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Dividend Earner by Dividend Earner - 1w ago

That’s it, we reached the halfway mark for the year. The S&P 500 has definitely given us a roller coaster ride. Up one month and down the other. It should provide for some buy opportunities should you have some cash on hand to invest.

These roller coaster moments are when you need to stick to your strategy, not panic, and remember why you bought the stocks you hold in the first place. My dividend growth strategy works through the thick and thin.

Stock Trades

June was quiet with one addition to my dividend growth portfolio. I have been working on topping up our spousal TFSA account and with a new contribution, I have purchased Alimentation Couche-Tard TSE:ATD.B. The addition of this consumer defensive dividend growth stock brings my total stocks for the sector to 6.

Last month, I shared my top 5 performers which happened to all be US stocks. This time around, I will share my top 5 Canadian stocks. It’s important to note that I don’t bother with a YTD return or a 1-year return. I focus on my annual rate of return (ROR) since inception. There are too many fluctuations in the short term to really understand the long-term return on an investment.

  1. 13.41% National Bank TSE:NA
  2. 12.79% TD Bank TSE:TD
  3. 11.79% Royal Bank of Canada TSE:RY
  4. 9.93% Canadian National Railway TSE:CNR
  5. 8.01% Telus TSE:T

Not surprised by the banks on the list I hope. If you remember the performance of my top holdings last month, you will notice a large difference between the US and Canadian blue chip stocks.

Sector Diversification – June 2018

A snapshot of my portfolio diversification on July 8th, 2018. I made a slight adjustment to my ratios by making the consumer defensive and healthcare sectors the same. I created a small imbalance and I am hoping to rectify it over the year. I wish I could have known what the best ratio should have been but it has taken me a long time to get the ratios right.

Since I focus on growth, the top 5 sectors have 79% allocated to them and the last 4 sectors have 21% which I consider income sectors since it’s more regulated by governments.

Stock Selection Made Easy

Dividend Income

My June 2018 dividend income is $1,613.13. I finally have USD $1,000 cash in my RRSP account which I consider my minimal investment amount as I have to pay 1% for the transaction but it doesn’t buy many shares in that account. Most of the holdings start at $150 which adds approximately $2 per share at that amount. I will exercise patience and wait to have more before deploying the money.

DISCLOSURE: Please note that I may have a position in one or many of the holdings listed. For a complete list of my holdings, please see my Dividend Portfolio.

DISCLAIMER: Please note that this blog post represents my opinion and not an advice/recommendation. I am not a financial adviser, I am not qualified to give financial advice. Before you buy any stocks/funds consult with a qualified financial planner. Make your investment decisions at your own risk – see my full disclaimer for more details.

Image: Master isolated images / FreeDigitalPhotos.net

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I regularly use the Norbert Gambit approach to convert USD to CAD (and vice versa) through RBC Direct Investing. The process is smooth through RBC but not all discount brokers are created equal and you need to find out if your discount broker can support it. For example, Questrade does support the strategy but the journaling of the shares is not automated and you need to contact them.

Not all discount brokers are able to easily execute the Norbert Gambit. Make sure it can be done smoothly by asking your discount broker about the ability to journal the shares. What you need to understand with DLR and DLR.U is that they both trade on the Toronto Stock Exchange (TSX).

If your discount broker doesn’t support the process and it’s important to you, you can always consider switching discount broker. I have done it once and it was pretty simple to do. It just takes time for all the shares to be transferred.

Norbert Gambit Transaction Steps

Below are the 3 steps to exchange USD currency to CAD dollars using DLR as the ETF (Horizons US Dollar Currency ETF). As mentioned earlier, the 3 steps are based on the experience with RBC Direct Investing and other discount brokers may have extra steps and you should make sure your discount broker has dual-currency support for the account.

Step 1 – Purchase DLR.U on the TSX

Once the US currencies is in the account, initiate a purchase transaction of DLR.U.Make sure you choose the USD account to make the transaction. Note that it trades on the TSX and is in US dollars unlike other stocks that are dual traded between the NYSE and TSX.

A wise transaction tip is to always put a limit on your stock trades. I put my limit at $9.95 US and waited 2 days for all the shares to be purchased. The limit is up to you to decide on. I tend to pick the ask limit and that’s just to ensure I don’t pay more based on market transactions.

Step 2 – Sell DLR on the TSX

As soon as the transaction is filled, I initiated the sell of DLR in Canadian dollars for the number of shares I purchased. Again, I use a limit price of $13.35 CDN and I use the CAD dollar account to execute the transaction.

There was a warning of currency exchange rate when I put the sell order but I verified with RBC Direct Investing that there would be no fees. Since DLR.U and DLR are exactly the same ETF, there are no fees.

Step 3 – Get Your Money

Unfortunately, you have to wait for the transactions to settle to withdraw the money from the account and it takes approximately 2 days. If you want to convert your currency from CAD to USD, you just need to purchase DLR first and then sell DLR.U.

If you pick the wrong account to make a transaction, you will incur an immediate currency transaction by the discount broker, double check the accounts you make the transactions from.

If you want to convert CDN to USD, just start with buying DLR and then you just need to sell DLR.U.

Norbert Gambit Results

I have great results and the rate is very competitive. I have tried local currency exchange businesses and also looked at xe.com.

Obviously, the cost of the transactions approximate to $20 and requires a decent amount to ensure you are not overpaying in fees. Otherwise going to your local currency exchange might be better. I am very pleased to use RBC Direct Investing and DLR for my currency exchange even if the total time is approximately 5 business days before I can access the money.

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Healthcare can be a profitable sector to have in your portfolio. Any dividend growth investor should consider having at least 1 healthcare dividend stocks.

As a market, the healthcare industry is highly regulated and not easy to get into but yet, new research and findings continue to offer growth. There are 2 industry groups and  6 industries in the healthcare sector each with their own business potential, feel free to complement your holdings across multiple industries. The breakdown at a high level is between:

  • Health Care Equipment & Services
  • Pharmaceuticals, Biotechnology & Life Sciences
Johnson & Johnson

Johnson & Johnson

NYSE:JNJ Market Trend

Market Cap: 328.86B

Chowder Score: 9.30%

Industry: Drug Manufacturers

Johnson & Johnson is one of the biggest healthcare companies having an extensive global presence, with over one billion people using its products daily.

The company has a well-diversified global footprint with the US accounting for 50% of the company’s sales, and international markets constituting the remaining 50%.

Johnson & Johnson is organized into three business segments:

  • Consumer: accounts for 17% of sales (baby and beauty, health and healing products)
  • Pharmaceutical: represents 49% of sales, (immunology, cardiovascular & metabolic disease, infectious diseases & vaccines, neuroscience, oncology)
  • Medical Devices: constituting the remaining 34% (surgery, orthopedics, cardiovascular disease & specialty). The company has a strong product portfolio as well as a large pipeline which is expected to convert into revenue in future.
Source: 2018Q1 JNJ Earnings

Johnson & Johnson has a strong R&D base spending almost 14% of sales on R&D, making it amongst the top five US companies for R&D investment.

Johnson & Johnson is one of the most reputed healthcare organizations in the world with more than 130 years of existence. Today, the company has become synonymous with health and baby care products. Some of its top-selling and well-known brands are Neutrogena, Aveeno, Listerine, Tylenol, Motrin, and Zyrtec. Consumers are reluctant to switch healthcare brands unless absolutely necessary making J&J’s business highly sticky in nature. Healthcare companies are also subject to stringent regulations that act as a major entry barrier for new entrants.

Johnson & Johnson acquired Actelion in 2017 which expanded the company’s portfolio in the pulmonary arterial hypertension disease area. The company is also making good progress on a restructuring program which will help in cost savings of $800 million – $1 billion by 2018 end.

A trusted brand name, diversified businesses, extensive global distribution network and a growing customer base are the company’s key competitive strengths. Johnson & Johnson stands in a good position to benefit from continuous innovations in healthcare and aging of the global population.

Johnson & Johnson is a Dividend King increasing dividends for the 56th consecutive year. It has grown its dividends at more than 7% CAGR over the last decade and currently sports a dividend yield of 2.94%. The company last announced a 7% increase in its payout and should continue the same dividend growth rate, given the management guidance of mid-to-high single digit earnings growth.

Source: 2018Q1 JNJ Earnings AbbVie Inc

AbbVie

NYSE:ABBVMarket Trend

Market Cap: 155.91

Chowder Score: 19.51%

Industry: Drug Manufacturers

AbbVie is a leading global biopharmaceutical company engaging in the research and development of therapies for some of the most serious human diseases facing the world.

