2015 Financial Goals

As great as 2014 was for me personally, professionally, and financially, I'm happy to turn the calendar to 2015. After tracking six financial goals in 2014, I'm going to simplify in 2015 by only tracking four goals. 

Increase Expected Forward Dividend Income by $1,800/yr 

This is definitely a stretch goal, but one I think is possible with some discipline. My plan is to invest a certain amount per month, and make one special contribution based on my work bonus. Additionally, the dividend growth I have from my current portfolio will help in achieving this important, but realistic objective. Lastly, I'm hoping the Canadian market continues in a bearish mode as there are some nice opportunities developing in the energy and banking sectors. I look forward to adding to my positions in solid companies that reward their shareholders with regular dividend increases...hopefully at lower prices than in 2014.

Complete the Transformation of my RRSP by Year End

Mid last year, I decided to use my RRSP to increase my holdings of US and foreign companies in order to benefit from favorable tax treatment of international dividends and to increase my portfolio diversification. The plan is also to hold Canadian REITs in my RRSP, as their distributions are taxed at a higher rate than dividends in my taxable account. I started a very long process of cleaning up my various holdings, knowing it would take me at least a year, possibly 18 months in order to get my portfolio in tax efficient, well diversified shape. I made a lot of progress in the transformation in the second half of 2014, but there's still much ground to cover in 2015. The rise of the US dollar against the Canadian dollar is making this objective even more challenging as I look to buy attractive US stocks where a 25% exchange premium won't completely negate my returns if the Canadian dollar appreciates again (which I do feel it will in the long-term). My current estimate is that the transformation in my RRSP will be complete around September 2015.

Give Twice as Much to Worthy Causes as in 2014

Last year, I tied the amount I gave to charity to half of my short-term trading gains. Although last year's plan provided me with motivation to complete profitable short-term trades, I realized that my contributions to charities shouldn't be tied to the luck I have with my investments and the direction of the market. If I have a rough year on the market, I should still give money to worthy causes that are important to me. I'm very lucky in life that I have an incredible wife, amazing son, loving family, fantastic friends, a fulfilling job, and so many other blessings. After reading Tony Robbins' "Money: Master the Game", I decided to double the amount I gave last year. The plan is to give a certain amount per month in order to ensure that I don't lose sight of the importance of giving to the less fortunate.

There are a couple non-financial goals I'll be working toward in 2015 (keeping my weight under 165 lbs at the end of each month and averaging a blog post each week) that I'll report on here as well. This is gearing up to be a great year, and here's wishing everyone the best of luck with accomplishing everything they set out to do in 2015!

First Dividend Raise of 2015 - Corus Entertainment

     January isn't even half over and I already received my first dividend raise of the year! On Tuesday, Corus Entertainment ("CJR") announced they were raising the annual dividend on their 'B' shares by 4.6% to $1.09 annually. Management commented that "This 4.6% dividend increase reflects our confidence in the continued development of our business and is supported by our strong free cash flow". Management seems to understand that as their business grows and free cash flows increase, shareholders should be rewarded for staying faithful to what has been a pretty volatile stock over the past year (52-wk-low of $20.08 and 52-wk-hi of $26.05).  I'm a long-term investor in Corus and think their specialty channels, radio stations, and other investments make it a long-term hold given the near 5% dividend rate and history of growing the payout each year.

     I'm anticipating the following companies in my portfolio to increase their dividends this quarter: Rogers Communications, TD Bank, Bell Canada, TransCanada Pipelines, Bank of Nova Scotia, Cisco Systems, and Royal Bank of Canada.

Update on Investment Goals at December 31, 2014 (YE14)

My investment portfolio had a strong finish to 2014, bolstered by the weakening Canadian dollar and Enbridge's announcement to make themselves more dividend-friendly. I accomplished many of my goals in 2014, and feel great heading into 2015.

Increase my portfolio value by 17% :

My portfolio increased in value by about 38% compared to its value at the start of 2013.  As indicated above, the depreciation of the CAD relative to the USD over the course of 2014 helped grow my portfolio given US stocks now account for about 30% of my portfolio holdings. The spike in both Enbridge and Enbridge Income Fund Holdings' shares after their Q4 announcement to re-structure the company in a more dividend-friendly matter benefited my portfolio value as well. Another primary contributor to the increase in value was a series of short-term trades I made in 2014 that added about 1.5% of return to my portfolio value. 

Despite accomplishing this goal, I still long for an extended bear market that would allow me to buy more quality dividend paying stocks at lower prices.

Total Dividends Received Up 25% (Revised from 18% at June 30th):

My forward dividends were up 32% in 2014, a truly remarkable figure which I doubt I'll ever accomplish again.  During Q414, a number of my holdings in my portfolio announced dividend increases, including Inter Pipeline Limited, National Bank, Bank of Montreal, Enbridge, Enbridge Income Fund, Laurentian Bank, Telus, Kinder Morgan, Pfizer, and Realty Income. 

