Currency Reportings

For the sake of simplicity, all blog posts so far have treated passive income reportings simply as a $ amount – without any differentiation between USD$ and CAD$. This blogger is based in Canada and this was fine in the past as the Loonie (the nickname for the Canadian dollar) was on par with the US$. However, over the last couple of months, the loonie has dropped down below the US$ and for the sake of more transparency, I have decided to differentiate the currency reporting unit.
The Loonie and The Greenback

Brokerage Holdings
My brokerage allows me to hold US$ and CAD$ and funds are converted back and forth depending on availability of funds. All my deposits are in CAD$ (local currency) and are held as CAD$ in cash until I execute a trade (although the brokerage has a provision for me to deposit in US$ if I choose to).
If I don’t have any US$ funds in my account and buy a US$ denominated security, the brokerage converts the funds from CAD$ to US$ (with a little cut for the brokerage, of course) and executes the trade. When I sell a US$ denominated stock or fund, the cash is held as US$ (and not automatically converted back into CAD$) – this way, if I buy a different US$ denominated stock of fund, I am not losing more with the constant exchanges of currency. In case of dividends, as expected, the dividends paid out by US holdings is held as US$ and the dividends paid out by Canadian holdings is held as CAD$.
A note about my investments
The drop in the loonie is a good news for me – as I invested heavily in the US market over the last couple of years when the loonie was trading either on par or above par the greenback. This means, I was able to buy more US-based stocks for the same CAD$ amount in companies such as Archer Daniels Midland (ADM), Chevron (CVX), Johnson & Johnson (JNJ), Omega Healthcare Inc (OHI), Realty Income Corp (O), Kinder Morgan (KMI), The Southern Company (SO), Wells Fargo & Co (WFC). The dividends that are paid out by these companies – when now converted from US$ to CAD$ will yield more!
This is also good news for my passive income streams such as advertising revenue for this blog and payouts from writing Seeking Alpha premium articles – which are paid in US$.
Blog Updates
For all future passive income updates, I will indicate the different US$ and CAD$ amounts and a total for the month (exchange rate calculated at the time of reporting) converted to my local currency – CAD$. 
As an overview, my passive income is in the following currencies:
  • US-based stocks, funds and options: US$
  • Canada-based stocks, funds and options: CA$
  • Interest on cash holdings: CA$
  • Cash back rewards credit card: CA$
  • Advertising revenue from this blog: US$ CA$ (Google has changed my unit of ad revenue from US$ to CA$, as of last week).
  • Earnings from publishing premium articles on Seeking Alpha: US$
Feel free to leave a message if you have any questions or comments. 
Full Disclosure: Long all stocks mentioned above. My full list of holdings is available here.

Chatter Around the World – 41

Chatter Around the World is a weekly link update of economics, investing, dividends and personal finance articles that have caught my eye. In these weekly updates, I also capture my blog updates and news related to my holdings.

New Blog Posts

Let’s dive into the links that caught my attention this week.

Updates from My Portfolio Holdings

General Reads

Dividend Reads

Dividend Stock Analysis

< All Previous Weekly Links

Have a wonderful weekend.

Image Source: Funders and Founders

Johnson & Johnson (JNJ) Dividend Increase

Johnson & Johnson (JNJ) announced that its quarterly dividend will be raised by 6.1% from $0.66 per share to $0.70 per share. This dividend increase is the company’s 52nd consecutive annual increase. The new dividend is scheduled to be paid on Jun 10, 2014 to shareholders on record as of May 27, 2014, and ex-div date of May 22, 2014. The new dividend rate results in an annualized yield of 2.79% based on JNJ’s current stock price.

 

My portfolio consists of 15 shares of Johnson & Johnson, which increases my annual dividend raise from $39.60 to $42. My yield-on-cost is 3.26%.

Apple – A Dividend Grower?

Another earnings report. Another home run. Apple Inc (AAPL) reported after yesterday’s market close, a Q2 EPS of $11.62 beating analyst expectations of $10.18 by $1.44. Revenues for the quarter came in at $45.6B. As the world’s largest publicly traded company, currently with a market cap of $470B, that is quite an achievement.As a quick reference, the following chart shows the great story of Apple’s trend in revenue, earnings and book value per share. On a 10-year scale, Apple boasts a revenue growth of 38%, EBITDA growth of 63.6% and book value growth of 43.5% annualized.

But as a dividend growth investor, I am more interested in the announcement of the stock split, dividend raise and the buyback plan.

Stock Split
Apple has confirmed that the stock will be split 7:1 that is targeted to be completed Jun 9, 2014; which at current levels will drop the stock price around the $75-$80. This is good news for the small investors considering to add Apple to their holdings.
Buyback
Apple is currently sitting on a cash pile of $151B of which $132B is kept overseas to lower its US tax bill. The company has decided to increase its buyback by an additional $30B through next year bringing the total to $90B. Carl Icahn should finally be able to calm down and get some sleep 🙂 It is important to note that the overseas cash cannot be used in buybacks and dividends unless Apple decides to pay the additional US tax on the amount.
Dividends
Apple started paying dividends in 2012 and much has been written by others about how this was the turn of Apple from a growth-focused stock to a value stock. This seemed to disappoint for a majority of the day-traders and investors who are in the market for a quick buck, but that news was really music to my ears. With the initiation of dividends, Apple signaled that investors can profit while staying invested without selling the position to exit the investment before realizing any profit.
The growth in dividends seem to be at a very good pace as well. From 2012 to 2013, the dividend rose 15% and yesterday’s announcement of new dividend of $3.29 signals an 8% increase. All signals seem to point that Apple may continue to be a dividend grower for years to come.
Disclosure: None. My full list of holdings can be found here.

Boost Your Income With These ETFs

The stock market continues to linger close to the all-time high while the interest rates continue to hold at an all-time low. There is still no clear indication from the Fed on when the interest rates will rise – leaving risk-averse investors with paltry returns on cash and bond holdings. In the recent years, investors have rotated out of bonds and piled into the equities market driving up the stock prices. With most of the stocks either fully priced or overvalued, investors yearning for income have had to turn to alternate strategies. This article discusses one such strategy.

Continue reading the full article.