AbbVie operates through only one business segment – Pharmaceuticals. The company produces drugs for several different therapeutic areas such as rheumatology, oncology, virology, neurology etc. AbbVie’s blockbuster drug, Humira is one of the best-selling drugs globally and accounts for almost two-thirds of the company’s revenue. The drug is used to treat psoriasis and rheumatoid arthritis. Other well-known products include Vicodin, Androgel, and Marinol. The company also has a robust late-stage pipeline across several therapeutic areas.

Formed as a spin-off from Abbott Laboratories in 2013, AbbVie has a huge worldwide presence. More than 26 million people in 200 countries use AbbVie’s products each year. The US accounts for over 60% of AbbVie’s revenue while international markets constitute the remaining 40%. The company has a large distribution network consisting of AbbVie-owned distribution centers and warehouses from where AbbVie’s products reach wholesalers, distributors, and government agencies worldwide.

Source: AbbVie 2018Q1 Report

AbbVie is looking at launching 20 new products by 2020 to further strengthen its product portfolio. The management expects drug sales (excluding Humira) to reach more than $35 billion by 2025. It is aggressively investing in R&D activities with investment in research increasing by more than 70% over the last five years.

Strong R&D capabilities, a strong line of successful products, extensive patent portfolio, and global brand recognition are some of AbbVie’s key strengths. The company will benefit from a growing demand for prescription drugs and medical supplies.

Since inception, AbbVie has increased its dividend by 140%. The shareholder-friendly company last raised its dividend payout by 35% and also authorized a new $10 billion stock repurchase program. It also has a relatively high dividend yield of 3.9%.

AbbVie should continue its double-digit dividend growth pace in the future; given the company’s intent to rapidly produce introduce drugs in fast-growing markets.

Abbott Laboratories

Abbott Laboratories

NYSE:ABTMarket Trend

Market Cap: 108.94

Chowder Score: 8.21%

Industry: Medical Devices

Abbott Laboratories is a leading healthcare and research company having a presence in more than 150 countries worldwide. With over 130 years in business, Abbott has become the worldwide leader in adult nutrition and blood screening. It enjoys a leadership position in virtually every market it serves.

Abbott has four reportable segments, see the 2017 sales breakdown:

  • Established Pharmaceutical – 16%
  • Nutritional – 27%
  • Diagnostic – 23%
  • Cardiovascular and Neuromodulation – 34%

Its portfolio consists of more than 1500 products across multiple therapeutic areas. The strategic acquisitions of St. Jude Medical and Alere last year have further bolstered Abbott’s leadership position across the spectrum of cardiac-care specialties, neuromodulation, and point-of-care diagnostic testing.

Abbott is trusted worldwide for its quality products and breakthrough medicines. Some of its most famous brands include Similac, FreeStyle, Brufen, Alinity, and PediaSure. The company has been at the forefront of innovation, developing the groundbreaking glucose sensing technology, innovative devices for chronic pain and novel diagnostics solutions.

The company has a strong focus on emerging economies and should benefit from their rising aging populations, growing disposable income and improving healthcare systems. About 40% of its revenues come from emerging markets.

Source: Abbott Laboratories Corporate Infographic

A growing percentage of people suffering from heart ailments and diabetic diseases should be beneficial for Abbott, given its leading position in diabetic care and cardiovascular disease treatments in the developed markets.

Abbott’s strong reputation, complementary portfolio of businesses and a strong presence in the world’s largest and fastest growing markets provide a strong competitive moat to its business.

Since 1973, Abbott has been increasing its dividends every consecutive year making it a member of the S&P 500 Dividend Aristocrats Index. The company has paid dividends for 95 years in a row.

The average dividend per share growth was 6.4% per year over the last three years and Abbott recently raised its dividend payout by 5.7%. The company should comfortably maintain at least a single digit dividend growth rate, given its expectation of a low double-digit earnings growth in future.

Source: Abbott Laboratories Corporate Infographic Becton Dickinson & Co

Becton Dickinson & Co

NYSE:BDXMarket Trend

Market Cap: 61.49

Chowder Score: 11.44%

Industry: Medical Instruments & Equipment

Becton, Dickinson & Co is a leading global medical technology company providing solutions in the fields of advanced medical research and genomics.

Becton, Dickinson & Co enjoys a leadership position in medication management and infection prevention. The company is poised to become one of the top five medical technology companies in the world once it successfully integrates the operations of C. R. Bard, Inc., which it acquired last year.

Becton Dickinson has a presence in virtually every country in the world. The US is its largest market accounting for more than 50% of its revenues followed by Europe, Greater Asia, and others. The company is expanding in emerging countries which are poised to become large markets in the future owing to the rapidly growing demand for healthcare.

The company’s key segments are BD Medical accounting for 67% of 2017 revenue (Diabetes care, medication and procedural solutions and pharmaceutical systems) and BD Life Sciences accounting for the rest (preanalytical, diagnostic systems and biosciences).

Source: BD Investor Reports

With more than a century’s old existence, Becton Dickinson & Co has become a leading name in providing advanced healthcare solutions, diagnostics and the delivery of care. The company has developed a good understanding of patient needs and provides effective solutions for the same. Becton Dickinson & Co has several R&D centers worldwide. Millions of patients and healthcare providers depend upon the company’s cost-effective and efficient solutions.

A deep understanding of customer needs, extensive R&D, a large global distribution network, diverse portfolio of medical products and growing footprint in emerging markets are Becton Dickinson & Co’s key competitive strengths. Growing demand for better medical diagnostics should act as a key growth driver for the company.

Becton Dickinson & Co is a Dividend Aristocrat as it has raised dividends for more than 25 consecutive years. The company last raised its dividend by 2.7% and management estimates that earnings will grow in the high single-digit range till 2019 as it integrates C. R. Bard, Inc. It is a good long-term dividend growth candidate with a five-year dividend growth CAGR of 10%. Investors should expect solid dividend growth going forward as well.

Source: BD Investor Reports Cardinal Health Inc

Cardinal Health Inc

NYSE:CAHMarket Trend

Market Cap: 16.85

Chowder Score: 16.63%

Industry: Medical Distribution

Cardinal Health Inc. is a global, integrated healthcare services and products company. It is a leading distributor of pharmaceutical and medical products to pharmacies, hospitals and other healthcare providers in more than 60 countries worldwide. The company is involved in the manufacturing and sourcing of nearly 2.5 billion healthcare products each year.

Cardinal Health has become a leading household name with more than 2 million patients using its healthcare products.

The company’s reportable segments are Pharmaceutical and Medical. Accounting for 90% of the revenues, the Pharmaceutical segment is the company’s’ main cash cow involved in the distribution of specialty and generic pharmaceutical, healthcare, and consumer products in the US. The Medical segment (constituting the remaining 10%) manufactures and distributes Cardinal Health and other branded medical, surgical and laboratory products, in the US, Canada, Europe, Asia and other markets.

With decades of healthcare experience, Cardinal Health has become a preferred partner for providing safe and secure channels for the delivery of medications. As one of the largest healthcare supply chains in North America, Cardinal Health is trusted for its supply chain strategies which have resulted in superior inventory management reducing costs for its partners. The company owns one of the country’s largest distribution networks and engages with suppliers globally. With a presence in nearly 85% of the US hospitals, Cardinal Health occupies a dominant position in the healthcare industry.

The company is known for its portfolio of high quality and value-oriented products spanning medical, surgical, pharmaceutical and specialty segments. The product portfolio will be further strengthened by the addition of Medtronic’s patient products which are used in nearly every U.S. hospital.

A well-recognized brand name, economies of scale, extensive distribution infrastructure and a strong focus on products and patient care are the company’s major strengths. The company is favorably placed to play a vital role in healthcare and its transformation.

Cardinal Health has achieved an impressive dividend per share growth of 16% CAGR over the last five years. The company has increased its dividends for 33 years in a row, making it a member of the prestigious Dividend Aristocrat group.

Cardinal Health last raised its dividend payout by 3% and sports an impressive yield of 3.5%. The Medtronic portfolio acquisition will provide synergies exceeding $150 million annually by 2020 and should enable the company to keep increasing dividends in the single digit range going forward.

Source: CAH Quarterly Reports Alternative Healthcare Dividend Stocks

Are you keen on pharmaceuticals? or biotech? Depending on your investing strategy, there are other healthcare stocks for you to consider.

CVS Health Corp

NYSE:CVS

Market Trend

Medtronics

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Dividend Earner by Dividend Earner - 1M ago

I hope you don’t sell in May. That’s not a strategy worth following. That would be like timing the market and blindly doing it. I prefer to stay put, earn my dividend while it’s slow, average down with the DRIP and then ride the wave back up.

