Sunday, January 22, 2017

Option Expiration Day

January 20 was option expiration day.  I previously sold cover calls in Potash Corporation of Saskatchewan (POT) and IAMGOLD (IMG)  in the Canadian markets. Actually, I sold covered calls on these positions more than once.

I previously wrote about selling the covered call in POT with an expiration date of January 20, which you can read about here. This covered call was assigned at expiration as POT was trading above the strike price of $25.00 at expiration. POT will be have an earnings release in the very near future.

IMG was trading above my strike price of $5.00 at expiration, so this covered call option got assigned as well. The wrote several covered calls on this position.The premium I received on this particular covered call at the time of writing the call was $413.05 after commissions. I sold 9 contracts as I owned 900 shares. IMG does not pay a dividend currently.

I believe POT will see some downward pressure in the next while.  POT is currently in the process of merging with Agrium as the shareholders of both companies voted in favor of the merger. 

POT and IMG were purchased on the Toronto Stock Exchange prior to writing option contracts on these positions.

I will update my investment tab spreadsheet in earlier February.

Do you use covered calls for positions you are trying to sell? Do you sell covered calls when you are bearish on a position to collect some income?
 
DISCLAIMER
I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.




Sunday, January 15, 2017

What happened to Netflix's Competition in Canada?

        




       Shaw Communications Inc. is a Canadian communications company that provides internet, mobile, telephone and television services.  They operate mostly in Alberta and British Columbia but operate smaller systems in Saskatchewan, Manitoba and northern Ontario.  There main competitor is Telus Communications.

       Shaw added mobile capabilities only recently with their acquisition of Wind Mobile. Shaw since has changed the name of Wind Mobile to Freedom Mobile.  Telus Communications , Rogers Communications, and Bell Canada Enterprises are considered the big 3 in Canada in terms of providing communication services. The big 3 also have discount companies that operate using their mobile networks. With the latter, the services and coverage of these discount companies obviously are not as good as going directly with the main carrier.

        Shaw Communications and Roger Communications had teamed up to provide a video on demand service to compete with Netflix. This service was called Shomi, and was launched in November 2014.  Shomi did not take off, likely due to the fact people get set in their ways and decided to keep Netflix. Netflix's popularity speaks for itself and a Netflix Subscriber can have 5 profiles under their account and these profiles can watch Netflix from anywhere he or she chooses to and from any device.

        Shaw has not raised its dividend since the March 2015 payment , that was equivalent to 8% increase in the annual dividend.  Shaw has reported dividends for the next 3 months and there is no dividend increase.  Shaw pays a monthly dividend, in which I received a monthly dividend of $19.75 as I own 200 shares.

        Shaw Communications' partner in Shomi, as stated above, is Rogers Communications.  Rogers Communications has not raised its dividend since the April 2015 payment.  Unlike Shaw Communications that pays a monthly dividend, Rogers Communications pays a quarterly dividend.

        Recently, Shaw Communications and Rogers Communications decided to shut down the Shomi video on demand service at the end of November 2016.  Shaw Communications recently reported earnings and reported a profit of $89 Million or $0.18 per share in the 3 months that ended November 30.  This is down from 59.2% from $218 Million of $0.43 per share for the same period last year.

        With Shomi shut down, investors are hoping Shaw Communications and Rogers Communications start rewarding investors with dividend increases. With the slow down in western Canada due to the low oil prices, this might affect the chances of dividend increases not happening as quick as investors would like. 

 Please Note:  All my shares of Rogers Communications, Bell Canada Enterprises and Shaw Communications have been purchased on the Toronto Stock Exchange,

Do you own shares of Roger's Communications, Bell Canada Enterprises, Telus Communications, or Shaw Communications?

Disclosure (With TSX ticker symbols) :  Long RCI.B, SJR.B, BCE

Disclosure :  Do not own shares of Telus or Netflix at the time of this writing.

DISCLAIMER
I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.

      

Saturday, January 7, 2017

High Interest Savings - Part 3

    This is Part 3 of the High Interest Savings options to combat the low interest rate on the high interest savings accounts.  To read the Part 2 of the series can be read here.

