Thursday, May 29, 2008


Sorry for the late notice but I've been on vacation recently and will return to a more regular posting schedule in the 2nd week of June.


Wednesday, May 21, 2008

Some Recent Dividend Increases

For those dividend hungry investors here are some of the companies that have raised their dividend/distribution over the last month:

-AGF Management (AGF.B) - Annual dividend increased by 25.0% from $0.80 to $1.00
-Barrick Gold Corp (ABX) - Annual dividend increased by 33.3% from $0.30 to $0.40
-Baytex Energy Trust (BTE.UN) - Annual distribution increased by 11.1% from $2.16 to $2.40
-Boyd Group Income Fund (BYD.UN) - Annual distribution increased by 11.1% from $0.18 to $0.20
-Calian Technologies (CTY) - Annual dividend increased by 25% from $0.48 to $0.60
-Cineplex Galaxy Income Fund (CGX.UN) - Annual distribution increased by 5% from $1.20 to $1.26
-Clorox Company (CLX) - Annual dividend increased by 15% from $1.60 to $1.84/share
-Easyhome Ltd (EH) - Annual dividend increased by 21.4% from $0.28 to $0.34
-Finning Int'l Inc (FTT) - Annual dividend increased by 10% from $0.40 to $0.44
-Freehold Royalty Income Fund.(FRU.UN) - Annual distribution increased by 20% from $1.80 to $2.16
-Johnson & Johnson (JNJ) - Annual dividend increased by 10.8% from $1.66 to $1.84.
-McGraw-Hill Ryerson (MHR) - Annual dividend increased by 6.7% from $0.90 to $0.96
-Melcor Developments (MRD) - Annual dividend increased by 25% from $0.40 to $0.50
-Methanex Corporation (MX) - Annual dividend increased by 10.7% from $0.56 to $0.62
-Power Financial Corp (PWF) - Annual dividend increased by 7.2% from $1.25 to $1.34
-Richelieu Hardware (RCH) - Annual dividend increased by 14.3% from $0.28 to $0.32
-Seamark Asset Management (SM) - Annual dividend decreased by 12.5% from $0.32 to $0.28
-Talisman Energy Inc.(TLM) - Annual dividend increased by 11.1% from $0.18 to $0.20
-Wajax Income Fund (WJX.UN) - Annual distribution increased by 3.0% from $3.96 to $4.08

Friday, May 16, 2008

High Fuel Prices

With the long weekend upon us you’re bound to hear a plethora of opinions and complaints about how the government and oil companies are gauging the poor working man. At some point during these many rants someone always suggests (in a very confident manner) that the government should be doing something about these prices. Although I agree that it would be nice if someone magically made fuel prices cheaper I don’t think it’s practical, realistic or appropriate to expect governments to do this. Since oil is a global commodity what exactly should the government be doing to protect us poor Canadians from high fuel prices? Maybe they could eliminate the gas tax altogether? Sounds like a great idea but then where are they going to make up that revenue? Maybe spend less on hospitals, schools etc? Or perhaps they could initiate a communist style business policy and claim the private owned oil companies as government property? This obviously isn’t a reasonable option either.

In my opinion if you want to remain living in a democratic, civilized, industrial nation there are only two options available if you really want to fight the high cost of fuel:

Option #1: Use less of it. (ie- drive, boat and heat less).
Option #2: Protect yourself from high fuel prices by buying part of the oil companies. When you buy shares of a publicly traded company you’re buying a small percentage of the company. As a part owner you’ll benefit (in the form of capital appreciation or dividends) each time the pump prices go up. Hey if can’t beat them join them.

If you’re interested in Option #2 here are a few companies that you might want to start your search with PCA, HSE, SU, COS.UN, TLM.

Tuesday, May 13, 2008

Macquarie Power & Infrastructure Income Fund - (MPT.UN)

Macquarie Power & Infrastructure Income Fund invests in essential infrastructure assets, with an emphasis on power infrastructure.

-Gas Cogeneration – Cardinal, a 156 MW gas cogeneration plant, is located in Cardinal, Ontario.

-Wind – MPT owns the 99 MW Erie Shores Wind Farm in Port Burwell, Ontario, which currently represents about 6% of Canada's installed wind capacity.

-Hydro – MPT owns four hydroelectric facilities, located in Dryden and Marathon, Ontario, and Sechelt and Dease Lake, British Columbia, totalling 36 MW.

-Biomass – MPT owns a 28 MW biomass facility in Whitecourt, Alberta, and holds investments in a 31 MW facility located in Chapais, Quebec.

An indirect 45% investment in Leisureworld, which is currently the fourth largest provider of long-term care (LTC) homes in Ontario.