Stock Trades

I made no trades in May but I have decided to stop my DRIP in my RRSP account. I earn a decent amount of dividend and would like to start deploying the cumulative amount towards the stock that needs it most. The reality is that most stocks are worth over $100 and it’s pretty difficult to DRIP each stock anyways.

While I have not made any trades, I have spent some time with my accounting to derive the rate of return (ROR) of my individual holdings per account. The results provide a ROR per stocks as per the table below. The ROR is simply using the XIRR function.

Value today $5,000.00
Invested $4,000.00
Total Growth 25.00%
June 12, 2018 -$5,000.00
April 1, 2018 $1,000.00
April 1, 2017 $1,000.00
April 1, 2016 $1,000.00
April 1, 2015 $1,000.00
Annual ROR 13.37%

There are multiple ways to look at performance. Above, you can see the growth of the stock and the annual rate of return. What do you make of the statement “My stock is up 50%”? The big question you should ask is “since when?”. A 50% growth over 1 year is amazing but a 50% growth over 15 years, that’s not much to brag about. I already had the total growth since that’s easy to calculate as you only need the top 2 values (total value and cost) but I wanted to really understand the performance of the individual holdings. To get the ROR for each holdings, I needed all the transactions.

I have some interesting observations considering there are a few holdings I have across a few accounts and I have made purchases at different times. I am able to see if there is averaging over time and performance convergence. With that said, here are my top 5 performing stocks per the ROR as of writing. Don’t get me wrong, I don’t expect this level of performance to continue every year.

  1. 44.20% AbbVie NYSE:ABBV
  2. 37.06% Visa NYSE:V
  3. 34.70% Costco NASDAQ:COST
  4. 27.40% Microsoft NASDAQ:MSFT
  5. 24.88% Apple NASDAQ:AAPL

Not surprised I would expect considering some of the names. The technology sector is definitely a growth sector. Here is how my TD Bank TSE:TD holdings perform across each account.

  • Account A: 25.02% (position started in 2017 – Just got lucky with the timing)
  • Account B: 14.20% (position started in 2017)
  • Account C: 12.90% (position started in 2012)

Having the data can really put into perspective what you should expect of the different sectors.

Sector Diversification – May 2018

My sector diversification is a snapshot on a specific day. On any day it fluctuates considering any market movement will adjust the ratios. I don’t sweat it. When I have money to contribute, the sector that is behind is the one I research first. I may not invest in the sector that is behind in case one of my holdings has provided me with an opportunity.

Stock Selection Made Easy

Dividend Income

My May 2018 dividend income is $1,407.98. Compared with May 2017, my April income is up $291. There really isn’t much to analyze when it comes to the monthly income. What really matters is the annual growth and that’s driven by dividend growth and new money invested.

Year Dividends Growth
2010 $3,745.53
2011 $4,752.90 26.90%
2012 $5,782.57 21.66%
2013 $6,303.69 9.01%
2014 $8,218.14 30.37%
2015 $10,563.88 28.54%
2016 $12,658.09 19.82%
2017 $15,703.71 24.06%
2018 $18,492.79 17.76%

DISCLOSURE: Please note that I may have a position in one or many of the holdings listed. For a complete list of my holdings, please see my Dividend Portfolio.

DISCLAIMER: Please note that this blog post represents my opinion and not an advice/recommendation. I am not a financial adviser, I am not qualified to give financial advice. Before you buy any stocks/funds consult with a qualified financial planner. Make your investment decisions at your own risk – see my full disclaimer for more details.

Image: Master isolated images / FreeDigitalPhotos.net

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Oh! Oh! You just found out you have, or may have, over-contributed to your RRSP and you want to know what to do next. I empathize with you as I also over-contributed to my RRSP once. The process to fix your RRSP contribution is not quick and you will have some paperwork to diligently fill out but I can help you navigate through it. You can read through everything or jump to your question below.

What is RRSP over-contribution

An RRSP over-contribution is when you (or your employer) contribute more money to your RRSP account (or spousal RRSP) than you are allowed to during the calendar year you have made the contributions. Your contribution limit is your maximum allowed contribution plus $2,000. You can find your annual limit on your notice of assessment tax statement from your previous tax year.

Below is a visual graph showing an RRSP over-contribution scenario. Make sure you understand when the employer/pension contributions are reported. My employer’s matching contributions for the year 2018 are reported against the following year, 2019 in this case.

It’s important to know if you over-contributed as soon as you can as the Canada Revenue Agency (CRA) will charge a 1% penalty on the over-contribution amount that you would need to pay if it’s not rectified. The calculation is not simple either and it may challenge your personal accounting. For details of the calculation, see the ‘how to calculate RRSP over-contribution’ below.

One important consideration is around your RRSP benefit with your employer. You will need to have a clear understanding of when the company reports the contribution. For example, in my case, I found out that while the company makes a matching contribution during the year, the amount contributed by my employer is deducted in the following year and shows up as pension adjustment as seen below in the notice of assessment example.

Determining Your RRSP Deduction Limit

When you receive the notice of assessment after filing your taxes, the government provides you with your RRSP deduction limit for the next calendar year which is the lesser of 18% of your annual earned income or the annual contribution maximum set by the government for that tax year. There are 2 minus and 1 plus line that can change the final amount as outlined in the image below.

The employer contribution mentioned earlier is entered in the 2017 pension adjustment line below and you can see it uses 2017 for a future calculation in 2018. That means your employer is contributing money in 2017 and adjusting your RRSP deduction limit for the following year.

Notice of Assessment Calculation Example

If you have a CRA My Account, you can also log on the site to see your recent statements. You can authenticate using your bank authorization for simplicity through the partner login.

There Are Penalties

Unfortunately, while you are doing well maximizing your RRSP contributions, there are penalties for going too far. If you are within the $2,000 limit, you probably don’t have to worry but otherwise, you are faced with 2 potential penalties.

Penalties for Over-Contribution

Generally, there is a 1 % per month tax penalty on the amount you over-contributed that exceed your RRSP/PRPP deduction limit by more than $2,000 unless you:

Penalties for Late-Filing your T1-OVP

In short, you have 90 days to fix the over-contribution and pay the 1% penalty on your over-contribution. Failure to do so, another penalty comes into play:

  • 5% of your balance owing, plus
  • 1% of your balance owing for each month that your tax return is late, to a maximum of 12 months

You may be able to avoid paying any penalties if you can show the CRA the steps you have taken to correct the over-contribution (more on this below) and that it was a reasonable error. It’s always good to reach out to CRA and explain the situation with your documents in hand.

With pension and company plans, it can get complicated so don’t hesitate to reach out to the CRA or involved a tax accountant but first make sure you have the information on hand to avoid wasting time on the phone.

How to deal with RRSP over-contribution

There is no magic to resolve an RRSP over-contribution, you have to correct the situation and follow up with Canada Revenue Agency. The consequence, as mentioned above, is a 1% tax penalty on the over-contributed amount as well as a late-filing penalty if not corrected in the first 90 days of the calendar year – think the last day of March.

There are 3 steps to follow to correct your situation but if you realize that you over-contributed before the calendar year is over, what you have to do is withdraw the amount you over-contributed as soon as you can.

  • You will have to fill out a form with your financial institutions to withdraw from your RRSP and you will be charged a withholding tax upon the withdrawal. Box 30 in the T4RSP form would have the tax paid on withdrawal when all is said and done for your tax return.
  • To avoid the withholding tax, you will have to fill out the T3012A CRA form and provide details of your over-contribution situation. The financial institution will need the form to return the complete amount without any amount withheld. Box 20 in the T4RP form would have the amount to file your taxes.

Once you have step 1 & 2 completed, take a moment to call the Canada Revenue Agency to review your documents and the final steps. Check in with them to ensure all is in order. Make note of the person you are talking to and document your conversation with the CRA.

Step 1 – Gather Your RRSP Contribution Details

You first need to identify the year you made the RRSP over-contribution and get all of your RRSP contribution records for that year and all the subsequent years. The records should also include your employer’s contribution or your pension. You should gather all of the information in order to calculate your contributions month by month. If you need your paycheque or your financial statement by month, you should retrieve those. Step 2 will require monthly data for the calculation.

Gather your notice of assessment to have a clear understanding of your RRSP deduction limit. You will have either received it by mail or delivered through CRA’s My Account.

After this step, you will have the records for all the money you contributed and the deduction limits. You can better calculate the RRSP contributions (green rectangle) against the deduction limits (orange rectangle) per year – see graph below.

Step 2 – How to calculate RRSP over-contribution

This is the most crucial and hardest step as your annual contributions will not match how you submitted your taxes. The first 60 days of contributions we are allowed to include needs to be excluded from the year it’s reported on your taxes and included in the following year. It means that your 2017 taxes probably include the first 60 days for 2018.

