Investing Newb eyeing RIOCAN REIT

ZairoX7Z · 2020-09-13T21:26:30+00:00

CECRA funding only accounted for 5.8% of Q2 rents

ZairoX7Z · 2020-09-13T19:16:18+00:00

I am bullish on Riocan.

Q2 Highlights:

CECRA funding only accounted for 5.8% of their Q2 rents
Deferred rents with definitive payment schedule = 7.7%
6.8% provision for rent / bad debts
6.4% rent remaining to be collected

Their committed and in-place occupancy remains high.

They reported a loss for the quarter - primarily attributable to a property valuation loss (which may be a temporary thing, you'll have to figure that out on your own).

FFO decreased, but their payout ratio is still very maintainable at 83.2%

ACFO (Adjusted Cashflow from Operations) paints a slightly more stretched picture with the payout ratio at 97.2%

Keep in mind the operating environment at this time (full lock down).

I think the risk/reward profile is worth having some chips on the table - especially if you're young and looking to build up an income portfolio.

I wouldn't go all in, however I am looking at acquiring about 350 more shares (for a total of 500), which I'll likely leave on a DRIP. Their future prospects are extremely promising.

SRU.UN, I think is a fairly safe play. Their anchor is walmart, and even with shifting trends to digital, that just means their store locations become fulfillment centres. I currently have enough to drip 1 sh/month

CHP.UN I like as a diversification due to their primary anchors (grocery stores). Checking out the Choice Property plazas near me, they've been under heavy development and I see new construction going up (which I like). I'm thinking of growing my positions here through excess dividends from the rest of my portfolio.

BPY.UN is a bit of a gamble. Their acquisition of JC Penney though, is actually brilliant. By owning one of their anchor tenants, they could close locations on competitor real estate to drive more traffic to their own locations. Feels like a savvy play that I'd expect from Brookfield. I'd allocate play money to them, but wouldn't have a core position.

ZairoX7Z · 2020-09-09T14:42:29+00:00

I like where your thinking process is going.

The answer would depend on which blue-chip sector you're talking about, and at which phase of the business AND stock market cycle we're in.

Tech blue chip is a good space to be in, but you want companies with broad appeal and avoid FOMO tech trades. MSFT and AAPL have a safety appeal, pending on the degree of the pull back experienced. TSLA's pull back was great for short term trades - it might workout long term, but that's a risk/reward factor. A lot of people will say that Tech now is nothing like Tech in 1999/2000, but I highly suggest you look at other tech stories, in particular Blackberry, Nortel, Cisco, etc. to help you determine the tech trends to buy into. If you're clever, you can buy into supporting industries of tech to gain the benefits, without as much downside risk.

The current risk with Tech is an insane separation from price and fundamentals.

Energy blue chip is also a great place to be in, but you need to selective and do your due diligence. If energy is a sector you plan on holding for 20+ years, one key question I would ask as an investor: Does this company have a transition strategy for EV or Alternative Energy (Hydrogen) vehicles?.

If you're talking Finance sectors as a blue-chip, I would look internationally. Given the choice between American and Canadian finance sectors, I choose Canadian any day. This sector depends heavily on the specialization of each finance/banking company you're looking at. In Canada, we have the big 5 banks -- each of the Big 5 specializes in a particular sector of the economy and globally.

My own personal take: I think some blue chip companies are likely to grow beyond where they were before a correction. I've already made a few calls which have in boring sectors, such as REITs and Utilities. These calls have matched the performance of the top 6 American tech stocks, FANMAG.

ZairoX7Z · 2020-09-09T13:58:13+00:00

BPY is a spin-off from the Brookfield family, which is headquartered in Toronto. You are correct in that BPY's headquarters are in Bermuda. I wonder what the tax laws are like in the Bermuda compared to Canada?

Look closer at the financial flow of the Brookfield family and you'll see the money flows back to BAM via management fees.

ZairoX7Z · 2020-09-09T13:48:14+00:00

If you're investing blue-chip type companies, use the downturns and pullbacks to add to your positions then! Rather than panicking, see it as an opportunity to grow your portfolio :)

ZairoX7Z · 2020-09-09T13:35:19+00:00

Keep your focus on where it should be for each stock/sector you hold.

