Sunday, 31 January 2016

January 2016 Performance


Well it's been a wild ride for the markets in January, and Neu Grufti road that wave. I wound up in the black for the month, so I'm off to a good start beating the indexes. It wasn't the result of anything more than having a diversified portfolio in solid companies, the class and boring 'don't put all your eggs in one basket'. With dividend reinvestments and some dividend increase announcements, my annual dividend totals are off to a great start as well. Both my Long Term Growth Holdings, Canadian and US, are up an identical amount (4.34%) and as they make up the largest chunk of my holdings, I am glad for it.

Bear Stock: Methanex is down 11.46% in one month, really hoping to see an upswing as increased capacity at their Geismar facilities blunts the impact of lower product prices

Bull Stock: Canadian Apartment Properties REIT is up 11.82% for me this month. Predictable cash flow that`s grown regularily over the years, some overseas exposure (with ownership in an Irish REIT they spun off), and a place to put over peoples heads in good times and bad. It`s being a landlord without the hassle.

NEU GRUFTI PORTFOLIO (1/31/2016)
2016 Dividend Payments: $3009.62 (+8.28% over previous year)
2017 Dividend Payments: $3024.46 (+0.49% over previous year)

Speculative Growth (-1.71%)
Canopy Growth Corporation (TSXV:CGC): -9.76%
Organigram (TSXV:OGI): -18.09%
Prairie Sky Royalty (TSX:PSK): -8.54%
Sherritt International (TSX:S): -4.11%
Superior Plus Corp (TSX:SPB): -2.48%
TELUS (TSX:T): +3.0%

Long Term Growth Canadian (+4.34%)
Alliance Grain Traders (TSX:AGT): +3.77%
Brookfield Renewable Energy (TSX:BEP.UN): +2.12%
Canadian Apartment Properties REIT (TSX:CAR.UN): +11.82%
Capital Power Corp (TSX:CPX): +8.21%
Corby Spirit and Wine (TSX:CSW.A): +0.81%
Innergex Renewable Energy (TSX:INE): +4.94%
RBC Global Corporate Bond Fund (RBF1009): +0.12%
Surge Energy (TSX:SGY): +5.49%
TD Monthly Income Fund (TDB622): -0.24%

Long Term Growth US (+4.34%)
Alcoa (NYSE:AA): +0.00%
Disney (NYSE:DIS)
: -8.14%
Investors Bancorp (NASDAQ:ISBC): -6.03%
Microsoft (NASDAQ:MSFT): -0.70%
Nordic American Offshore (NYSE:NAO): -23.15%
Realty Income Corp (NYSE:O): +8.43%
Unilever (NYSE:UL): +2.67%
Verizon (NYSE: VZ): +6.8%

Canadian Retirement (-2.18%)
Anglo  Pacific (TSX:APY): +0.0%
Alterra Power (TSX:AXY): -2.17%
Boralex Inc (TSX:BLX): +8.16%
Chartwell Senior Housing REIT (TSX:CSH.UN): +0.78%
Dream Global REIT (TSX:DRG.UN): -6.26%
Methanex (TSX:MX): -11.46%
RBC 1-5 Year Laddered Bond (TSX:RBO): -1.01%
Rogers Sugar income Fund (TSX:RSI): +0.74%
Royal Bank (TSX:RY): +22.33%

US Retirement (-2.12%)
Johnson & Johnson (NYSE:JNJ): +1.67%
Dow Chemical (NYSE:DOW): -8.7%

Tax Free Income (-0.19%)
RBC US Monthly Income Fund (RBF1503): -0.19%

Saturday, 30 January 2016

Organigram 1st Quarter 2016

Organigram has reported their 1st Quarter 2016 results, the announcement can be found here.

Positive news for one of my two Medical Marijuana holdings. They hit positive cash flow from operations, and have exceeded their previously announced goals (which had also been increased over previous expectations).