    Another option an individual could consider is purchasing units in a REIT, or Real Estate Investment Trust.  Obviously, an individual would have to careful examing the charts of the stock over a timeframe of at least 3 years. The individual then considering the minimum yield they want to start off with.  The yield will definitely be higher than the current interest rates of high interest savings account.  REITs have to pay out 90% of the profits to unitholders, which is the law for them to be able to trade as a REIT.

    REITs usually pay monthly.  So an individual could decide how much to invest initially in a REIT. An individual could decide to make another investment by saving up more more along with an money paid to them as a distribution. 

    The price of a REIT can be affected by rise or fall of interest rates and what is going on in the economy.  If the economy is getting bad, then the REIT can be affected if the REIT has properties in the area that is doing bad.  A perfect example of this is what is happening in Alberta right now. In Calgary, Alberta there are lots of vacant offices due to the slowdown in the energy sector. An individual must decide if they feel the REIT will continue to lose more value if the economy continues to struggle. 

     The current rate of interest on my high interest savings account is 0.80% per year.  For a REIT, the yield averages is usually higher than 5%. So, we will chose an yield of 7.5%. 

Example

Invest $1000.00.

High Interest savings would pay $8.00 in interest for 1 year.

A REIT with a 7.5% yield will pay $75.00 in distributions in 1 year. 

We see a difference of $67.00 annually. The distribution from the REIT will also be more tax advantageous than that of the high interest savings account. 

So if an individual keeps savings and purchasing more units of the REIT, they will grow their money a lot faster.

Please Note:  The share price of a REIT is highly volatile.

Disclosure:  I own REITs inside my margin account and my Tax Free Savings account.

DISCLAIMER
I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.

Dividend Increase

       Enbridge is known for raising its dividend shortly after the Dec 1 dividend payment. This year Enbridge decided to not raise the divided until January.  This was due to the vote on the acquisition of Spectra Energy in the United States. The investors of these 2 companies voted in favor the acquisition.

Enbridge Inc. operates as an energy transportation and distribution company in the United States and Canada. Its Liquids Pipelines segment operates common carrier and contract crude oil, natural gas liquids (NGL), and refined products pipelines and terminals. The company'’s Gas Distribution segment operates as a natural gas utility that serves residential, commercial, and industrial customers in Central and Eastern Ontario, and Northern New York State, as well as in Quebec and New Brunswick. Its Gas Pipelines, Processing and Energy Services segment has interests in natural gas pipelines, including the Vector Pipeline and transmission and gathering pipelines in the Gulf of Mexico, as well as holds an interest in Aux Sable, a natural gas fractionation and extraction facility. This segment is also involved in the renewable energy projects, such as wind, solar, and geothermal projects with a generating capacity of approximately 2,800 MW. The company’s Sponsored Investments segment is involved in renewable and alternative power generation; crude oil and liquid petroleum transportation and storage; and natural gas and NGL gathering, treating, processing, and transportation. Enbridge Inc. has a strategic partnership with EDF Group for the development, construction, and operation of three French offshore wind farms. The company was formerly known as IPL Energy Inc. and changed its name to Enbridge Inc. in October 1998. Enbridge Inc. was founded in 1949 and is headquartered in Calgary, Canada. (Source: Yahoo Finance)


       Late in the afternoon on January 5th, Enbridge announced a 10% dividend increase.  The quarterly dividend payment has been raised from $0.53 per share to $0.583 per share.  This represents an annual dividend rate of $2.332 per share.

      I currently own 48.983 shares of Enbridge across 2 accounts. My annual dividend income will increase $10.38.  I did not have to do anything except be a shareholder of this company. This $10.38 increase is equivalent to investing $296.57 of my own money at a 3.5% yield.

      Enbridge is planning to raise the dividend again upon the completion of Spectra Energy that would represent a total dividend increase of 15% over the dividend rate of 2016. 

Disclosure : Long ENB

DISCLAIMER
I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.



