Weekend Reading – Undervalued stocks, right mindset, Air Miles alternatives and more!
Welcome to the weekend!
Welcome to my latest Weekend Reading edition that shares some of my favourite articles from the week that was across the personal finance and investing blogosphere.
A reminder, in case you missed last week’s edition – here it is!
Weekend Reading – BlackRock soaring, how Canadians invest, paying off your mortgage and more!
Enjoy these articles and see you here next week with more fresh new content along with 5,000+ subscribers!
With real estate prices soaring in Canada, Freedom Thirty Five Blog highlighted how his rental property is doing. He makes a good point when it comes to holding real estate citing a Globe and Mail article:
“To prevent making this mistake I suggest renting out your property instead of selling it. This is especially prudent in a buyer’s market like in 2019 when it may not be a good time to sell. Stock investors are always encouraged to buy and hold. Why should real estate investing be any different?”
Wise words from Larry Bates on MoneySense recently regarding the right mindset for investing success.
“For most of us, investing is a multi-decade journey. Ignoring short term market moves, focusing on the long-term and maintaining the right mindset, including thinking like a business owner, finding the right asset mix and investing like clockwork, will help you achieve the investing success you deserve.”
FrugalTrader was back with an update on Million Dollar Journey about various Canadian undervalued stocks.
He also highlighted his top-10 individual stock positions in that post – dividend stalwarts in Canada like:
- TD Bank (TD)
- CIBC (CM)
- Canadian National Railway (CNR)
- Royal Bank (RY)
- Scotia Bank (BNS)
- Bank of Montreal (BMO)
- Fortis (FTS)
- Enbridge (ENB)
- Emera (EMA)
- TC Energy (TRP)
His approach to investing is similar to mine, although we own different companies in different quantities. You can check out how I built my juicy dividend portfolio – and how you can too here!
Like FrugalTrader, I own stocks that have rising cash flow, modest yield, and modest payout ratio.
For considerations about how to build your dividend portfolio, metrics to learn about, here is another fine post:
How to build an income portfolio using 12 simple steps.
Always nice of GenY Money to share my content in her awesome reading list: PF Round Up about Net Worth.
Interesting to see how Fortis (FTS) returns compare with Berkshire Hathaway (BRK.A shares) via Henry Mah this week.
Thanks to Rob Carrick, Dale Roberts from Cut The Crap Investing found a new favourite Canadian Dividend ETF to enjoy: CI Wisdom Tree Quality Dividend ETF (DGRC).
Dan Kent and the team at Stocktrades.ca has a How to Buy Cryptocurrency in Canada primer for you.
My recent posts:
Speaking of juicy dividend income – here is my latest monthly income update. Wild that I’ve been posting these updates for almost 12 years now – the chart is proof!
I’ll be back in a few weeks to show you how April trends are coming along.
Weekend Reading – Undervalued stocks, right mindset, Air Miles alternatives and more!
Stephen Weyman and the team at CreditCard Genius highlighted some Air Miles alternatives. My/our go-to points and rewards programs continue to be Aeroplan, Marriott and PC Optimum. What are yours?
Brian So offered 87 tips to save on life insurance.
I’ve worked with Brian regarding our life insurance needs. Check out my post about determining whether term life or whole life insurance is right for you.
Financial Independence – Retirement
As part of my ongoing commitment to share some financial independence, early retirement or retirement articles from the blogosphere, here are some links!
A Purple Life did a six-month check-in on her early retirement decision.
I liked her post-retirement goals in particular:
- Slow Down
- Time With Loved Ones
- Be Present
- Be Closer To Nature
Sounds like where I am trending to…
On Cashflows & Portfolios, we shared our latest profile about how to retire by age 60 even if you didn’t have a cent saved until age 45! Read on for that case study and see how you can catch-up between ages 45 and 60 for a good retirement all the same.
As always, ensure you check out my dedicated Retirement page where I have case studies about “how much is enough”, how other successful retirees are managing their portfolios and much more. They’ve been inspirational to me and shape where I want to be…
I’ve also updated my comprehensive Helpful Sites page to share some FREE FIRE-like, early retirement calculators, along with much more, to help you plan without any fees to do so.