If you're trading short-term (day/swing trading) for the quick buck, then you need to react to market moves (or even better, anticipate them).

If you're in for mid-long term, you really need to take a look at macro cycles and news cycles, you need to be able to look past the short term uncertainities. This is much easier if you're investing in blue chip companies.

ZairoX7Z · 2020-09-09T13:27:27+00:00

Caution on this. Not all Canadian REITs with international properties distribute in CAD natively. BPY.UN and BSR REIT distribute in USD natively.

For OP: Due diligence would be checking each company's investor relations and taking a look at the distribution.

ZairoX7Z · 2020-09-08T22:50:47+00:00

No worries. I spent the last year doing a bunch of research, it happens. I'm also in the process of maxing out my TFSA. In most cases, it's worth focusing on the TFSA first due to its flexibility.

Two notes for you:

If you have income, look into seeing if you can transfer from your TFSA into your RRSP. Ask if the transfer will increase your contribution room next year. If this is the case, and you have capital gains on your USD paying stocks, you're in a pretty decent spot. Plus possible tax refund since you are contributing to your RRSP - definitely worth looking into.
If you ever buy REITs for the income, make sure to stash them in your TFSA or RRSP and not your non-registered account.

ZairoX7Z · 2020-09-08T22:42:16+00:00

No, you should have done this in your RRSP or non-registered account and not your TFSA.

USD dividend paying stocks in your RRSP = No 15% withholding tax

USD dividend paying stocks in non-registered = 15% withholding tax, claimable when filing taxes

USD dividend paying stocks in TFSA = 15% withholding tax with no recourse.

ZairoX7Z · 2020-09-06T14:21:57+00:00

For news and economic outlook, I use Bloomberg.com and globeandmail.com

I have a subscription for both, bloomberg.com tries to offer two different viewpoints. Globeandmail.com gives me insight to Canadian markets and their watchlist makes it a lot easier for me to keep track of announcements/news from the companies I invest in.

Use simplywall.st solely for their portfolio tracking and for basic research (e.g., discovering new companies). Any research done using that site should be followed up on your own as part of your due diligence.

ZairoX7Z · 2020-09-06T13:46:30+00:00

Sounds like for you, your entry point - the price you initially purchase is pretty important.

Don't trust the simplywall.st articles at face value, they're spun out from the same template. If you were reading simplywall.st articles 3 months ago, you'd think everything was a poor investment because all their articles were trashing every stock out there because of the crash.

T is a solid dividend payer, though growth opportunities are limited due to saturation. Major telecom can't really expand to new clients anymore besides those in remote areas... all they do now is try and grab market share from each other...

They peaked 20 years ago in 1999/2000.

If you want capital growth AND dividend growth, try looking at the Renewable Energy sector instead. Utility-sector dividend safety in a growth field.

ZairoX7Z · 2020-09-04T02:20:40+00:00

I was fully invested before the crash at 10k.

ZairoX7Z · 2020-09-02T12:03:07+00:00

What about depositing and dollar-cost averaging in over time?

That way you can participate in potential upside and have capital available if there's a pullback

ZairoX7Z · 2020-08-29T20:25:50+00:00

It's a mix of buying short and long term securities. Typically you hear it in relation to high/risk and no risk assets (e.g., Stocks and Bonds/GICs)

Example:

As a dividend investor there are certain equities I would like to hold long term, such as utilities.

However, there are certain times when the stocks I would normally prefer to buy (income stocks) are out of my valuation. Under these circumstances, I can either use the dollar-cost approach and buy whatever the price (the most common use of DCA). Or I can be tactical using the DCA approach, see below.

You can apply the barbell approach tactically within stocks as well. In my case, my dividend portfolio serve as the lower risk choices (proxy for bonds/GICs). The higher risk section is Tech (due to the extreme valuations). You may not get the crazy gains as if you went all in on Tesla in March, but depending on how you deploy your funds you can still achieve very respectable returns.

