Category Archives: Investing

How To Choose Stocks For Your Defensive Dividend Portfolio

The U.S. market has been led by the bull for pretty much 10 consecutive years. So, it’s better to take a more defensive stance to prepare for attacks from the bear. A core component of a defensive portfolio is it can utilize conservative dividend stocks as its foundation.

Here are some tips for choosing your foundation conservative dividend stocks.

Earnings or Cash Flow Stability

Healthy dividends are paid from earnings or cash flow. So, stable earnings or cash flow generation improve the dividend safety of a stock.

Typically, utilities, REITs, the big Canadian banks, the big Canadian telecoms, and energy infrastructure stocks are good places to search for businesses that generate stable earnings or cash flow.

Dividend Safety

When checking for dividend safety, the first 2 things to look at are the payout ratio and dividend track record of the company. Typically, the lower the payout ratio, the safer the dividend.

However, certain industries like REITs and utilities tend to have higher payout ratios. So, it’s best to compare a company’s payout ratio to that of its industry peers.

Read More

How Much Are You Really Paying for Your Property?

Most people need to get a mortgage (i.e., a loan) to buy a property. After all, investing in real estate is a humongous investment.

In the scenario of buying your first home, the good thing is that once your mortgage gets approved and all the papers are signed, you can start living in the home while paying off the mortgage every month.

Have you thought about how much you’re really paying for your property?

There are a number of factors that affect how much, in total, you’re paying for your property. Here, we’ll focus on the total you’re paying your lender over the course of paying back the mortgage in its entirety (also called the mortgage amortization period).

a beautiful blue house for a home

What affects how much you’re paying in total for your property?

On top of the price you paid for your property, you need to pay back the mortgage with interests. Here are factors that affect ultimately how much you’re really paying for your property. We’ll follow with an example later.

  1. Interest rate: the higher the interest rate, the more interests you’ll be paying your lender.
  2. The amortization period: the longer the amortization period, the more interests you’ll pay.
  3. If you need to get mortgage insurance, that will add to the cost as well.

Notably, the interest rate you pay for your mortgage changes. For example, it may take 25 years for you to pay off your mortgage, but mortgages tend to be shorter. The most common is a 5-year mortgage. You can also choose between fixed rate or variable rate.

Typically, variable rate results in lower effective interests. However, some people like the predictability of fixed rate. At the end of the 5-year period, you’ll refinance your mortgage at a new interest rate.

Read More