Owner: Middle Class Millionaire URL:http://middleclassmillionaire.blogspot.com/ Join Date: Wed, 16 May 2007 09:40:58 -0500 Rating:0 Site Description: I will document my journey from middle class to an early middle class retirement. I will share my financial progress, rant about the market, stocks, retirement, saving money and anything and everything related to money, investing and retiring early. Site statistics:Click here
Lack of Posts Recently 2007-07-12 07:01:00 I apologize for the lack of posts recently. I have been overwhelmingly busy with a few things: mainly house renovations and working 5 to 7 hours of overtime everyday. However, I do plan on returning to my regular 3 to 5 posts a week shortly.
Golden Blog Awards 2007-07-17 06:35:00 Well I just thought I’d tout my own horn today as I’ve recently won a very very very prestigious “Golden
Blogs” award in the “Best Blog Name” category. The awards were held at the lavish and informative online palace of The Money Gardener over at http://themoneygardener.blogspot.com. If you want to check out the event or any other of the prestigious award winners you can check them out here. Read more:Awards
Renovations Update – II 2007-07-16 07:42:00 I made some significant progress in my house renovations over the last 4 days. I primed and painted almost the entire interior of the house. Here are the approximate costs of the work: –paint and primer (cost $210)-beer for helpers ($175)-food for helpers ($20)-brushes and trays ($45)-plaster for areas damaged by wallpaper/trim removal ($5)-misc ($10)TOTAL: $465 (leaves me $1120 in my renovations budget)In my opinion the painting is by far the best "bang for my buck" and will have the greatest return once I sell the house.Items Remaining:-Aesthetic work to 2nd bathroom-Painting front door-Painting trim-Replacing kitchen counter tops(?)-Replace receptacle, switches + plates-Clean/scrub garage-Paint Kitchen cabinets Read more:Renovations
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Inflation 2007-07-19 06:49:00 The latest inflation numbers are in and to the surprise of many economists inflation declined 0.3% from the previous month (2.2% versus the predicted 2.5%...but still above the central banks target of 2%). Although inflation checked in at a national annualized rate of 2.2% I think it’s meaningful to examine where this average is coming from. Listed below are the inflation rates per province and territory:—Newfoundland and Labrador 1.4 —Prince Edward Island 1.6 —Nova Scotia 1.8 —New Brunswick 1.9 —Quebec 1.5—Ontario 1.6 —Manitoba 2.2 —Saskatchewan 3.2—Alberta 6.3—British Columbia 1.5—Whitehorse, Yukon 1.7 —Yellowknife, N.W.T. 3.6 —Iqaluit, Nunavut 2.8 Anything stand out? Of course it does...all the provinces/territories participating in the oil boom are also experiencing rapid inflation (mainly as a result of the high cost of housing). Read more:Inflation
Where is the Value? 2007-07-18 06:54:00 With the exception of resource companies I invest for the long term based on a number of factors (mainly fundamentals). However, lately I’ve been having a hard time finding any attractively priced equities that I’d want to hold for the long term (if you’ve found any let me know). I have a personal philosophy that once money enters my investing account it can’t be taken out until retirement. As a result, I’ve been accumulating cash in my regular bank account (which isn’t included in my monthly nest egg statements). Instead of depositing this money into my nest egg investing account I am going to be using this money on real estate in 1 of 2 ways:1. Going to pay down my existing mortgage (which would be equivalent to generating a guaranteed after tax return of 5%)2. I’m in talks to purchase a house privately and would use this money as a down payment/deposit (would be over a year closing time). Read more:Value
Bicycle Trusts 2007-07-24 06:44:00 I was recently reading about setting up trust funds and thought I’d highlight this interesting trust structure. A bicycle trust is similar to traditional trusts except there are certain milestone and requirements that must be met by the beneficiaries. These milestones can be virtually anything ie-graduating university, turning 35, etc...So much like riding a bicycle you have to “pedal” to make it work. This is a great structure to ensure that your hard earned inheritance is being used in an appropriate and responsible manner. A properly thought out bicycle trust would ensure that if something did happen your 18 year old son couldn’t drop out of school and use the $300,000 trust fund to tour himself and his band around the country for a few years. Instead, the trust could be setup so that he’d receive $20,000 upon your death however, after that milestones would have to be met to receive more money, $15,000 after the first year of university, $15,000 after the second etc...If
Alimentation Couche-Tard 2007-07-23 06:43:00 I initiated a position in ATD.B on Friday. I revisited this name shortly after my last Wednesday’s posting “Where is the Value?”. I’ve provided a brief description of ATD.B as well as my reasons for buying:“Couche-Tard is the largest convenience store operator in Canada with a network of over 2,000 stores in Canada as well as a considerable presence in the U.S., with more than 3,000 additional stores. Over 3,600 of the total number are Company-operated stores and nearly 1,400 stores are operated under our affiliate program. The Company sells fuel in 65% of its Company-operated stores. The Canadian stores are located in Quebec, Ontario, Alberta, British Columbia, Manitoba, Saskatchewan and the Northwest Territories. The U.S. stores are located in 28 states. The stores are primarily operated under the Couche-Tard® and Mac’s® trademarks in Canada and the Circle K® trademark in the U.S.""In addition to the North American Couche-Tard network, there are approximately 3,500 Cir
