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Stocks

mimico_polak said:
How's that work? Each company pays dividends at a different time. So I guess you just take your own cash to pay off the loan, and then re-pay yourself once each dividend is paid out?
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Only needed my money month one as I bought after ex-div date so no income. Interest charge shows up ~4 to 8th of each month and is due ~26th. Dividends get paid 10th and 27th of every month (and a quarterly on the 1st of every 3rd month). The one on the 10th covers more than the interest so it gets transferred and bank is happy. The other two hit the principal.

EDIT:
Above may change slightly with interest rates. Obviously rates are climbing and a bunch of the money borrowed was on a special fixed at 1.49 that is expiring soon. If the interest exceeds the dividend on the 10th, instead of transferring dividend on the 27th when it happens, it will stay as cash until after the interest charges appear so none of my cash is required (but I pay an extra week or two of interest on that dividend). I don't know if rates will be high enough to need to do this. Dividend on the 10th pays more than double my current interest payment.
 
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GreyGhost said:
Only needed my money month one as I bought after ex-div date so no income. Interest charge shows up ~4 to 8th of each month and is due ~26th. Dividends get paid 10th and 27th of every month (and a quarterly on the 1st of every 3rd month). The one on the 10th covers more than the interest so it gets transferred and bank is happy. The other two hit the principal.

EDIT:
Above may change slightly with interest rates. Obviously rates are climbing and a bunch of the money borrowed was on a special fixed at 1.49 that is expiring soon. If the interest exceeds the dividend on the 10th, instead of transferring dividend on the 27th when it happens, it will stay as cash until after the interest charges appear so none of my cash is required (but I pay an extra week or two of interest on that dividend). I don't know if rates will be high enough to need to do this. Dividend on the 10th pays more than double my current interest payment.
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I'll need to pop by for a beer next time I'm up in that area. I may be too dense for this!
 
mimico_polak said:
I'll need to pop by for a beer next time I'm up in that area. I may be too dense for this!
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You're welcome to stop by (bring the kids for a swim) but you don't need to waste the gas. Just grab a calendar and write in the dates where money is going in and out. You need dividends exceeding interest to be transferred to your heloc between the date they add the interest and the required payment date (about 21 days later). If you want to keep things simple, buy securities with monthly dividend payouts and just transfer all the dividends you have in your account once a month about a week after they add the interest (say the 15th of every month). Pick the payment date properly and you never need your external money to make payments (except for maybe the first month depending on when ex-div date is).
 
@GreyGhost this has peaked my "interest".... Never really thought of the combination before.

I have lots of room in my TFSA and a HELOC, but could also be a LOC, with nothing on it...
  • I take money out of the LOC and max out my TFSA.
  • I buy dividend paying Canadian stocks (or ETFs)--Canadian so there is no potential withholding tax...
  • Dividends are tax free in TFSA
  • Use the monthly dividend to at minimum pay the interest on the LOC, hopefully some principal each month.
  • Any growth in the stocks is tax free.
  • Requires the dividends to be > LOC interest rate.
  • Largest risk is the stock prices drop.
  • If interest goes up I can always just sell and pay it off.
  • I may need to do some manual transfers, no big deal.
Right now I see ETFs that fit the above pay 3% to high 4% range. Many individual stocks in the 3 to 6% plus but maybe more risk If I pick my own... At the moment I do not think it is the time to execute for me (basically to start, different if you are already in) as the LOC interest and the dividends are too close. The markets will also likely take a further beating IMO. There may be some bargains in the context to be had and once interest rates stabilize....

In theory (not today's rates, future hypothetical).... 50K to start. 3% LOC, $1.5K/year (125 a month in interest). 4% dividend $2K per year ($167 per month). Interest is covered and $500 of the P gets paid down each year and any growth is gravy.... Numbers may be better with special rates etc.... just being conservative numbers wise.
 
backmarkerducati said:
@GreyGhost this has peaked my "interest".... Never really thought of the combination before.