You then need to identify the month where you crossed the threshold as that is when the penalty starts. The penalty is 1% of the over-contributed amount for the year. Below is the picture we are trying to build.

  • The over-contribution started in November
  • January and February of the calendar year are included

The T1-OVP CRA form needs to be filled to assess the 1% penalty and make payment. To make filling out the form simpler, I have a spreadsheet that can help you with all the math. The form is set up to track the over-contribution per month as seen in the graph above.

Get your RRSP Over-Contribution Excel Calculator Step 3 – How to correct an RRSP over-contribution

Each situation is different but the concept is the same, if you find out within the year, withdraw the money ASAP and reach out to the CRA, explain your situation and they will help you out with the proper steps. Filling out the T3012A form will be the best option to get all of your money back with the least amount of paperwork before requesting the funds to be withdrawn from your financial institution.

If you find out after the calendar year is over, you have 90 days to file the T1-OVP form and correct the situation. You do not have to withdraw money as the year is complete. You will have to pay the 1% penalty on the over-contribution amount and submit the form. However, you do need to ensure the following year is not in danger of over-contribution either. The excess contribution you made is now rolling over to the new year and you may need to reduce your contribution for the year.

If it’s a new year but you don’t expect an income to cover the excess contribution, you will need to withdraw and pay the penalty. That’s the worst-case scenario.

There is one way to reduce the penalty for the year if you have leveraged the Home Buyer’s Plan (HBP) to purchase your home and still have money to pay back into the plan. Part of your RRSP contribution can be designated to the HBP plan and in doing so, it reduces your RRSP contribution which can prevent you from over-contributing in the end.

Pay the tax within 90 days after the calendar year and avoid late-filing penalties or interest charged.

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Investing in dividend stocks has brought peace to my finances and it has provided me with an investing strategy to grow my portfolio and earn an income from it. Yes! You can get your cake and eat it! You can grow your portfolio with a 10% annual growth rate of return (ROR) and earn dividend income at the same time.

Unfortunately, you can’t just buy any dividend stocks to reach those results. You need to put a plan in place starting with the basics. Master the basics and you will be on your way to build a strong dividend portfolio. Take some time to get a headstart by learning from others and their mistakes.

Read on for the 3 simple steps to start dividend investing. Skip the mistakes and start with a good strategy.

What is a Dividend Stock?

A dividend stock, in simple words, is a stock that pays a dividend on a regular schedule. The schedule can be annual, semi-annual, quarterly or monthly. A dividend represents cash returned to investors which technically reduces the value of the company by the amount of dividend paid. In practice, with the stock price trading up and down during the day, it rarely settles that way.

The dividend yield is calculated by dividing the total annual dividend by the stock price. Typically, each sector will tend to have a dividend yield pattern that you should be familiar with.

Often times, when mentioning dividend stocks, it also includes stocks that pay a non-qualifying dividend such as a distribution. Income trusts, or MLPs, will usually pay non-qualifying dividends in the form of distribution which can also include a return of capital. It’s important to understand the difference between dividends and a distribution as it has tax implication and often time, the stock and dividend growth will differ between the two types of stocks.

Why invest in Dividend Stocks?

If you build the right portfolio you can set up a wealth building machine! It doesn’t happen overnight but you can build a portfolio that can provide a 10% annual rate of return and pay you dividend along the way. When you choose to leverage the dividend re-investing program (DRIP), you put compound growth on autopilot and if you have dividend growth stocks such as the Dividend Ambassadors, you have an accelerated growth.

Here are some reasons why investors seek dividend stocks.

  • Seek regular income – often times, income seekings focus on REITs or high-yield stocks. There is very little growth but you can earn more from your portfolio today.
  • Getting paid while markets fluctuate – dividend stock prices fluctuate just like any other stocks on the markets but dividends paid from strong dividend stocks can be consistent and even grow if you pick dividend growth stocks.
  • Manage volatility through blue-chip dividend stocks – blue-chip stocks can provide less volatility and troubled times and are considered safe dividend investments.
  • Higher returns from dividend growth stocks – dividend growth stocks can provide higher growth since they should only be able to grow their dividends if the company grow its bottom line. See the dividend triangle.
  • Beat the markets – if you select the right dividend growth stocks, you can beat the markets.
  • Avoid depleting your portfolio from withdrawals and retire with dividend income – worried about outliving your money? Dividend investing can help you avoid withdrawing and live from your portfolio dividend.
  • Predictable income today and tomorrow – dividend income from dependable companies is predictable. Dividend Aristocrats have paid grown their dividends for 25 years.
  • All of the above

In the end, investing in solid dividend growth stocks can be less stressful. In bear markets, you still get paid to wait. With DRIP, you get to buy more stocks and average your cost over time. No market timing involved.

You can see my dividend income history as proof that dividend investing works and is totally worth the effort needed to find a strong dividend growth company.

Dividend Growth Investing – A Successful Investment Strategy

Before we review the details of the winning strategy, let’s discuss some approaches that are less effective.

  • Don’t focus on dividend yield, that’s not the most important metric. It’s mostly telling you how much you get paid today based on the stock price. If all you want is income, it will be important but remember that you will be sacrificing total return growth over time. More on that later.
  • Forget about yield on cost, that’s just a feel-good metric. It’s a number that should go up over time but that’s not really telling you much. You get to know how much income your invested capital is providing you but you cannot use that to select a future investment as you will need to use the current dividend yield.

CONSISTENT DIVIDEND GROWTH is what has been working. I did start with high yield stock and it was nice to see the dividend income but my total portfolio growth was not where it should have been. What can I say? I was a newbie dividend investor and I wanted to generate retirement income from my portfolio and that’s what I was doing – only generating income and not growing my portfolio. In my strive to become a better investor, I stumbled upon the 10% dividend growth, the chowder rule, and the total return value of a portfolio. Let me show you why those 3 concepts matter.

10% Dividend Growth

This concept comes from a BNN interview with Thomas Cameron where he mentioned that his stock picks must past the 10/10 rule. The rule is essentially a really strong filter to select companies with the ability to grow their earnings consistently and at a certain rate by paying a dividend with a minimum growth rate. There are 2 criteria to the filter:

  1. 10 years of consecutive dividend growth
  2. 10% annual growth rate

Here is why this filter is better than using ANY US DIVIDEND ARISTOCRATS! Yes, even if an aristocrat must have increased their dividends for 25 years, the increase could simply be 1 cent.

The 10/10 rule expects a 10% CAGR (compound annual growth rate) dividend growth to pass the test. To achieve consistent dividend growth with a 10% CAGR growth, a company must be able to grow the earnings, otherwise, the payout ratio will get out of hands. If the dividend payout ratio becomes an issue, investors will start assuming the dividend is at risk. Investors will sell, the price will go down, the dividend yield will go up and either the dividend is reduced or there is earnings growth.

Get your list of STRONG Dividend Growth Stocks The Chowder Rule

The Chowder Rule is a quick metric to help you quickly assess your potential total return. The formula is simple, you take the 10 years CAGR dividend growth and add the current dividend yield.

Chowder Score = Dividend Yield + Dividend Growth

It’s a quick and simple formula to assess growth and you just need to decide what value is important to you. What this method does is include any stocks with a lower dividend yield as a low dividend yield stock may have a spectacular dividend growth setting you up for a good total return on your investment. My filter for the Chowder Score is 12% but that’s really up to you to decide what your cut off is.

Total Return

I ignored this in the first few years and focused on income even though I was very early in my accumulation years. I basically left money on the table. It’s the difference between a 6% return on your portfolio and a 12% return. You should separate your income strategy in retirement versus your accumulation strategy during your working years.

Once I made the switch and included the fitlers above, I started adding stocks like Visa NYSE:V, Costco NYSE:COST, or Saputo TSE:SAP into my portfolio and the results have been great.

In retirement, I have 2 options, keep riding the growth or switch to a higher dividend yield stock at some point. I am undecided at this point but using my RESP account to assess the withdrawal strategy with a cash bucket.

How To Start Investing in Dividend Stocks Step 1 – Choose your investment platform

If you have small amounts to invest, Computershare might be the best platform to start investing in dividend stocks at ZERO cost but it’s not as flexible as a discount broker. It’s a good automated platform for regular small addition to a holding.

If you have some money to open an account for a $9.95 cost per trade, you should go with a discount broker. The cheapest discount brokers are Questrade and CIBC’s Investor’s Edge. Think of your account size and review the maintenance fees for small accounts.