US Banks 2007-07-26 06:48:00 The US banks haven’t been a pleasant place to be invested recently. Here is a snapshot of the price history of some of the big US banks over the last month (remember these loses exclude any losses resulting from the rising CDN dollar)CJune 25: $51.69 Now: $49.21Change: DOWN 4.8%BACJune 25: $48.85Now: $47.93Change: DOWN 1.8%JPMJune 25: $48.36Now: $45.27Change: DOWN 6.4%USBJune 25: $33.39Now: $31.14Change: DOWN 6.7%WBJune 25: $51.91Now: $48.83Change: DOWN 5.9%WFCJune 25: $35.08Now: $34.57Change: DOWN 1.5%As you can see there where some fairly impressive declines over the last month. So…does this mean it might be time to pickup some big US banks? Personally, I think there might be another round of declines. What’s your opinion?
Vacation 2007-07-27 06:30:00 I will be on vacation from now until August 7th. Since I’ll be fishing and camping for almost the entire week you might as well cancel your internet and disconnect your computer as there will be no posts until my return. Cheers,MCM Read more:Vacation
Retirement Nest Egg at the close of August 3, 2007 2007-08-08 07:03:00 -Down 2% from last month-Up 6.8% in 2007TRP – 4.16%ABX – 4.25%CSH.UN – 3.24%GWO – 4.82%PFE – 3.78%POW – 4.21%BA.UN – 0.41%L – 4.06%UNS – 2.83%GZ – 2.82%TD – 13.35%EIT.UN – 2.95%JNJ – 5.80%MMM -4.13%ZED - 0.52%GO.A – 2.97%ATD.B – 3.77%O'Shaughnessy’s Global Fund –3.93%American Growth Fund –1.0%Canadian Value Fund – 3.73%Small Cap Growth Fund – 4.27%Chou Associates Fund – 10.42%Health Science Fund – 0.87%Money Market Fund – 7.68%My portfolio is down 2% from last month. Most of the lost was a result of the general decline in the market. However, both CSH.UN and EIT.UN declined approx. 8% over the month. I am going to continue to hold all my positions and will begin to look at accumulating more shares if the market declines further. I am currently taking a hard look at BNS. Read more:August
Why I Chose a Dividend Growth Strategy 2007-08-07 07:09:00 In this post I’m going to explain why a dividend growth strategy works for me. 1.In my opinion a growing dividend is usually a good indicator that a company is healthy (although certainly not the only indicator). Annual dividend increases indicate that the executive and director insiders are sufficiently confident in the long term prospects of the business to payout their earnings as dividends.2.Dividend
s from Canadian sources are taxed at a preferential rate (see this post for details on the tax treatment of dividends)3.Commission costs are dramatically lower as positions are usually held for the long term.4.Annual dividend growth can protect your income stream against inflation. Additionally, companies with a history of increasing their dividend can usually pass much of the price inflation on to their customers.5.The share price of the company usually increases with the dividend (ie-you don’t see many high quality blue chips yielding more than 4% because the share price increase Read more:Growth
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How I Select Securities 2007-08-10 06:38:00 I am for the most part a value investor and as such invest primarily based on fundamentals. Some of the main metrics that I use are: -P/E-Forward P/E-Price/Book-Dividend growth rate-ROI-ROE-Average EPS growth-debt levels -revenue growthI am not going to provide specific numbers for each of the above metrics as it varies from industry to industry. However, one number that I generally view as being important is the forward P/E and I will rarely invest in a company with 1yr forward P/E of over 18 and a 2 year forward P/E of over 15. Due to that fact I generally do not invest in the technology sector (regardless of how great a company’s technology is I’m not going to pay over 18X next years earnings for it). From my experience, growth companies and those with a high P/E will often get caught with “multiple compression” when either the economy stalls or they fail to meet expectations. I also look at qualitative factors such as:-barriers to entry-competitive advantage-long term pros Read more:Securities
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Time to Buy Financials? 2007-08-14 06:39:00 Is there actually a global credit crunch? Is there a major economic crisis in the making as a result of the US sub-prime mortgage market? I don’t think anyone really knows but if I was a betting man I’d bet YES to the above two questions. Ok, so now that we’ve established that there might be a legitimate credit crunch what do we do? Panic? Sell all our holdings? Never buy another stock? That might work for some people but what I’d suggest is scan the market, identify which sectors and companies are taking the biggest hits and evaluate whether or not these out of favour stocks might be a good fit for your portfolio. The recent market declines are eminiscent of 2002 when I picked up TD. With many of the Canadian banks hitting 52 week lows I think that the time might be near for Canadian investors to get their fingers back on the buy button. Remember...BUY ON FEAR, SELL ON GREED.