Thursday, January 5, 2017

First Option Trade of 2017

      I currently own 200 shares of Potash Corporation of Saskatchewan (ticker symbol POT), which were bought on the Toronto Stock Exchange.  POT also trades on the NYSE.  My covered call on POT expired worthless on Dec 30.  So on Jan 3, I sold 2 covered call contracts in POT with a $25.00 strike price and expiration day of January 20.  I collected a net premium of $40.05 after commissions.

      POT is currently in the process of merging its company and Agrium into one of the largest potash supplies in the world.  The shareholders of each company recently voted in favor of the merger.  There is a lot of hurdles still overcome in order for this deal to go through.

Summary:

Strike Price : $25.00
# of contracts : 2
Option Assignment Fee:  $24.95
Premium received after commissions: $40.05
# of days until expiration : 17
Adjust Cost Base: $4245.85

Scenario # 1:  Option Not Assigned

Return = $40.05 /( $5000)
            = 0.801%

This return of 0.801% is for 17 days.  Currently, interest rate on my high interest savings accounts is 0.80% year. 

Annualized Return = ($40.05 / $5200 )* (365/17)
                                =  17.20%

Scenario #2 : Option is Assigned

Total Return = (Profit - Adjusted Cost Basis) / Adjusted Cost Basis
                      = ($5000+$40.05 - $24.95 - $4245.85 ) / $4245.85
                      = 18.12%

Disclosure: Long POT

DISCLAIMER
I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.

Monday, January 2, 2017

Dividend Update - December 2016




      The month of December is another month of dividend income landing in my accounts. This money is used to help pay my expenses if it is needed. If the money is not needed, it is ALL used to purchase new investments to further increase my cash flow.

       The markets continue to go higher in the month of December.  The price of barrel of crude oil continues to trade over $50.00 per barrel and is currently around $53.00 per barrel.  The Toronto Stock Exchange has lots of energy companies, so energy is a major part of investing decisions for Canadian investors.

      One thing for sure, is that I was paid dividends and distributions for being a shareholder or unit holder in  various companies or funds. In  Sept 2016, the Dream Office REIT in the margin account will be counted as dividend income  for the first time.

 Non-registered Account

  • Enbridge (ENB) - $8.39
  • Enerplus (ERF)  -$ 5.58
  • Dream Office REIT   (D.UN)  - $ 75.50
  • High Liner Foods (HLF) - $7.00
  • Shaw Communications (SJR.B)    - $19.75
  • Westjet Airlines (WJA) - $19.60
TFSA
  • Boston Pizza  Royalties Fund (BPF.UN)   - $26.91
  • Canadian National Railway (CNR) - $14.25
  • Cominar REIT (CUF.UN ) - $41.16
  • Dream Office REIT   (D.UN)  - $ 17.63
  • Enbridge (ENB) - $17.49 
  • Horizons Natural Gas Yield ETF (HNY)  - $4.43
  • Killam Properties REIT (KMP.UN) - $  15.10

Total = $272.79

        The bond ETF , Claymore 1-5 yr Laddered Corporate Bond ETF, did not pay a distribution in December.  It usually pays at the end of the month. As December 31 is the end of the year, they will pay the distribution within the first 10 days of January. This bond ETF will also pay a distribution at the end of January

        As the amount of distribution from D.UN inside my margin account, will have a large impact on the comparison of dividend income from 3 months or from 12 months ago.  Therefore, I will not compare November 2016 dividend income with that of 3 months and 12 months ago.

 Dream REIT has reduced the amount of distribution they pay monthly which was announced in February 2016.  Recently, I wrote about purchasing more units of D.UN inside a margin account.  Starting in September, the distribution from this D.UN inside the margin account will be included in my dividend income.

             I currently have DRIP turned on for the following stocks in margin account, which are D.UN and ERF.  DRIP is turned on for D.UN and CUF.UN inside my TFSA.  DRIP is turned on for BNS and ENB with the transfer agents. When investing with transfer agents directly, all the dividend is reinvested as you are able to buy partial shares. When you can only purchase whole shares with DRIP, then the dividend received has to be higher than the price of the stock to receive at least one share.

