Weekend Reading – Best dividend stocks, juicy yields, ICOs, millennials and more #money stuff
Welcome to my latest Weekend Reading edition folks.
Here is my lone article from this past week: I recapped the Equifax cybersecurity breach – and what you can do about it – now that potentially some of your personal data is in anyone’s hands!
Enjoy the best of the rest!
Investing guru Norm Rothery listed Canada’s best dividend stocks for 2018. It would be worth checking out his selections. From the article:
“If you had purchased an equal dollar amount of each A-graded Dividend All-Star and rolled the proceeds into the new ones each year, you’d have gained a total of 178%, including dividends, since we started way back in 2007. Similarly, a portfolio of A-and-B stocks would have climbed 119%. By way of comparison, the S&P/TSX Composite Index ETF (XIC), which tracks the broad Canadian stock market, lagged with a total return of 47% over the same period.” Impressive.
One of my favourite bloggers Million Dollar Journey wrote about taking the commuted value (of a defined benefit pension) over the guaranteed value. Given the current interest rate environment (commuted value goes up if interest rates go down or stay low) I think he and his wife made the right choice – he likely got top commuted value dollar.
Steadyhand told investors not to focus on juicy yields. I largely agree with this:
“If you have a strong affinity to yield, your portfolio can be tilted toward higher yielding securities, but do so judiciously. Don’t go overboard.”
What the heck is an ICO? Read on to find out.
This 30-something millennial couple should be learning that: to generate enough investment income to reduce their work, by their mid-50s, without compromising their lifestyle and retire at the age of 60 with $120,000 a year, after tax – is simply a dream. They have liabilities close to $900,000…
From my oldie but very goodie file: what should my financial plan cover?
Sure Dividend said “it depends” when it comes to investing (in stocks) or paying down debt. That’s the right answer for most people. We happen to do both. This way we don’t have to worry about the debate.
Freedom Thirty Five Blog listed some investment objectives. I certainly agree with this: “…over time, in preparation for retirement, my investments will focus more on income and capital preservation, and less on growth and speculation.”
Tawcan believes if you want to increase your net worth – strive for high efficiency in everything you do. That includes being efficient with your home operational expenses (heat, hydro, gas, water) and other basic necessities.
Rob Carrick wrote this recently – something I’ve often thought about – why using just your home is a really bad idea for retirement.
I love Norm Rothery! Thanks for sharing the link for the dividend allstars with Moneysense. I forget that Moneysense is not in print anymore!
Still a decent online resource!
Mark, Thanks for the summary. Enjoyed both the Tawcan and Freedom 35 articles. Still need to dig in to the others. Tom
Please do Tom. Enjoy!
I guess Money Sense is highlighting the index can be beaten without being Warren Buffett … Wait I am beating the index since 2009. I just need a downturn in the stock market to see where I land in the long term.
I slowed down my mortgage payments when I renewed (took a longer amortization than what I had left) to invest the difference. So far I am ahead with the money invested. Considering time is one of the biggest factors in building wealth, it makes sense if you can reach a safe threshold in your borrowing.
re: I guess Money Sense is highlighting the index can be beaten…
I guess. But it’s an apples & oranges (aka useless) comparison. I could say that my investment picks and strategies are superior to these “all-stars” because they’ve produced higher returns over the same period. There’s also no mention of risk or costs.
If it isn’t clear by now, the resurgence of dividend focused investing seems to have been borne out of fear — that of the Great Financial Crisis (2008) and the fear of losing all your money (aka capital gains). Div investors hang on the payout because it’s literally cash in the hand today that the markets can’t take away tomorrow. But it makes no logic sense. I’ll let someone far more respected than I explain — Larry Swedroe (and Vanguard) on the dividend myth: http://thebamalliance.com/blog/vanguard-debunks-dividend-myth/
re: Considering time is one of the biggest factors in building wealth, it makes sense if you can reach a safe threshold in your borrowing.
True. Also consider that if Time=Money*, then Money=Money. Mark (MOA) is utilizing mostly Time to build his wealth, where as other PF bloggers such as Freedom35 are utilizing mostly Money (safe threshold of borrowing) to build wealth.
*(Time does not actually equal Money. For one thing, Time is a constant and Money is a wild variable.)
Absolutely time is money and vice-versa…but you knew that.
Dividend investing has great merit, Larry told me that personally when I met him once. He’s just not convinced there is anything magical about them.
Mark, did you ask Larry what’s in his wallet? I wonder if he invests in the DFA funds his firm recommends for clients. He might even be a closet dividend investor. 🙂
I recall he does. Larry shared some comments on this site before…I’d have to search for them myself to confirm 🙂
“Dividend investing has great merit, Larry told me that personally when I met him once. He’s just not convinced there is anything magical about them.”
I hope Larry wasn’t suggesting that indexing is magical…lol
Larry is a HUGE indexer.
That’s what I was thinking too about index fund magic.
Most index investors I have talked to believe that their way is the only way to investing.
So I am surprised to hear that Larry Swedroe would say that dividend investing has great merit.
No doubt you’re doing very well DE. Time can absolutely be money and vice-versa. Keep up the progress.
Re (above): ““If you had purchased an equal dollar amount of each A-graded Dividend All-Star and rolled the proceeds into the new ones each year, you’d have gained a total of 178%, including dividends, since we started way back in 2007.”
