Investment Portfolio Stock, Bond and Index Fund Updates and Surprises for January

A Few Defensive Stock Updates

We have some stocks in various investing accounts and some low-cost-buy-the-market ETFs in others. January brought some pleasant surprises for a few of our favourite defensive stocks.

CNR Boosts Dividend After Already Giving Us a Huge Capital Gain

MyOwnAdvisor tipped me off to go check the dividend for CNR as they have announced a significant improvement. Thanks, Mark!

CN is just the gift that keeps on giving: It’s up over 100% since we bought (and yes we’ve taken out our original investment recently since it was meant for a fairly short term not for retirement) and the dividend yield is up from under 2% to over 3% on what was meant to be a capital gains play. I really can’t complain. : )

Bank of Nova Scotia continues to drift down into the Ocean Depths: any Sign of Nemo Down There?

On the other hand, I notice our BNS is rapidly drifting down to the price we bought at. Good thing that one is in our RRSP and is meant to generate dividends not capital. I swear it spends more time underwater than breaking the surface.

Bell’s Price Is Entering Crazy Territory

I can see the attraction of BCE. When I bought some in 2011 it was yielding over 5.5%. It has raised the dividend a few times since then. It’s the traditional “widows and orphans should invest their life savings in this type of stock” stock.

Although people said that about Nortel too.

It’s been on a huge tear recently, climbing quickly to new record highs. So high, in fact that the dividend yield today is only 4.2%.

I’m not sure exactly what is motivating investors to pile into Bell. I suspect it may be because of the perception of security, the high yield, and the current drop in bank stock prices.

Either way, the rapid climb made me very nervous. I checked our holding of BCE and discovered as I suspected that we were over-invested. I’d parked some cash into BCE hoping to score a quick $1 or 2 of capital gain before I had to sell it, and knowing I would be satisfied with the yield if I got caught and had to hold it for a long time. So I sold off some of our extra position at this current high to lock in the gain. We’ll keep a chunk in our dividend-income-producing-long-term holdings but I don’t see any reason to get greedy and have over 5% of our stock picking money tied up in any one stock no matter how blue chip.

Should We Buy More BCE Now?

That said, would I recommend people buy Bell right now? (in January 2015) Fortunately, I don’t give investing advice. And if really pushed, I’d say buy some ultra-low-fee S&P TSX ETF units instead. Then if Bell tanks, you may still make a gain when oil and banks rebound.

A Few Index Fund and Fixed Income Fund Updates

We have some interesting low-cost whole-market index funds in our retirement accounts, including large holdings of a bond fund managed by PH&N.

Bonds Continue to Perform Startling Acts of Support for a DC Retirement Portfolio

And then there are bonds: We’ve enjoyed a return of over 3.8% in January alone as of January 28 on our PH&N bond fund. After fees. Yes, I mean the value now subtract the value on December 31, 2014, divided by the value on December 31 is 3.8%. That’s just crazy. I will NEVER try to predict bonds….

It makes it difficult though to decide what to do. Should we re-balance immediately before some other world event sends them plunging negative? Should we let the profit ride and see if it continues to grow?

By comparison, the S&P TSX index fund has generated $3 count them $3 in our DC pension fund during that same interval, after fees.

I guess that’s why you have bonds and fixed income, though, to help calm you during the turbulence of stock market flat-lines and drops. It does help, certainly, to see a big bunch of green numbers somewhere on the screen!

International Stock Market Funds Boast the Best Return for January

The global (which includes the US) market funds are also spinning out some lovely winning numbers. We don’t have huge bucks invested in this category in the DC pension plan since we try to balance across all of our retirement investment vehicles, but it’s lovely to see the actual $$ these small funds have added to our DC total.

For those of a certain age, you may remember when you were limited in how much you could invest in stock markets outside of Canada within your RRSP. It’s good to see that restriction gone, especially for indexers given the way the TSX is heavily loaded towards certain resource and financial stocks. It’s also good if you’re buying US dividend paying stocks because it’s often better to hold those in a RRSP than in a TFSA to reduce US taxes withheld at the source.

So overall, it’s been a decent January. A few flat-lines, a few falling stocks, but overall lots of lovely green values. Here’s hoping that doesn’t all switch to red once the infusion of new money from RESPs, TFSAs and RRSPs stops flooding into the markets sometime in the next few months.


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