Welcome to my Weekend Reading roundup friends. At the time of this post, I just got home after watching my Sens lose 7-2 to McDavid’s Oilers. It was one of the worst efforts I’ve seen from the Senators this year. I wonder what changes for this team are coming with the NHL trade deadline looming – I suspect there are a few. At least the beer at the game was cold…
Earlier this week I shared some resolutions for dividend investors like me and I listed some new ETFs (from TD Bank) and SmartFolios (from BMO) for your portfolio.
Enjoy these articles from the week that was and see you here again next week.
Here are four mortgage trends to watch in 2016 from my friend and mortgage pro Rob McLister.
Ben Carlson wrote about the incredible growing dividend. He wrote: “For those investors who still have plenty of time to save and invest, this analysis gives you a sense of the potential compound interest you can earn from a continuous reinvestment of dividends over time. Those cash flows can start to snowball eventually and take on a life of their own.” I couldn’t agree more and I’ve structured my portfolio for largely the same purpose, to get my snowball rolling.
Amid some layoffs in 2015, here’s what Bloomberg calculated for big bank bonuses: about $12.5 billion.
Thanks to Preet Banerjee, here’s how time and rate of return have a big impact on your savings.
Andrew Hallam said U.S. brokerages are slamming the door on U.S. expats. #Ouch.
Dividend Growth Investor wrote about the importance of multiple income streams. I agree with him, because employer income can and will end at some point, possibly when you don’t want it to.
Tawcan highlighted using Google Spreadsheets for ETF investing.
How does your salary stack up? Read on.
In terms of recent dividend hikes and slashes….
Pfizer (PFE) increased their dividend by 7.14%.
BCE increased their dividend by 5% this week.
Brookfield Renewable Energy Partners (BEP.UN) increased their dividend by 7% and Brookfield Infrastructure Partners bumped their dividend to $0.57 this week.
ConocoPhillips slashed their dividend from $0.74 to $0.25 going forward.
Roadmap2Retire shared his outlook for February, and is looking for his “big fat pitch” to buy stocks.
Michael James on Money has a sensible take on insurance, meaning, he self-insures where he can.
Boomer & Echo hope your portfolio is diversified versus diworsified.
Modest Money has a new stock directory out.
Mark
My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.
An intelligent view of dividends posted today:
Why Do Corporations Pay Dividends?
http://www.pragcap.com/why-do-corporations-pay-dividends/
“Shareholders like optionality and the payment of a dividend gives the shareholder the option to increase or decrease their exposure to that entity across time.” Seems reasonable to me.
Apologies for all the links…’Weekend Edition’ seems like the proper place to put them.
That was a good article, an interesting way of phrasing it: optionality, thereby changing your risk profile over time for that asset. Thanks for that.
Thanks for the mention Mark, always appreciate it. Loved that BCE raised dividend but didn’t like that COP slash dividend. Luck for us COP makes up a very small amount of our portfolio.
Same Tawcan. COP is <0.5% of our portfolio. All the best!
To play the Devil’s Advocate, have you ever read Debunking Dividend Myths on Canadian Couch Potato?
http://canadiancouchpotato.com/2011/01/18/debunking-dividend-myths-part-1/
As for the salary list…notice the top earners are the ones with the most skill, education, and experience (surgeon, judge); those that follow (teachers, police) derive a large portion of their high income being unionized.
Everyone can argue, with sound reasoning, their own point of view. I prefer to stick with my results on the approach I’ve taken (as I believe you have). If one achieves what they hope for than the approach they used was the right one, they don’t have to regret not taking a different one because of someone else opinion.
Yes, I did read Dan’s article/series. It was very good.
When it comes to dividend myths, I agree: equity returns have two components: capital gains (price increases) and dividends. Add them together and you have the total return for a stock. Ignoring taxes and transactions costs, a stock that pays no dividend but increases in price by 6% provides precisely the same return as one whose share price rises 4% and pays a 2% dividend.
I do however, because of the psychological benefit maybe, prefer the money in my pocket (dividends) over capital gains (price increase) because I don’t need to worry about transaction costs for the former.
In the end, this of course is true: “a dollar labeled dividends is as green as a dollar labeled capital, so rational investors are indifferent between the two.” I just want to get paid.
As for the salary scale, yes, I found that interesting SST!
The articles have a few straw man arguments. I am always skeptical of people who only have one narrow view of the world, and ignore everything else. Many index investors have the type of attitude where they ignore everything else they hear about, whether because of ignorance or arrogance. In fact, because of interactions with a bunch of arrogant index zealots, I read John Bogle’s first two books to see where all that lunacy came from. It turned out, it wasn’t from John Bogle.
The goal of the ordinary investor is to achieve their goals, not to beat anyone and anything.
“The goal of the ordinary investor is to achieve their goals, not to beat anyone and anything.”
This is also how I feel. If you are realizing your financial objectives with the least amount of risk, isn’t THAT what matters? I often feel from all the indexing talk, this is only way to invest. Investing in real estate, dividend stocks, owning other assets, etc. is simply foolish and akin to gambling. Anyhow, there is more than one way to realize your goals and financial goals are usually only a small part of the life journey – at least I feel that way. Thanks for your comment.