Review your needs and use the discount broker for dividend investors table to compare them and assess which platform will work for you. It’s easy to transfer in and out of Questrade, Qtrade or Virtual Brokers but the bank platforms are much easier if you bank with them. Nevertheless, it’s really easy to switch discount broker when you have a decent size portfolio as all the fees will be covered in case you are not happy with your first choice.

Step 2 – Screening Dividend Stocks

The easiest is to start from a pre-existing list such as the Canadian Dividend Aristocrats or US Dividend Aristocrats but you can expend to the Dividend Achiever list or restrict the list to the Dividend Ambassadors.

What I actually like to do is include all of the stocks that

  • Pay a dividend for at least 10 years – it’s enough to have gone through an economic cycle and it includes newcomers. It’s also the perfect time period to understand management’s intent.
  • Dividend growth of 10% for the last 10 years – in general, the growth between 3, 5 and 10 years will be consistent but sometimes there is an outlier growth that triggers the 10% CAGR growth and you want to make sure there are no outliers.
  • Filter against the Chowder Score – that’s not a standard metric. You will need to compute it in a spreadsheet. The 10-year dividend growth is also not always accessible.
  • Dividend yield can be a deciding factor when you are down to a few options or any other criteria you feel are pertinent to your strategy.

Filtering stocks should leave you with a handful of options before the final decision.

I use the Dividend Snapshot data to filter my list of stocks. It provides a comprehensive list of data points to filter against. While dividend investors have dividend stocks in common, there is a myriad of ways to select a dividend stock. This is a journey you have to venture on by yourself to figure out what data points are important in your decision process.

There are many website and services, free or paid, that can help with filtering stocks. Unfortunately, the free resources are usually very limited. Consider the cost of any services as a portfolio fee which should still be cheaper than paying someone to give you advice.

Step 3 – Choosing the Dividend Stock to Buy

What if every month a different stock matches your criteria, there is a point where you need to stop adding new stocks to your portfolio. The reason is that you should focus on reaching a certain number of shares to DRIP at least one share. That’s when you put compound growth on autopilot.

Markets will fluctuate, that’s a fact and a reality you will face and not all stocks bounced back at the same rate. The last decision you need to make is to understand which stock fit best in your portfolio. As mentioned earlier, are you either in the accumulating or retirement phase of your life. Each of those phases may have a different strategy that will guide you make the final decision for which stock to buy.

I am very peculiar to my sector exposure and track the ratios against my targets meticulously. I made clear decisions to not have bonds, consumer cyclical or basic materials. I usually try to close the gap of a sector when I make a purchase.

The shortlist from step 2 and your strategy from step 3 should provide you with a clear decision and the best of all is that no emotions were involved.

Dividend investing is worth it, it’s safe, and will bring you peace of mind.

Image: Master isolated images / FreeDigitalPhotos.net

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This Questrade review will establish Questrade as a serious player in the discount broker market. In fact, it’s the BEST platform for new and small investors. Read on to learn why it’s the perfect discount broker to start with.

Questrade is an independent discount broker not owned by any financial institution. Without the backing of a large Canadian bank, Questrade is able to compete with the like of BMO InvestorLine, TD Direct Investing, RBC Direct Investing or Scotia iTrade.

Don’t eliminate Questrade from your discount broker options just because you cannot walk into a branch. As it happens, none of the bank branches can actually help you with their discount broker either since it’s an online service. Chances are, if you walk into a bank branch for discount broker questions, they will end up calling someone to help out. It comes to the same with Questrade.

The application process is actually easier with Questrade. You can do it all online. Any required documents can be uploaded which is not the case with some bank discount broker. For example, with RBC Direct Investing, I have to fill forms and mail them in whereas Questrade supports online signature and document upload. It’s quick and easy if you are comfortable doing everything online.

Questrade is to the discount broker world what Tangerine is to the banking world.

Questrade offers 2 ways to invest your money.

  • Questrade Self-Directed Investing
  • Questrade Portfolio IQ

The self-directed approach is as advertised where the investor is in control of buying and selling the stocks. The Portfolio IQ a professionally-managed low-cost online investment service. Questrade describes the service as follow. It’s not index investing but it’s using ETFs to manage your portfolio.

With Questrade Portfolio IQ, your money is invested in a diversified portfolio, much like a mutual fund. However, we use a cost efficient portfolio of exchange-traded funds (ETFs). These ETFs give you a diversified investment with much lower fees.

Questrade Portfolio IQ is a step up to any mutual funds investors. It can be a stepping stone to the DIY self-directed approach.


Source: Website

In a past survey of readers, Questrade usage rank 6th with bank discount brokers leading the pack. It highlights how many investors seek to have everything in one place. It’s not a bad approach to managing your money but I think it’s important to understand the fees you pay annually, and more so when you are just starting as you want more money working for you.

I do have an account with Questrade along with a big bank discount broker. You can only have one non-registered account at a financial institution and I have a need for 2 accounts for accounting and tax purposes. One account is built against a line of credit and the other is just a normal account. Having a non-registered account with each discount broker allows me to separate the tax tracking necessary to deduct the interest from the investment LOC. Questrade also has the lower transaction cost which keeps the cost lower.

Questrade Review Table of Content Get your list of STRONG Dividend Growth Stocks Trading Costs

This is probably one of the most important criteria for everyone. I like to look at the cost of a transaction to ensure I am satisfied to invest $1,000 minimum at this cost.

The basic online stock transaction will set you back between the minimum of $4.95 and maximum of $9.95. The actual price is 1 cent per share with a minimum and maximum value. You can find all the transaction costs and fees on their website. When it comes to ETFs, all transactions are free. The dream for any index investors as you really are paying very little for your portfolio.

The trading fee is less than all the bank discount brokers unless you trade over 1,000 shares at a time. As per many of the discount brokers, using a real person to execute a trade is an extra $45.

Mutual fund transactions are $9.95. If you are investing in mutual funds, such as the BMO Monthly Income Fund, make sure you understand all the fees that come with mutual fund investing.

If your investing approach includes index investing, you should have your index portfolio with Questrade. With no purchase fees on ETFs, you can do monthly contributions, benefit from the dollar-cost averaging approach and have all of your money work for you. Rebalancing a portfolio with ETFs can be minimal if you sign up with the $50 trade commission rebate.

Stocks 1¢ per share – Minimum $4.95 and Maximum $9.95 per trade
ETFs Free purchases, standard commission when selling
Mutual Funds $9.95 per trade
Options $9.95 / trade + $1 / contract
Over the phone Add an additional $45 for trader fee
Comments by Readers
  • Free To buy a wide variety of ETFs
  • Low trading fees
Accounts

Opening an account with Questrade is by far the easiest I have found so far. You can do it all from the comfort of your home at your computer. It supports digital signature. When opening an account, you need to be ready to transfer $1,000 to fund your account and complete the steps. The process is also very simple, it’s done just like you would make a bill payment to your bank account. Below are the three steps Questrade expects to activate your account.

  • Step 1: Fill the form online
  • Step 2: Upload a copy of the documents needed (Driver’s license for example)
  • Step 3: Fund from your bank account

DRIP is another benefit with Questrade for those seeking income and wanting to put their earned money at work. DRIP plays a big part in my investing strategy and Questrade provides the support.

Unfortunately, there can be maintenance fees on accounts depending on the size of your holdings. This is now the reality of many discount brokers and a bit of a challenge for investors with a small portfolio. Questrade has a silver lining with their ‘myfamily’ plan where you can combine all assets for lower fees. It’s brilliant since it brings more customers into the fold and on top of that Questrade has a referral program.

  • No annual fees on TFSA or RRSP accounts
  • RESP with less than $15,000 have a $50 annual fee
  • With less than $5,000, you incur an inactivity fee of $24.95
    • As of April 1st, 2015, an inactivity fee of $24.95 per quarter is charged to clients with under CAD $5,000 in combined total equity for any quarter in which the client does not complete one commissionable trade.
  • Questrade will cover the cost of transferring holdings over as long as you transfer $25,000

Questrade is one of the platforms that can support dual currencies and it’s a must-have if you are going to be interested in holding US companies in your portfolio. As you can see below, the account has separate cash accounts.

Source: Questrade Platform Usability

The trading platform is intuitive. There are clear call outs and naming that are easy to understand for all investors. The top bar is clear and there are added links at the bottom with more details to educate new users.

Source: Questrade Platform

While the website is intuitive and easy to use, the mobile app was not easy to identify. It’s called Questrade IQ which is confusing with Portfolio IQ. It is the right app and you can see your portfolio, news, and watch list. It’s functional but the naming of the menus differ from the website and take a little time to adjust.

The comments below seem polarizing but from my experience with RBC Direct Investing and Scotia iTrade, it’s no difference between many of the discount brokers.

