we have 5 weeks, which mean 5 paychecks and I may find the money to invest in 100 stocks of CDL.A at that time. As for now, I have money available and I want it out of my saving account!

This is the fabulous dividend income:

From my non registered investment portfolio:
Sprott Inc. (SII): 512 stocks x 0.16$ = 81.92$
Bank of Nova Scotia (BNS): 106 stocks x 1.96$ = 207.76$
Methanex Corporation (MX): 103 stocks x 0.62$ = 63.86$
Fortis (FTS): 105 stocks x 1.12$ = 117.60$
Pembina Pipeline Income Fund (PIF.UN): 413 units x 1.56$ = 644.28$
Just Energy Income Fund (JE.UN): 731 units x 1.44$ =
1 052.64$
Yellow Pages Income Fund (YLO.UN): 437 units x 0.804$ = 351.35$
Bell Aliant Regional Communications Income Fund (BA.UN): 100 units x 2.904$ = 290.40$
Pengrowth Energy Trust (PGF.UN): 106 units x 0.84$ = 89.04$
Enbridge Income Fund (ENF.UN): 308 units x 1.152$ = 354.82$
Corby Distilleries (CDL.A): 100 stocks x 0.56$ = 56$
Davis + Henderson Income Fund (DHF.UN): 100 units x 1.836$ = 183.60$
Premium Brands Holdings Corporation (PBH): 200 stocks x
1.176$ = 235.20$
TOTAL: 3 728.47$

From my Tax-free savings account (TFSA) portfolio:
Consumers’ Waterheater Income Fund (CWI.UN): 400 units x 0.65$ = 260$
TOTAL: 260$

From my RSP portfolio:
EnCana Corporation (ECA): 100 stocks x 0.80$ = 80$
Emera Incorporated (EMA): 200 stocks x 1.132$ = 226.40$
TOTAL: 306.40$

4 294.87$ + an extra 100$ from DRIP = 4 394.87$

I am now at an official 4 294.87$ in dividend income and at a nonofficial 4 394.87$. My dividend incomes slowly grow. What I don’t like about earning dividend inside a RSP is that dividend cannot be cash out, everything that been earned inside a RSP account have to remain inside the RSP account. Of course it can be remove from the RSP, but huge penalties will need to be paid, making cashing out dividend from RSP impossible.

With the TFSA, its possible to cash out dividend. I recently discover something with T D Waterhouse. T D Waterhouse authorize 1 free withdraws per year out of the TFSA. All extra withdraws are being charged 35$ or something like it by T D Waterhouse. AWFUL! But of course, brokers like T D Waterhouse, even if its own by TD Canada Trust, they are there to make money from investors. Even for more sophisticated investors (100 000$ in assets and up), the rule is the same: 1 free withdraws from the TFSA per year. Only one! Extremely annoying because I had 32$ in cash I would had like to withdraw. But when I learned the 1 withdraw per year rule; I decide to leave the little sum of money just where it is right now.

You might wonder what this post is all about, where am I going with all this stuff. Well, I have an awesome announcement to make!

3 728.47$: current dividend earn in my non registered portfolio
260$: current dividend earn in my TFSA

3 728.47$ + 260$ = 3 988.47$

I am very close to the 4 000$ in dividend earning with those 2 right? I mean dividend money that I can benefit from without penalties, if it’s just of that 1 withdraw rule for the TFSA.

With the money I currently have available, I decide to invest in 100 units of Pengrowth Energy Trust (PGF.UN). Currently, Pengrowth Energy Trust (PGF.UN) is at a bargain price. PGF.UN had made huge profit. The company is in good position and don’t forget, PGF.UN is being hold by Derek Foster. PGF.UN had once paid more than 2$ per unit in dividend. Due to the economy, the dividend distribution had been reduced. But at 84 cents annual distribution, PGF.UN is still a good player. Myself, I got scared when PGF.UN had announced their distribution cut so I sell PGF.UN. But since I do no hold thousands of dollars in cash, I have to look into affordable investment and PGF.UN is one of those affordable investments. Also, I wanted to bring an extra 100 units of PGF.UN in order to benefit from the DRIP. I won’t benefit that much, I will be earning 1 unit per month of PGF.UN, but its still worth it. Same thing for CDL.A, I want to invest in 100 extra stocks of CDL.A to benefit from the DRIP.

3 988.47$ + 100 units of PGF.UN at an annual dividend of 84 cents (84$)
= 4 072.47$

My newest investment will bring my dividend available money to 4 072.47$! I have exceed the 4 000$, which is nice. Overall, including the RSP dividend, I will be at a nice 4 478.87$. Next step will be to reach 5 000$ in dividend available money. I am not too far away without too much efforts, if not of looking at the TSX going up and down.

I am currently working at one the lowest income I have ever earned in my life. Before, I use to work at several jobs, multiple hours to make that of a salary so I can have money to invest. With my current situation, I make an average of 500$ per week after taxes. I may plan to remain on the same track. Why? Because of the taxes.

500$ x 52 weeks = 26 000$

For the fiscal year of 2010, I can invest a bit more than 7 000$ in my RSP.

26 000$ - 7 000$ = 19 000$

To this amount, we need to bring the dividend earnings from my non registered portfolio. But still, dividends are not being taxes that much. At this point, I will have to pay taxes on an income of a bit more than 19 000$. This is not bad at all. If I earn more, I will have to pay more in taxes. And I don’t really want to pay more taxes. Even if it’s mean having more money to invest. So that’s the scheme for now, until I change my mind. :)


MOneyEnergy said...

Nice job with the dividends - looks like you'll be at your $1000/mo. goal in no time!

Anonymous said...

What are your current thoughts on Yellow Pages Income Fund. The recent negative results and opinions might cause some people to sell the stock.

self-taught investor said...

Hello Sunny,

Are you aware that the dividend tax credit only apply to "eligible" dividends from corporations (like your BNS, Fortis, Colby and PBH should be ok) and not to distributions (all your .UN stocks). So your taxes may be a little higher than what you are actually expecting.


Thank you

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