Major Purchase and Depressed Markets 2007-08-17 07:19:00 Although the markets have fallen a lot recently I haven’t made any purchases. The main reason I haven’t pulled the trigger yet is simple...I have very little available cash. I recently purchased a cottage and as such will need all of my available funds for the down payment. However, I have a small amount of money available to invest in my RRSP and I’m currently looking to add one of the following companies IPL.UN, BMO, BNS. Longer term I believe all of the above three names are a good buy and I currently have an order in for IPL.UN at $8.50 (I’m doubtful that it will reach that level but if it does I’ll be an owner). I may have more available cash after the financing for the cottage is worked out. However, until the details of the cottage financing are worked out I only have enough money for one position.The timing of the cottage purchase was certainly not perfect however, we have been looking in the area that we bought in for about 4 years and this was the first opportunity Read more:Depressed
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Investing Based on Demographics 2007-08-22 08:17:00 It’s a fact North America is getting older. The baby boomers have made their mark in every stage of their life and their retirement and old age will be no different. I’ve compiled a little list of some of my favorite companies that will be directly benefiting from the aging North American population. Please feel free to add your companies to the comments section and then I’ll compile a comprehensive list later in the week.CSH.UNSCCLC.UNJNJTEVA Read more:Investing
Dividend Growth Stock VI 2007-08-20 07:20:00 Bank of Montreal BMO“Founded in 1817 as Bank of Montreal, today BMO Financial Group is a highly diversified financial services provider. We offer clients a broad range of personal, commercial, corporate and institutional financial services across Canada and in the United States through BMO Bank of Montreal, BMO Nesbitt Burns, BMO Capital Markets and our Chicago-based subsidiary, Harris Bank.”-founded in 1817-policy to payout 45% to 55%-paid dividends for over a century-dividend increased 80% from 2002 to 2006-current yield of 4.2%-trailing P/E 13.4-2007 estimated P/E 11.5 -2008 estimated P/E 10.8-ROE 19% Read more:Dividend
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8% Pay Raise 2007-08-23 09:09:00 Well in the midst of the whole sub-prime scare TD decided to give me an 8% raise. They recently reported great third quarter results and raised their quarterly dividend by 8%. This move simply reinforces my conviction in the dividend growth strategy that I’m pursuing. Simply put the strategy involves buying out of favour but stable, high quality, blue chips that have a long history of dividend increases.
