The Weekly Lineup: From Indexing to Dividends

In search of the golden egg: index or dividends?This week I’ve been selling my index equity funds, and set buy prices on three dividend stocks I’ve had on my watch list over the last year. This is something I’ve been contemplating for several months now, and I finally pulled the trigger this week with my TFSA. I had wanted to sell my index funds when they had appreciated enough to warrant selling, and when the stocks I wanted to purchase were trading at a lower price. In February, both those conditions were met. I had to be 100% certain it was the right decision, and I waited a few weeks before pulling the trigger.

One thing is certain, put an index investor and dividend investor in the same room, and you’re going to run into some lively debate. These are fundamentally two different investment strategies, where people rarely see eye to eye. But having tried both strategies, I would prefer to take my 4% yield with a guaranteed monthly income, than hedge my future portfolio on where the markets might or might not be nine years from now. The reason is simple, I can take early retirement at that time, and I fully plan on doing so!  What I will need at that time is monthly income. I don’t want to retire and take the gamble of drawing 4% off a portfolio that suffers another 2008 and 2009 financial style crisis.  The flip side of the coin is markets may be substantially higher by then, and they likely will be, but who really knows? Looking forward, a balanced income producing portfolio of dividend stocks and Bond ETFs is the direction I want to move towards. So next week I’ll cover the reasons why I’m shifting my portfolio towards dividends and income. Stay tuned! ;)

Posts around the web

While I was a seller of McDonald’s at $100 per share, back in December, find out why my good friend Dividend Mantra is now a buyer! Although he admits in his recent buy post, MCD is not a bargain; he also feels it’s a stock he wants to top up as part of his core holdings. (And don’t worry Mantra I’m the first to admit in public I love eating McDonald’s!)

The Passive Income Earner explained how he transferred his shares of Telus, BMO, and Fortis to his children, in How To Transfer Shares to Your Kids. That’s a real gift that PIE is giving to his children! Not the value of the shares, but as PIE points out “they have time on their side and if they can understand what time can do to their investments, they are off to a good start.” So while some kids will be using their allowance for eating and shopping, PIEs kids will be investing towards their first million! ;)

This week (in case you didn’t notice) I coauthored a cool post with Steve at Money Infant, on Dividend Stocks from Thailand. In that post I also looked at the iShares Thailand Market Index Fund (THD). Steve also covered THD and Thai stocks in, Emerging Markets Diversity – Thai Stocks for Profits. I’m not suggesting we all load up on Emerging Markets, but what is interesting to note is the SET has outperformed its North American and European counterparts. THD is certainly going to be on my watch list, but its had a good run up the last few years. Right now I’m more interested in taking a vacation to Thailand!

Thought you’ve heard of everything? How about Iceland adopting the Canadian Dollar? No joke!  Since their banking system was pummelled by the 2008 to 2009 Financial Crisis, the Icelandic Krona has lost over 92% of its value and has now become virtually worthless. Obviously the last currency Icelanders want to adopt is the U.S. dollar, or the ailing Euro, so they are looking to the Canadian Dollar or Norwegian Krone. This means that Canadians and Icelanders will get even more cozy in winter. How cool will that be to travel to a foreign country that uses Canadian Dollars?

Barbara Friedberg wrote an excellent guest post over at The Digerati Life on Buying Bonds, Effect of Interest Rates on Bond vs Yield. If your’e unfamiliar with how interest rates and yield curves relate to bond prices, then this post is an excellent primer! Well done Barbara. ;)

MoneyCone wrote a nice post on The Many Inventions of Steve Jobs. Most of us understand the role of Steve Jobs as CEO at Apple, and the enormous impact of the iPhone, and what an incredible invention it really was. But did you know that Steve Jobs actually had over 342 patents to his name, and he was actually an inventor?