Canada's Medical Marijuana space is fairly crowded, however I tried to pick two holdings that could prosper even if, for some reason, the planned legalization of marijuana for recreational doesn't go through, or goes through in a form that isn't beneficial to the medical companies. Organigram benefits by being the only major, active supplier east of Ottawa, offering fully bilingual services, and having product strains that are organic certified.

Thursday, 28 January 2016

Investors Bank 4th Quarter 2015 Results and Dividend Increase

Investors Bank (NASDAQ:ISBC) reported their 4th Quarter 2015 results today, which can be found at their investors relations link here.

With that report came the announcement of a 20% increase to their dividend, bringing it to .06 per quarter.

Investors Bank is a small holding for me, but an area I wanted exposure to, which is regional banking in the US. I'm not a huge fan of the big US multinationals, but there are a lot of good regional banks in the US that held the promise of growth and expansion in the financial sector. It took me a while to pick one for my US Long Term Growth portfolio, but Investors Bank was the winner, and I'm glad I chose them.

Dividend growth potential is an important part of my portfolio. If every one of my dividend stocks increased their dividend by 20% a year, I'd never need to make another a purchase again. That isn't going to happen, of course, but every time one of my stocks increases their annual payout, it's that much less effort I have to expend on my side to grow the dividend payouts on my own.

Microsoft 2nd Quarter 2016 Results

Microsoft announced their 2nd Quarter 2016 Results today after the market closed, the press release is here.

Microsoft has been a core holding in my US Long Term Growth segment, and today's better than expected earnings is a demonstration of why. I was hesitating about holding on to Microsoft while Ballmer was in charge, but once they put Nadella in charge, I knew the company was going to focus on areas that would be nothing but growth potential. Since then, it's been a positive ride, with growing dividends along the way.

Cloud computing was the future of business computing when a lot of initial decisions about where to focus ecosystems were taking place. I think Microsoft made some mistakes and was taking the wrong approach when they tried to follow Apple's closed ecosystem approach, and Nadella gave the company the right focus and purpose to swing things around. It's no accident that since Nadella took over 2 years ago, Microsoft stock is up 37%. I'm up slightly more at 39.42% in that same time period due to good timing, but I think this is one of those situations where I picked the right horse.

I don't think I'll see it up another 37% in 2 years, but I'm holding in for the dividend growth potential at this stage.

Long Term Growth Defined

So what is Long Term Growth within Neu Grufti?

Long Term Growth is the old school 'buy and hold' philosophy. While it may well contain speculative stocks or value stocks, the general core of Long Term Growth is picking something that I won't be letting go of within the next ten years. So it's generally an eclectic mix of Canadian (covered here) and US (covered in my next component update) stocks.

Alliance Grain Traders (TSX:AGT) recently underwent a name change to AGT Food and Ingredients, which I'll probably start using once I get used to it. That name change covers why it's here. AGT is a pulse processor and shipper as well as food ingredient company that has global exposure. As they are focused primarily on pulse crops, they are also riding the wave of people looking for alternatives to long grains, and they have recently opened a center in Minot for food ingredient processing. Everyone needs to eat, that's why this is here.

Brookfield Renewable Energy (TSX:BEP.UN) is engaged in the production and delivery of power through renewable sources on a global basis. Even a cursory glance of my portfolio will show a bit of a heavy weight on the power and energy side, and it's due to the simple fact that electricity runs the modern world, and those who produce it tend to do so under long term contracts with Governments and their populations. Brookfield has Canadian and US exposure, but also has a large presence in Brazil, Wind Farms in Europe, and has recently finalized the purchase of one of Columbia's largest renewable energy producers. They also pay their dividend in US currency, which protects the revenue stream from fluctuations in the Canadian dollar.

Canadian Apartment Properties REIT (TSX:CAR.UN) boils down to the simple fact that as well as eating and keeping the lights on, people need a roof over their head. Why be a landlord when you can own a landlord and collect on the rents? CAP REIT is one of Canada's largest landlords, with holdings in almost every Province.