Comments by Readers
  • Ease of trading
  • Weak mobile app
  • Took a while to learn interface
  • Don’t know how to use most of the features
  • Website challenging at first
  • Some info hard to get
  • I can’t seem to navigate around it easily. I find it cumbersome to find research info
Transactions

You can see the transaction window on the right. I always make my trade with a limit order so you want to ensure the interface is not prone to mistakes.

It’s really easy to see your buying power which can include your ability to borrow so be careful or the result of executed orders.

Execution order seemed fine. I buy with limit orders to avoid any momentary swings or to be caught on a flash crash of any sort. It’s a habit I picked up and I usually pick the ask prices which is essentially the market price.

Comments by Readers
  • None
Performance Monitoring

In this day and age, you would expect that a discount broker can provide you with the performance of your account. Profit & Loss is present in many areas of the website as well as the return percentage in the account section.

There is an investment return section which can help keep track of your return per account. I personally would not stop tracking my performance on my own using a spreadsheet. See how I track my Rate of Return (or ROR) for accurate performance tracking. The first priority of a discount broker is to properly report on income tax, showing you the performance return is becoming mandatory along with reporting on fees spend but it’s limited.

Mobile Capabilities

As it happens, I have made trades from my phone and considering everything else we do with our phone, the mobile version of the platform should be good.

Mobile support with Questrade is present under Questrade IQ. As mentioned, I wasn’t sure it was the appropriate app but it is. It provides the same feature set that most discount brokers have. All the basics but the menu names differ slightly. Give yourself some time to become familiar with the app to avoid making a rush transaction.

Source: Questrade Trading Platforms

Investment Research

At first, the market research section is overwhelming. It’s a summary of the market from multiple views and a lot of data to look at. What you may be interested in for researching stock investment is under market intelligence research. Like many of the discount brokers, the market research data comes from third party providers. In the case of Questrade, the partnership is with Morningstar. There isn’t any recommended list unlike the Scotia iTrade research I have seen.

There is an alert system that can be useful if your investing approach is based on choosing a stock price and waiting for it.

Comments by Readers
  • Some info is hard to get to

How To Calculate Your Rate of Return

Customer Service

My experience is limited to email and chat support but it was efficient and useful. The chat questions I had were also answered efficiently. I have not asked complicated support questions but in general, it’s important to get the terminology right. For example, it took me a few discussion with RBC to know that a share transfer between trading exchange is called journaling. It’s a feature that must work in order to do the Norbert Gambit with DLR and DLR.U.

Comments by Readers
  • Efficient 800 #
  • Helpful and easy to contact
Get your list of STRONG Dividend Growth Stocks FAQ – Your Questrade Answers How to fund a Questrade account

It’s as easy as paying a bill and it’s exactly how you do it. Questrade is the institution and the account you want to deposit the money is the account number. After 3-5 days, the money is in the account. Do make sure the account you are funding from matches your name.

The initial funding of a Questrade account takes the same amount of time once the account if fully approved. It’s faster than the banks to get started, or at least it was when I started with Questrade.

How to withdraw funds from Questrade

Withdrawing funds from Questrade is also easy and you have a couple of options.

  • A cheque by snail mail
  • An electronic fund transfer (EFT) which takes 3-5 business days
How are dividends paid with Questrade

Once enrolled in the DRIP program, all dividends paid from a stock or ETF are automatically re-invested. Questrade will purchase whole shares based on market price. Any remaining cash will be deposited in your account.

Questrade Self-Directed

Choosing a discount broker is a personal choice and the discount broker should satisfy your requirements. If you are a seasoned investor with a decent portfolio, the fees usually are not concerned but if you are starting, make sure you understand the fees you may pay for each of the accounts you are interested in.

Questrade and some other discount brokers have practice accounts. Try the practice account to see what is offered and if it will work for you. In the end, each discount broker will probably not meet all of your requirements and your requirements may change over time. Don’t hesitate to switch, especially if you have over $25,000 as the receiving discount broker tend to cover the fees.

Discount Brokers Available

While the easiest path to selecting a discount broker is to use the one affiliated with your bank, there are options available with different feature set and cost that may best fit your needs. Be sure to review all of your options.

Canadian Discount Brokers US Discount Brokers
RBC Direct Investing e*trade
TD Direct Investing TD Ameritrade
BMO InvestorLine Charles Schwab
Scotia iTrade Scottrade
National Bank Direct Trade King
Questrade Interactive Brokers
Qtrade  
Virtual Brokers  
Interactive Brokers  
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Dividend Earner by Dividend Earner - 2M ago

If you feel your portfolio is hurting these days, it’s probably because you looked during the peak markets in January. If you bought during that time, you may feel your portfolio is hurting but remember that it’s a long journey. I have found that it’s normal for a recent purchase to fluctuate up and down for 6 months to a year initially. The down periods can be used to add more if desired. Some learnings only come with experience and how fast you learn them will help you become a better investor faster. Read up on 5 learnings I shared over the past 9 years.

Here is a good quote to keep in mind when the markets give you the blues …

In the short run, the market is a voting machine but in the long run, it is a weighing machine.– Benjamin Graham
Stock Trades

I made 5 trades in April and invested 50K total. You can read the details on my selection process earlier this week.

My minimum number of stocks per sector is now on target. Unless I find a better alternative to an existing holding, that’s pretty much my portfolio. I do have a couple of stocks on my mind to add which do not pay any dividends … Berkshire Hathaway NYSE:BRK.B and Google NASDAQ:GOOG. These 2 holdings would be purchased in my non-registered account. My RRSP is full along with my TFSA, which will have me add money to my non-registered account after topping up my wife’s TFSA.

Sectors Target # of Stocks # of Stocks in Portfolio
Basic Materials 0 0
Communication Services 2 2
Consumer Cyclical 0 0
Consumer Defensive 5 5
Energy 1 2
Financial Services 4 6
Healthcare 4 4
Industrials 3 3
Real Estate 1 1
Technology 3 3
Utilities 2 2
Total 25 28
Sector Diversification – April 2018

My sector diversification is a snapshot on a specific day. On any day it fluctuates considering any market movement will adjust the ratios. I don’t sweat it. When I have money to contribute, the sector that is behind is the one I research first.

Stock Selection Made Easy

Dividend Income

My April 2018 dividend income is $1,630.32. Compared with April 2017, my April income is up $500. There was a time when I was interested in having a balanced monthly income but that has changed. The ups and downs between the months isn’t an issue as I intend to have cash on hand for 1 year ahead anyway.

I am on target to make $18,500 for the year and that’s already a 17% increase over the previous year’s growth. If I assume a 10% dividend growth next year based on my holdings, I should expect to break the $20K dividend income next year.

DISCLOSURE: Please note that I may have a position in one or many of the holdings listed. For a complete list of my holdings, please see my Dividend Portfolio.

DISCLAIMER: Please note that this blog post represents my opinion and not an advice/recommendation. I am not a financial adviser, I am not qualified to give financial advice. Before you buy any stocks/funds consult with a qualified financial planner. Make your investment decisions at your own risk – see my full disclaimer for more details.

Image: Master isolated images / FreeDigitalPhotos.net

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I recently transferred 50K from my employer’s retirement plan to my dividend portfolio and invested all of the 50K over the past month. I find it very easy to invest 50K, 100K or even 250K, and you will see that I only added two stocks to my portfolio in the process. There are no emotions and no chase for the next hot stock either.

A Word on Value

While the markets have been turbulent since the start of the year, my approach is to be invested and make my money work for me. Waiting for the markets to reach a low point is market timing just like waiting for a stock to enter a specific price range for an entry point. See the S&P500 and the TSX Composite below where dips occur very regularly over a 5-year period, but in general, the trends are up over an extended timeline. The same pattern below can be seen with individual stocks.

Market timing is not an approach I can do. In fact, not many investors can do it, and not many analysts can predict future earnings or value either. In the end, the odds are just not in my favor. Rather than focusing on establishing today or tomorrow’s value, I focus on the business and strength of the company with the understanding I can always average into my holdings and invest for the long term.

Source: MSN Money – 5 Year S&P 500 vs. TSX Composite

That is not to say I buy stocks regardless of their value. That is not the case as I use the P/E and FP/E with the opportunity score along with other metrics. Considering my time horizon is really long, and I am in the accumulation years, I can usually average my holdings over time as well.

Here is why my approach has worked for me so far. I have done quite well with Kimberley-Clark NYSE:KMB and not by market timing the stock but rather by taking profits when the value exceeded my sector target. Strategic sector targets take away the emotion or the gut feeling of executing transactions. When you look at the 5-year graph of KMB below, it seems like the stock is not going anywhere, but when you look at the all-time graph further down, there has been growth all along the way. Will you be patient or chase the quick profit?