I back tested to see how one would do if they purchased Mawer Canadian Equity’s top 10 stocks at the beginning of each year. Surprisingly, the list has very little turn from year to year. My calculations for the period 2007 to current show one’s overall total performance would have been 134.5% vs 100.4% had they held the fund itself.
Good back-test. I certainly haven’t bought and sold such stocks Bernie so my returns are closer to the 134%…actually under that because I didn’t start investing with my approach until 2009.
re: Weekend Reading
Out of curiosity, what’s are MOA’s most viewed/commented on posts? I thought the recent ‘retired early’ article was a doozie with almost 100 comments, but who would have thought preferred shares would garner over 150!?
re: Canada’s best dividend stocks for 2018.
Seems odd to be picking stocks for just a single year if your goal is to hold very long-term; show me the best dividend stocks for 2050. And do I really want to be churning my portfolio every year (e.g. what are the costs)?
re: …“it depends” when it comes to investing (in stocks) or paying down debt.
My “it depends” is which ever pays me the most. My debt (mortgage) currently ‘pays’ me 2%; my investments currently pay me many multiples of that. Removing emotion from both and relying on cold hard math makes the decision of where to put my money a no-brainer.
re: …to increase your net worth – strive for high efficiency in everything you do.
The obvious contradiction being having children. Kids are perhaps the pinnacle of inefficiency; pretty much the best waste of all known resources. However, as previously mentioned, with new metrics being utilized to measure poverty, we should also be using expanded standards to measure wealth. One of these could be human capital. Having children might be considered the pinnacle of investment (i.e. spending, not consumed, for future production). The ultimate in (very) long-term private equity — think J-curve, high-risk, non-guaranteed return, highly speculative, etc. With that said, perhaps the establishment should consider children as a form of wealth — parents are, after all, taking on the greatest form of true long-term investment, so why not bestow them with corporate-type benefits (e.g. declare (and carry forward) 18 years of “losses” on tax returns)? As well, institutions currently only evaluate ‘income’ when considering loans, etc. Perhaps they could also consider ‘future earnings’ of offspring. Kind of like how mining stocks jump of the release of positive assay reports; market value of your kid might improve with every A, or karate belt, or lawn mowed. After all, we keep saying children are our most valuable asset.
re: …commuted value (of a defined benefit pension) over the guaranteed value. Given the current interest rate environment (commuted value goes up if interest rates go down or stay low)…he likely got top commuted value dollar.
Last year I was investigating doing the same — getting paid out and then re-starting my pension (due to low rates heading higher). The Man said ‘No!’. Seems like I always want to do things which are far too interesting for the establishment. Through my research I had read the best time to commute was actually a few years ago, but even at this point MDJ took home some lump sum bonus dollars.
(Rambly note on similar: I received my pension performance report this week…of note was the returns of Private Equity 27% (vs 18% benchmark) vs Public Equity 18% (vs 20% benchmark). Their PE holdings have vastly outperformed both the benchmark and public equity returns for close to a decade…yet their allocation is still well below 10% of the fund. Interesting that the funds’ 25-year total return is 8.3% (vs 7.9% benchmark) and admin costs are 0.3%…looks as though the admin is getting paid big bux to achieve the same return as a simple four-fund index/ETF portfolio (“Total compensation for…executive officers was $8.2 million is 2016-2017; $7.2 million in 2015-2016″ — a 14% raise; Total cost of salaries and benefits to entire staff was $84 million 2016-2017” — 6.5% of AUM + 35% raise) WTF?! That’s worse than the worst mutual fund!. Yet they state “The total cost of investment management and pension administration is about one-half of one per cent—
significantly less than the fees individual investors commonly pay.” Uh, yeah… But we already know how the game is played. )
My contribution: Artificial-Intelligence Hits the Equity Markets
why don’t you just start your own blog?
don’t start your own blog sst! i get to read your take here without going to another. you are our resident expert!
@gary — don’t flatter me, I might never leave! At most I’m probably only an expert at rubbing people the wrong way (think of me like The Drunk Uncle). 🙂
@TJ — no thanks. I’m far too lazy to try and reinvent the wheel. Mark has done a very solid job job with MOA and provides a platform for a wide range of voices. I operate kind of like the world’s second largest pharmaceutical company…of which you have never heard. An Indian company which, after the big brand names release their drugs, reverse engineers the product and produces their own version; much less work in much less time with much more profit.
Thanks SST. Happy to hear and post many perspectives.
Why is this bank not widely known? https://www.wealthonebankofcanada.com/Personal/
How can if offer such high rates? How would a member know it is trustworthy?
It’s not widely known because it just began operations (last year, I believe). They are a Chinese funded bank with a focus on serving the Chinese community.
It can offer such high rates because it’s still in the customer accumulation phase. As their website states: The Rate and these Terms and Conditions are subject to change without notice. We know what that means.
Are they trustworthy? Yes, according to the government who granted them “bank” status. Other sources says otherwise (e.g. https://beta.theglobeandmail.com/report-on-business/the-murky-beginnings-of-a-new-canadian-bank/article33034258/?ref=http://www.theglobeandmail.com&😉
Correct…in asset accumulation phase. It will be interesting if this incentive is there in another year!
Thanks for the mention Mark. Lots good articles here. I quite liked MoneySense’s dividend picks.
Same. Own most of them 🙂