7.7%
By Gordon Pape
In February 2013 I created a model RRIF portfolio for this newsletter with an initial value of $49,910.30. Its twin objectives are income generation and capital preservation. The focus is on low-risk assets that provide decent cash flow. Here are the current positions with a commentary on how they have fared since the last review in August.
MAXA Financial five-year GIC. Our original three-year GIC matured in February 2016. We reinvested the $13,418.75 that we received (principal and accrued interest) in a new five-year GIC paying 2.5%, with annual payments, which are compounded. The GIC will mature in February 2021.
iShares Core Canadian Universe Bond Index ETF (TSX: XBB). This bond fund seeks to replicate the performance of the broad Canadian bond market, including both government and corporate issues. It has been a solid performer over the years, rarely losing money. We added this fund to the portfolio last August. The price is unchanged since then, but we have received monthly distributions totalling $0.442 per unit.
iShares S&P/TSX Canadian Dividend Aristocrats Index ETF (TSX: CDZ). This fund invests in a portfolio of mainly large-cap companies that have increased their dividends annually for at least five years. It was added to the portfolio one year ago and has generated a total return of 20.1% since.
PIMCO Monthly Income ETF (TSX: PMIF). This ETF invests in investment-grade bonds from developed countries around the world as well as some mortgage-backed securities. It pays monthly distributions, which vary significantly from one month to the next. The unit price was up $0.28 in the latest period as bonds continued to be strong. We received distributions of about $0.38 per unit.
CI First Asset Canadian REIT ETF (TSX: RIT). This ETF invests in a diversified REIT portfolio and was added to the portfolio last August. It has performed very well so far, generating a total return of 7.5% in six months.
BCE Inc. (TSX, NYSE: BCE). BCE shares had a good run during the latest six months, gaining $2.84. We received two quarterly dividends totaling $1.585.
Pembina Pipeline (TSX, NYSE: PPL). We replaced Inter Pipeline with this company one year ago, as we felt it had better prospects. The shares gained $4.83 during the six months, and we received dividends of $1.01 per share for a total return of almost 12% during that time.
Brookfield Infrastructure LP (TSX: BIP.UN, NYSE: BIP). This Bermuda-based limited partnership continues to generate great returns for us. It is up $11.40 since our last review, and we received two distributions totaling just over US$1.
iShares S&P/TSX Capped Utilities Index ETF (TSX: XUT). This ETF invests in a portfolio of utilities stocks traded on the TSX. It was added to the portfolio last August and has done well. The units are up $3.72 since our purchase and we received distributions totalling about $0.46 per unit.
Cash. We kept the cash balance of $1,477.89 in a high-interest savings account with Motive Financial paying 2.8%. Interest earned in the latest period was $20.69.
Here’s a look at the RRIF Portfolio as it stood at the close of trading on Feb. 7. The market value of the GIC includes all compounded earnings to date. Note that commissions are not deducted, and that U.S. and Canadian currencies are treated at par. Although this is a RRIF portfolio, withdrawals are not factored in, as this would make it impossible to track performance accurately.
