Apr 052014
 

Remember last year when I explained how investing in coffee businesses was an awesome idea? Well good news, because it looks like the daily grind is paying off 😉 One of those companies, Tim Hortons (THI), recently increased its dividends from $0.26 to $0.32 per share!

That’s a 23% dividend increase! Holy hamburgers! That’s amazing eh (゜∀゜) I only bought 20 shares of Tim Hortons at $50 per share, so all it took was just $1K of my personal savings to make this happen. Ain’t it great that we don’t need a ton of money to start investing 🙂 The first payment under the new increased rate was distributed last month. Here’s a look at what that dividend payment looked like for me.

Capturetim Tim Hortons

If you buy your doughnuts or coffee from Timmy’s I would like to say thank you on behalf of all Tim Hortons shareholders 😀 Without loyal customers like you, this company would not exist today. I look forward to receiving another $6.40 in June, and so on and so forth until the dividend is raised again! Aw yiss 😀 Collecting passive income is so exciting \(^_^)/

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Oct 252013
 

Thanks a Latte

For all of next week there will be free coffee being served at participating McDonald’s restaurants in Canada. You can see their Facebook page for more detail 🙂 If you want to exploit other people’s caffeine addictions like I have, then consider investing in profitable coffee companies 🙂

13-10-mcdcoffee

I bought shares of Starbucks and Tim Hortons earlier this year. On average these 2 companies have so far produced over 30% return on investment since I blogged about buying them in January. I hope some of you guys were also able to take advantage of that opportunity. I predict their prices will rise even higher going into 2014!

Growth Downgraded 

A couple days ago the Bank of Canada pointed out that the country’s economy is growing slower than previously thought. It’s even considering to lower the interest rate. This changes everything for businesses. For the past couple of years, we’ve believed that rates could only go up. But now we realize that they could just as easily go down in the future. This is excellent news for investors like myself 🙂

How can we benefit from this news?

  • First. Realize that this means borrowing to invest is now less risky than before because we know with relative certainly the cost of short term lending won’t be going up any time soon (exception being in the fixed rate mortgage market.) So personally I’m going to use more of other people’s money to hopefully accelerate my own profits.
  • Second, buy US assets. After the Bank of Canada announced this news my net worth increased by $400 immediately 😀 Why? Because I have $40,000 USD in American stocks, and the news brought the Canadian Loonie down by a whole 1% compared to the U.S. dollar. I have a feeling the $CAD will fall even more over the next 12 to 18 months. Since I calculate my net worth in $CAD, for every 0.25% weaker our currency becomes I’ll get an extra $100 for free 😀

The Panes of Building a Home

A young couple, both artists like myself in their 20s, had quit their jobs to build a home in the woods in West Virginia. They scavenged abandoned yard sites for building material and spent as little money as possible. Slowly but surely they built their dream home for only $500.13-10-glasshouse

They also claim their diet contains a lot of rice and beans, which is understandable since they purposefully quit working! But hey, good for them. I admire their creative passion and how they did something meaningful with their lives 🙂 This is a great example of frugality taken to the extreme! But it’s not something I’d want to do myself.

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Aug 252013
 

This post explains how to quickly build up net worth without feeling deprived. If I can help it I simply don’t start a routine (which costs money) that is hard to quit.  Below are 4 categories where I spend less than the average person. The reason I appear to be frugal in these categories isn’t because I want to save money, but it’s because I’ve never developed a desire for these consumer goods to be a part of my life in the first place.

Eating Out: The average Canadian household spends about $40 per week on restaurant food. I spend $5. This isn’t about the money. I just find it faster and more convenient to prepare my own food at home because most dishes I make take less than 15 min to prepare.
Coffee: The average adult consumes about 2.7 cups a day. A weekly cost of maybe $15. I spend $0 because I don’t drink coffee. I just don’t like the taste. Coffee is bitter *ick* 😐 It’s not about the money because I wouldn’t drink coffee even if it was free.
Alcohol: The average Canadian household spends about $858 a year in this category. I spent about $20 last year. A $16 weekly difference. I don’t like how alcohol makes me dizzy. Plus I haven’t developed a taste for beer yet. Again, bitter doesn’t agree with my taste buds.
Cable TV: $30 per month is on the low side of what people pay for TV. I pay $0 because I don’t have cable. I’m not trying to be a hipster. Even if I got 250 channels for free I still won’t watch TV because there are better things I can do with my free time 😀 Besides, all of my favorite shows can be legally streamed online for free anyway >^_^<13_08_adsupovertime

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Jan 242013
 

In the US alone the entire coffee industry is valued at $20 billion a year.  In the quick service business, companies like Starbucks and Tim Hortons have such loyal customers that people are willing to sacrifice a part of their busy morning lives and wait in long lineups to get their cup of joe. In the past I couldn’t help but notice how many people I see everyday walking around with Starbucks coffee cups in their hands, and I thought hey if I were Starbucks, I could have just made some money from these folks. Well it’s time I stopped missing out. It is time to take action! So earlier today I bought 20 shares each of Tim Hortons and Starbucks 😀

2013_buy_sbux_thi

Starbucks for example had $13.3 billion in sales last year, from which they made $1.4 billion in profit. Out of that profit, they paid about $535 million to shareholders as dividends.

