Friday, July 29, 2005

DRIPS - Dividend Reinvestment Plans List

Just a quick post today. I came across a blog that has a pretty good list of available DRIPs. It is a bit of a mess right now, formatting wise, but it provides a pretty good list of the available DRIPs in Canada.

Thursday, July 28, 2005

Tracking Investment Income

As I drive towards my goal of an investment portfolio worth $300,000, I always keep the income that it is throwing off in the back of my mind. It is this income that is going to provide me with a good portion of my investing return over the years. I have started to use an Excel chart that graphically reminds me of this growing income stream. I find this is an awesome motivator to keep on course as it highlights progress towards my goal.

REMEMBER though, as Canadian Capitalist pointed out in his blog, investing in dividend paying stocks requires you to complete your due diligence. Do not just invest in a stock because it provides you with a huge dividend. A poorly managed company can drop like a rock, and with it so can its dividend, a la Nortel. Dividends don't mean much then. You must understand what you are buying and feel comfortable that earnings will continue to rise in the future, and that you are getting in at a price you are comfortable. That is a judgment call. But more on that later...

Transactions for the week:
Stock: BCE Inc. Transaction: Dividend Reinvestment Amount: $18.60

Good Book: This is one of my favorite investing books of all time. I didn't list it in my Recommenced Reading post, but I should have.

Wednesday, July 27, 2005

Recommended Reading

I wanted to provide a list of books that I consider to be valuable in the journey to becoming a knowledgeable investor. These books deal directly with dividends or at least has some content that is pertinent. Please take a look. Comment on any other books that you have found valuable as well.

The Dividend Growth Investment Strategy: How to Keep Your Retirement Income Doubling Every Five Years - Roxann Klugman
- A good summary of the dividend investment strategy with many solid examples.

The Dividend Rich Investor: Building Wealth with High-Quality, Dividend-Paying Stocks - Joseph Tigue, Joseph Lisanti
- Similar to Klugman's book, but not quite as in-depth.

The Single Best Investment - Lowell Miller
- This is a very convincing book. Well written. Does focus on US utilities too much IMO.

The Dividend Connection - Geraldine Weiss
- Geraldine has had amazing success investing in dividend paying stocks. Check out their newsletter

Eight Steps to Seven Figures - Charles Carlson
- A little too much fluff, but good overall wealth-building concepts.

Mergent's Dividend Achievers Winter 2005 - Mergent Inc.
- Mergent tracks company dividends, and keeps a comprehensive list of companies that have increased their dividend on a regular basis. Check them out

The Intelligent Investor - Benjamin Graham, Jason Zweig
- The investing bible. Enough said.

Saturday, July 23, 2005

The Power of Dividends

Why I Like 'Em and How I Track 'Em

The thing that I like best about dividends is that they grow on a regular basis. At least the stocks that I select to purchase tend to do. One of my most important stock selection criteria is a growing dividend. Each and every year, a company's dividend must have increased.

Why do I want this? So that my money can compound rapidly. Let me give you an example. On December 17, 2003 I made my first purchase of IGM Financial (IGM-TSX). When I bought it at $30.50, the company was paying a yearly dividend of $1.02 per share. This gave me a yield of 3.34
%. Today, IGM Financial pays investors $1.29 per share. My average cost on these shares, after purchasing some more shares and reinvesting dividends, is $31.64. $1.29 / $31.46 = 4.08%. After only a couple of years, my dividend yield has gone from 3.34% to 4.08%. That is compounding at its finest. It will only get better as IGM continues to raise its dividend (I hope!!).

How do I track this? I have set up a little spreadsheet that does the calculations for me. It looks like this:

On the 'Purchase' side, I input all my original purchases, the price I bought the stock at and the dividend the stock was paying at the time. This gives me my then dividend yield. On the "Current Yield' side, I recalculate my buy price to take into account any additional purchases and dividend reinvestments and the current dividend to arrive at my new dividend yield. This provides me with a good picture of which way my dividends are going. You will see I have a fair way to go before I hit a 5% yield, but it is going up nonetheless. If you have any questions please do not hesitate to drop me an email or comment.

Transactions for the Week

July 22, 2005:
Stock: The Coca-Cola Co.
Transaction Type: Dividend Reinvestment

Amount: $10.22

Good Book:
To learn more about the power of an increasing dividend, check out Lowell Miller's, The Single Best Investment.

Monday, July 18, 2005

Rules of this Site

Not much of a post today, but I need to get it out there anyway. I have few ground rules on this site. Please ensure you follow them.

Rule #1
: Do not, I repeat - DO NOT - follow any advice given on this site. The site is for informational purposes only. The decision I make concerning my goals and money work for me (hopefully), but given your circumstances, they may not be relevant.

Rule #2: I am not your financial advisor.

Rule #3: I will advertise on this site.

Rule #4: Comment, Comment, Comment. I want to hear from you, so please comment.

Sunday, July 17, 2005

What My Investing Accounts Mean

On the sidebar to the right, you will see all the investment accounts that I have. Below is a brief description of these accounts:

RRSP: This is my registered retirement savings plan account. For those of you in the U.S., this is like your IRA. All investment gains (dividends, capital gains, interest, etc.) are not taxed while in the plan you can deduct your contributions against your year's earnings.
I hold this account with Canadian ShareOwner Investments. Their commissions are pretty good and best of all, they do free dividend reinvestment.

Non-RRSP: This is just my regular investment account. It is fully taxable.
I also hold this account with Canadian ShareOwner Investments.

Pension: This is my pension account I get from work. Basically, I contribute 3% before tax and my employer matches it with 2%. I look at it like free money.

ESPP: An ESPP is a 'Employee Stock Purchase Plan'. This plan, also offered through my employer, allows me to contribute 5% of my salary to company stock. It works like this: Each pay period, 5% of my salary is deducted and placed into a holding account. After 6 months, the company buys stock for me at 85% of the average stock price during the 6 month contribution period. In other words, I get a 15% return right off the bat.

Wife RRSP: This is my wife's RRSP. Not a lot in here but I will eventually use it for a spousal RRSP. Currently it is held at TD Canada Trust.

Friday, July 15, 2005

Introduction - The Dividend Guy

Hey there investors, let me introduce myself. I am a 31 year old guy, employed by a global management consulting firm, have a wife and two young kids, with a pretty nice house, and a white picket fence. Like most of the free world out there, I am just trying to earn as much "jack" as possible. What do I do with this cash I earn? Well, to be honest, most of it goes to pay for food, housing, cars and all the other stuff you need to support a family. However, being the diligent guy that I am, I make sure that I put at least 10% of my gross earnings into investing - mainly investments that pay me dividends. This blog is about my trek to build a $300,000 investment portfolio by the time I am 40 years old!! Stay tuned and watch me as I get closer and closer to my goal!!

* "jack" = money for all you non-hip people