I have lots of room in my TFSA and a HELOC, but could also be a LOC, with nothing on it...
  • I take money out of the LOC and max out my TFSA.
  • I buy dividend paying Canadian stocks (or ETFs)--Canadian so there is no potential withholding tax...
  • Dividends are tax free in TFSA
  • Use the monthly dividend to at minimum pay the interest on the LOC, hopefully some principal each month.
  • Any growth in the stocks is tax free.
  • Requires the dividends to be > LOC interest rate.
  • Largest risk is the stock prices drop.
  • If interest goes up I can always just sell and pay it off.
  • I may need to do some manual transfers, no big deal.
Right now I see ETFs that fit the above pay 3% to high 4% range. Many individual stocks in the 3 to 6% plus but maybe more risk If I pick my own... At the moment I do not think it is the time to execute for me (basically to start, different if you are already in) as the LOC interest and the dividends are too close. The markets will also likely take a further beating IMO. There may be some bargains in the context to be had and once interest rates stabilize....

In theory (not today's rates, future hypothetical).... 50K to start. 3% LOC, $1.5K/year (125 a month in interest). 4% dividend $2K per year ($167 per month). Interest is covered and $500 of the P gets paid down each year and any growth is gravy.... Numbers may be better with special rates etc.... just being conservative numbers wise.
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That's pretty much it. I picked pretty high dividend, mostly diversified securities so I dont need to worry about a single company bailing and wiping me out. Predicting about 9 years for this round to pay off loan. Then I'm left with securities that I paid nothing for.

If you borrow to invest in an unregistered account, you can write off the loan interest but obviously get hit with income tax and capital gains.

I suspect the bank will send me promotional heloc cheques around the end of the year and I will use those to add more money to the scheme (as mortgage is paid down, add that money back in to market). Dec 2021 was up to low six figures at 1.49% for six months, then normal rate. If market rates suck, I could liquidate when the rate jumps. That obviously assumes that the security is worth more than the outstanding loan six months later. I did not use all available money last year. Next year, I may use more money in cdn banks. With the teaser interest rate, bank dividends can chew into principal and they are unlikely to have a huge cap drop.
 
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backmarkerducati said:
@GreyGhost this has peaked my "interest".... Never really thought of the combination before.

I have lots of room in my TFSA and a HELOC, but could also be a LOC, with nothing on it...
  • I take money out of the LOC and max out my TFSA.
  • I buy dividend paying Canadian stocks (or ETFs)--Canadian so there is no potential withholding tax...
  • Dividends are tax free in TFSA
  • Use the monthly dividend to at minimum pay the interest on the LOC, hopefully some principal each month.
  • Any growth in the stocks is tax free.
  • Requires the dividends to be > LOC interest rate.
  • Largest risk is the stock prices drop.
  • If interest goes up I can always just sell and pay it off.
  • I may need to do some manual transfers, no big deal.
Right now I see ETFs that fit the above pay 3% to high 4% range. Many individual stocks in the 3 to 6% plus but maybe more risk If I pick my own... At the moment I do not think it is the time to execute for me (basically to start, different if you are already in) as the LOC interest and the dividends are too close. The markets will also likely take a further beating IMO. There may be some bargains in the context to be had and once interest rates stabilize....

In theory (not today's rates, future hypothetical).... 50K to start. 3% LOC, $1.5K/year (125 a month in interest). 4% dividend $2K per year ($167 per month). Interest is covered and $500 of the P gets paid down each year and any growth is gravy.... Numbers may be better with special rates etc.... just being conservative numbers wise.
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My buddy did this. 80k without telling the wife out of the HELOC. Maxed out his TFSA and put some into the non-registered account.

Talking to him last week he said he's at about $800/month in income from dividends. I didn't ask details, but last I recall he had about 30-50 different stocks in there.

EDIT: I'm the type of person that would basically try to pay down the loan ASAP with my own money, and then reinvest the room back gain. I couldn't stomach dropping 70k into a TFSA and just pay down minimal payment of interest only. I've got 5 years to pay it back before it comes time to renew/refinance the mortgage.