On Vacation 2007-08-28 08:17:00 Sorry I forgot to post this last week but I'm on vacation until Sept 4 (this was the first time I could get on the internet).Enjoy the last few weeks of summer.Cheers,MCM Read more:Vacation
On Vacation 2007-09-26 09:43:00 I’ll be on vacation from tomorrow until October 9th. However, I’ll try get at least a few post in over that time period...so there’s no need to cancel your internet subscription and sell your computer. Read more:Vacation
Thompson Corp. (TOC) 2007-09-24 08:23:00 I wanted to take another break from the demographics theme to talk a little bit about TOC."The Thomson Corporation is a leading global provider of integrated information-based solutions to business and professional customers. Thomson provides value-added information, with software tools and applications that help its customers make better decisions, faster. We serve professionals in the fields of law, tax, accounting, financial services, scientific research and healthcare."Thompson
Corp. is the kind of company I want to own and would fit perfectly into my conservative, dividend growth oriented portfolio. I’ve been watching TOC for a number of years and just haven’t been able to pull the trigger based solely on valuation. As you can see from the below numbers they do still appear expensive from both an earnings and cash flow perspective. However, I believe that their recent acquisition of Reuters could allow the company to capitalize on the synergies between the two companys and rea
Investing Based on Demographics – DIS, RET.A 2007-09-20 07:22:00 Disney (DIS)I think everyone basically knows Disney...Mickey Mouse, Donald Duck etc… However there is a lot more to Disney than their famous classic characters. Although, their roots are certainly in animation they are now a massive international media company that operates in four major business units:1. Studio Entertainment - Pixar Animation Studios, Touchstone Pictures, Miramax Films2. Parks and Resorts – 5 Disney Land resorts in 4 different countries, Disney Cruise Lines 3. Consumer Products – Disney stores, largest publisher of childrens books4. Media Networks – ABC, ESPN as well as a many broadcast, cable, radio, publishing and Internet businesses I’ve listed some of the brands in each of the 4 categories but to view their entire holdings please follow this link.Dividend Yield:0.9%Dividend Yield 5yr Avg: 1.0%ROE: 14.27%ROI: 10.45%PE: 16XEstimated 2007 PE: 18XEstimated 2008 PE: 16.3XS&P Rating: 5 stars, strong buy, $45 price targetArgus Rating: buy, $41 price targetTHESI Read more:Investing
Home Renovations Update III 2007-09-19 06:26:00 I thought I’d take a break from the “Investing Based on Demographics” theme for a day to give a quick update on my home renovations (as a couple of people have emailed me wondering how they're progressing). Basically, I haven’t really done much since my last update in July. However, this weekend I primed and applied the first two coats of melamine paint to our outdated kitchen cabinet doors. Three more coats will result in us having updated, new looking kitchen cabinets. The total cost for this project will be:Melamine Paint: $80New Hardware: $110 (estimate)By simply painting our existing cabinets I’ve essentially saved 1 to 2 thousand dollars, as that’s what it would cost to replace the kitchen cabinet doors with brand new ones. As I’ve already spent $880 on home updates this will bring my total spent to $1070 leaving me $930 to spend on the remaining fix ups. Read more:Renovations
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Investing Based on Demographics - IGM, TROW 2007-09-17 07:39:00 IGM Financial (IGM)“Provides financial products and financial planning services to individuals and corporations, including the sale of mutual funds, investment certificates and insurance programs. Also offers trust and management services to mutual and pension funds. “Other Fact:-Canada's largest independent mutual fund.-Owned by PWF (Power Financial) which in turn is owned by POW (Power Corp) which is controlled by the Desmarais family.-Over $123 billion in total assets under management.-Over $110 billion in mutual fund assets under management.Dividend Yield: 3.6%-20.1% average compounded annual dividend growth over the last 10 yearsROE: 21.39%PE: 16.8XEstimated 2007 PE: 15.97XEstimated 2008 PE: 13.69XTDNewcrest: Buy, $64 target-17.7% average compounded annual EPS growth over the last 10 yearsTHESIS: As the population ages they’ll increasingly start to put funds aside for retirement. As IGM is the largest mutual fund company in Canada they’ll certainly start to see their shar Read more:Investing
Investing Based on Demographics - SMG & FO 2007-09-14 11:13:00 The Scotts Miracle Gro Company (SMG)“The Scotts Miracle-Gro Company is the world's leading lawn and garden company with trusted brands in every category in which we compete”Dividend Yield: 1.14%ROE: 13.9%ROI: 25.89%PE: 25XEstimated 2007 PE: 18.47XEstimated 2008 PE: 16.35XS&P Rating: 3 stars, Hold, $46 target priceTHESIS: The consumer lawn and garden industry is now one of the worlds leading outdoor leisure activities and is currently around a $7 billion global business. As the population ages they will be home more and presumably be spending more time and therefore money on their lawn and gardens. The only flaw that I can see with this thesis is the fact that there is a push in many of the industrialized countries to limit or ban herbicides/fertilizers and most other chemicals used to beautify lawns.Fortune Brands (FO)“Fortune Brands is a leading consumer brands company sharply focused on shareholder value. With our foundation of powerful and trusted consumer brands, industry-le Read more:Investing