Reader question of the week (adapted only slightly for the site)
Last week, I answered a reader question about RRIFs and specifically my plans for this account when it comes to our RRSP/RRIF draw down plans.
This week, a new question!
I have been reading your blog for several years now, always great stuff, thanks for doing this.
My question is this: although I see the benefits of a portfolio of Canadian Dividend Stocks what about private REITs? I am thinking of investing in one, it’s locally owned and operated, been around for 10
plus years, wins lots of awards and it pays 7%. The company is Skyline Wealth here in Guelph, Ontario.
Your thoughts would be appreciated.
Thanks for your email!
First off, as you acknowledge, I have been and remain a fan of dividend paying stocks and then some low-cost ETFs for extra diversification for my portfolio. In investing this way, I feel I get the best of both worlds:
- Dividends = passive, growing dividend income I can spend as I please, and
- ETFs = growth and international diversification (such as from VTI and XAW in particular).
Don’t forget my lessons learned in diversification in this post – so you don’t make the same mistakes!
When it comes to private equity investing or REITs, I have a post on that too.
Now, with Skyline REIT in particular I’m not too familiar with them but a quick search tells me they “invest in a 100% Canadian diversified portfolio of retail properties with a focus on trusted national brands with long-term leases.”
Fine. Looks like their tenant base is overall, decent. I grabbed this link from their site:
On their site they also highlight their REIT is eligible for registered accounts such as the TFSA, RRSP, RRIF – which is good – because this way you can avoid any unnecessary calculations with return of capital, interest, dividends, etc. that comes with taxable account investing when you own REITs.
Will Skyline be able to deliver sustained annualized returns of 12%? Not sure myself.
Which is why if you do want to speculate (fine by me!), just some caution:
avoid putting more than 5% or so into any one individual stock, singular private REIT or alternative asset class (e.g., Bitcoin) inside your portfolio.
While this individual decision might turn out great – even if it doesn’t, it won’t sink your portfolio. Past performance does not equate to any future results, so even if there is a miss-step, then you’ve got 95% of the rest of your portfolio to manage and succeed on. That’s good risk and reward odds.
For more context, check out how some retirees feel about speculating with their retirement portfolio.
These are just my thoughts since you asked but as always, would love to hear from 5,000+ subscribers on this one as well. Thanks for your readership!
Save, Invest, Prosper!
As always, check out my Deals page for a few personal promo codes you can’t find these codes or deals anywhere else in Canada – to save on investing and more!
On Cashflows & Portfolios, my partner and I can run your retirement draw down projections for your tax efficient retirement. Contact us for details!
Happy saving and investing!
It’s pretty hard to find any undervalued stocks right now in the market. People are talking about market crush day in and day out. Well, I guess I will just stay in the market and ride out any ups and downs. Meanwhile, for the money I still need to invest, like investment incomes from my taxable account and also savings from our frugal life style, the best I can hope for is some good stocks fairly valued. Maybe some ETF too.
As part of my goal to diversify out of North America, I recently bought some Tencent when it was at dip due to the biggest holder company off loading some shares. I have no doubt Chinese economy will continue to boom and Tencent has a very wide moat with their chatting tool WeChat being the only one used by Chinese people not only in China, but worldwide.
“As part of my goal to diversify out of North America…” Me too. I own XAW for that reason via all-in-one fund. Up 10% this year and likely to buy another few hundred shares in 2022 for the TFSA.
Interesting call on China growth, I don’t doubt your thinking!!
Probably smart to look outside NA.
If you have USD maybe consider VWO. I see 10cent is 2nd biggest holding. China =41% and they are knocking it out of the park now.
For CDN value maybe this gives you an idea or two. https://www.firstasset.com/solutions/overview/?fund=CI+First+Asset+Morningstar+Canada+Value+Index+ETF
I wonder if XEG is a simple play considering oil price up 50% from a year ago and oil stocks still down 40%.
Yes, China is flying. More to come? XAW is a great fund for U.S., Japan, China, UK and more although very biased to U.S. market. Then again, historically, it’s been outstanding.
