Possible Stock Split

Well it was officially clarified yesterday that there might be a possible stock split for Enbridge share holders.

"(Marketwire - 02/25/11) - Enbridge Inc. today provided clarification with respect to the proposed two-for-one stock split announced February 22, 2011.If approved by shareholders at the Company's Annual and Special Meeting May 11, 2011, the record date for the stock split is expected to be May 25, 2011."

So what does this mean for my Enbridge shares? Basically my shares will double and the value and dividend will be halved. Some would argue that you don't gain anything with a stock split, but I see it as an opportunity for stock growth.

When talking to people about investing in solid companies the first thing they ask is, "How much are the shares?" When I tell them that they are over $50 a share the response is usually "Wow, that's expensive!" Most dividend paying stocks tend to be stagnant once they rise over $60. Depending on the dividend, as the yield starts to decrease, so does the appeal to investors. By lowering the share price, you allow more investors to buy in which increases earnings for the company. Enbridge has split their shares in '99 as well as '05 allowing more investors to buy in at a more affordable price.

 From what I've seen with stock splits, there is usually spike in share price before the stock split occurs. If you purchased ENB at its current value of $57.75 and it increased $3.00 before it spilt, then you would be ahead of the same person who bought in at $30.38. I will be buying more ENB next month because I am very confident that my Enbridge shares will be with me along the road to early retirement and beyond.

 (Disclosure: Long ENB )

Rogers Dividend Increase

Sorry for the old news but I've been without internet access for the last few days and we headed out of town to Grande Prairie for the long weekend. Once I was able to log on I found out the Rogers communication's board of directors had increased their annual dividend by a solid 11% from $1.28 to $1.42 which is a very nice increase.

Recently RCI.B had dropped from a high of over $41 a share to almost its 52 week low and personally I was ready to sell some shares to buy some JNJ to put in my RRSP account, but I'm very glad I changed my mind. Seeing as RCI.B is close to it's 52 week low I reckon it would be a good time to nabb some shares as share prices tend to rise after dividend increases.

I promise to update the stock watch list when I get back to Edmonton tomorrow afternoon and I will be adding some new elements to the Loonie bin so stay tuned for new Flash animations and updated graphics.

Have a great weekend.

RRSP Challenge

It's that time of year again and one thing is for sure; If I read one more RRSP blog post I think I'm going to be sick. Just kidding! Although there are thousands of them out there, my post is a little different.

Ever since I can remember, I have been told to save money for retirement in an RRSP. Any money I contribute will be deducted from my income and I'll get some of the money I paid in taxes back from the government. Like most people, I was always excited to see that government check in my mailbox and It felt like I was getting free money. In reality it was MY money to begin with and the government was collecting interest on it and I was not.

It seems a lot of people think that way when it comes to tax time. I've even heard of people telling their employer to increase the amount of taxes they take off their pay cheque each month just so they have a huge refund at the end of the year. It is fair to assume that these people are not financial wizards and the only way they could amass a large sum of money is having it hidden from them. If I can just help one of these "over payers" to stop this silly strategy and see the "light", then maybe there is hope for this blog after all.

I have devised a strategy that allows me to pay less taxes throughout the year, and then end up owing the government money and not paying it back. My employer matches my RRSP contributions all year long and reduces the amount of taxes I pay each month. Basically my refund is distributed equally across twelve months which means my hard earned money is available to me every paycheck. No more free interest for the government to collect on my hard earned money and only pay me back the principle amount. I use the extra money every month to pay down debt so that the principle is reduced over the whole year, minimizing the amount of interest I pay overall.

So when February rolls around, I purchase Quicktax (I know it's called turbotax now, but that name is stupid ;) and I enter all my tax forms and I figure out what it's going to take to get me owing $1.99 in taxes. Why $1.99 you ask? Well the Canadian government has a policy for money transactions that if the amount is less the $2.00, then no money is owed or paid out. I first learned about this when my refund of .75 cents was not paid to me a few years ago, and ever since that day I've made it my goal at tax time to end up owing the government money and not having to pay it. Even though it might seem futile, it's the only legal way of getting back at them. Plus it makes me feel better.


I challenge all my readers to owe the government money without having to legally pay this tax season and enjoy the feeling of screwing over the government, no matter how insignificant it might be.

Dividends: The Ultimate Tenant

In my last post I talked about a potential rental property and the pros and cons of being a landlord. Even though our condo would make an excellent rental property, we chose to list it and forgo the headaches that renting to tenants would bring. Finding the perfect tenant is like finding a needle in a haystack. Someone who would pay the rent on time, take care of the place like they owned it, would rent from you for the long term and would increase the rent on their own merit according to inflation. If only such a tenant would exist....oh wait, they do!

Hello Dividends! 

Dividends as tenants you say? Why not! There is no human being on earth that can compare to a dividend payment when it comes to renting. 

They pay the rent on time

 Dividends are either paid quarterly or monthly depending on the stock. I see dividends deposited into my trading account like clockwork with no NSF showing up, no excuses and no leg work on my part. My dividends are so efficient at paying "rent" that I don't even have to keep track of them. 

Absolutely no upkeep

 For some reason, human beings like to make holes in walls. Dividends don't. Dividends are well mannered and they don't feel the need to cause leaks, scratch walls, start fires, dent ceilings, wear out appliances, wear out flooring, smoke, have pets with weak bladders, leave the lights on because utilities are included, or feel the need to have parties. Actually, dividends can have as many parties as they want. There is nothing better than more dividends.

Long Term Income

Dividends don't need to move, or choose to one day own a home. They are quite content to live in my trading accounts and to grow more dividends over time. You may have to look for more companies to invest in that have a proven dividend growth history, but they are a lot easier to find than good tenants.

Keep up with inflation

Inflation increases the cost of goods and services, and dividends don't mind increases in "rent" to offset the costs. As dividends are increased over time, it allows your retirement dollar to keep its buying power for the long term. No renter ever likes rent increases, but when the landlords property taxes and utilities go up, the rent is sure to follow.

Although dividends are not 100% guaranteed to be paid, there is nothing, and I mean NOTHING more guaranteed in life then dividends. If a company were to up and cut their dividend completely, you could evict your shares from your trading account for not paying the rent and sell them. Trying to evict tenants for not paying the rent on the other hand is a long and frustrating battle.

Some might argue that a rental property's value increases over the years more predictably then an investment would. The only problem with houses getting older is that the materials they are built from do not last forever. New windows or a new fence might not seem like much trouble, but when houses get to 40 or 50 years and the roof and foundation starts to go, then things start to add up. And while your fixing all these problems, where do your tenants live? No tenants means no income.

Personally I'd rather stick with dividends paying me rent then a tenant any day. No crappy renters, no phone calls to fix the furnace, and no time spent in small claims court to recoup unpaid rent. I'll let the power of compounding increase my investments over time more effectively than any appreciating piece of property. I can just imagine the money I will save on Tylenol alone!

FYI

The dividend list is now available from under the main menu in case you are all wondering.