Maintain US Holdings at About 30%:

My US holdings accounted for exactly 29.99% at YE14!  As the CAD continues to depreciate against the US dollar, and with plans to continue to shift my RRSP holdings to US and international stocks, this number should climb slowly over time.  That said, I must admit that with the CAD at a year-low against the USD (about 85 cents today), I'm finding it harder to force myself to buy US stocks and pay the 20% premium my brokerage thinks is fair. However, my rising stream of USD dividends helps to remind me to follow through with my plan. 

Doubling Down on Comfortable Holdings:

I made decent progress on this throughout 2014, but couldn't find attractive entry points to increase my positions of Coca-Cola, Microsoft, or Realty Income. It's definitely a goal I keep in the back and look for opportunities when stocks I hold decrease in price. 

Get rid of all companies who haven’t raised their dividend in the past 18 months:

Only two companies in my portfolio didn't raise their dividend/distributions in 2014 (H&R REIT and Riocan REIT). I simply cannot sell Riocan due to tax implications, but I'm still considering selling H&R REIT since they no longer seem committed to increasing distributions, despite strong business results and growth in AFFO. 

Figure out what to do with cash in excess of $500 (especially in TFSA and RRSP):

Given the current cash-producing nature of my portfolio, I've decided against pursuing this goal. I tend to invest when I have above $1000 in cash in any of my accounts. I figure transaction costs of less then 1% are fair. Plus, I like having some cash in my accounts just in case interesting opportunities arise.

My portfolio continues to perform well-above my expectations. Although the value of my holdings is down slightly during the first week of 2015, I remain comfortable with all my holdings. Hopefully your investments had a strong showing in 2014, and will continue to increase in value this year!

Brief Update As Year End Approaches

It's an interesting time to be a dividend growth investor in Canada. Looking at the TSX plunge day-after-day on lower oil prices makes it depressing to see the value of my holdings decrease. However, I'm ecstatic that a bunch of my holdings have recently announced dividend increases (i.e. ENB, NA, LB, IPL, etc.), thus boosting my passive income. Given the goal of my portfolio is to generate increasing amounts of passive income over time, and lower stock prices make it more affordable to increase passive income at lower prices, ultimately I'm quite happy.

As oil prices have plunged, I've taken the opportunity to invest in Suncor, Canada's largest integrated energy company. This might seem counter-intuitive to some, but Suncor was always too expensive for my liking, as it traditionally yielded under 3%. I took some of my short-term profits from trading Alaris in my TFSA this year and invested in Suncor at a yield of 3.2%. Then when it went on sale earlier this week, I was able to buy more shares with cash in my RRSP at a 3.4% yield. I'm ultra-comfortable investing with Suncor as I see high gas prices as sticky. As disfunctional as OPEC has proven themselves to be recently, I can't imagine cheap gas/heating oil as a long lasting phenomenon. When oil prices inevitably rebound, Suncor stands to benefit handsomely. In the mean-time, I see the 5% of my portfolio that I've allocated to Suncor as a life expense hedge.

The other material purchase I made in recent months was shares of Omega Healthcare Investors ("OHI") in my RRSP. I sold some of my beloved shares of Telus, as I was far over-weighted in that position, and put the money towards OHI, which is a healthcare REIT based in the US. The yield was over 5%, they have a super impressive record of distribution growth, and I was looking to add a play in the healthcare field in the US. With aging boomers accounting for a higher percentage of the population, I think OHI will benefit in the long-term.

I'm paying close attention to TransCanada Pipelines lately, as I'd like to add to my position given they recently announced plans to increase their dividend payout ratio. Plus, a couple activist investors are pressing them to up their yield materially and/or split apart their business. The oil price plunge is pulling down TRP's share price, making it seem like a good time to increase my bet on this Canadian dividend growth darling.

That about covers my big moves in recent months. I'm not necessarily looking to add to any positions this year, but, if Mr Market gets even more depressed, I might as well take advantage of it.

Un-mortgaged!

Today is a great day since my wife and I made our last mortgage payment on our house. This marks the second time I've been mortgage-free, and this time is even sweeter than when I paid off my condo. A couple posts ago I calculated that I spent about 18% of my monthly income on my mortgage.  For the remainder of 2014, the amount I would have spent on the mortgage will go towards my son's RESP. Then next year...well...the future is wide open :)

My quick tips regarding mortgages:

- Always use a mortgage broker to find you the best rate

- Don't necessarily take the lowest rate mortgage; make sure the low rate comes with acceptable options regarding pre-payments and accelerating payments.

- If you can manage it, make mortgage payments weekly instead of monthly. Your mortgage will disappear much faster

- My experience with Tangerine (formerly ING Canada) was much better than my experience with First National. Tangerine is more flexible in their payment options, while First National doesn't seem to have much experience dealing with actual clients (vs brokers).

- Make sure to get your mortgage discharged by a lawyer when you're done paying it off. 

Here's hoping my days of having a mortgage are permanently over. Financial independence feels that much more attainable :)