VWO has been roaring recently over the last year.
My GUESS is yes on China, and on VWO running for a while.
XAW is excellent with the big run up in the US. Will it continue? Hard to use it if you’re trying to boost exposure outside of N. America, without increasing the US.
Yes, good point. My bet remains on U.S. multinationals for the coming decades. I hope I am right!
Well I won’t bet against the US but I’m betting there will continue to be good and bad periods for different regions around the world like history teaches us. The US has had an unusually strong, long run with extreme valuations now. China is overtaking the US and will continue to grow globally. My bet is globally diversified.
CB’s with debt and rates are engineering much of what takes place in equity markets nowadays so its hard to understand just where we’re going.
“CB’s with debt and rates are engineering much of what takes place in equity markets nowadays so its hard to understand just where we’re going.” – I hear ya. The future is increasingly very, very cloudy.
“The future is increasingly very, very cloudy.”
Yep. But I feel also increasingly risky as the markets rocket up.
I am also big YES on China. This country is still full of potential. Almost half of the population are still pretty poor, but imagine when all of them getting richer. Also, China is one of the countries being most successful when fighting COVID. Look at people there back to normal life for how long already and we are here in lockdown again. Getting ahead of the pandemic pretty much means getting ahead of the economic recovery.
My 20 day visit to China in 2015 opened my eyes. The growth astounded me.
Thanks, RBull. Will take a look at VWO. I don’t have much USD now, but I guess I can always convert to USD now CAD is stronger.
I was adding some Energy stocks and might add a little bit more. Hesitating to add oil and gas as I am not sure what the future for them but I really don’t see EV will be dominating soon. There are aggressive goals like in Washington States a bill just passed to ban gasoline cars by 2030. I feel it’s not realistic.
Talking about value, I initiated a position in BRK.B. I know it’s underperforming for quite a while, but nobody knows the future. For now at least it looks pretty fair valued.
Yes, a good time to do a NG with CDN to USD. Great. I used to own VWO but did some consolidating into VXUS, VTI.
Those forecasts on EV’s are crazy early. Not going to happen and even if it did its only a tiny percent of the US. The electrical grids can’t handle it either, without massive capital outlays to grow.
Not a bad idea on BRK.b.
They’re still sitting on tons of cash waiting for a correction or some big stumbles.
I wonder how long the boys can keep at it.
Correction has to come at some point…saving some cash for it!
Good. I have a little bit too.
Thanks for your weekend reading. It’s informative and interesting. The more I read your posts the more I learn and realize that I need to improve my portfolio. Thanks for additional resources as well. It’s a bit overwhelming for a newbie. I have a few questions:
1. Regarding your previous post, you mentioned about dividend incomes from TFSA and non-register account. Did you cash it out from non-register account or you will reinvest the dividends?. I read somewhere that reinvest dividend in non-register account is not tax-efficient. Can you clarify?
2. Regarding “RRSP decumulations”, I manage RRSP and spousal RRSP currently. My spouse is retired but I have 10 years to go. Should I contribute spousal RRSP first then my RRSP? so that I can decumulate his account first. What do you think?
3. I have hard time to pick a single winning stock. What’s your tips?
Again, I know that you won’t provide advice but your thought and experience are valuable. Thanks for your time. Kim
Hi, Kim, once you become 65, you can convert part of your RRSP to a RRIF account, and withdraw from RRIF instead. Then you will be able to split the withdrawal with your spouse. So basically, if your spouse’s RRSP account will not be cleaned out until you are 65, then there is no difference which account you contribute.
When you say reinvest dividend, do you mean drip? DRIP in a non-registered account would require you to keep track of ACB which is troublesome, so lots of people, including myself, choose not to drip a non-registered account. I still reinvest the dividends though. Once dividends accumulated to an investable number (as I pay $10 commission, I don’t buy unless at least $2K), I will use it to buy some stocks. I used to buy 100 shares Telus everytime I have enough dividends. This year I adjusted my portfolio and now the dividends in my taxable account will be much more. I got more than $900 investment income in my taxable account on the day of Apr. 15. I am still thinking what to buy now I don’t want more Telus. I might begin to buy some ETF instead of individual stocks.
