Latest Portfolio Decision, Moves

At the risk of looking like an idiot or someone who doesn’t know what they are doing, I’m going to share with you some recent decisions I’ve made and a recent move I made in my Registered Retirement Savings Plan (RRSP) account. Back on September 17th I wrote a post where I shared with you all of the portfolio changes I made, I showed you all the stocks I sold and bought. I also provided you with a plan that I was going to follow that would in my opinion set me up for success and diversify my portfolio. To refresh your memory I came up with a plan for my Tax Free Savings Account (TFSA) where I would buy the Canadian stocks that are currently sitting in my RRSP. Once I had bought the same amount of shares of a particular stock I would than sell it in my RRSP account and convert the money to $USD and buy US stocks.

To me this was a good plan as it would help (eventually) diversify my portfolio away from my home bias of the Canadian market. Since writing that post I have had doubts with this plan, one being it would take years to complete and two because I would be tying myself up buying and selling the same stocks and could potentially miss out on other investments.

So after all that I have decided to changes things for the better. I have not bought or sold any stocks other than what I have shared with you through the blog. I spoke with a couple friends and fellow investors who made a lot of sense in regards to a better way of doing things when it comes to diversifying my portfolio. One recommendation I received was to journal my stocks in my RRSP to their US equivalent. I am a little embarrassed to say this but I never even thought about doing this and it made a ton of sense.

What is Journalling a Stock?

The process of transferring a share across stock exchange is called ‘journaling’. It is a term used with the discount brokers for moving cross-listed stocks between exchanges. The end result is that you can hold Canadian blue chip companies in US currencies generating US dividends.

(Source : Dividend Earner)

In order to do this you must for Canadians have a US cash account inside your RRSP like I do with RBC Direct Investing.

A couple of weeks ago I sent RBC a message requesting that they journal the following stocks because they also are listed on the US exchanges BCE, Bank of Montreal, Enbridge, Royal Bank of Canada, Telus and TC Energy. That has since been completed and I own the same amount of shares as I did before but now they are in US.

Effect on RRSP

My RRSP now currently has only one stock on the Canadian side of my account Power Corp of Canada (ticker: POW) as it doesn’t trade on the US exchanges I think, the rest of my account is now all in US dollars. For January I’m not sure if the dividends I will receive from BCE and Telus in January will be in Canadian dollars or US since I journalled the stocks after their ex dividend date. Going forward though these stocks will pay me in US dollars and will help grow that side of my portfolio quicker.

By making this move my dividend income might be lower next year as the money will be converted into $USD when received. This might hinder my ability to drip new shares of these stocks, if it does it means my cash will grow and at this stage I’m willing to make that trade off.

TFSA Going Forward

Your probably saying by now so what does this mean for his TFSA account? Or why doesn’t this guy just sell his stocks and go with index investing lol? To be truthful I’m not sure yet what I will buy with the $6,000 in contribution room we will receive in 2021. I can tell you for certain that I want to get out of the habit of selling my investments, so that being said I am not planning on selling any of the stocks I currently hold in this account. I’m fine owning these in two accounts, I also think they provide me with a good dividend base for this account. I believe once the pandemic ends all of the stocks/ ETFs will reinstate their dividend or begin to raise them (banks).

In 2021 I think I will take a look at possibly reinvesting in the following stocks:

  • Alimentation Couche-Tard
  • Manulife
  • Sun Life
  • Enghouse

Also I will look at adding some stocks I haven’t owned before such as:

  • TD Bank
  • Emera
  • National Bank
  • Brookfield Infrastructure Partners

Well folks that’s it for me this week. I hope you all have a good New Year’s and I will see in 2021.

Thanks for making this the best year for my blog.

Thanks

Matthew

5 thoughts on “Latest Portfolio Decision, Moves

  1. Interesting moves but seems to go against your original goal of diversifying away from Canadian stocks.

    I guess if your turning off drip and collecting usd to buy us stocks it makes sense but it sounds like you still want to drip them.

    Ahhh well didnt cost you anything to do.

    At may be my next purchase, low starting yield but they boosted that dividend like crazy this yr!

    cheers matt

    Liked by 2 people

    1. Hey Rob I gotta tell RBC to turn the drip off. The goal is to use the dividend cash to diversify. At moment just moving the stocks over didn’t help diversification. I will try this for a little bit and see how it goes.

      Liked by 1 person

  2. I am following a similar strategy, shifting to the point where my RRSP is entirely US stocks. My taxable account will be entirely Canadian dividend payers with tax-advantaged income. My TFSA will be Canadian dividend payers whose income is not tax-advantaged.

    Liked by 1 person

  3. I don’t really think you’re accomplishing that much by journaling the stocks over unless you want to sell the stock. The stock price itself will track the CAD price times the mid market FX rate so it is an efficient way to covert CAD to USD or vice versa if you want to sell and get paid in the other currency. If you want to sell to get USD then yes you are getting the money converted without a brokerage spread as long as you keep the USD. If you want to collect USD dividends, as long the company pays in CAD like BCE, all that’s happening is the brokerage is getting CAD and converting it to USD at whatever their rate is at the time, which includes their “spread” (Profit for them). If the company pays in USD like AQN, or the Brookfield companies, you are avoiding the spread as long as you stay in USD. You can avoid the spread on conversions, or minimize it by using the DLR/DLR.U Norbert gambit.

    Liked by 2 people

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