Investing For Dividends

1. Investing For Dividends AvromDigance from Dividend Ninja and With Peter Hodson, Editor of Canadian MoneySaver, CEO of 5i Research present Sponsored by Canadian MoneySaver and 5i Research. www.canadianmoneysaver.ca and www.5iresearch.ca

2. Welcome! • Outline: • Introduction • What to do after a 5-Year bull market • Screening for dividend stocks • Impact of the Canadian financial industry on returns • How to build your own mutual fund (time permitting) • Q&A with Peter and Avrom

3. Introduction www.canadianmoneysaver.ca www.5iresearch.ca • Canadian MoneySaver Magazine • Offering independent personal financial advice since 1981 • 9 issues annually plus 12 years of historical content for online users • Monthly webinars, online forums, over 70 Expert writers • Info on taxes, stocks, retirement and other investment topics • 5i Research • Independent, conflict-free research provider • Offer investor Q&A on a range of investment topics • Over 70 research reports on Canadian companies • An income and diversified model portfolio (original up nearly 48% in first year)

4. How to position after a 5-year bull? • Diversification is and will always be key • Rising markets do not mean an immediate fall ‘tomorrow’ • What is the economic outlook? • How are company fundamentals? • Dividend payers offer some safety in a downturn • Beware ‘reaching for yield’ • Dividend growers offer protection in rising rate environments

5. How to position after a 5-year bull? • Sell Everything? • worst option, can’t time entry and exit points • Buy and Hold(best approach – stay the course) • Invest for Income (dividends) (ignore market swings and business news) • Other Options?(stop limits and covered call ETFs – but don’t go overboard)

6. What to look for in dividend stocks • One of the best signals an investor can find is a company that announces its first dividend • Ensure dividend is sustainable • High yields are sometimes too good to be true • Look for dividend growth • Consider payout ratio, debt/equity, interest coverage when evaluating sustainability • Be aware of various way payout ratios can be calculated • Profit Margin

7. www.dividendninja.com Screening Dividend Stocks: What to look for before buying • Dividend Yield (high yield = high risk) • Dividend Payout Ratio (DPR) (Annual Dividend / EPS) * 100 • Income Trusts, Oil & Gas, REITs, use Distributable Cash Flow • DRIPs added when a company is short of cash (with Peter Hodson) • Net Profit Margin (company profitability) • Company Debt (i.e. Debt to equity ratio) • Dividend Growth (at least 5 years, 10 years preferred) • Dividend performance in recessions (with Peter Hodson) • Cash flow vs. EPS

8. First dividends • Comdev (CDV) • New dividend announced January 9, 2014 • ~3.25% yield • PUR Technologies (PUR) • Dividend announced March 13, 2014 • ~1.7% yield www.5iresearch.ca

9. First dividends Con’t • AxxiaNetMedia (AXX) • Dividend announced January 6, 2014 • ~2% yield • Western Energy Services (WRG) • Dividend announced August 9, 2012 • ~2.7% yield

10. Mutual Fund Fees:Killing investor returns year after year • Front-end load fees • Back-end load fees • Deferred sales charges • Trailer fees (part of MER) • Management expense ratio (MER) http://www.dividendninja.com/why-canadians-should-avoid-mutual-funds

11. Mutual Fund Fees:What the experts say • According to Andrew Hallam, Canadians • are in the last spot at 18 of 18, paying the highest mutual fund fees in the entire world!(Millionaire Teacher, pg.54) • Andrew quotes the fees that Canadians are paying at 3% per year (MER + load fees). Andrew Hallam Author of Millionaire Teacher http://www.dividendninja.com/the-millionaire-teacher

12. Mutual Fund Fees:What the experts say “The average Canadian equity mutual fund has an MER of 2.43 per cent. The 10 largest Canadian equity mutual funds, have an average MER of 2.1 per cent.” Rob Carrick personal finance columnist Globe and Mail http://www.theglobeandmail.com/globe-investor/investment-ideas/portfolio-strategy/if-you-hate-fees-have-i-got-a-bargain-for-you/article1957084/

13. Buy what the mutual funds buy:Top-10 holdings of the largest Canadian Dividend funds Did your mutual fund pass the dividend income onto you?

14. Buy what the mutual funds buy:Top-10 holdings of the largest Canadian Equity funds Did your mutual fund pass the dividend income onto you?

15. Impact of financial industry • Avoid/reduce fees • Keep it simple • More complexity usually means more fees for the originators • Be aware of conflicts of interest • Does another party have something to gain from your decisions? • Whose interests do they have in mind? • Always remember: No-one cares more about your money than you do! www.canadianmoneysaver.ca

16. How to build your own mutual fund • Own the 10 sectors of the TSX • Add in some US/International ETFs • Own mostly large caps • Add small cap exposure for growth • ‘High grade’ your companies. Not all index stocks are good • Focus on dividend payers, low debt, and companies that do not issue shares

17. How to build your own mutual fund • Focus on portfolio return; not individual stocks • Trim the weeds; water the flowers • Monitor sector weights every three months • Do not hold much cash if you have excess income • Ignore recommendations and target prices • Focus instead of fundamentals, growth, and prospects

18. Thank You!We hope you enjoyed the presentation. Questions? Receive 20% off your introductory subscription to Canadian MoneySaver Magazine. Website: www.canadianmoneysaver.ca Use the code “CC” in the discount box to claim your 20% discount Email: moneyinfo@canadianmoneysaver.ca Sign up for the Dividend Ninja Newsletter: Dividend Stock Analysis, Resources and Guides, Investing Strategies and Featured Posts Website: www.dividendninja.com Email: info@thedividendninja.ca Sign up for 5iResearch and receive a complimentary 1 year subscription to Canadian MoneySaver Website: www.5iresearch.ca Email: info@5iresearch.ca