Market overview
So far, October has lived up to its reputation as the most volatile month of the year for the stock markets. Global markets have witnessed a dramatic sell-off over the last four weeks. We saw irrational selling of pipelines and utilities, energy and financials. But corporate earnings remain strong, interest rates stays low for longer than expected, and the U.S. economy continues its course of recovery. Oil prices have dropped to $80 range, but lower crude prices are beneficial for consumers. The less we spend at the pump, the more money left in our pockets.
So far, October has lived up to its reputation as the most volatile month of the year for the stock markets. Global markets have witnessed a dramatic sell-off over the last four weeks. We saw irrational selling of pipelines and utilities, energy and financials. But corporate earnings remain strong, interest rates stays low for longer than expected, and the U.S. economy continues its course of recovery. Oil prices have dropped to $80 range, but lower crude prices are beneficial for consumers. The less we spend at the pump, the more money left in our pockets.
OIL (Black gold)
We are told by the news media that the main cause for the recent decline in oil price is based on short term over supply. However, the fundamental demand remains quite strong. I think the main reason for oil drop is to damage Russia financially as it relies heavily on oil for its income. Russia needs oil to be around $100 to balance their budget, while other oil export countries could balance their budget with $80 oil. Canadian oil produces will be hurt badly as well if oil stays at $80 price range. The world leaders will have to find a compromise and oil producers will have to cut production to stabilize the price.
We are told by the news media that the main cause for the recent decline in oil price is based on short term over supply. However, the fundamental demand remains quite strong. I think the main reason for oil drop is to damage Russia financially as it relies heavily on oil for its income. Russia needs oil to be around $100 to balance their budget, while other oil export countries could balance their budget with $80 oil. Canadian oil produces will be hurt badly as well if oil stays at $80 price range. The world leaders will have to find a compromise and oil producers will have to cut production to stabilize the price.
I'm posting below the chart of
the TSX composite index. The chart demonstrated a steep decline by mid-October
and then a bounce back. Back in September I was predicting that the market would
rebound by 50%, but because of falling oil prices that I did not oversee, the
market continued to slide further. Since mid-October the market did recover by
about 800 points or around 40% from the bottom.
Dividend portfolio value
As of October 31, 2014 my dividend portfolio balance
is at $18,520.30. It's is higher by $300 from previous month mainly due
to new funds that were contributed to my "TFSA" account.
Dividends
For the month of October, I received a total of $108.15
in dividends vs $101.84 for the same month a year ago. My dividend income
increased by 6.19 % on year over year basis. My total Year-to-Date dividend
income for 2014 is $908.41.
My goal for 2014 is to receive $1,000 in dividend income and I'm on track
to meet my goal. In fact, I will reach my dividend goal in November. Anything
earned in December, will be considered as a surplus :)
Dividend increases
So far, no dividend increases were announced and I don't expect
any increases in the 4th quarter due to the correction that we had in October
and November.
Contributions
During the month of October, I was able to contribute
a total of $1,000 to my TFSA (Tax-Free Savings Account). My objective for 2014 is
to contribute $5,000. So far, $4000 was contributed in 2014 and I will need to save and
contribute another $1,000 before the end of the year.
What is a Tax-Free Savings
Account (TFSA)? (for non-Canadian readers)
In 2009, the government introduced a Tax-Free Savings Account (TFSA) that allows Canadians to put aside $5,000 per year. Investment income, including capital gains and dividends, earned in a TFSA is not taxed, even when withdrawn. From 2009 to 2013, the maximum contribution room was $5,000 per year. In 2014, the contribution room was raised to $5,500 per year.
In 2009, the government introduced a Tax-Free Savings Account (TFSA) that allows Canadians to put aside $5,000 per year. Investment income, including capital gains and dividends, earned in a TFSA is not taxed, even when withdrawn. From 2009 to 2013, the maximum contribution room was $5,000 per year. In 2014, the contribution room was raised to $5,500 per year.
Transactions
Crescent Point (CPG.TO)
I added 10 shares to my existing position at $34.05 per
share. All energy shares got beaten down, but I believe the selling was
exaggerated. I never bought Crescent Point before for such a low price. Crescent
Point has a 7.4%
dividend yield and this purchase will bring additional $2.30 per month in
dividend income.
I added 10 shares to my existing position at $33.65 per
share. The story with BTE is the same as with CPG. So I decided to take
advantage of the low stock price. Baytex has a 8.3% dividend yield and this
purchase will bring additional $2.40 per month in
dividend income.
Wajax (WJX.TO)
I added 10 shares to my existing position at $34.20 per
share. Wajax has a 6.6% dividend yield and this purchase will bring additional
$2.00 per month in
dividend income.
No milestones were reached this month. If we get a rally in November then I should surpass $19,000 mark. I'm looking forward to it.
Market outlook
Usually November and December are good months for stock and I expect that to be the case this year. Since winter is around the corner, the price of oil should strengthen as energy demand increases. The recovery of energy stock will help the TSX to rebound.
Usually November and December are good months for stock and I expect that to be the case this year. Since winter is around the corner, the price of oil should strengthen as energy demand increases. The recovery of energy stock will help the TSX to rebound.
