Algonquin Power & Utilities Corp T.AQN

general stock comment

[SargeX]

Some people like this kind of post and some don't but here goes anyway. Some of this is a repeat of past posts but is needed for background.

I've been retired for 9.5 years without any company pension. My wife was stay at home (volunteered at a few places instead of working(. We live entirely off our OAS, my CPP, and our dividend income. We own 16 stocks and 1 ETF and use our book value rather than current value for stock allocation. Up until this year, we kept all 16 stocks at a very similar book value. Earlier this year, I decided to split the holdings into 3 tiers with the stock in each tier having a similar book value and tier1 being the largest.

Here's the stocks in each tier in the order I curently like them::
1 - BCE/PPL/BNS/EMA, TRP,CPX,KEY,ENB
2 - RY,TD,BMO,T,DIR.UN,NWH.UN,AQN
3 -  FTS.ZWB

We have way more dividend income than we need to live off so are doing regualr early inheritance payments to the kids, adding $12.5k tper year to the grandkids non-reg accont, amd continually adding to our current holdings $5k at a time.

The current plan is to do 2x$5k for each stock in tier1 in the order listed. We will probably trim 430 shares of AQN to get it back into the tier 2 range. We are also slowly going to move ZWB from tier 3 to tier 2 (instead of adding to individual banks other than BNS as we like the very large ZWB yield)

So my current best buys in our limited universe are BCE, PPL, BNS, and EMA but I like all of tier 1.

I have been very high on midstream for the last 2 years and still think it is the best sector for any new money.

I have also really cooled on REITs this last couple years. Way too many divy cuts for my liking. We used to typically own 6-10 up until 2019 and are now down to just the two.

I'm expecting 2 divy cuts in our holdings - AQN and NWH.

For those that are ineterested, I'd be more than happy to answer any questions.

Ciao
  Sarge

[newcoin]

I think it's nice that you share your information and try to help others.

[555rookie555]

thanks for the free tutorial on DIY investing in retirement. I know there are a lot of factors but I'll ask anyway. My wife just started her psychology practice two months ago and we are now entering a stage of life where we will have extra cash, so we are currently setting our goals to 1) eliminate primary mortgage debt and 2) build our best egg up to the levels we wish to retire on. My

[RayDonovan78]

Well thats an easy one. Dont put your money here, Spread it across a few canadian banks that are currently paying 6% + in Dividends and PRESTO min $120K / year income.

[SargeX]

Hey Rook Thanks for the comment. I'm certainly not a financial advisor (although I do know more than most of them  :-) and this is stockhouse, so take this comment with a grain of salt. I think generating $125k with a $2M portfolio would be really tricky as you'd need an average yield of 6.25%. As an example, our portfolio which includes the two REITs has an average yield of 5.64%.

[SargeX]

One other thing I should add is that most people don't expect to be able to live off dividends alone. They usually plan for a mix of dividends, stock sells, and OAS/CPP. Of course the problem with stock sells is that you then become more dependent on what the market is currently doing. Also, on the flip side, if you do live entirely off dividend income, then your portfolio will continue to

[jimgeorge]

I can chime with with my wife's and my investments...this isn't advice, just telling our story! We retired early, we don't qualify or cpp or OAS and don't want to drain rrsp's until we have to, so we are living entirely off dividends.  We have about 30 stocks, mostly low risk bank, pipeline, telecom and utilities (apparently AQN wasn't one of the low risk ones

[555rookie555]

Thank you for chiming in Jimgeorge. 5% seems like a conservative return I will use. If you take OAS and CPP does it somehow affect your RRSP? Am I understanding correctly? Thanks

[555rookie555]

nevermind I just realized what you had said about not qualifying for OAS and CPP.

[jimgeorge]

The only effect on an rrsp is the tax rate you pay on withdrawals.  The more you earn from other sources, like cpp and OAS, the higher your tax rate will be on the rrsp withdrawals.  We make too much in dividend income to qualify for OAS, and I want to defer the cop and rrsp withdrawals as long as I can (age 70) because I'm already at max tax rate.

[SargeX]

Good on ya'. That must be a huge wack of divys. For some reason. I thought you were younger and didn't even think that you'd have that much dividend income. We get around $184k per year across all accounts but only $92k of it is in our non-reg accounts. My spreadsheet estimates only a 15% clawback for 2022. Anyway another big congrats to you for doing so amazingl well. Take her easy

[SargeX]

Hey Jim Excellent stuff. I love to hear these kind of success stories. Just a bit of a suggestion for you to think about on RRSP drawdown. If you are too young for CPP and OAS, it can sometimes be total lifetime tax advantaged to try and drawdown your RRSP before you have to convert it to a RRIF and do the forced withdrawals. You can just put the withdrawn money into your TFSA or a non-reg

[555rookie555]

Thanks Sarge, I like to ask questions from those that have clarity and are in a stage of life that is desirable. And what you are doing for your children is commendable and worth emulating! God-willing we have 2 to 3 decades of working years remaining and I think we are going to adjust our target to $3M or $4M which would provide a little extra buffer in retirement. Then we can be generous to our

[SargeX]

You're more than welcome and thanks for such nice words.  There's no doubt that we've been very fortunate with how things have worked out on all fronts. I'm pretty confident that with $3M you'll be able to generate at least your $125k target. All the best   Sarge

[BlueElk]

[Karl63]

Hello Sarge, I read your post with great interest, and I think it's terrific that you share your experience. I note that your investments are in the Canadian sectors of Financial (banks), Telecoms, Energy, Utilities and some REITS.  I presume that, like me, the big draw is that they pay good dividends, something we all need in retirement.  May I ask . . . 1.  That portfolio

[jimgeorge]

We are mainly in Canadian divy stocks to get the tax advantage.  Our rrsp's are mainly US divy stocks because the lack of tax advantage doesn't matter inside the rrsp.

[Capharnaum]

The price came down due to higher cap rates (which means that their properties lose a bit of value) and they also got slightly more leveraged to complete future acquisitions, so they did miss on AFFO/FFO metrics. Their tennants are very stable and they can likely maintain their dividend forever.

[raybay_98]

Remember this quote, " Read my lips, there will be no tax increases" and we all know what came later. Same picture here?

[SargeX]

Hey Karl Thanks for the really nice comments and great questions. This AQN board has to be one of the best on stockhouse. Everyone seems so polite (or maybe I just have all the impolite posters on ignore :-) 1-2. TSX listed/diversification, cash - we are 100% invested in TSX listed companies in the 5 sectors - banks, utils, midstream, telecom, and REITs. No fixed income/GICs/etc. We usually try

[Jtpatrol1]

[Karl63]

Thanks Sarge, as always I read your posts with great interest. I say with great interest because I'm quite inclined to your style of investing, yet have encountered resistance from others or the media regarding some of the methods.  For example, I have always liked investing in Canadian companies that pay good dividends, and yet many say that you should diversify throughout the world . .

[SargeX]

Hey Karl Thanks back at you. It really is enjoyable to see and read about investors that have the same style as us. There's not many but I've heard and read of a number and all of us are very dedicated to our strategy. I put a good effort into developing this strategy starting back in 2011 when I cut back my works hours to 4 7 hrs days/week. It took about 4 years to refine and I still

[jimgeorge]

Just another comment - over the past 30 years we have dabbled in global equities many times, with the help of "experts", we always lost money.  Always! and Sarge, speaking of inheritance, a friend of mine always says "if you don't fly business class, your kids will"!