I’ve spent a few years dithering about what to do with my RRSP, but since my income has increased over that time I can no longer ignore the tax advantages of making RRSP contributions.

After only contributing $1,500 to my RRSP in 2011, I’ve added $5,000 in 2012 and another $5,100 during the first 60 days of this year.  I’ve also budgeted to make another $10,000 in RRSP contributions during the remainder of 2013.

Related: RRSP Portfolio Update 2012

Here’s what I’ve done with my cash over the last 12 months.

  • Bought 200 shares of Rogers Sugar on August 23rd, 2012
  • Bought 250 shares of Rogers Sugar on November 30th, 2012
  • Bought 100 shares of SNC-Lavalin on November 30th, 2012
  • Bought 60 shares of Empire on January 10th, 2013
  • Bought 30 shares of BMO on February 20th, 2013

I like to buy blue-chip companies that tend to increase their dividends on a regular basis.  I believe these types of companies will deliver the highest returns over a long period of time.

RRSP Portfolio

Here’s a look at my RRSP portfolio as of March 22nd, 2013:

Symbol Shares Market Value Book Price Current Price Dividend
BMO

90

$5,743.80

$55.95

$63.82

2.96

BNS

45

$2,674.35

$42.64

$59.43

2.40

BCE

80

$3,736.80

$24.52

$46.71

2.33

CM

32

$2,602.24

$60.29

$81.32

3.76

COS

140

$2,977.80

$20.71

$21.27

1.40

EMP

60

$3,891.00

$59.07

$64.85

0.93

FTS

100

$3,370.00

$29.28

$33.70

1.24

GWO

150

$4,075.50

$26.33

$27.17

1.23

LIQ

160

$2,964.80

$11.61

$18.53

1.08

REI.UN

130

$3,537.30

$12.88

$27.21

1.41

RSI

450

$2,857.50

$6.23

$6.35

0.36

SNC

100

$4,219.00

$39.39

$42.19

0.88

SJR.B

100

$2,484.00

$20.38

$24.84

1.02

T

85

$5,918.55

$31.74

$69.63

2.56

TRP

60

$2,974.20

$37.91

$49.57

1.84

CASH

$8,412.45

Total

$62,439.29

This portfolio currently generates $2,278 in annual dividends.  Only two of the 15 stocks failed to increase their dividend in the last 12 months (LIQ, GWO).  Rogers Sugar paid out a special dividend of 36 cents per share earlier this year.

What To Buy?

I’m trying out a simple stock screener to find Graham-like Canadian dividend stocks to add to my watch list, but nothing has matched the criteria so far:

  1. Positive P/E Ratio less than 15
  2. Positive P/Book Ratio less than 1.5
  3. Dividend Yield more than 0%
  4. 1-Year Revenue more than $500 Million
  5. 5-year dividend growth rate more than 5%
  6. Dividend coverage between 5-95%

I’ve got a fair bit of cash sitting in my RRSP account so hopefully the market pulls back a bit so I don’t have to buy in at such a high value.

Related: The Pitfalls of Chasing the Highest Dividend Yield

What stocks are on your watch list right now?

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18 Comments

  1. Jane Savers@ The Money Puzzle on March 25, 2013 at 5:41 am

    I am saving a bit from each pay to buy some BMO. I will have enough cash to buy in late April. What happens to your dividends? Mine drip back in.

    My plan is to start to sell the shares 5 years before my projected retirement date. I have picked 5 years out in case things are down in the market and I will be prepared to wait for a few years after I retire to sell. I will probably be converting to a GIC ladder. Safety first in retirement.

    • Echo on March 25, 2013 at 6:47 am

      @Jane – I haven’t set up any DRIPs for these stocks, so the dividends collect in my cash account and then I’ll buy a new position or add to an existing position (eventually).

    • Robert on March 25, 2013 at 7:29 am

      I am a year from retirement and just bought 100 shares of TD and 300 of NYB(US) to celebrate. I want safety first too so in general I have been increasing my blue chip lower dividend holdings vs riskier things. Cash has increased also as a bit of a buffer for 2 or 3 years around retirement in case the markets take a hit. In general I conside cash very risky if I am going to live another 30 years and cash seldom has an edge on inflation.