Source: MSN Money – KMB 5-Year Graph Source: MSN Money – KMB All-Time Graph Strategic Investing Approach

With a sector target approach, you are able to take a profit at the peak and deploy it to another holding. Should you completely exit the position? That depends if you have a replacement for the sector or if your sector has gained so much that you could sell all to the benefit of another holding. I do exit positions and that’s usually after reviewing the entire sector and assessing there is a better holding for growth. More so if the dividend growth rate is trending down.

When adding 50K to a portfolio, it’s normal to expect each sector to need some money to maintain the ratios but you don’t have to approach it that way as long as you are aware of your ratios. A rule I have is to not have more than 4.5% of my portfolio value into a stock so I avoid those that are over and focus on adding to those under if there is an opportunity. Another rule I have is to target a certain number of stocks per sector based on my sector ratio and the 4.5% limit in one stock. The rules allow me to navigate my portfolio management process to reach a decision on the next purchase.

Decision #1

The first choice I made was to convert all of it into USD using my beloved DLR Norbert Gambit approach. The money is in an RRSP account, and that’s the best account for holding foreign US holdings with respect to the foreign withholding tax.

Decision #2

If you follow my dividend income progress, you will be aware that I have some sectors that are in need of an extra holding to support my target number of stocks per sector. As you can see below, the technology and healthcare sectors are in need of an added holdings.

Sectors Target # of Stocks # of Stocks in Portfolio
Basic Materials 0 0
Communication Services 2 2
Consumer Cyclical 0 0
Consumer Defensive 5 5
Energy 1 2
Financial Services 4 6
Healthcare 4 3
Industrials 3 3
Real Estate 1 1
Technology 3 2
Utilities 2 2
Total 25 26

I did not go all in as there is also an expected amount to reach my target needed to meet the established sector ratios. The need to add an extra stock to each sector has been present for a while now and I have been monitoring the sectors for what I would find works for my portfolio. I had a couple of options narrowed down and ultimately decided on Texas Instrument NASDAQ:TXN and Becton Dickinson NYSE:BDX. Those represent the new holdings to my portfolio.

Decision #3

With my target number of stocks reached, my next step was to reduce the gap against my sector ratios. Since I had USD, it made sense to focus on adding to existing USD holdings which are all I have in the RRSP account anyways.

I track the sector ratios through my portfolio tracker and below is the March 2018 update. As you should expect, adding money shifts the ratios and the day-to-day changes in stock prices also shift the ratios. I use the table to choose the sector to focus on and at the time of purchase, I added to the following holdings:

  • Industrial Sector – Illinois Tool Works NYSE:ITW
  • Healthcare Sector – Cardinal Health NYSE:CAH
  • Financial Sector – Visa NYSE:V

50K Invested

And that’s how you do it. Simple right? Ok, I did not go through how I picked the actual stock but that’s also relatively simple. I use the Dividend Snapshot USD stock list and go through the following steps:

  • Filter the list by sector
  • Review the Chowder Rule
  • Review the 10/10 dividend growth rate
  • Review the 3, 5 and 10 year growth rate for positive or negative trend
  • Make sure the opportunity score is 60% or more
  • Make sure it’s a business I want to invest in

That approach really helps me narrow down to 1 or 2 stocks and then I start reading news and assessing which of the final stocks is better for my portfolio.

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After the refresh of Google Finance, I am in need of a Google Finance Alternative. The update is really a disappointment from a DIY investor perspective. Losing the portfolio was not a big deal but the new layout, new graphing and removal of some key data is a major let down. Google Finance was set as my homepage and the first thing I looked at in the morning with a coffee, now I am in need of a replacement that can provide me the necessary information to get a quick glance at the market, news and easy to read graphs.

I was surprised to see how many tools were used outside of what discount brokers provide. In fact, not many DIY investors use their discount broker exclusively to look at data. In the search for a Google Finance replacement for my quick market and portfolio overview during my morning coffee, I decided to test drive some of the sites I was suggested.

Stock Charting Tools

I reviewed a number of stock charting & news tools used by many readers and decided to rate them according to the following set of criteria.

Below is the list of tools that will be reviewed. I created an account and looked up Royal Bank of Canada TSE:RYNYSE:RY and created a watchlist or portfolio where possible to understand the process and information on hand.

I did receive a few more options when I polled my readers and at first glance, the tools either required an account or were not providing a portfolio style portal and decided against evaluating them.

Stock Charting Tools Criteria
Quote News Charting Usability
Is the basic and fundamental stock information such as 52-week ratio, market capitalization, and dividend yield to name a few. Does it provide news at a glance regarding the stock or list of stocks? Can I compare multiple stocks within the same chart? Can I have arbitrary timelines? Is the navigation simple or cluttered with advertisements
Portfolio Mobile Cost
Any portfolio tracking capabilities? or a simple watchlist. A bonus is to have the ability to group a set of stocks together. This is a bonus really but a consideration nowadays. Is it free? Is the free version enough?

My goal, before anyone gets upset at my ranking, was to find a replacement to Google Finance where I could quickly see what’s up with the market and the stocks in my portfolio. I had the stock I held in a list and could see the news pertaining to the list and I could see a clear up or down trend. I did not have to navigate away from the main page or select multiple tabs. I had it all set up in one page and it was clean and I searched for a similar setup.

As you read through, feel free to adjust the ranking based on what you are looking for. Those are my rankings according to my needs but it should give you a headstart in finding what works for you. The ratings below have the following meaning.

  • thumbsup – Good
  • sleep – Passable
  • thumbsdown – Needs Improvement
  • gift – Free
  • banknote – Paid Option
MSN Money ⋆⋆⋆⋆⋆
Quote: thumbsup | News: thumbsup | Charting: thumbsup | Usability: thumbsup | Portfolio: thumbsup | Mobile: thumbsup | Cost: gift

Yup, Microsoft did one-up Google in this category. In fact, it feels like Google just dropped the ball relying on the machines rather than human feedback for their design update. MSN Money is my best Google Finance Alternative.

Quote – There is a lot of data available under different tabs but the basic price, range, market cap., dividend yield, beta, and PE are present. Those are pretty much the only numbers I could keep in my head (or at least the range) for a variance.

News – I really like the layout of the news list. You can see plenty with a quick glance and you can see the source of the news as well. Considering MSN has access to Bing for searching content, the money news are as broad as what you would find on Google. When looking up a stock, I can see 18 news articles at one on a laptop compared with 5 from Yahoo Finance.

Charting – The designer behind the chart has an excellent color palette. It’s really pleasing to the eye. The color is not relevant at all in the trend but looking at an appealing esthetic compared to a pixelated graph does impact the experience. With that said, there are 3 visual graphs and 6 fixed timeline. The timeline is where I would have like some customization to chose the time window. For a quick snapshot during my morning coffee, all is good. The comparative capabilities are also well done and represented.

Usability – It had been a long time since I had looked at MSN Money and I was pleasantly surprised at the ease of use of the website. It did not take me long to figure out the UI. Entering a quote took a bit of searching at first, but once I found it, it was easy. I particularly like the attention to details like clicking on a stock in the portfolio list opens a new window automatically.

Portfolio – With an account you can track your portfolio and have multiple account representations. You can even track transactions if you are so inclined. I already religiously track my portfolio, I don’t need to replicate the transactions elsewhere.

Mobile – The mobile version is cleaner than the desktop but with less screen space as you can imagine.

Cost – It’s free and you can use any email to track your watchlist and portfolio.

Source: MSN Money Yahoo Finance ⋆⋆⋆⋆⋆
Quote: thumbsup | News: thumbsup | Charting: thumbsup | Usability: sleep | Portfolio: thumbsup | Mobile: thumbsup | Cost: gift

Yahoo Finance was the first candidate I thought of when I realized Google Finance wasn’t meeting my needs anymore. However, for some reason, Yahoo Finance has never appealed to me or provided me with the experience that I was seeking. I think the site is too overwhelming for me from an interface perspective.

Quote – All the necessary data to get a snapshot are present and easy to read.

News – While I prefer the layout and number of news from MSN, the Press Release option from Yahoo finance is a nice one. Unfortunately, Yahoo’s news is older than MSN. When comparing what is shown for Royal Bank, the news on Yahoo are days old whereas MSN has hourly updates.

Charting – The graph is well done and satisfy my needs to compare multiple stocks.

Usability – I won’t repeat my introduction statement. The fact is, the interface is overwhelming and there is a lot of advertisement in your face.

