Home » Dividend Updates » November 2018 Portfolio Update

As a dividend growth investor (DGI), I am driven to keep track of both my inflows and outflows. Increases in investment income represent one measure to assess whether I am winning or losing the game of money. While I have been diligent to track my progress on a quarterly and annual basis over the past few years, through 2018 I have also been providing monthly income updates.

Along with the income update portion of these articles, I have been pursuing a more active strategy in terms of stock purchases to further build on the dividend “snowball” effect of wealth building which involves dividend reinvestment, organic dividend increases from companies, and adding altogether fresh capital.

CAD Dividends

CompanyCAD Payments ($)
RioCan Real Estate Investment Trust (REI.UN)31.32
Chartwell Retirement Residence (CSH.UN)4.90
Metro Inc. (MRU)3.60

Dividend Summary

I earned $39.82 in dividends from three businesses through November. This is the lowest November dividend total I have had since 2013 and comes as a result of the amalgamation of Jean Coutu into MRU. I had previously been building up a position in the former which paid dividends on the Feb-May-Aug-Nov payment schedule and have now to account for the drop off.

Here’s a glimpse at my November dividend track record:

I have, however, taken steps to shore up this dividend drought in my portfolio.

Market Activity

While I have previously stated that I would never buy a company simply to fill a gap in my monthly income payments, I have nevertheless started paying closer attention to when companies make dividend payments during the normal course of my research. One current standout in my mind is AbbVie Inc. (ABBV).

ABBV is a research-based biopharmaceutical which was spun out of Abbott Laboratories (ABT) back at the start of 2013. The purpose of the split was to give investors a choice between two companies with distinctly different risk and growth profiles.

ABBV is best known for its blockbuster Humira medication which treats rheumatoid arthritis along with a host of other ailments. The drug is pushing $20 billion per year in global sales and represents a sizeable portion of ABBV’s business at this time. Although ABBV is building many other drugs to offset the eventual patent cliff for Humira, it is nevertheless leveraging its intellectual property with the drug by developing patent license agreements; just this past week the company announced a non-exclusive license with Pfizer Inc. (PFE) under which PFE will pay royalties to ABBV for its proposed biosimilar adalimumab product, beginning late 2023. While the terms of the deal are private, this is the seventh such agreement and demonstrates ABBV’s ability to work harmoniously with global competitors to protect future cash flows.

At this time I am satisfied to have initiated a position in ABBV but would also be interested in averaging down subject to market opportunities. The company seems to have a healthy runway of growth in the pipeline as it prepares for the decline in income from Humira. That is something I would love to remain a part of in the years to come. At the time of writing it seems I may not get an opportunity to increase my stake at favourable prices any time soon given the PFE deal helped push the shares up nearly 5% toward the end of the week.

A side-benefit of making this purchase is that it will add income to my “off months” which stick out like a sore thumb when providing my monthly portfolio updates. It definitely motivates me to earn more when I realize I am putting out for the world to see that I brought in less than $50 in a given month.

While ABBV didn’t make it onto my Q4 Stock Watchlist, this purchase is a great example of remaining flexible and taking advantage of what the market offers up. As an investor, it is critical to keep an open mind and recognize that conditions are always changing. A rigid strategy is one that is likely to get broken along the way.

Having noted the above, let’s take a quick look at the two purchases I made in November and see what they mean to the overall dividend growth portfolio –

ABBV: I initiated my position with 20 shares at a total cost of $1,766.75 USD. Based on the current quarterly dividend of $1.07 USD, I am expecting this purchase to yield $21.40 quarterly or $85.60 annually.

Brookfield Renewable Partners L.P. (BEP): I made what I regard in the near-term as my final purchase of BEP by picking up 45 shares at a total cost of $1,634.45 CAD. With the current quarterly dividend set at $0.49 USD, I am approximating quarterly income of $28.67 CAD or $114.68 CAD annually with a 30% FX conversion estimated (though this is, of course, volatile and will fluctuate over time). For clarity’s sake, it is worth stating that while I own BEP in CAD and receive dividends in this currency, the company announces its dividend in USD and so there is always FX to consider on my side.

In aggregate, these purchases represent $3,401.20 in currency-neutral invested capital. Given that they occurred toward the end of 2018, it won’t be until 2019 that their full effects are felt over an entire year.

Cash Cushion

I continue to earn 2.5% on liquid savings at the present time from my online bank. This offer ends at the end of December and so I am currently on the lookout for another opportunity to put my cash to work.

As interest rates trend higher, it should become easier to find reasonable rates of return on my “float” while I comb the globe for stock market deals.

Conclusion

November was a slow month for dividend income. It brought in more than ten times less the preceding two months based strictly on the timing of dividend payments from companies in my portfolio. With that said, I am nevertheless grateful for the cash flow I did receive and am certainly looking forward to December for those year-end payouts; I anticipate it will be a banner month for the portfolio dividends.

The highlight of the month was my purchase of ABBV primarily because I excited about the opportunity to deepen my pharmaceutical exposure beyond Johnson & Johnson (JNJ) and because it will bulk up my dividend income in what are otherwise soft payment periods. Making this purchase along with the BEP addition fuels my enthusiasm to close out the year in December strongly. I am hoping late tax-related sales by traders offer up opportunities for someone such as myself with a genuine long-term mindset.

Thank you for reading.

Full Disclosure: Long REI.UN, CSH.UN, MRU, ABBV, BEP, JNJ

16 thoughts on “November 2018 Portfolio Update

  1. Tawcan says:

    Nice purchase, I’ve been eyeing AbbVie too. Seems like this stock is very popular within the DGI community recently.

