May Budget 2012

Let's try this again. Last month, I added an extra $25 to my budget and moved an additional $25 from Item Purchases to Food & Entertainment, giving the expense 50% more breathing room. I'll stick to this for a month or two to see how it goes. Transportation should be a lot less though because it's summer break so I won't be taking public transit as often. I plan to negotiate my phone bill as well because many people I know get more than what my plan gets me, while paying less money. Hopefully I'll get around to that soon.

-the Paperboy

Canfor's Complicated Structure & Dividend Woe

Oh Canfor, why do you do this to me? Yesterday, the company announced they will be distributing a dividends of 22 cents (compared to 25 cents in the previous quarter). A little background on Canfor will help grasp a better understanding of the situation.

Canfor Pulp Limited Partnership (CPLP) is what owns two pulp mills and one paper & pulp mill. Canfor Pulp Products Inc. (CPPI) use to own 49.8% of CPLP (CPPI is what currently have a position in). Canadian Forest Products Ltd. (CFP) controlled the remaining 50.2%. Under the terms of the Exchange Agreement made back in January 2011 from all parties involved, CFP exercised its right to essentially exchange its 50.2% interest in CPLP for a 50.2% direct interest in CPPI in early March of this year. This resulted in CFP having a controlling interest in CPPI (with the remaining 49.8% of shares being owned by the old shareholders - like me) while CPPI took 100% control of CPLP. Confused yet? I sure was. Basically this is what happened:

Fully Contributed

Today I finally did something I was meaning to do since January 1st 2012. I recently transferred my position in CIBC over to my TFSA account and now it's collecting me dividends tax-free. With that transfer and all the other transfers I already made, I had leftover contribution room of $459.96 - not quite enough to buy another holding.

I didn't want that room to go to waste (although it would be carried over to the next year) so I just topped off the rest in a TFSA savings account. It took me 4 months but I've finally fully contributed to my TFSA. Now all I have to do it set up my DRIPs because the amount of money that would accumulate in the account would not be enough for me to buy shares manually and I'd rather have my money reinvested as soon as possible than to have it sit there for a year until I can pump in another $5000.

Next goal for my TFSA? Eventually I would like to get all of my positions in the TFSA DRIPing so that I can set them on autopilot and while they collect more shares for me, I can focus on the non-registered account. When it gets to the point where what I'm getting back in dividends is substantial, I'll turn the DRIP off and consciously decide when and where to put the funds (I like to call it "manual DRIPing"). No strict deadline for this one because of the annual $5000 contribution limit, but I can speed things up by increasing my positions in companies I already own rather than transferring stock over from my non-registered account. The only issue with that is I need to find some cash so I guess we'll see how much of that I have when December rolls around.

Slowly but surely, I'm putting the pieces of the money-generating puzzle together, and I'm positive that in the long run this dividend approach will reward me.

-the Paperboy

Dividend Progress Report: March 2012 Edition

March was the first month of 2012 where I actually made a move in the market. I took up a position in Kinross Gold, with the intention to make a quick trade. That was a month ago and I still have the position. No worries though because it actually gave me some cash to wait for better days. On to the numbers:

Total yield of portfolio - 4.63% (- 0.25%)
Actual dividends received - $327.69 (+ $92.91)
Expected dividends return if the current positions are held for 1 year - $1268.31 (+$32.64)

The yield took a bit of a hit because of the lower yield of Kinross weighing down the average. Initially, I didn't want to include Kinross in the calculation because it's a trading experiment. It doesn't contribute to my goal of reaching a dividends return of $2500 (I know i said that $2500 was ambitious before but now it seems like a monster of a task) if all my positions were held for a year because I don't plan to hold this long-term. However, it does distribute a dividend and that should be considered in every calculation that involves dividends.

Over the summer I'm hoping to get the time to fix my spreadsheet so that I can extrapolate the amount of cash I going to get by the end of this year rather than just have a number of what I would have "if I held the current positions for 1 year". This is because many things can happen in 365 days so having my portfolio have the same positions for a whole year is unrealistic so a better metric should be used.

-the Paperboy