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I Need Your Help.

As you already know, I’m looking to diversify. Currently, I’m very overweight into Financial 15 (FTN) and as such quite dependant on whether they pay a dividend or not month after month.

Here is my current portfolio allocation %:

RRSP

  • FTN 83%
  • DRG.UN 7%
  • ATD.B 3%
  • RSI 2%
  • SIS 2%
  • DOL 2%
  • MRU 1%

TFSA

  • FTN 31%
  • PLC 23%
  • SIS 18%
  • BLX 11%
  • WEED 7%
  • T 5%
  • ENF 4%
  • Others 1%

Right off the bat, my TFSA seems a lot healthier in terms of its distributions. Mostly because of the transfer that took place a few months back when I first opened my RRSP. I transferred most of my FTN position into my RRSP.

I can’t lie, I’m a little scared at the idea of seeing my monthly dividends go down If I decide to shave a bit of my position in FTN, but I think it will be inevitable. It’s giving me a >14% yield after all. Such a yield combined with a DRIP will only make this position progressively more disproportionate.

My TFSA is fine. My RRSP isn’t.

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I have 3 options (If you have nay other options, feel free to pitch them).

Option 1

I disable the DRIP in my RRSP. Month after month I would increase my other positions with the dividends received, either increasing or creating new positions.

Advantages:

  • My dividend income wouldn’t drop spontaneously, but would only increase slower from here on.
  • I could see which position is more favourably priced at the moment of purchasing.

Disadvantages:

  • I would pay trading fees every month on the purchases, so a new $120 ($9.95 monthly) cost to me.
  • I would still be overexposed to the monthly FTN distribution as the initial position would be unchanged.
  • The smaller position in the portfolio would suffer from the absence of DRIP. Some positions DRIP monthly with just enough for a single shares, which is awfully close to the baseline trading price.

Option 2

I keep the DRIP but shave off a clean chunk of my FTN position. Say I sell off (when price goes up slightly) 30-50% and reallocate it to new positions and fortify some of my existing positions.

Advantages:

  • Less risk and exposure to the monthly dividend provided by FTN (which is never guaranteed).
  • One-time selling and buying fees, which would come down to about $50, instead of the $120 above.
  • Smaller positions keep benefiting from the DRIP, which enables them to increased and compound on their own.

Disadvantages:

  • My monthly dividend from FTN drops by the proportion sold. And as such the compounding loses its momentum.
  • I make purchases mostly at current prices (I would wait for price drops, but not forever…)

Option 3

Suck it up, princess! Keep it as is and keep building around my existing FTN position much like I’ve been doing since my RRSP inception. Initially, FTN represented 100% of my RRSP and I’ve been contributing to it and building around it. But now I’m out of contribution room and any further contributions will have to wait until the new year. Advantages and disadvantaged are a mixed bag of option 1 and 2… My FTN compounding will keep outpacing the rest of my positions until further contributions.

Thought?! Which option would you choose and why?

Thanks in advance for your input.

Cheers,

-DI

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Dividend Investor View All

Money Lover, Dividend Growth Investor, Youtuber, and Blogger!

7 thoughts on “I Need Your Help. Leave a comment

  1. Wish I knew a little more from the Canadian side, but sadly my knowledge is geared more toward the US. Still an accomplishment to max out your account though. Probably doesn’t help but if you have extra money to invest, there is always the option of opening up a taxable account. Not ideal but at least you could keep buying new positions and it would diversify overall in time.

    Liked by 1 person

    • Absolutely! I’m thinking maybe I could just use the large FTN position as my marginally unsafe cash, and sell out whenever I see a good buying opportunity. Benefiting from dividends and having patience on my side. Could be good!

      Like

    • I think the smaller positions would suffer from this though. I think what I will end up doing is keeping it as is and using the FTN as a money market. Selling whenever I see a good opportunity. Thanks for reading Matt!

      Like

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