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me and my money

Eric Davies, 67

Eric Davies, 67

Occupation: Retired

Portfolio: Bank of Nova Scotia, Royal Bank, CIBC, Agrium Inc., BCE Inc., Telus Corp., Suncor Energy Inc., Enerplus Resources Fund, Pengrowth Energy Trust and Bonavista Energy Trust. Investment history

Taking the slow and steady route When Eric Davies began investing in the early 1980s, he put his money into guaranteed investment certificates. "At that time, you could invest in five-year GICs paying 18 per cent a year," Mr. Davies says.

He subsequently moved into mutual funds that could be purchased directly at low fees, doing well with the Altamira precious metals and resources funds. Later, he diversified into the top-quartile dividend and equities funds of Phillips, Hager & North.

"Then, in the 1990s, I became aware of dividend reinvestment plans, otherwise known as DRIPs," Mr. Davies adds. He opened an online trading account with Royal Bank's discount brokerage and started moving his money in.

Investing approach
Mr. Davies' portfolio is now concentrated in blue-chip companies that pay dividends. Not surprisingly, several chartered banks are prominent holdings.

He also owns several oil and gas royalty trusts, such as Enerplus Resource Fund. "Oil prices in the long term will continue to rise and, over time, so will the distributions," he explains.

He has kept track of his performance over the years. "Since 1982, I have had only three down years in my portfolio."

He adds, "The current yield on the portfolio is 4.9 per cent, with yields on individual stocks ranging from a low of 2.6 per cent to a high of 9.2 per cent."



More about DRIPs:

  • DRIPs drop discounted shares in your lap
  • Why you should be a DRIP fan
  • Take the sting out of DRIP tax torture
  • Dividends rise and shine amid recession
  • 10 investing strategies to consider


Best move
It was purchasing shares in Bank of Nova Scotia at $30 at the bottom of the bear market in 2009. "The dividend yield was 6.5 per cent. Today, the dividend yield is 3.9 per cent."

Worst move
"Purchase of CIBC at over $100 a share at the top of the bull market in 2007."

Advice "If investors research the benefits of DRIPs, they will see the advantages. There are no commissions or mutual fund fees to pay."

Automatic reinvesting of dividends can pay off. For example, the Bank of Nova Scotia dividend purchased 50 shares for him at the lows in 2009; today it purchases 33 shares.

"All the major banks' online investment arms will allow you to set up a DRIP account." But they only reinvest in whole shares, not fractions. If you want a pure DRIP account, you can deal with the companies directly or use the services of Canadian ShareOwner Investments at investments.shareowner.com.

Special to The Globe and Mail

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