Income Investor RRIF Portfolio (a/o Feb. 7/20)
| Security | Weight % |
Average Cost |
Shares/ Units |
Book Value |
Current Price |
Market Value |
Retained Earnings |
Gain/
Loss % |
| MAXA GIC | 18.2 | $13,418.75 | 1 | $13,418.75 | $13,418.75 | $14,811.79 | $0 | +10.4 |
| XBB | 8.1 | $32.52 | 200 | $6,504.00 | $32.52 | $6,504.00 | $88.40 | + 1.4 |
| CDZ | 9.9 | $25.98 | 270 | $7,014.60 | $29.89 | $8,070.30 | $356.40 | +20.1 |
| PMIF | 8.4 | $19.88 | 340 | $6,757.80 | $20.20 | $6,868.00 | $279.66 | + 5.8 |
| RIT | 8.5 | $18.23 | 350 | $6,380.50 | $19.68 | $6,888.00 | $141.75 | +7.5 |
| BCE | 11.0 | $46.72 | 140 | $6,540.85 | $64.22 | $8,990.80 | $667.91 | +47.7 |
| PPL | 9.3 | $47.83 | 145 | $6,935.35 | $52.31 | $7,584.95 | $317.55 | +13.9 |
| BIP.UN | 20.4 | $28.45 | 230 | $6,867.85 | $72.27 | $16,622.10 | $349.55 | +147.1 |
| XUT | 5.7 | $25.27 | 160 | $4,043.20 | $28.99 | $4,638.40 | $73.44 | +16.5 |
| Cash | 0.5 | $388.33 | $409.02 | |||||
| Totals | 100.0 | $64,851.23 | $81,387.36 | $2,274.56 | +29.0 | |||
| Inception | $49,910.30 | +67.6 |
Comments: The portfolio gained almost 10% in the latest period, a very strong six-month gain for a conservative portfolio. Every security made a profit, with the best results coming from Pembina, BCE, the Brookfield partnership, and the Utilities ETF.
Since inception seven years ago, we have a cumulative total return of 67.8%. That works out to an average annual compounded rate of return of 7.66%. Our target is in the 5% to 6% range, given that much of the portfolio is in GICs and bonds.
Changes: All the securities in this portfolio are performing as expected, or better. Therefore, I am not making any changes in our holdings at this time.
However, we will use some of the retained earnings to add to our positions, as follows.
CDZ. We will add 10 units at $29.89 for a total cost of $289.90. We will now have 280 units, with retained earnings reduced to $57.50.
PMIF. We have enough to buy another 10 units at a cost of $20.20 each, for a total expense of $202. We now own 350 units and have $77.66 left.
BCE. We will buy 10 shares at $64.22, for a cost of $642.20. That will bring our total to 150 shares and reduce retained earnings to $25.71.
PPL. We’ll add five shares at $52.31, for an investment of $261.55. That brings our total stake in Pembina to 150 shares and reduces retained earnings to $56.
After these moves, we now have $1,279.03 in cash and retained earnings. We will keep that money in Motive Financial’s Savvy Savings Account, which is still paying 2.8%.
Here is the revised portfolio. I will review it again in August.
Income Investor RRIF Portfolio (revised Feb. 7/20)
| Security | Weight % |
Average Cost |
Shares/ Units |
Book Value |
Current Price |
Market Value |
Retained Earnings |
| MAXA GIC | 17.9 | $13,418.75 | 1 | $13,418.75 | $13,418.75 | $14,811.79 | $0 |
| XBB | 7.9 | $32.52 | 200 | $6,504.00 | $32.52 | $6,504.00 | $88.40 |
| CDZ | 10.1 | $26.11 | 280 | $7,311.50 | $29.89 | $8,369.20 | $57.50 |
| PMIF | 8.5 | $19.89 | 350 | $6,959.80 | $20.20 | $7,070.00 | $77.66 |
| RIT | 8.3 | $18.23 | 350 | $6,380.50 | $19.68 | $6,888.00 | $141.75 |
| BCE | 11.6 | $47.89 | 150 | $7,183.05 | $64.22 | $9,633.00 | $25.71 |
| PPL | 9.5 | $47.83 | 150 | $7,196.90 | $52.31 | $7,846.50 | $56.00 |
| BIP.UN | 20.1 | $28.45 | 230 | $6,867.85 | $72.27 | $16,622.10 | $349.55 |
| XUT | 5.6 | $25.27 | 160 | $4,043.20 | $28.99 | $4,638.40 | $73.44 |
| Cash | 0.5 | $409.02 | $409.02 | ||||
| Totals | 100.0 | $66,274.57 | $82,792.01 | $870.01 | |||
| Inception | $49,910.30 |
Previous updates
tii1704 | tii1816 | tii1904 | tii1916 | tii2003