RRSP Deadline – March 2nd. New Purchases

rrsp deadline

RRSP Deadline – March 2nd. New Purchases

Hey everyone with the rrsp deadline approaching it was time to look at things a little closer. Normally I do my taxes late March or early April, but this year I decided to do a rough estimate of our returns before the March 2nd deadline.

Rough estimate sounds weird right? Well basically I did our taxes with all the paperwork but didn’t submit it. I wanted to see what we could expect back this year and possibly use a line of credit to add that much more to our contributions. By doing this we actually increase our tax return even more and could keep playing with numbers to make things work out perfectly. I decided not to go that far though, just in case there was some error in my return.

Our Return

To our surprise this year we are expecting to receive over $6,000. A crazy number, we have never had a return this high. Did I lend the government money for free last year? I don’t think so, but maybe.

The return this year was a bunch of factors but we put a lot more into our rrsp’s then we used too. Daycare costed more than normal for sure! We gave almost 1,000 bucks to movember and the nature conservatory of Canada and we also got that carbon tax credit. Don’t know how much that was exactly but they say the average family of 4 will receive $888 back from this.

Don’t get me started on the carbon tax though…….

So now we debated should we use a line of credit for 6k. If we put that into our rrsp’s before the march 2nd rrsp deadline we would get an additional 1500-2000 back. After sleeping on it, it was obvious. Yes we should. Could we actually then put almost 8k in and still get a couple hundred more back? Yeah, but I decided against it.

*Note I plan to file our taxes as soon as possible and will pay that line of credit off immediately once receiving our return. Last year I think we got our return 2 weeks after e-filing it. If you are going to do this pay it off as soon as possible!




RRSP Contributions

So we got 6,000 Canadian in our rrsp account now and our dollar sucks so basically after conversion we have $4,500 usd to play with. ARG!

*Side Note* – I don’t time currency conversions, just like the market its hard to time. With all this stuff happening here with our rails and our Prime Minister stating we should be patient as rail blockades continue. I don’t think our dollar will do to well short term…

I try to hold only U.S stocks or international etfs in our rrsp’s since we have enough Canadian exposure in our 2 tfsa’s and kids resp.

There are certain stocks I really want to buy but they aren’t exactly cheap at the moment. With the current coronavirus situation maybe they will pull back, but I have learn t on more than one occasion – Don’t Time the Market..

I decided to make just 1 purchase this week and also switched the portfolio up a bit as well.

JNJ

The stock that got away… I have wanted this one since I started investing now. It’s a solid company, with a wide moat and great history of raising dividends. I should of listened to my friends on twitter when I created a poll on which to buy jnj or disney. Overall jnj won the poll but I thought Disney was about to take off and went that route instead. JNJ was at 130 back then…..

Disney did take off, but then they didn’t raise that dividend and the virus fears hurt the parks. Since then the stock has pulled back. (Long term disney will be great but I’m going to wait until next earnings to see if they raise that div and how the virus affected them before I add to our position)

Meanwhile jnj started taking off, all these court case charges seem to be a lot smaller than what was originally thought and JNJ reported a great quarter. With jnj projecting earnings between $8.95 – 9.10 a share for 2020. At $8.95 a share they have a forward p/e of  16.7.

Very nice, a low p/e, 57 year dividend streak and a 5 year dividend growth average of 6.21%. I decided to start a position with them this month before their ex dividend on the 24th. We bought 13 shares at $149.54 per share. This adds $49.40 to our forward income.

We will continue to add to this position in the future and with the market uncertainty I like the healthcare sector overall. Especially if JNJ comes out with a coronavirus cure.




Speaking of Healthcare Stocks

I decided to switch things up today as well. In an effort to not have a tonne of different stocks I decided to sell one of my holdings.

Which one? I sold our position in cvs. Since I have held this stock it has went sideways and hasn’t raised the dividend once. I had 31 shares of them and really don’t see us adding to that position. I want our portfolio to be full of dividend growth companies. There is still a couple that don’t and they may get cut in the future as well too. Overall I’m up 1% on the stock and collected the 2.7% dividend since October 2017. Id rather move that into another healthcare stock that pays in the same month, raises their dividend and has a lot of potential.