Portfolio – There is both a watchlist and portfolio. The tracking is well done and the visual range is easy to read. It’s pretty standard otherwise, you get to have a current value of your holding as per the number of shares you own if you are inclined to update it.

Mobile – It’s well done and has been my go-to app on my phone until I found MSN Money.

Cost – Free. Just create an account and you are all set to keep track of your portfolio. The mobile version doesn’t need an account to track a watch list.

Source: Yahoo Finance Investing.com ⋆⋆⋆⋆
Quote: thumbsup | News: thumbsup | Charting: thumbsup | Usability: sleep | Portfolio: thumbsup | Mobile: thumbsup | Cost: gift banknote

Investing.com has a wealth of information to offer. You have to get past the initial experience an overwhelming amount of data with fonts smaller than most. It compares to Yahoo Finance in terms of the initial experience and is a good Google Finance alternative.

Quote – All the basic information on a stock or portfolio is provided to have the basic data points on hand.

News – The news headline section breaks down the different source of information allowing investors to filter by sources if desired. The layout of MSN Money is still better for a bird’s eye view and scanning the page but it has more sources than the standard aggregators with a nice filtering touch.

Charting – The charts may look familiar as it’s powered by Trading View so it’s powerful and could be intimidating.

Usability – It’s comprehensive and logically set up but also overwhelming. The ads put me off. On a large screen, the ads still take 30% of the space and it probably drives the fonts smaller to fit more and it leads to a negative experience as the fonts on the ads usually take over your attention. It’s the same issue I have with Yahoo Finance.

Portfolio – The portfolio or watchlist is easy to use and effective. The only issue is that you have to switch tab to see news and you lose the listing of the stocks. There is room at the bottom to show the news. Again, I feel MSN Money got this interface figured out.

Mobile – The mobile app is one of the best so far. Between Yahoo Finance, MSN Money and Investing.com, you have a solid mobile tool. If mobile is important to you, you should consider Investing.com.

Cost – Free with the option for a paid service

Morningstar ⋆⋆⋆⋆
Quote: thumbsup | News: thumbsdown | Charting: thumbsup | Usability: thumbsup | Portfolio: thumbsup | Mobile: thumbsdown | Cost: gift banknote

There is a big difference between the Canadian and US versions of Morningstar. The Canadian version is on an old design whereby the US version is on a new refreshed design. The new design is more appealing and simpler to navigate. Morningstar shines against the competitors by showing extra information such as the competitors and more detailed financials.

Quote – The fundamentals are easily accessible and easy to read with more financials at your fingertips if you scroll down.

News – The news data is pretty exclusive to official financial news aggregators such as NewsWire, or PR Newswire. For a few US stocks, no news showed up … a little disappointing. Not the quality of news I am looking for.

Charting – While finding a stock to pull up was not intuitive, the chart comparison is just the opposite. I pulled up the comparison for Royal Bank of Canada TSE:RY and the competitors all showed up as options. I tested it with Enbridge TSE:ENB and the same happened with 6 pipeline competitors.

Usability – As mentioned in the intro, the US design is easier to navigate but that’s not to say the Canadian design is not. The Canadian design has tabs to navigate between the data set and the page is well organized with separators to group the data together.

Portfolio – The portfolio management is not easy to use. The interface is definitely not keeping up with Web 2.0. It works but there are more steps needed than necessary.

Mobile – No mobile app found.

Cost – The free plan compares to all the other providers but you are reminded through the site about the premium subscription to unlock added features.

Source: Morningstar.ca Stockhouse.com ⋆⋆⋆
Quote: thumbsup | News: thumbsdown | Charting: thumbsup | Usability: sleep | Portfolio: thumbsup | Mobile: thumbsdown | Cost: gift banknote

My first experience was a disappointment as a Canadian looking to pull up Royal Bank of Canada. The ticker format is not intuitive and it creates a frustrating experience to find the stock you want.

If you are familiar with MorningStar, you will notice similarities in the data and feeds since it’s powered by Morningstar.

Quote – It has excellent data. Possibly too much for the untrained investor. I really like how the sector and industry are up front. I believe it’s a very important data point when investing to understand the actual business.

News – It’s the same disappointment as Morningstar. Sorry, but I want to see more news outside of what the companies have to say.

Charting – It’s exactly the same as Morningstar. The colors are different but the same overall.

Usability – Aside from the inconsistencies around the ticker name, the usability is consistent with web 1.0 design. It does not resize or adjust the layout based on the window size and has many menus to navigate.

Portfolio – There is support for both a watchlist and portfolio tracking. The portfolio has a nice feature where you can compare it to an index and it also tracks dividend. I have my doubt that the dividend works properly since it’s usually manually tracked but if you wanted to track your portfolio with dividend growth and performance tracking against an index, you can try it.

Mobile – No mobile app found.

Cost – Free with the option for a paid service

Source: Stockhouse.com TMX Money ⋆⋆⋆
Quote: thumbsup | News: thumbsdown | Charting: thumbsup | Usability: thumbsup | Portfolio: thumbsup | Mobile: thumbsdown | Cost: gift banknote

TMX Money is the DIY investor service out of the company that runs the Toronto Stock Exchange. I did not find it good enough for my needs in the past but if you are a Canadian investor with a Canadian portfolio, it may work well for you.

Quote – All the basic data points are present and easy to view.

News – News provided are from the standard financial news aggregator. No search engine news surfaced.

Charting – You can compare to indexes and stocks which is a minimum requirement for me and you get the picture but the interface and visual is stuck in time. Too many steps to refresh and update the chart.

Usability – The interface is functional but can be clunky when compared with other Web 2.0 interfaces. Creating a portfolio is not as intuitive as other competitors.

Portfolio – Portfolio management is present with too many steps to manage it and it’s tucked away on its own away from your overall account and no news shown against your portfolio.

Mobile – No mobile app found although there exists a TMX Money Dividend app.

Cost – Free with a paid option for real-time data.

Source: TMX barchart ⋆⋆⋆
Quote: thumbsup | News: thumbsdown | Charting: thumbsup | Usability: thumbsup | Portfolio: sleep | Mobile: thumbsdown | Cost: gift banknote

A pleasant option for looking up stock information but mostly geared towards technical traders.

Quote – The standard data points are present with a neat price alert feature. It’s the easiest alert setup I have seen so far.

News – News provided are from the standard financial news aggregator. No search engine news surfaced.

Charting – The visual is pretty consistent with the competition and good overall with many options but unfortunately, I could not see how to add other stocks to compare. That’s a feature I like to see to understand comparative growth over time.

Usability – The site, menus, and charts are easy to use.

Portfolio – Portfolio support is present but I found it confusing as the price for a transaction needed an entry and exit price. A little confusing with little explanation as to how the data was going to be used.

Mobile – No mobile app found.

Cost – Free with the option for a paid service

Source: barchart MarketBeat ⋆⋆⋆
Quote: sleep | News: thumbsdown | Charting: thumbsup | Usability: thumbsdown | Portfolio: thumbsdown | Mobile: thumbsup | Cost: gift banknote

A lot of data is available and some of it unique. I don’t find it particularly well laid out for what I am looking for but it’s possibly a good research tool if you are interested in analyst ratings or insider trading.

Quote – A simple set of data points is present on the first tab. I find that most other options show the dividend and the yield to avoid having the investor hunt for it. Often times, it’s the annual dividend with the dividend yield in brackets. The missing P/E Ratio as seen in the image below doesn’t speak to a good data source or update from the system. All other competitors have the P/E displayed. Again, a good representation is the P/E Ratio with EPS in brackets if you want to save space.

News – The news headline section breaks down the different source of information allowing investors to filter by sources if desired. The layout of MSN Money is still better for a bird’s eye view and scanning the page but it has more sources than the standard aggregators with a nice filtering touch.

Charting – Charting is provided by Trading View so it’s powerful. At this point, why not just use Trading View if that’s what you want.

Usability – The layout and data presentation doesn’t work for me. The chart tab is at the end and not even included in the primary tab or view.

Portfolio – No portfolio or watchlist support from my purview of the interface. While there are paid features, it seems to open access to research information and timely notifications.

Mobile – An app is present.

Cost – Free with the option for a paid service

Source: MarketBeat Trading View ⋆⋆
Quote: thumbsup | News: thumbsdown | Charting: thumbsup | Usability: sleep | Portfolio: thumbsdown | Mobile: thumbsup | Cost: gift banknote

Trading View has a lot to offer but it falls short for me. It’s trying to be in the social or crowdsourcing of investing idea similar to Seeking Alpha and it promotes ideas over the news. On the flip side, you are not overwhelmed with advertisement and the UI is appealing and it comes with a mobile app.

Quote – The..

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