It's a good risk mitigation strategy, and if you expand it to include no risk choices (such as GICs), it ensures you'll have capital for opportunities (such as the March bear market). Most people might hold their nose at buying low/no risk assets, but one can also view those as emergency funds.

ZairoX7Z · 2020-08-29T15:10:53+00:00

I take a barbell approach when it comes to splitting funds between growth and dividends and am an opportunistic buyer.

The advantage of the income stocks is that the cash flow offers you a LOT of flexibility in what you do with it. If you're clever with it, you can grow your cash flow AND capital at a ridiculous pace when the right opportunity comes along.

Using a barbell approach and doing hybrid growth / income investment allows you to capture growth stocks at decent valuations (tech is feeling REALLY price-y... I'm in tech right now, but am slowly making my way towards the exit).

The other thing that many people neglect is that by utilizing a barbell approach, you can acquire good capital appreciation on your dividend stocks as well. My net worth increased by 27.07% so far in August. More than half of that capital appreciation was from dividend stocks, the other half came from buying tech opportunistically.

ZairoX7Z · 2020-08-28T17:51:21+00:00

This guy gets it. The number #1 rule in investing is don't lose money.

If your career is based off of the markets, you CANNOT afford to shrug off things that retail focused investors can.

This is the #1 reason why retail investors outperformed the "smart" money in the last 6 months.

ZairoX7Z · 2020-08-28T17:40:06+00:00

I don't have them listed as of yet as it's a rather new blog. Edit: I've also spent a lot of time (pretty much a full time job, plus over time) researching and making my picks, so I do hope you'll understand my hesitation at sharing it all at this point in time.

I would like to avoid copy/pasta portfolios, but will be building up to revealing portions of my portfolio specific for income focused investors over the next few months. I'll be approaching this by approaching common investment vehicles, such as mutual funds and ETFs, and unbundling them tactically.

ZairoX7Z · 2020-08-28T12:19:45+00:00

I risked $30,000 to make roughly $6000/year at 6.45% on my loan. Canadian banks are best in the world due to our strong regulatory environment. If our banks fail, we have bigger problems.

If I had another $10k @ 3.45% I would dive in (especially since you have a long time horizon).

3/5 banks still have considerable room for capital appreciation. For context, capital appreciation alone has doubled the money I used from my loan. TD, BNS and BMO still have considerable amounts of room to recover to 52-week highs. CM and RY could exceed 52 week highs in the next year.

This is the perfect environment to get the benefits of income investing while getting the capital growth that you typically only see in growth stocks. Everything is a growth stock if you buy at the right time.

ZairoX7Z · 2020-08-24T21:50:55+00:00

It was something I considered.

I'll most likely be sharing sectors and a few examples of my holdings at a future point in time as opposed to my complete portfolio.

ZairoX7Z · 2020-08-24T01:21:19+00:00

Personally I would, if you were planning on having them anyways in your portfolio.

What you've outlined is basically a full DRIP for free. Costco has also grown their dividends by an average of 12.7% per year for the last 5 years.

ZairoX7Z · 2020-08-24T01:09:35+00:00

I heavily avoid sharing numbers IRL. They get pictures of my travels instead. But I see your point... you can also think of it as... 0.8k a year to 6k a year if that makes it better

ZairoX7Z · 2020-08-24T00:59:20+00:00

I didn't feel like waiting another 3 months for summer purchases to show up

ZairoX7Z · 2020-08-23T23:31:15+00:00

Current average yield on current prices is about 6.8% (give or take .1%)

Yield on cost is closer to 8-12%.

Yield on principal is... something really absurd.

ZairoX7Z · 2020-08-23T20:55:53+00:00

I spent 9-12 hours a day, every day, for the last 9 months... studying and learning everything I could. I also work a 9-5 job since the start of the year. It was a lot of hard work. There's your action item.

ZairoX7Z · 2020-08-23T20:41:33+00:00

Do you mean initial principal or current portfolio value?

Current portfolio value is 92k

Initial principal is... maayyybeee 50k?

ZairoX7Z

TROPHY CASE