Capital Power (TSX:CPX) is another power generation company, although more traditional than Brookfield in that they own several coal burning power plants in Alberta. However they have been slowly moving over into Natural Gas generation as well as renewable, so this holding is more to keep one foot in the old school of power generation while things transition over to renewables.

Corby Spirit and Wine (TSX:CSW.A) is a long term play on the fact that everyone loves their vices, and Corby Spirit and Wine owns some of the most popular brands in Canada when it comes to Whisky, Rum and Vodka. In good times and bad, people drink.

Innergex Renewable Energy (TSX:INE) is another renewable energy provider, although focused in Canada. I own them for the same reason I own Brookfield, as power generation isn't going away any time soon, and the switch to renewable sources from fossil fuels is going to be advantageous to companies like this.

RBC Global Corporate Bond Fund (RBF1009) is focused on owning investment grade corporate bonds, and as any balanced portfolio needs a mix of equities and fixed income. I am not even close to a novice when it comes to fixed income and bonds, so rather than purchase individual bonds, I am more inclined to look at ETFs and Mutual Funds for those particular aspects of my portfolio. In the Online Investing world, funds like this have a D series where online investors pay lower management fees than they would through a broker, so Canada's traditionally high mutual fund fees didn't turn me away from this one.

Surge Energy (TSX:SGY) happens to be one of the big drags in my long term growth at the moment, but that's a product of the oil industry being in the middle of a bust in their traditional boom bust cycle. Long term (as in, the next 10 years), I expect it to see it rise, and I wanted a mid range producer that is capable of providing a cash stream that isn't focused on hyper accelerated growth, and had a solid balance sheet. Surge fit that profile.

TD Monthly Income Fund (TDB622) is largely in the long term growth portfolio to provide additional monthly income to help keep assets balanced. I use proceeds from the Fund to keep the portfolio relatively balanced. I wanted something that was a fire and forget purchase that could produce a reasonably stable monthly income within the portfolio for 'dry powder'.

Wednesday, 27 January 2016

Methanex 4th Quarter 2015 Results

Methanex reported their 4th Quarter 2015 results after the market closed, the presentation can be found here.

This has been a core holding of mine since I started investing. One of the worlds largest producers and marketers of methanol, it carries very little debt and a commanding market position in the production of a feedstock chemical used in a variety of applications. And the dividend is paid out in US dollars, so the revenue grows as the Canadian dollar declines in value.

I don't expect the results to do Methanex any favours with respect to the recent decline in price, but as I originally picked this up 7 years ago, even the recent share price collapse hasn't phased me. It'll be a rough ride, but this one was always intended to provide a steady and growing stream of dividends that are priced outside the Canadian dollar, and so far, it's always delivered.

Tuesday, 26 January 2016

Johnson & Johnson 4th Quarter 2015 Results

Johnson & Johnson reported earnings this morning, and their full earnings presentation can be found here.

Johnson & Johnson is one of my core holdings under the US Retirement category (I haven't gone over this category yet, but short version is, it's my US currency retirement account). As a Canadian, it's important to have exposure to US currency holdings to protect retirement dollars from fluctuations in the Canadian dollar. That's pretty evident right now as the Canadian dollar hovers near lows it hasn't seen in a decade.

As a global conglomerate in consumer goods and health care, Johnson & Johnson doesn't promise a lot of explosive growth, but it delivers stable returns and a slowly growing dividend. While the stock price may not promise massive returns, the dividend has increased every year from $0.425 annual in 1997 to $2.95 today. It's that steady march upwards in dividend that's earned it a place in my US Retirement portfolio.

Sunday, 24 January 2016

Speculative Growth Defined

So the first category in my portfolio is Speculative Growth. How do I define that, and how do these fit in? Well, the idea is that these are stocks with the potential for significant growth, but on a very speculative basis. I have these in an account outside any tax shelters, so if I lose money, I can use that against any gains I experience as well. So essentially, this will contain most of my higher risk bets.