  2. My Own Advisor on March 25, 2013 at 6:15 am

    Tidy portfolio. Seems we own a number of the same stocks, exceptions include RSI and those crooks at Lavalin, although I keep almost U.S. holdings exclusively in my RRSP. Canadian stocks are unregistered or in TFSA.

    Any plans to hold some U.S. stocks in the RRSP? Or, dare I say it, indexed products in RRSP with U.S. and international holdings? 🙂

    Mark

    • Echo on March 25, 2013 at 6:51 am

      @Mark – Haha, those ‘crooks’ at SNC gave me a nice entry point to buy in. They keep securing new contracts so I’m pretty happy with this one.

      I have been looking at US dividend payers but haven’t been able to pull the trigger yet.

      I’ll definitely consider ETFs for the US and International exposure. Do you have any recommendations?

      • My Own Advisor on March 25, 2013 at 3:49 pm

        I’m a fan of VTI and VWO. I’ve been thinking about adding VXUS to the RRSP.

  3. Janine on March 25, 2013 at 11:46 am

    Do you only buy shares that have dividends?

    • Echo on March 25, 2013 at 11:58 am

      @Janine – Yes, I prefer to buy dividend growth stocks.

      • Janine on March 25, 2013 at 2:41 pm

        Is there a specific reason you prefer this?

        • Echo on March 25, 2013 at 3:00 pm

          @Janine – I believe that dividend growth stocks deliver above average returns compared to non-dividend payers.

          • Janine on March 26, 2013 at 1:48 pm

            That’s interesting, thanks for sharing!



  4. Adina J on March 25, 2013 at 12:47 pm

    Thanks for sharing this, Robb!

    I am always curious about what other people do with their money, literally. Like, not broad strokes “I save x % of my income”, but how they actually allocate their money, how they invest it, etc. Debt bloggers always have these detailed breakdowns of their outstanding loans and such, but I wish more people did the same with their savings/investments. Because I’m nosy like that 😉

    • Echo on March 25, 2013 at 3:04 pm

      @Adina – I like to see the details too and I’m happy to show someone how (or how not) to do something based on my own experience.

  5. Bernie on March 25, 2013 at 1:18 pm

    Energy stocks are value priced right now. Chevron (CVX) has grown it’s dividend for 25 consecutive years and has a 5 year CAGR over 9%. It’s high on my buy list.

    • Echo on March 25, 2013 at 3:06 pm

      @Bernie – Thanks for the tip. I’ve thought about adding to my Canadian Oil Sands position.

      • Bernie on March 25, 2013 at 5:35 pm

        Cenovus would be my Canadian energy pick. Why COS?

  6. Bet Crooks on March 26, 2013 at 7:29 am

    I tend to buy stocks slowly looking to their value as income generators in retirement. I don’t think you can wait till 2 years before retirement and then start to try to sell aggressive growth stocks and buy dividend stocks or (a) they may be very highly priced just when you want to buy or (b) the dividend yield may be very low.

    For example, we have some oil stock that we bought so long ago that even though the yield today is only 1.6% for new buyers, we are getting 12.3% on it. (Yes, we’ve held it forever. Yes, we could potentially have made more money by selling all of it and re-investing elsewhere during that time. There were other factors in play.)

    Have you considered buying ENB or do you think it’s overpriced? We bought some just before the split (May 2011) but it’s grown over 50% since then so I think it’s a bit highly priced. Unless it keeps going up of course… Decisions, decisions.

    CU is voting on a split soon, too, FWIW. I doubt it will take off the way ENB did, but we’ll keep some of our holding and see what happens. It’s gone from $50 to $77 in 2 years, too.

    (We don’t include any of these unrealized capital gains in our net worth, though. Another crash could take us back to where we started overnight. If we want to count them, we sell part of a position and put it in a GIC.)

  7. igra on March 28, 2013 at 8:50 am

    Great post! Thanks for sharing!

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