“The goal of the ordinary investor is to achieve their goals, not to beat anyone and anything.”
“…realizing your financial objectives with the least amount of risk…”
Yup and yup. This is what personal finance is all about. Period.
Unfortunately, most people are unclear of their financial goals (e.g. how much for retirement?), and very unclear about risk.
We need a Facebook page to push this agenda. 😉
Ha, or another blogpost. 🙂 Thanks for your contributions.
Thanks for the mention. Having non-correlated sources of income is great – a job, a portfolio producing dividends, interest income, pension, old age/social security etc.
Good job on the BEP hike..
I liked the article by Andrew too. Interactive Brokers is the best broker for serious investors, offering direct access, rather than selling your order flow like most other brokers out there. Plus, their commissions are much lower than anyone else’s. It sometimes beats me when some dividend investors choose to pay $7 – $10/trade, when they can pay less than $1 and get excellent execution on that trade. I pay approximately 35 cents for a trade. And they also claim to be frugal.
DGI
This is what I’m hoping for….income, a portfolio producing dividends, blog, then eventually; pension, dividend portfolio, a part-time job, a blog to earn income and then old age/social security etc.
That’s the plan 🙂
Yes, happy to see my Brookfield holdings bump their dividend. I hope it’s sustainable. Thanks for reading and supporting the site DGI.
Mark
re: “Having non-correlated sources of income is great – a job, a portfolio producing dividends, interest income, pension, old age/social security etc.”
I doubt all of those sources would be non-correlated. As a matter of fact, I’d say they are all correlated to the strength of the economy at large.
Take a look at what happened post-2008: jobs were lost, dividends cut, portfolios damaged, pensions & funds eliminated, interest rates dropped, OAS pushed back…etc.
The streams may be different, but they all draw from the same pool.
@SST: I was thinking the same thing, but I wasn’t sure there was any point in saying it given much of the rest of the discussion here. But I’m glad you said it.
“I doubt all of those sources would be non-correlated. As a matter of fact, I’d say they are all correlated to the strength of the economy at large.”
You are wrong.
“Take a look at what happened post-2008: jobs were lost, dividends cut, portfolios damaged, pensions & funds eliminated, interest rates dropped, OAS pushed back…etc.”
I see why you are wrong – you don’t see the world as it is.
I have no interest in proving you or Michael James how wrong you are. You have thick skulls, and think you know it all. But of course you are wrong.
Got it. No need to email me any more reminders to check out your reply here. We’re both poopyheads. Have a nice life.
I wish you a happy life as well.
Just remember to have income streams with varying correlations and not be 100% dependent on stocks. Some fixed income and pension income can do wonders for diversification purposes.
During the great recession, a portfolio of government bonds from either Canada or the US would have continued paying interest.
A portfolio of stocks would have seen a drop in values and some drop in dividends. S&P went from 1468 in 2007 to 1115 in 2009. Dividends fell from 27.7 to 22.3.
Someone who received a pension from the government would have continued receiving the pension. A pension from a corporation would have been guaranteed up to a certain amount, even if that corporation goes under.
The unemployment rate did increase, but not everyone lost their jobs. Those who lost their jobs received severance pay and unemployment insurance.
Long story short, the economy affects these sources of income differently. Perhaps the comments do not understand how these different income streams will be affected? Perhaps people on this forum do not have a good understanding that diverse income streams march to a different beat throughout the economic cycle?
I am also not sure why the people above do not understand that different asset classes respond differently to different economic realities. The sad part is that what they lack in knowledge, they sure do not lack in confidence. This is the Dunning-Kruger effect at its best!
Thanks for the mention, Mark. Some great set of reads here…looks like this will keep my busy today.
R2R
Good to hear, that’s my job here 🙂
I thought I’d get more push-back from insurance salespeople on my insurance take, but I didn’t. Thanks for the mention.
On insurance we agree. Good article. I carried insurance when I worked because I traveled so much. As soon as I retired I dropped all insurance when I felt my portfolio and income was sufficient. The only insurance I consider is for Travel, where again the probably is low but if one ever ended up in a hospital in the US, it could cost a bundle.
Mark:
BCE 5% div increase, NA, & CU. I expect the increases this year will be lower than last, but even a 5% average will greatly increase my total income for the year and well ahead of inflation.
I followed the same path. While I was working, held a mortgage and did not have enough saved to retire on, life insurance made sense for my wife and myself.
But now, what would life insurance do apart from increase the value of the estate that the taxman can look at?
We are down to house and car insuranceas well as travel insurance when we travel.
That seems to be the way to go Richard, mostly self-insure as you get older. For sure, keep the mandatory car and home insurance but beyond travel insurance – simply self-insure as much as possible. Even life insurance may not be required if you have no debt and good assets.
Your article was once again, straight-forward and sensible Michael – hard to argue with that approach 🙂
Hi Mark,
Always enjoy your blog. Just wanted to point out that BIP actually increased their dividend from $0.53 to $0.57 per quarter.
MG
You are of course, correct! Thanks for the catch!