Great stuff May, thanks for your reply, lots of good things there re: ACB, etc.
Thank you so much for your thought. I now feel that I have a community.
It makes sense for spousal rrsp so now I don’t have to make things more complicated. I’m still not clear about ACB as I haven’t done it myself. I’m with RBC DI and it seems to me that they already counted for me in T5 form. I will review my non-registered account and check with RBC DI get off DRIP.
I recently bought 100 Telus also and felt good to “own” it. Happy weekend! Kim
No problem Kim, I’m far from perfect but my approach is working over time for me/us.
1. I tend to save up TFSA money during the year, then invest each January. I have however moved/transferred stocks from non-reg. to TFSA:
Most of those are dividend-paying stocks.
re: “I read somewhere that reinvest dividend in non-register account is not tax-efficient. Can you clarify?”
I would say the challenges with reinvesting dividends in a taxable account are two-fold:
1) You need to keep track of your adjusted cost base.
2) Dividends are not as efficient as capital gains depending upon your tax rate.
I wouldn’t say dividends / Canadian dividends are not tax-efficient because I believe they are 🙂
2. Regarding “RRSP decumulations” – I believe it is best practice for the higher income earner to maximize their RRSP first. That’s just me but every situation is different and a CFP or tax expert can likely help with that.
3. “I have hard time to pick a single winning stock. What’s your tips?”
So do I 🙂
Check out this post. Other than this post, I index invest for the most part.
Again, not advice, just some insights into my thinking!
All the best and thanks for the kind words.
Thank you very much for your thought and sharing. I love your supportive community.
1. After reading your posts, I’m now in a process of transferring some stocks from non-register account to RRSP as I still have a room to contribute. Your similar post on transferring from non-register account to TFSA is very useful.
2. I agree on tax credit efficient as we can’t escape to pay tax but we try our best to reduce it. So no question on it. About ACB, it seems to me that RBC DI did that for me in T5/T5800. Is it correct?
3. Got it on “decumulation”
4. I’m reading ” your ever growing income” book by Henry Mah. Great to see your website there as one of references. Your work is recognized and valuable.
5. I’m not a good stock picker so I may go with flow i.e efts. It helps me sleep well at night. However, sometime my spouse as a wining stock that made me envy:)). But we can’t have both (good sleep and great return), right???
Have a great weekend,
Thanks Kim. Again, I can’t stress enough about the lack of advice (that I cannot provide on this site) but I can always tell you via the blog what I think about and do 🙂
I recall various brokerages might keep track of the ACB for you, which is great, just make sure you do your own due diligence with keeping track of that. CRA will care about your math, not RBC’s!
Yes, Henry was kind to mention my site in that book and some of his other books as well. He’s been a very good visitor to my site for years. He has a few posts on this site that he wrote – as you know, he’s a big fan of some CDN dividend paying stocks.
“5. I’m not a good stock picker so I may go with flow i.e efts.”
Most aren’t good pickers!! So, yes, while I do own many dividend paying stocks for growing income I hedge my bets and own a few low-cost ETFs just in case!
All the best,
Great read as usual Mark,
Real estate has been good for us and we’ve been holding two rental properties for over 20 years both bought at 145k and 155k and each one generating about 24k in rent yearly, steady stream of monthly income but sometimes i wonder if we could’ve done better with just investing in stocks alone but having both in my opinion is a more way of having multiple streams of income.
as for rewards points Aeroplan is our best card and i can’t remember how many trips as a family we took with those points and i also love my PC points specially when i collect enough points to pay for a weekly grocery bill 🙂 you feel like you’re being rewarded somehow .
one more update on my individual stock portfolio i bought few shares of ENB so now i have ENB and TRP i know i’m double dipping on this since i have a good chunck of VCN but I’m going to hold them.
Wow, that’s great! $24K per year is not trivial in rental income plus you can sell the real assets at some point 🙂
Personally, I like multiple income streams. Diversification is good there too!
We’ll have our RRSPs (x2) + taxable income + x2 small workplace pensions. If I keep after it, likely the blog will be my part-time job in a few years since it makes minimum wage when I work at it.
