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A look at youngandthrifty's tax free trading account portfolio and an analysis of Just Energy Income Fund.

Alright, I promised that I would share the other 4 equities I bought to hold in my TFSA aka Tax Free Trading Account. With the markets plummeting these past few days, it might be a good idea to load up on some stocks you have been keeping an eye on. The volatility is back.. stocks are on sale (that’s how I like to think of it, anyway).

Like last week’s post, I had you try to guess what the equity I bought in my TFSA was. So I’ll try and do the same again this week.

I had bought a very small amount of shares of this income trust before 2011 rolled around.  With the newly added money ($5000) I put in last month, I added more shares to equal 100 shares.  When I get more money in my TFSA from my tax refund, I plan on buying more of this stock.

Alright, here goes, time to put on your thinking caps:

  • This is another big dividend payer- 8.28% annual yield  (that’s $0.10333 per share per month or $1.24 per share a year)
  • They didn’t decrease their payout to investors even though they converted from an income trust to a corporation (one of the few ones that didn’t).  This says a lot since the government changed the tax structure, so they are being taxed and still paying the investors the same amount.  That says a lot.
  • It’s an independent energy supplier with electricity and natural gas customers throughout Canada and the US (they use contracts and long term fixed-price agreements)
  • More energy supplied to the US (more customers) and a little more natural gas supplied to Canada (in terms of customer numbers)
  • They are also one of the largest competitive green energy retailers in North America- you can choose to have a portion of your energy come from renewable resources
  • Current P/E ratio is 10.03 (which is good)
  • Canadian stocks are heavily weighted in utilities and this is one of them 🙂
  • You can DRIP it (I still need to get in on this DRIPing action)

Okay, did you guess it?  It’s kind of an investment darling for a lot of people, PF bloggers alike (I know Sunny from My First 50,000 is a huge fan)- it’s…. drum roll please….

Just Energy.  Their Just Green program (using renewable resources) seems very innovative and it appears there is a lot of potential growth for the company.  Again, if you are thinking about this stock, I warn you I am not a financial professional, so do your due diligence and research before you make the plunge with any investment advice or opinions. 🙂

Readers, did you guess it right?  If you have this stock, what do you think about it?  Any readers use this company for their electricity and natural gas?

Article comments


here’s another…http://www.keyframe5.com/just-energy-why-you-should-not-do-business-with-this-company/

don’t agree with their practices but if its making ya cash in your TFSA whatever right? heck I bought tons of oil during Katrina…

young says:

@crazyfasteddy- whoops so much for them being “green” and ethical. 🙁 Yeah, I personally wouldn’t use a business product that is framed in that way (e.g. contract with utility agent) but I’m happy with the dividends. They are obviously profiting quite well from those contracts, unfortunately for customers but fortunately for shareholders.

Eddie Mah says:

sure hope this pick makes ya some $$.. $JE used to be Alberta energy Savings…like Direct Energy… they sell natural gas contracts door to door in Edmonton as I recall… doing some DD on the stock and found stuff you may want to see…http://www.edmontonsun.com/news/alberta/2010/02/24/13016911.html

and http://www.esksfans.com/forum/showthread.php?25334-Just-Energy-Watch-out-for-these-guys

but 8% yield is pretty damn good! Try $DH and $ERF if you like high yield stuff!

young says:

@Eddie Mah- I have DH as well too. Nice and stable and boring (just the way I like it)- they make the cheque books that everyone has 🙂 Haven’t heard of ERF but I’ll look into it.

MoneyCone says:

Good advice to load up on stocks now that the markets are down! I did the same with my IRA (similar to your tfsa)!

young says:

@MoneyCone- Yeah, they’ve been very ‘roller coaster’ like these days, eh? Glad to hear you took advantage of it and had good timing!

Nice pick! That will be some tidy (tax-free) yield for you! 🙂

young says:

@My Own Advisor- Thanks! Learn only from the very best (yes, you!). I love the idea of tax free yield.. and tax free capital gains (or non-existent capital gains, that is!)

Hmm… intersting stock. Those are some strong fundamentals! Even if they have to drop that dividend, the solid P/E ratio bodes well for future development. I also agree that the fact they were able to keep their dividend up despite the change in taxation rules bodes well, but I wouldn’t count on it staying that high (even still, say it drops to half in a few years your still sitting on a pretty great dividend). The fact that it is a popular ‘green’ stock is neat cherry on top. Nice pick!

young says:

@My University Money- Yeah, that’s what attracted me to that company, too. Strong fundamentals and solid P/E, plus fantastic dividend. To be honest, I actually didn’t know that they were so heavily vested in green energy until I did this post, so ya learn something new every day. Makes me like the stock even more 🙂

Ravi Gupta says:

Seems very interesting and something I may want to invest in down the road. I recently wrote an article on ethics and investing and there I talk about possibly investing in green stocks. I think it’s a great thing not just for your bottom line but to have ownership in a corporation that does something good for the world.

Keep on rocking!

-Ravi G.

Tax Guy says:

So, what is the withholding tax applied to the distributions form this entity? If it’s a true unit trust, the dividends would be reduced by 35%. If it’s a corporation they would be only 15%.

I normally would not suggest holding something in a TFSA with a 35% withholding tax because it cannot be claimed under the foreign tax credit.

young says:

@Tax Guy- Hm there are no withholding taxes on this distribution as it’s now a corporation and it’s a Canadian company (Canadian corporation). So it’s actually dividend income that’s paid out. Thanks for your tip about the withholding taxes- they are a bitch! I am trying to keep all my dividend paying US stocks in my RRSP.

I hope you kept some money on the side as it seems there will be more “good ones” on sale given all the uncertainty!

young says:

@BeatingTheIndex- Oh i know- hindsight is 20/20! No unfortunately I didn’t keep any money aside to buy stocks on sale, but I did sell some ECA for a nice profit and might use that money to buy more stuff on sale. Or buy ECA again when it dips.