-I have listened to the last conference call and management seemed to be very conservative and selective in any growth opportunities that they’ll investigate in the future.
-12.2% yield
-They have provided 2008 payout ratio guidance in the range of 95%-100%
-Trading at approximately book value
-Involved in recession resistant, government regulated industries.
-S&P stability rating of SR-2 which is the second highest rating and described by S&P as “An entity rated ‘SR-2’ has a VERY HIGH level of distributable cash flow generation stability.”
-Estimated 2008 PE - 21X
-Estimated 2009 PE – 17X
-Although this trust is fairly small ($420 million market cap) their income streams are diversified with 23% of distributable cash from their investment in Leisure World with the remainder coming from their power generation facilities.
-One note of caution is they do pay relatively high fees to their Australian based parent company “The Macquarie Group”
-TDWaterhouse rates them a very strong buy with a $10.00 one year target price (recently reduced from $10.50).

[I do not own units of MPT.UN. As always please do your own research and consult your own financial advisor before making any decisions.]

Monday, May 12, 2008

Best of the Blogs Winners

Well the results of the “Best of the Blogs” contest are in and Middle Class Millionaire was voted the “Best Blog on the Internet”…well not quite… Middle Class Millionaire came in tied for 14th place. The real winners deserve their crowns and are listed below:

1. iBankCoin (formerly known as Fly on Wall Street)
2. Wall Street Fighter
3. Dealbreaker
4. Paul Kedrosky
5. Canadian Capitalist

Thanks to everyone who voted.

Thursday, May 8, 2008

How Many Securities Should You Have?

I’ve been asked this question before and my general rule of thumb is 20. I touched on this in a January, 2007 post about diversification however I’ll just rehash it a little bit. I think that if you own over 20 stocks you run the risk of becoming too diversified. If you’re too diversified you basically become the market and if that’s the case why waste the time and commission fees buying individual stocks? Simply buy some low MER index funds and get it over with, because if you diversify too much you’re going to mimic the index anyways.

There are of course exceptions, for example if you’re pursuing a high risk strategy such as penny gold stocks it would probably be wise to create a basket of these high risk stocks and hope for a few big winners. Additionally, if your portfolio is under $70,000 I don’t think that you should be aiming to hold 20 stocks. I believe that if you can’t commit a minimum of 2.5% to 3% of your portfolio to a stock you probably shouldn’t buy it. I will often buy a half position ie- 2.5 to 3% of a stock and if it increases and grows into my target 4 to 8% of my portfolio great! but if not I will wait and average down to increase the weighting.

Tuesday, May 6, 2008

Best of The Blogs

I thought that I’d use this post for some shameless self promotion as Middle Class Millionaire has recently been nominated as one of the "Best of the Blogs" by The Globe and Mail. I am definitely in good company as fellow bloggers Canadian Capitalist, Four Pillars, Dividend Guy, and Million Dollar Journey were also on the list.

Monday, May 5, 2008

Does 1% Really Matter?

When it comes to investing and your portfolio does 1% really matter? If you are paying an MER of 2.5% instead of 1.5% is it a big deal? What about if your portfolio returns 7% instead of 9%?

If your investment horizon is between 1 and 2 years than a couple percent really doesn’t matter. Your portfolio won’t be affected in any meaningfully way. However, if you are a long term investor 1 or 2% certainly does matter and will have a huge impact on your total portfolio return. I created the below chart to illustrates just how much difference 1 or 2 percent can make. The chart makes the following assumptions:

1. Initial investment of $10,000 in year 1.
2. No additional contributions.
3. Interest compounded annually.
4. All interest is reinvested.

So although it may seem petty to be wasting time and squabbling over a one or two percent difference it could mean a difference of hundreds of thousands of dollars in retirement.

Thursday, May 1, 2008

Portfolio Update as of May 1, 2008

-up 3.1% from last month
-up 3.5% in 2008
-CDN 66%
-U.S. 30.5%
-International 3.5%

TRP - 3.99%
CSH.UN - 4.03%
GWO - 4.25%
PFE - 4.39%
POW - 3.80%
WAG - 3.22%
L - 2.64%
UNS - 1.95%
GZ - 2.82%
TD - 12.61%
EIT.UN - 2.68%
JNJ - 5.82%
MMM - 3.38%
C - 3.57%
ATD.B - 2.59%
BCE - 5.26%
IIC - 2.65%
O'Shaughnessy’s Global Fund - 3.43%
American Growth Fund - 0.89%
CDN Value Fund - 3.00%
Small Cap Growth Fund - 3.71%
Chou Associates Fund - 9.14%
Money Market Fund - 10.20%

There were no changes to the composition of my portfolio last month and I don’t anticipate any major changes this month either. However, I am taking a close look at BPT.UN and CU and may initiate a position in one of those names this month.