We probably get a 1-2 months’ worth of household supplies each year from Shoppers thanks to those PC points!
Nothing wrong with VCN. A good hedge for any individual stock risk!
Have a great weekend Gus.
Thanks for including my post Mark:
When I decided to do a comparison between Income Growth and Growth investing, I really expected to saying “See, Income investing does provide price growth as well”. But I really didn’t expect that over the longer term, Income investing could actually do just as well or better price growth than a straight growth stock.
I know that other growth stocks have done better and would have changed the results, but that’s not really the point.
The point is that one does not lose price growth by concentrating on income, they really get both.
Agreed – but we have to be careful with stock selection, certainly looking at $SHOP the total returns are WAY better than $FTS but I see your point and I’ve invested that way for 12 years now myself = primarily income investing + some low-cost ETFs for growth.
As you know, I feel I get the best of both worlds this way! Been a shareholder of $FTS for 11 years. DRIPping probably 6 or so per quarter 🙂
Another great read. Thanks for sharing.
Interestingly, DGRC has been part of my Questwealth portfolio for a year now. However, its yield isn’t that great honestly. Paying 1.70% isn’t as good as any other dividend ETFs like VDY 4.6% or even XIC 2.62%. It is one of the reasons I am getting away from Questwealth to self-managed as a lot of potential income and growth is being lost.
Nice to hear from your Dreamer! Interesting, you’re leaving Questwealth. You should write about that. Is that because as you say you can do better on your own and/or don’t want to pay the robo fees?
Hello Mark! Thank you. Yes, I am planning to write about it when I am done with my money moving around. I am confident I can do better in both growth and dividend aspects and I am not really happy with the 2.20% dividend yield I receive in the portfolio. Growth is great but it isn’t everything.
Robo is great if the person wants to have regular money transfer which gets invested automatically. I find myself passionate about doing it myself nowadays and picking what I like with the percentage I prefer. Also, Robo somehow confuses me. They seem to sell / buy for rebalancing a lot which sometimes messes things. Some occasions, they sold just 2 days before the record date of dividend so it was lost. I think too many factors and their algorithm isn’t optimized to consider everything.
“I find myself passionate about doing it myself nowadays and picking what I like with the percentage I prefer.”
Yup. That’s been me for over a decade now and I don’t regret the decision at all.
I think Robos like ModernAdvisor, Wealthsimple, QuestWealth can absolutely help investors just starting out or even later on in life to train their investing brain but if you have a sound, disciplined plan, this is nothing you cannot do on your own and save the fees in the process. I personally try and avoid selling, just rebalance by buying more stocks out of favour. REI.UN was a good example for me last year and this year. I bought more.
Great collection of articles as usual Mark. I like your suggestion to the reader about not putting more than 5% of a portfolio in something speculative. Solid dividend paying stocks are my bread and butter. Speaking of which, everyone on Twitter is talking about AQN and I feel like I’m missing out because I don’t own any yet, lol. Maybe I should get on that train before they announce a dividend hike this year. 🙂
Thanks, I try and get to your site as much as I can….!
Yes, I personally think the 5% rule is good but that’s also how I manage my portfolio and it seems to be working well (i.e., sleep at night factor!).
Yes, I like AQN, well positioned for long-term income and growth but there are many other “green” energy companies in this space that could take off as well.
The financial future is always very cloudy!
Great site, I have followed your blog for a long time. Curious, what other “green” energy companies are options other than AQN ? I know there is NPI, do you have a list of a few that you follow? Thanks
Not advice Charles but I do look at / watching to buy more INE and CPX over time. Of course, I own the Brookfield companies such as BEPC.
Big fan of AQN and they should increase their dividend in the coming year by 5-10%. At least I hope they will!
Thanks for the kind words. Very much appreciated.
Hey Mark, thanks for the mention! Great reads as well. I think I’m going to play around with the early retirement calculator and see how far I have left to go. 🙂
Great! Enjoy! All those calculators are FREE but I do double-check all of them from time to time to ensure they are working 🙂 The one for Financial Mentor on that page is good.