So why each one?

Canopy Growth Corporation (TSXV:CGC) and Organigram (TSXV:OGI) are both Canadian medical marijuana companies. Canopy is by far the largest in the space, having recently purchased Bedrocan, another operator in this space.

The rationale here is fairly straight forward. Canada's new Government announced their intention to legalize recreational marijuana. While medical marijuana is currently legal, no matter how legalization is implemented, current players in the marijuana space stand to significantly benefit.

I picked these two up before the last election so I've already seen some good gains, but they are here because of the potential. Canopy I picked because it's well run, well capitalized, and has already demonstrated it wants to lead the way in this space. Organigram is smaller, but it's the only operator east of Quebec, it's the only fully bilingual one, and it's the only one certified as an organic grower, while also being well capitalized. I figure in the new market, these are two that stand to thrive and survive.

Prairie Sky Royalty (TSX:PSK) is a bet on future oil price recovery. I may have bought too early, but their model offers a higher potential return over time than your traditional oil company. They don't actual drill or produce, they own the land rights on which production takes place, and get a cut of every barrel of oil. So they are less tied to the ups and downs of the oil market, have no capital expenses beyond purchasing more land rights, and stand to benefit tremendously in any market upswings.

Sherrit International (TSX:S) is a bit of a commodities bet, as well as one on normalized relations with Cuba. They are nickel/cobalt producer with operations in Cuba and Madagascar, with oil and electricity operations in Cuba as well. In addition to the commmodities/Cuba bets, it's also a bit of tie in with growing demand for electric vehicles, which could drive up the price of cobalt. The question is if they'll be able to navigate the low commodity price environment long enough to take advantage of those areas.

Superior Plus (TSX:SPB) has been a long term bet of mine that's already paid off handsomely (I tripled my holdings at one point when they were trading below $6 several years ago), though it's still a bet long term. I've long wagered they'd get their debt issues under control (they have) and since then they've now almost finalized a deal to buy Canexus (TSX:CUS), a struggling chemicals manufacturer, which now gives Superior Plus a significant increase in production capacity in that space.

TELUS (TSX:T) is a strange pick for 'speculative growth' you might think. Solid dividend that has shown steady increases over time, in an industry where it's one of three dominant players with little room for explosive growth.

However, they operate in digital Health records, and that is a space where they could conceivable grow by leaps and bounds over the next decade as Canadian Provinces look to streamline record keeping and lower costs.

So, there we go, a peek into my Speculative Growth space.

Back in the Game

Well, I'm back.

I had to put this blog on hiatus (and ultimately delete the old contents) due to a change of employment that saw me enter financial services. I loved doing what I was doing, but ultimately I decided to leave. I found that while I loved the work, and the prospect of helping people in their financial goals and dreams, the reality of people WANTING to make bad financial decisions for immediate gratification was draining. I thought I would be helping people, and instead more often than not I was watching them happily self destruct their financial futures.

So I moved on to something else.

The upside is, I get to return to something I genuinely loved doing and missed...blogging about finances, and hopefully learning a few new things along the way.

I decided when I came back that I wouldn't change much about the formula that had been working for me...why should I?

So here I am, and why not dive right in since we're still in the first month of the year?

Early retirement always has been and always will remain the goal. To do that, there are a few things that I need to achieve with the Neu Grufti Portfolio.

Primary Goal: Dividend Growth

Neu Grufti is based on the idea that whatever else happens, like spice, the dividends must flow. Every year needs to see a growth in dividend income. In an ideal world, dividend income alone will provide for retirement, but even if that isn't possible, it must show ever increase improvement.

Currently, my annual dividends for 2016 will amount to $2978.10
The goal is to see that grow to $45,000 by 2038 (22 years).

How to do that? It sounds difficult, but if I can capture 15% (average) dividend growth per year, I can actually hit that goal by 2035. So really, my goal is 12% per year (average), with a stretch goal of 15%. So while the goal for 2016 is $2978.10, the goal for 2017 is between $3335.36 and $3424.70.