     I will update my dividend income tab with the new amount. It is great to see money from passive income sources deposited into my brokerage account every single month.

     This month I received a personal record in options premium collected.  I received $655.10 in option premiums for the month of December.

EDIT(Jan 10) :  Cominar REIT paid out 2 distributions which were paid on December 15 and December 30.  For the December 30, the record date was December 16 which would means the ex-dividend date was 3 business days before  December 16. Therefore the new acquired 1 unit from DRIP on December 15 does not count in my total. The distribution on December 30 is the same as December 15, which is $20.58 for 169 units. The table above and dividend income tab have been updated.

How was your dividend income for December 2016?

Disclosure : Long all securities above.

Photo Credit: www.mipaq,co.za

DISCLAIMER
I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.


Saturday, December 31, 2016

Portfolio Update - December 2016

       The month of December  2016 is now behind us. The price of barrel of crude oil currently trades at approximately $53.00 per barrel for WTI barrel of crude oil.

       I currently own shares in the Bank of Montreal (BMO) which trades on the Toronto Stock Exchange announced a dividend increase prior to market opening on Dec 6.  I own 35 shares of BMO and the dividend increase is more than welcome.  I get rewarded with increasing dividends for just being a shareholder.  This is the beauty of dividend growth investing.  The company does all the work and I receive a dividend payment every 3 months for just being a shareholder.  When the company is doing well, they will increase the dividend as this is what investors are looking for as a dividend growth investor.

   I wrote about selling covered calls in IAMGOLD (IMG.TO) on December 10.  I currently own 900 shares of this stock and the stock does not pay a dividend.  I sold 9 covered call contracts and collected a premium of $242.05 after commissions.  The contracts had 8 days to expiration after the calls were sold. This option expired worthless, so I ended up keeping the premium of $242.05 for being the option seller.

   Option expiration day is, for the most part, occurs on the 3rd Friday of each month.  I had 3 options expired without being assigned.  I got to keep the premium for all 3 option trades as I was the option seller in each case.

    I sold 2 call contracts of Potash Corporation of Saskatchewan (POT).  I actually ended up selling 4 contracts of POT as my brokerage put the order in twice. I bought to cover 2 call contracts as a result of my brokerage put in my order twice.  To read about this trade, you can click here. The 2 covered call contracts that I continued to own expired on Dec 30.

   I completed my trading for the year which involved 30 trades in total, which you can read about here.  You can also see all my trades by clicking on the trading tab above.

   To close out the month of December, I decided to sell covered calls in IMG.TO again.  The strike price is $5.00 and the expiration day is January 20.  I collected a net premium of $413.05 selling these covered calls, which you can read about here.


Shares Acquired Through DRIP

1 Unit of CUF.UN.TO @ $14.59 for a total cost of $14.59           (TFSA)
1 Unit of CUF.UN.TO @ $14.37 for a total cost of $14.37      (TFSA)

4 Unit of D.UN.TO @ $18.8335 for a total cost of $75.33  (Margin Account)

0.150 shares of ENB @ $55.93 for a total cost of $8.39  (Transfer agent )

Cominar REIT (CUF,UN.TO) paid a distribution on the December 15 and a second distribution on December 30.  This is the reason for 2 separate DRIP purchases within the same month.  CUF.UN.TO will not pay a distribution in mid January.

As of Dec  31,  2016, the value of the portfolio is $101,049.54.  This is a 5.08%  increase over last month's total.  The spreadsheet in the investment tab above has been updated.

Edit:  Transforce Inc has changed their name to Transforce International Inc after shareholder approval.  On December 30, their stock symbol on the Toronto Stock Exchange was changed from TFI to TFII, which is reflected on the spreadsheet. 

Edit:  The portfolio value has been corrected $101049.54.  Inside my margin account, I have my trading account and a portion tied to savings. I forgot to subtract these balances.

 Disclosure:   Long IMG.TO, POT

DISCLAIMER
I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.