In the past twelve years we have recommended 42 stocks. Thirteen of those still remain on our recommendations list. Our past 29 trades have averaged a 34% return in just over two years.  There were three losses.          

Our current recommendations have returned 182% in eight years on average. We have outperformed the Dow Jones Industrial Average ( +97%), the S&P 500(+107) , the Teranet 11 Home Price Index (+125%)  and the TSX (+76%) since the first issue.  The NASDAQ closed five percentage points higher. 

The above returns do not include converting our US stocks into Canadian funds.  Doing so would bump the average return to 22.7% annually.

Dividends account for 46% of the above returns.  If you qualify for the Dividend Tax Credit, be prepared to tack on another 1 percentage point. 

Investing is all about patience.  A good portfolio should not have to be monitored on an ongoing basis.  The investor should be able to glance at their statements to watch the dividends roll in and not have to worry about the capital.  Boredom should also accompany a good portfolio because one should be able to buy and hold a stock, hopefully forever, resulting in very little to do once the company is found. 

Our strategy of buying and holding companies with a history of stable dividend increases is boring, but it works.  A stable dividend will place a natural floor below a share price.  As the dividend increases so does the floor. We continue to outperform the market year-over-year.

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“Money is better than poverty, if only for financial reasons.”

                ..Woody Allen

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It is probably due to tax season but we have had a few requests for information on what people paid for their equities.  Many have held a security for years and lost their paper work or did not keep records.  These numbers are required for capital gains, stock (share) exchanges, for estates and for personal curiosity.  Most brokerage month-end statements give a record of a persons purchase price so one should keep all month end records.  Unfortunately, we find some are incorrect.

For example we will use Interpipeline (IPL).  When the company changed from a Unit Trust to a common share there was an option for investors to record the conversion as a sale at $24 per share.  Everyone who took this option had to pay a capital gains tax and their new purchase price became $24.  Yet, many did not take the option (us included) so they still have a purchase price of $7.90 (our purchase price on page 6).  Today’s month end statement shows the purchase price of $24.  For those who did not change and put down $24 they will be hit with a reassessment.  The outcome will be pay back taxes and, more often than not, a penalty and interest on taxes owed.   So it is so important to keep accurate records.

Another common problem occurs when an investor adds to their position by purchasing additional shares.  Often the average purchase price on the month end statement is wrong.  We strongly recommend everyone keep a log of all securities one holds.  This should show date of purchase(s) and how many shares or bonds you bought.  If you made multiple purchases of a single security, you will need to find out the average purchase price (e.g. 200 shares of X shares in 2010 at $10 and 200 shares at $12 in 2014 for the average of 400 shares at $11.)  Then every January you update the list. 

The advantage of this is that you never have to go back through years of paperwork to get the numbers required.  Once you have set up this system it will take about an hour in January.  Going back years can take hours and might cost you money if you need the help of a lawyer or accountant.

We have clients that have held a security over 20 years. Going back all those years to find the right information will be a headache. Revenue Canada has access to all the numbers you might require but they do not give out this sort of information.    It is 100% your responsibility.