Abbvie

We used most of those proceeds to add to our position in Abbvie and bought 21 more shares, bringing our total share count in them to 70. Unfortunately abbv has had a nice run up as well since their latest quarterly report. I should of been scooping them up in the 60’s but was worried about that dividend. Then they raised it 10%. Recently both Abbvie and Allergan posted good quarterly results and the merger will make them become a major powerhouse. This merger is expected to close sometime this quarter.

I have grown to like the management at Abbvie and feel this stock has a long runway of growth, obviously Humira is still a concern but the merger will cover that loss. Abbvie also offers a high starting yield at just over 5%.

The sale of cvs lost us 62 bucks in forward income but the purchase of abbvie adds $99.12 so overall we gained 37.12 in forward income on this switch up.

Conclusion

I really don’t like selling stocks as I prefer to let them run, but I think this move will be better for the portfolio long term. The addition of JNJ to the portfolio is fantastic and I look forward to all their future dividend raises and growing that position as well. Overall these purchases added $86.52 to our forward income.

It feels good to contribute that much before the rrsp deadline. We still have about 3k usd that Ill be putting to work in the future. Id love to see pepsi drop a little more before their ex dividend date or cat and 3m with all this China news. Portfolio has been updated.

What are your thoughts on these moves? Do you ever use a line of credit before the rrsp deadline to take advantage?

cheers!




 

12 Responses

  1. Hi Rob,

    It’s a good idea to estimate your taxes early on. Typically I’ve used pay stubs from my last pay to get an idea of what will be on my T4 and using my personal expense tracker to see what credits I’ll be able to claim.

    As soon as the tax filing system opens up, I have my info locked and loaded and file as soon as I get my last slip.

    So that way when I get into the thick of tax season filing for others, don’t have to worry about getting my own done.

    -DGX Capital

  2. jimmbboe says:

    Excellent choices! I’ve had JNJ and ABBV for years.

  3. Terry says:

    What do you hold, if any, index ETF’s? I hold some stocks/dividend, but have chosen to build a mix of stocks and dividend ETF’s? What r your holdings

  4. John says:

    Good purchase Rob. I like and hold JNJ as a healthcare name in my individual stock portfolio (recognizing that the TSX doesn’t really have many candidates in this sector). That being said, it has definitely underperformed the wider US market lately (almost anything that isn’t tech has, it seems). It’s an industry stalwart, however, and the dividend growth is dependable. I will likely add, although truth be told I am in no rush.

    Recently I added to BPY. 2020 dividend growth was disappointing, but management is ramping up share repurchases, which are functionally equivalent to distributions in returning capital to shareholders. I think that this name represents a good value play, much like Enbridge got knocked down after the Spectra acquisition because the market was skeptical about their ability to integrate the consolidated firm effectively. Patient capital made good money on Enbridge, and I believe it will here too.

    Congrats on the great start to 2020!

    John

    • Rob says:

      hey John

      Thanks man, always appreciate your comments.

      So true about jnj. while it has lacked tech is carrying the market these days. I’d love to grow that sector but there just isnt many deals at the moment.

      When a recession does come I think tech will drop by the largest %. At that time I’ll be loading up on microsoft and possibly apple.

      Healthcare should continue to do well as baby boomers age and wont feel the negative effects I think we will see next quarter due to the virus.

      bpy is great but for now they make up a good portion of my portfolio.

      I’m tempted to start a position in smart reits. They have a good thing going with walmart in alot of their plazas and diversification into retirement homes and storage units. Plus they have a decent growth streak going now as well.

      cheers man!

  5. I’m hoping for a big return this year too (daycare expenses) but not sure how my severance payout at end of year is going to impact things…Guess I will find out in a couple weeks.

    I plan on pumping whatever the return is into the TFSA (looking at Andrew Peller, Newflyer and maybe adding more to Diversified Royalty if it dips again).

    Cheers!

    • Rob says:

      nice man

      Yeah severance should change things quite a bit.

      Andrew peller the one I always just watch and think someday….. haha

      cheers man!

Id love to Hear What You Think

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