    1. Hey Tawcan,

      Yeah, I seem to be reading about ABBV everywhere these days. I was happy to snag a position since I had some USD sitting around, though the amount I converted from CAD stung given the exchange at the moment.

      Take care,
      Ryan

  2. Hi GRB,

    Nice addition to the portfolio. I’m also looking to add some more pharmaceuticals to my portfolio.

    Cheers,
    TLTI

    1. Hey TLTI,

      Yeah, I was glad to get some more pharmaceutical exposure, myself. Thanks for stopping by.

      Ryan

  3. nice!

    love that riocan drip…
    Also that addition of abbvie. I would love to start a position in them sometime soon.

    while a slower month it seems like your making it better.

    In the overall picture the forward dividend number is all that matters. But like you id like to even out my months as well.

    keep it up!
    Passivecanadianincome recently posted…November 2018 – Passive IncomeMy Profile

    1. Hey Rob,

      Yeah, the forward dividend truly is what matters. That said, it does feel good knowing I’m working toward bulking up this off-month payment schedule. The main thing was that there was what I deemed to be a quality stock in ABBV that was available at a reasonable price and juicy dividend yield when I was looking.
      REI.UN will always have a special place in the heart; bought it as my second individual company and have been loving the monthly payments now for nearly a decade!

      Take care,
      Ryan

  4. Trippe says:

    Nice blog! I started a blog 6 months ago at 67 and am looking for blogs that I can learn from. I know it is hard work and often frustrating. I will give a good try even though I know I don’t have as much ‘time’.

    1. Hey Trippe,

      Never too late to get started with a good strategy for life or investing. Looking forward to speaking more with you in the time to come.

      Regards,
      Ryan

  5. Hey Ryan,
    What are your thoughts on using a dividend reinvestment plan vs taking the cash and reinvesting elsewhere. I like to keep my investing on autopilot and so use DRP but I’d be keen to here whether you have another strategy that you follow?
    – Money Professor

    1. Hey MP,

      Off the top, here are a few considerations from my point of view with regard to DRiPing:
      1) All dividends should ALWAYS be reinvested back into the portfolio during the accumulation phase (which we’re both in). In other words, the dividends shouldn’t be transferred out of the portfolio to be spent on a latte or shiny objects, etc..
      2) Dividends should be reinvested directly back into a company if you feel that the company is a better value than other investments/stocks you are considering at that given time. In other words, reinvesting dividends back into a company when you think it is really expensive doesn’t really make sense if you have another candidate in mind that looks like a much better value.
      3) Having noted the above, all things equal, the great thing about a DRiP is that it simplifies your life and makes sure all of your money is always being put to work (as opposed to just sitting in your stock account earning no interest, etc.).
      4) I don’t DRiP directly back into shares because my discount broker (ridiculously) doesn’t allow me to choose which stocks I want to DRiP. It forces me to go “all or nothing” which I don’t want to do since my biggest positions will get even bigger and I’d rather divert their dividends to other stocks. For instance, I would rather use my BCE dividends to buy more V stock rather than having BCE grow to be an outsized position.
      5) As a result of the point above, I simply “selectively reinvest” my dividends rather than automating the process.

      Let me know if all of that helps. I’d be interested to hear what you’re doing with your divs.

      Regards,
      Ryan

  6. You shouldn’t make a decision based on the payment month; however, it is always a benefit in my eyes when you can add to a position that pays a dividend in the first or second month of the quarter. I picked up 5 shares of ABBV right before the price popped last week. I would love to add more and will plan on doing so here when the price falls. We have plenty of time before the next ex-dividend date, so we can afford to be patient.

    Oh my, I haven’t even said congrats on the nice growth this month! Keep up the great work GRB!

    Bert

    1. Hey Bert,

      Absolutely… making a purchase based solely on payment schedule is a recipe for disaster. With that said, it gave me an opportunity to take a closer look at companies outside my portfolio and ABBV really tipped the scales given recent price weakness coupled with a double digit dividend raise. Glad to see you added to your position as well!

      Yeah, looking forward to the February payment when ABBV becomes accretive to the income.

      Take care,
      Ryan

  7. I agree you shouldn’t make purchases based on the month they pay out, but the value at the time. I think ABBV was an excellent pick up for you. They have a great track record of increasing dividends. The price has started to rebound so it may be harder to average down until another dip happens, but it still makes for a great entry point for a new position. I also own ABBV in my portfolio. Looking forward to seeing those dividends add to your growth numbers.

    1. Hey DD,

      Yeah, the plan isn’t necessarily to pick up a company just to bulk up slow pay periods, but it the exercise definitely expanded my horizons in terms of companies I was looking at, either way. ABBV just came about with good timing (though a few weeks earlier in my realization would have meant a better entry point).

      Glad we’re both riding the ABBV train; there are plenty of divs to go around for us both!

      Take care,
      Ryan

  8. AbbVie looks like a bargain and I think it’s a great buy! It seems to be a really popular stock in DGI community at the moment (I also purchased some ABBV shares last month).

    Getting one slow month once in a while doesn’t really matter, because your annual growth rate looks great! November would be a slow month for me too if I didn’t have any OHI shares.

    1. Hey DD,

      You’re quite right; things even out over quarterly periods and so having a slow month amid two strong ones is okay. Nevertheless, it does feel good to plug the gap even just a bit to make the monthly updates more interesting!

      Glad to hear we’re both invested in this one.

      Take care,
      Ryan

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