In other words, for every $4.00 cup of coffee they sell, it costs them about $3.60 to make, so they end up keeping about 40 cents as pure, after-tax profit. Makes good sense so far right? Out of this 40 cents, about 15 cents is paid to their shareholders (like myself) in cold hard cash (goes straight into my trading account) and the remaining 25 cents of the profit is used to further invest in the business such as establishing new locations, for example.

Starbucks has about 743 million shares in total, and I now have 20. Which means I own about 0.0000027% of the entire company :0) That means every time I see someone buying a cup of coffee (let’s say for $4) I know that they just gave me 0.0000004 cents in passive income (dividends,) or if I still remember how to do my scientific notations (4×10^-7) I know that doesn’t sound like much and I can’t really buy anything with 0.0000004 cents but think about all the billions of cups of coffee Starbucks serves around the world every year 😀 It all adds up! Anyone who buys just 1 stock of Starbucks today can expect to receive at least $.72 in dividends this year. Not to mention, Starbucks has a history of increasing dividends :0)

Starbucks dividend distribution history:

  • 2012 – $0.72 per share
  • 2011 – $0.63 per share
  • 2010 – $0.57 per share
  • 2009 – $0.51 per share
  • 2008 – $0.41 per share
  • 2007 – $0.38 per share

As you can see even during the great recession this company still managed to grow their business and give increasingly more dividends back to their owners. Starbucks is currently working on plans to open up another 3,000 stores in the Americas in the next 5 years, not to mention their other plans for the Asian markets. This tells me that their dividends are safe and their business outlook is strong, otherwise why would a company choose to expand if they don’t think they can get more sales? Think about how big Starbucks will become in 2020. That’s why I’m getting into the business now and holding it for the long term.

With three big names in the coffee service business all working for me I now collect altogether $155 a year in dividends from them 😀

if coffee is your daily grind you have 3 to choose from

To all those fabulous people who are regular customers of these fine franchises. Thank you so much for your business and for mocha me very happy (^-^)Your continuous support will bring me one step closer to financial freedom.

Disclaimer: I have 40 shares of MCD, 20 shares of THI and 20 shares of SBUX 🙂 Long all the stocks.

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Random Useless Fact: Despite living in Canada and even hosting the 2010 Winter Olympics, Vancouverites are notoriously bad for driving in the snow for some reason.coffee can give you the energy to drive to work

Jan 172013
 

I don’t drink coffee so it has never occurred to me before how big this industry is. Apparently after crude oil, coffee is the most sought commodity in the world. People drink over 500 billion cups of it each year. That’s a lot considering there’s only 7 billion people on this planet. Starbucks is a growing company that is expected to make $1.9 billion this year of after tax profit. The company is currently valued at $40.4 billion. Even if they stopped growing forever, anyone who bought the stock today can expect to make a 4.7% return on their investment ($1.9÷$40.4) Not much, but better than nothing! If you did the same calculations for Tim Hortons you would make about 6%.  This year I’m going to invest more in relatively defensive stocks that provide coffee, soft drinks, snacks, and other consumables that people can’t seem to get enough of.

Here’s my watch list for 2013. I plan to start buying some of these names soon.

Canadian Stocks

  • Canadian Utilities Limited (CU) *Electric, gas, and steam company*
  • Emera (EMA) *Another utilities company. This one has a great dividend growth record*
  • TransCanada (TRP) *Pipelines. Very recession proof*
  • Tim Hortons (THI) *Doughnuts and coffee, om nom nom ヽ( ̄д ̄;)ノ*
  • Ritchie Bros. Auctioneers (RBA) *A speculative way to invest in the auction business*
  • Bird Construction (BDT) *In construction and general contracting business. 4.9% dividend yield*
  • Canadian National Railway (CNR) *Railways. A great way to play the agricultural industry. Bill Gates is its largest shareholder owning over 10% of the entire company*
  • Canadian Pacific Railway (CP) *Another railway company. Good CEO. But currently overpriced*

 

US Stocks

  • The Walt Disney Company (DIS) *Steve Jobs’ estate is still making over $100 million a year from Disney’s dividends*
  • Coca-Cola Company (KO) *Buffett’s favorite company, enough said*
  • PepsiCo (PEP) *Very global. Very diversified. Maker of Pepsi, Frito Lay, Doritos, Tropicana, Quaker, and Gatorade. With a growing middle class with more disposable income in developing countries how can you possibly go wrong investing in Pepsi?*
  • Starbucks (SBUX) *Opening 3,000 new stores in the Americas by 2017. China to become 2nd largest market in 2014. This company is growing like a weed. Better get in sooner rather than later.*
  • Kimberly Clark (KMB) *They make the tissue you see in public washrooms everywhere. Very stable business model*
  • Johnson & Johnson (JNJ) *Increased its dividends for at least 25 consecutive years*

I already have shares in McDonald’s which owns the McCafé brand of coffee. Once I also buy Tim Hortons and Starbucks I’ll have part ownership to pretty much the entire quick service coffee business in Canada, haha (⌒▽⌒)and exposure to many other countries too. Canadians bought 1.5 billion cups of coffee last year, making it the nation’s most popular beverage. So every time someone buys a coffee from these lucrative chains a very small amount from that transaction will eventually be paid back to me either in dividends, or stock value 😀

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Random Useless Fact:

getting back into stocks and investing in coffee

source: CBC