Investing Based on Demographics - WAG, CVS 2007-09-13 08:17:00 Walgreens (WAG)“Walgreen Co., based in Deerfield, Illinois, filled 529 million prescriptions in fiscal 2006, and pharmacy business accounted for 64.3% of its $47.4 billion in sales. Walgreen also sells over-the-counter medicines which accounted for 11% of sales, as well as general merchandise (which accounted for about 25% of sales), ranging from digital photos to pinto beans. The company's Walgreen's Health Initiatives business manages pharmacy benefit plans for companies and other organizations. As of the end of, August, Walgreen operated 5,992 drugstores in 48 U.S. states and Puerto Rico.”Dividend Yield: 0.86%ROE: 19.88%ROI: 18.68%PE: 21.6XEstimated 2007 PE: 21.3XEstimated 2008 PE: 18.87XS&P Rating: 5 Stars, Strong Buy, $56 price targetArgus Rating:Buy $53 price target-paid a dividend for 299 straight quarters -raised its dividend for 32 consecutive years.THESIS: the thesis behind this company is obvious: older people take more drugs and fill more prescriptions. WAG should al Read more:Investing
Investing Based On Demographics 2007-09-12 08:13:00 Ok it took a while for me to post it...but here is the compiled list of companies that should benefit from the aging of the North American population. During the rest of the week (and possibly into next week) I’ll provide a brief description of each name as well as a few of the “vital stats” on each. I’d also just like to thank nurse,b and the MoneyGardner who contributed many of the names. Walgreens (WAG)CVS Caremark Corporation (CVS)The Scotts Miracle Gro Company (SMG)Fortune Brands (FO)IGM Financial (IGM)T. Rowe Price Group Inc. (TROW)Disney (DIS)Reitmans (RET.A)Chartwells Seniors Housing (CSH.UN) Shoppers Drug Mart (SC) CML Health Care (CLC.UN) Johnson & Johnson (JNJ) Teva Pharmaceutical (TEVA)Allergan, Inc. (AGN)Rite Aid Corp. (RAD)Pfizer (PFE)Glaxo (GSK)Callaway Golf (ELY)National Dentex (NADX) Baxter (BAX) Haemonetics (HAE) Kimberly Clark (KMB) Read more:Investing
Retirement NestEgg at the Close of Sept 4, 2007 2007-09-11 08:12:00 -Up 1.7% from last month-Up 8.6% in 2007TRP – 4.04%ABX – 4.19%CSH.UN –3.38%GWO – 4.96%PFE – 3.87%POW – 4.52%BA.UN – 0.4%L – 3.75%UNS – 2.81%GZ – 2.25%TD – 13.8%EIT.UN – 2.81%JNJ – 5.68%MMM -4.22%ZED – 0.55%GO.A – 3.03%ATD.B – 4.04%O'Shaughnessy’s Global Fund – 3.95%American Growth Fund – 1.01%Canadian Value Fund – 3.67%Small Cap Growth Fund – 4.1%Chou Associates Fund – 10.41%Health Science Fund – 0.89%Money Market Fund – 7.6%There were no big changes (either up or down) in my portfolio this month. Stocks that I am watching this month are WAG, BMO, BNS and IPL.UN. Read more:Close
Sold Barrick (ABX) 2007-09-07 07:32:00 I sold ABX yesterday after the large rise in gold prices. I’m the first to admit that I don’t really understand in this day and age what drives gold prices. I originally bought ABX because fundamentally it appeared to be good value and it provided some diversification in my portfolio. Historically gold has always been viewed as a safe haven, a place to park your money during times of uncertainty with the US dollar and during times of political and economic instability. I decided to sell because personally, I don’t think we are in a less stable environment than we were a month ago and I get a little worried when any commodity rises rapidly during a short time period. Additionally, the price move appeared to be driven primarily by funds and investors and not by demand for the physical commodity. This means the price of gold could fall whenever the funds and investors decide to take profits. Investing in gold stocks is certainly not part of my core strategy of dividend growth. How
Bank Dividend Growth 2000 to 2007 2007-09-04 07:15:00 I came across this interesting chart while doing my daily read at globeinvestor.com. This chart really reinforces the power of the dividend growth strategy. It nicely summarizes the dividend growth of the big Canadian banks over the last seven years. I know nothing is too good to be true but historically the bank stocks sure look like it. For the complete story please click here. Read more:Dividend
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Investing Based on Demographics - SC 2007-09-28 07:08:00 Shoppers Drug Mart - SC“Provides pharmacy products and services through retail drug stores across Canada. The company licenses its drug stores to pharmacists or associates who operate a retail drug store at a specific location in Canada using the company's trademarks, Shoppers Drug Mart”Dividend Yield: 1.2%ROE: 16.53%PE: 26XEstimated 2007 PE: 24XEstimated 2008 PE: 21XTHESIS: the thesis behind this company is the same as WAG and CVS: older people take more drugs and fill more prescriptions. SC should also benefit from seniors buying more beauty items in an effort to keep looking young as well as more impulse items simply because they’ll be in the store more. SC is also now has cosmetic consultants that are placed right by the entrance of many of their stores to target older women who want to stay looking good. I think SC is a great company but would not be a buyer at these valuations. Read more:Investing
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