Secondary Goal: Beat Inflation

The secondary goal is to beat inflation. If your investments don't outpace inflation, you're losing money. If they outpace inflation, you're making money. It's straightforward, and unless you keep your money under a mattress, in a coffee can, or these days in a regular savings account, you should be able to beat inflation. While simple on the surface, it's the second most important goal because it determines whether or not you'll actually be able to afford to retire or if you're falling behind on the lifestyle you want.

Final Goal: Beat the Indexes

While not as important for retiring, it's important to measure yourself against some simple goals. The TSX (Canada), the Dow Jones (US) and the S&P 500 (US) are the three markets I measure myself against, because if I can't beat them, I may as well just invest in index funds and be done with it.

I originally wanted to provide my results of the last 5 years (and for the record, it's been 5 up years), but on thinking about things, I decided I want to start from a clean slate.

So, without further ado, I present the holdings (and YTD performance) of the Neu Grufti Portfolio.

NEU GRUFTI PORTFOLIO (1/22/2016)

Speculative Growth (-3.81%)
Canopy Growth Corporation (TSXV:CGC): -8.75%
Organigram (TSXV:OGI): -15.96%
Prairie Sky Royalty (TSX:PSK): -13.15%
Sherritt International (TSX:S): -1.37%
Superior Plus Corp (TSX:SPB): -4.16%
TELUS (TSX:T): -0.69%

Long Term Growth Canadian (-1.27%)
Alliance Grain Traders (TSX:AGT): +9%
Brookfield Renewable Energy (TSX:BEP.UN): -3.5%
Canadian Apartment Properties REIT (TSX:CAR.UN): +8.72%
Capital Power Corp (TSX:CPX): -0.06%
Corby Spirit and Wine (TSX:CSW.A): -2.75%
Innergex Renewable Energy (TSX:INE): -2.4%
RBC Global Corporate Bond Fund (RBF1009): -0.55%
Surge Energy (TSX:SGY): -14.07%
TD Monthly Income Fund (TDB622): -4.25%

Long Term Growth US (-0.15%)
Alcoa (NYSE:AA): -2.19%
Investors Bancorp (NASDAQ:ISBC): -7.48%
Microsoft (NASDAQ:MSFT): -5.85%
Nordic American Offshore (NYSE:NAO): -21.44%
Realty Income Corp (NYSE:O): +5.33%
Unilever (NYSE:UL): -1.93%
Verizon (NYSE: VZ): +1.02%

Canadian Retirement (-3.49%)
Anglo  Pacific (TSX:APY): +0.0%
Alterra Power (TSX:AXY): -4.32%
Boralex Inc (TSX:BLX): +3.98%
Chartwell Senior Housing REIT (TSX:CSH.UN): -1.65%
Dream Global REIT (TSX:DRG.UN): -5.33%
Methanex (TSX:MX): -10.48%
RBC 1-5 Year Laddered Bond (TSX:RBO): -0.91%
Rogers Sugar income Fund (TSX:RSI): -1.66%
Royal Bank (TSX:RY): +21.09% *

*Royal Bank is a bit of an outlier, I have a tremendous return since I cashed out my company shares when I left RBC, and this was the gain I achieved on those shares when I moved them into my own retirement account

US Retirement (-5.79%)
Johnson & Johnson (NYSE:JNJ): -5.69%
Dow Chemical (NYSE:DOW): -6.14%

Tax Free Income (-0.16%)
RBC US Monthly Income Fund (RBF1503): -0.16%

There's a lot of red up there, but so far in January, the market has taken a massive hit, so that's not really something that's terribly surprising. I'm not really judging my portfolio by the first few weeks of January, although I'm managing to stay ahead of the worst losses on the market. We'll see how things end the month.

I'll also be going over these categories and their holdings over the new few days, to go more in depth over why they are set up the way they are.

Welcome back!