Wednesday, January 30, 2013

A Peak Inside my TFSA

After a week of all inclusive fun in Cuba, I'm back to the world of work and dividend growth investing.    Since I didn't actually have to make a deposit to my RRSP in order to purchase shares of Microsoft earlier this month (thank you dividends), I decided to max out my tax-free saving account ("TFSA") for 2013 by transferring in some cash from my non-registered portfolio (thank you again dividends) and making a deposit. Before I decide what exactly to use the money to invest in, I decided to give you a peak inside my TFSA.

After four years of maxing out contributions ($5K/yr), my TFSA was valued at approximately $26.5K today, representing an average return of 8.1% per year. Given the volatility of the market over the four years in question, and considering most people I know have their TFSA funds invested in a high-interest savings account (2-3% return), I'm pretty happy with the 8.1% return per year. I'm also pleased the Jim Flaherty has increased the contribution limit for TFSAs to $5.5K starting in 2013.

My holdings in my TFSA only consist of six stocks: Dundee REIT, Inter Pipeline Fund, Power Financial Corp, Rogers, SNC, and TD Bank. I've experienced very nice unrealized gains on Rogers, Dundee, and TD. Having only recently invested in Inter Pipeline, I'm up about 5% currently, and am interested in increasing my holdings in that company. I'm slightly down on SNC and PWF, but when accounting for dividends, am above water on both holdings.

I'm seriously thinking about selling Dundee given they haven't increased their distributions in 5-years, and I have no idea why the stock has almost doubled since I first bought it. I've also been waiting for a good exit point on Power Financial, as they have also had a stagnant dividend for the last several years. Plus, I've lost all faith in the Canadian public's continued support of high cost mutual funds (i.e. Investor's Group) given the increasing number of low cost, better performing exchange traded funds ("ETFs").

I've been looking at TD, Laurentian, and National Bank as potential investments in my TFSA in 2013. Of these, Laurentian looks the most tempting at the moment (highest yield and great history of dividend growth). As previously stated, I've also considered adding more Inter Pipeline Fund units, as the company has a great ability to throw off free cashflow. Lastly, I've thought about adding another REIT (likely replacing Dundee), but have held back given H&R's recent bid on Primaris's assets.

There's a brief peak inside of my TFSA. I'll keep you updated on any moves I make in it during 2013.

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