Tuesday, February 19, 2013

Adjusting RRSP Account

Currently I am doing adjustments to the RRSP (and RRIF) accounts. I try to keep some 5 years of cash and projected dividends in my accounts. See my blog entry on Planning in Retirement that discusses this concept.

Because some of my stocks pay low dividends (less than 1% in some cases and others less than 2%) I am selling off low dividend yield stocks and buying higher dividend yield stocks. Mind you, to me high dividend yield is 4 or maybe 5%. I do not chase really high dividend yields (over 5%) because the potential of higher dividend companies maybe making income, but losing capital.

So far I have sold Canadian National Railway (TSX-CNR) from my RRSP account as it was my lowest dividend yield stock with a yield of 1.56%. I have also sold some Alimentation Couche Tard (TSX- ATD.B) from my RRIF account which has a yield of just 0.57%. This is just to raise some cash.

In the RRIF I have sold some Alimentation Couche Tard (TSX- ATD.B) to buy some Davis and Henderson (TSX-DH). As mentioned above Alimentation Couche has a dividend yield of 0.57%. Davis and Henderson have a dividend yield of 5.9%. In my RRSP account I am planning to sell some Saputo Inc. (TSX-SAP) with a yield of 1.69% and buy some more RioCan REIT (TSX-REI.UN) with a yield of 5.14%.

The stocks I am selling have been great stocks. It is just when you are taking money from RRSP/RRIF accounts you want to have higher yields to lower the cash requirements for the account. These stocks were great in building up fund values and I might buy them for my Trading Account, but they are not as good when winding down RRSP/RRIF accounts.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.

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