Jan 1st is an exciting day for the TFSA

So here we are, the start of a new year! Symbolically, we get a fresh start. We get to set some new goals and resolutions. I’m not really into all that jazz, but I do look forward to Jan 1st so I can dump another wheelbarrow of cash into the ole Tax Free Savings Account. Even more exciting, we all got a raise this year!! $6000 will be the allowable contribution for 2019. That brings the total up to $63,500 of fantastic tax free investable Canuck bucks. I’ve been using this account to build up my Canadian dividend paying equities. My goal is to get this account to throw off $15,000 of cash flow annually when I get to financial independence.

Anyway, now I have to figure out what to do with that $6k?? They say that the best time to invest was 20 years ago, and the second best time is today. Or maybe that was planting trees. Regardless, I’m not going to sit around and see how the market moves in the New Year. We don’t try and time the market do we?! I think there are some pretty good companies on sale right now anyway. But which ones are going to be worth adding? Here’s what I’m considering, and my thoughts on the equities.

First off, I should decide if I want to ‘top up’ some of my existing holdings. Telus, Sunlife?? I’ve got most of them DRIPing so there’s no real urgency to do so. But could I get any of them into double DRIP status? That might be worthwhile. I use some really simple math to figure out how many shares I’ll need. You’ll see, don’t be afraid of the math!

I won’t go into any great deep dives on the equities, there’s lots of resources out there that do that way better than me. So without further ado……here’s a couple i’ve been looking at.

Brookfield Property Partners – BPY.UNActualTarget
Price
$21.38$30
Dividend per distribution (quarterly)
$0.42$0.42
Minimum shares to DRIP
5172
Required investment$1090.38$1539.36
First National – FNActualTarget
Price$27.41$35.00
Dividend (monthly)$0.1583$0.1583
Minimum shares to DRIP174222
Required investment$4769.34$6085.02

See how easy that math was?? Divide the share price by the dividend and multiply that number by the share price. It’s okay I used a calculator too. The column titled Actual is the numbers I used from yahoo finance that represent today’s value. I usually like to ensure I will continue to DRIP up to a higher price, therefore I’ve put in my Target numbers. These are representative of how much I would actually buy.

So, which to choose? Brookfield’s dividend yield is a juicy 8.16% but First National isn’t to shabby at 6.93%. They’re both sitting at nice P/E levels too. One is into property management and the other is into mortgage lending. Pretty similar sectors there. I think the selling point for me is that BPY is trading at a 50% discount to it’s NAV and it has a low payout ratio of 65% to maintain that giant yield. I like the company too, I’m quite happy owning a well managed company with diversified real estate holdings.

I’d be happy to hear of any other options out there…

Disclosure, I already own a position in BPY and the content of this post is my personal opinion.

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About the Author: Money Mechanic

The Money Mechanic is a 40 something 50% of his way to FI. Active in the FI/RE community. He is passionate about personal finance and educating others and sharing the tools you need on the path to Financial Independence in Canada.

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