Personal Finance Book Giveaways

[easyazon-image-link asin="0981110401" alt="Findependence Day" src="http://ecx.images-amazon.com/images/I/51MM16V5ZZL._SL160_.jpg" align="left" width="106" height="160"]

Young and Thrifty did an excellent book review of Findependence Day by Jonathan Chevreau. This book has already revived high praise from Andrew Hallam, and other financial authors. It’s also a book giveaway, so head over to Y&T and sign up! Remember, you’ve got nothing to lose except the time it takes to read the giveaway instructions!

My friend the Passive Income Earner is going all out and has even topped Y&T! It’s not that I’m competitive, but I do like seeing people raise the ante. He’s not only giving away Findependence Day, but also a copy of Millionaire Teacher, The Wealthy Barber Returns, and two $25 Amazon gift cards (courtesy of yours truly the Dividend Ninja). You have until March 30th, so that leaves you time to enter Y&T’s giveaway first, then come back for more at Financial Education Giveaway!  

The Ninja was also featured in…

The Dividend Ninja was also featured in the following finance carnivals. Thank you!

On the topic of finance carnivals, be sure to check out the new Kings of Cash Flow Carnival over at my good friend Money Infant.


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Have a great weekend everyone! :)

9 Responses to “The Weekly Lineup: From Indexing to Dividends”

  1. Money Infant

    Mar 09. 2012

    Thanks for the double mention! I see you’ve dropped below 200k on your Alexa, nice work!

    Reply to this comment
  2. Dividend Mantra

    Mar 10. 2012

    Ninja,

    Hey, interesting to see you’re moving away from index funds. Good for you. I personally don’t have anything against index investing. If one can make money on it I say go for it, but it’s just not for me. Keep us updated on the transition and how it treats you.

    Thanks for the mention. Yes, MCD is certainly not cheap at these prices but I’m always willing to pay a fair price for a wonderful company. If it drops into the $80’s then I’ll just buy more.

    Great to see the growth of your site. You’re killing it.

    Have a great weekend!

    Reply to this comment
    • The Dividend Ninja

      Mar 10. 2012

      Thanks Mantra! That’s the key point isn’t it “if you can make some money on it.” If you’re investing and not gettign the returns going forward, then it doesn’t make much sense. Right now an indexed portfolio essentially gives you the same return of a blue-chip dividend yield. Plus the monthly income (which I will DRIP for now) is what I am after.

      MCD is solid, buying on the dips is a great way to do it over the long term. You may indeed have the opportunity to buy more at $80 ;)

      However I will be keeping my Bond ETFs and Bond Funds in place, becuase as well as monthly income they cushion the ride when Mr. Market goes nuts. That’s my security blanket that lets me sleep at night ;)

      Have a nice weekend!
      Cheers

      Reply to this comment
  3. Hey Ninja, Thanks for the double mention!

    I can’t wait to hear what you did with your investments next week.

    Reply to this comment
    • The Dividend Ninja

      Mar 10. 2012

      Thanks PIE. I’ll give you a hint ;) A lifeco you briefly discussed that begins with the letter M, and an oil and gas producer (in my stock picks) that begins with the letter H.

      Have a great weekend!
      Cheers

      Reply to this comment
  4. youngandthrifty

    Mar 10. 2012

    LOL.. PIEEEEE Why do you top me!! Geez. ;)

    What did you buy???

    Did you buy HSE!?

    I’ve been meaning to buy some more.

    You bought some Manulife too!!? I had MLF before but sold it and bought SLF. I think I need to pick up on more SLF too.

    Reply to this comment
    • The Dividend Ninja

      Mar 10. 2012

      Y&T You hit the nail on the head for two of the stocks I’m purcahsing for my TFSA.

      Regarding SLF, their yield is still very high at 6.9%. Although its a great price point, be cautious that the dividend could be cut ;)

      Cheers!

      Reply to this comment
  5. MoneyCone

    Mar 12. 2012

    Very interesting going from indexing to stock picking! I too follow a hybrid approach.

    MCD is a good company no doubt, but then never pay more than what you think is a fair price!

    Thanks much for the mention DN!

    Reply to this comment

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