At that time I would hopefully be able to sell stocks to pay off the remaining HELOC balance...or refinance the mortgage to add that into it...but that's dicey.

I've also considered taking the HELOC and dropping 10k or so into my RRSP for the tax benefit...but I'm not 100% convinced it's a great idea.
 
mimico_polak said:
My buddy did this. 80k without telling the wife out of the HELOC. Maxed out his TFSA and put some into the non-registered account.

Talking to him last week he said he's at about $800/month in income from dividends. I didn't ask details, but last I recall he had about 30-50 different stocks in there.

EDIT: I'm the type of person that would basically try to pay down the loan ASAP with my own money, and then reinvest the room back gain. I couldn't stomach dropping 70k into a TFSA and just pay down minimal payment of interest only. I've got 5 years to pay it back before it comes time to renew/refinance the mortgage.

At that time I would hopefully be able to sell stocks to pay off the remaining HELOC balance...or refinance the mortgage to add that into it...but that's dicey.

I've also considered taking the HELOC and dropping 10k or so into my RRSP for the tax benefit...but I'm not 100% convinced it's a great idea.
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Christ that is a lot of stocks for that amount of money I could not track that I hold about 6 to 8 stocks total. Makes it way easier.

Sent from my Pixel 5 using Tapatalk
 
mimico_polak said:
My buddy did this. 80k without telling the wife out of the HELOC. Maxed out his TFSA and put some into the non-registered account.

Talking to him last week he said he's at about $800/month in income from dividends. I didn't ask details, but last I recall he had about 30-50 different stocks in there.
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$800/mo ($9600/yr) from only $80k is 12% annually in dividends alone! I didn't realize they paid that much.
 
Relax said:
$800/mo ($9600/yr) from only $80k is 12% annually in dividends alone! I didn't realize they paid that much.
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I have the list of his stocks...it's a LOT of different stocks.

He dropped 80k into it, and bought (let's say) 30-50 different stocks...so according to him the average payout monthly is $800.

I've got the list somewhere here if you'd like it.
 
mimico_polak said:
I have the list of his stocks...it's a LOT of different stocks.

He dropped 80k into it, and bought (let's say) 30-50 different stocks...so according to him the average payout monthly is $800.

I've got the list somewhere here if you'd like it.
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That's ridiculous. 80K should not be in tens of stocks. I would argue 10 at most and probably far fewer. Averaging 12% across that many stocks is interesting. I've got one that pays more in my borrow to invest game but my average is well below 12% (a little less than 10 with two funds and one company).
 
GreyGhost said:
That's ridiculous. 80K should not be in tens of stocks. I would argue 10 at most and probably far fewer. Averaging 12% across that many stocks is interesting. I've got one that pays more in my borrow to invest game but my average is well below 12% (a little less than 10 with two funds and one company).
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He musta remembered some advice about eggs and baskets and stuff.
 
Another suprise came last week dealing with my wife's estate. A very large pile of stocks showed up that i had no idea she had. Part of an employee profit sharing plan. She started collecting in 1973. Company contributed 2 shares to every share she bought. It's a wonderful pile of money. But it brought a flood of tears.
 
Wingboy said:
Another suprise came last week dealing with my wife's estate. A very large pile of stocks showed up that i had no idea she had. Part of an employee profit sharing plan. She started collecting in 1973. Company contributed 2 shares to every share she bought. It's a wonderful pile of money. But it brought a flood of tears.
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Enjoy it Ric, it was meant to be.
 
Wingboy said:
Another suprise came last week dealing with my wife's estate. A very large pile of stocks showed up that i had no idea she had. Part of an employee profit sharing plan. She started collecting in 1973. Company contributed 2 shares to every share she bought. It's a wonderful pile of money. But it brought a flood of tears.
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Nobody would trade Sue for the money but a gift to fund your travels could be a wonderful thing. I'm glad to see you are enjoying your travels. Don't be afraid to sit by the ocean for a few days to rest your mind.
 
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