MAXA Financial five-year GIC
. Our original three-year GIC matured in February 2016. We reinvested the
$13,418.75 we received (principal and accrued interest) in a new five-year
GIC paying 2.5%, with annual payments. This GIC is redeemable, so if rates
rise, we can cash in and trade up (albeit with a penalty). The GIC will
mature in February 2021.
Phillips, Hager & North Short Term Bond and Mortgage Fund
(RBF1250). This is a short-term bond fund that provides stability for the portfolio.
However, with interest rates low but rising, we must expect returns to be
minimal. Since the last review, the net asset value (NAV) has declined by
$0.11, while we received distributions of about $0.096 per unit, so we lost
a little ground.
CI Signature Dividend Fund (CIG610). This fund invests primarily in preferred shares and
dividend-paying large-cap stocks. The fund came out slightly on the plus
side since the last review. NAV was down by $0.17, but we received
distribution of $0.24 per unit (($0.04 per month) for a modest overall
PIMCO Monthly Income Fund (PMO005, front-end units). This fund invests in investment-grade bonds from developed countries
around the world as well as some mortgage-backed securities. It pays
monthly distributions, which are currently running around $0.04 per unit.
The NAV was up $0.36 in the latest period, so with the distributions we had
a total return of 4.3%. That’s very good for a bond fund these days.
Sentry U.S. Growth and Income Fund (NCE737). This fund invests in a portfolio of U.S. dividend-paying stocks, both
common and preferred, with a large-cap bias. The net asset value increased
by $0.13 during the latest period, and we received six monthly
distributions totaling $0.30 per unit.
BCE Inc. (TSX: BCE)
. BCE shares gained modestly over the summer, adding $0.32
each. We received two quarterly distributions totaling $1.4348.
Inter Pipeline (TSX: IPL). We took a big hit on this one in the latest period, losing $6.36 per
share. Disappointing returns and the company’s prevarication about
proceeding with a major project concerned investors. The dividends
continued to flow at the rate of $0.135 per month, however.
Brookfield Infrastructure LP (TSX: BIP.UN). What we lost on Inter Pipeline we more than made up on this limited
partnership. The shares are up $7.67 since the last review, and we received
two distributions totaling US$0.87, with another due shortly.
Emera Inc. (TSX: EMA). After a slow start, we finally got back to slightly above breakeven with
this utility stock. The shares were up $2.55 in the latest period, and we
received $1.045 in dividends.
Cash. We kept the cash balance of $1,550.64 in a high-interest savings account
with EQ Bank paying 2%. Interest earned in the latest period was $15.51.
The following table shows the RRIF Portfolio as it stood at the close of
trading on Aug. 23. I have included the accrued interest on the GIC in the
retained earnings column. Note that commissions are not deducted and that
U.S. and Canadian currencies are treated at par. Although this is a RRIF
portfolio, withdrawals are not factored in, as this would make it
impossible to track performance accurately.
Comments: The big loss on the shares of Inter Pipeline reduced our gain for the
six-month period to 1.9%. Most of the upside was provided by the continued
strength in Brookfield Infrastructure LP.
Since inception four and a half years ago, we have a cumulative total
return of 41.4%. That works out to an average annual compounded rate of
return of about 8%. For a portfolio with a large weighting in GICs,
preferred shares, and bonds, that is a respectable return. Our target is in
the 5% to 6% range.
Changes: There may be a temptation to sell off our position in Inter Pipeline as a
result of its retreat. I think that would be a mistake. Despite the
setback, this is a stable business with a steady cash flow. The company is
not going out of business. At the lower price, the yield is a very
attractive 7%. We have $479.33 in retained earnings, so we will use $463 of
that to buy 20 more shares. That will bring our total to 280 shares and
reduce the retained cash to $16.33.
We will also make some other purchases with our cash, as follows:
CI Signature Dividend Fund.
We will add 10 units at a cost of $144.60. Our total position is now 470
units, with cash remaining of $3.82.
PIMCO Monthly Income Fund.
We’re buying 10 more units for a total of $144.50. That gives us 450 units
in total with cash of $68.12.
Sentry U.S. Growth and Income Fund.
We have enough cash to buy 10 units at a cost of $205.30. We now own 380
units with retained earnings of $79.22.
Brookfield Infrastructure LP.
Finally, we will add 10 units of this partnership at a cost of $551.60. We
will take $0.41 from cash to cover the shortfall in retained earnings. We
now own 220 units.
We will keep our remaining cash of $1,121.24 in the EQ Bank account, which
is now paying 2.3% annually.
The table below shows the revised portfolio. I will review it again in my Income Investor newsletter next February.
Gordon Pape is one of Canada’s best-known personal finance commentators and
investment experts. He is the publisher of
The Internet Wealth Builder and The Income Investornewsletters, which are available through the Building Wealth website.
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Notes and Disclaimer
© 2017 by The Fund Library. All rights reserved.
The foregoing is for general information purposes only and is the opinion
of the writer. Securities mentioned carry risk of loss, and no guarantee of
performance is made or implied. This information is not intended to provide
specific personalized advice including, without limitation, investment,
financial, legal, accounting, or tax advice. Always seek advice from your
own financial advisor before making investment decisions.
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