Home » Dividend Updates » Q3 2019 Dividend Report

My Background

Each investor faces a different set of circumstances. Now 32, I have been investing since I was 22 years old. My first investment in individual stocks was made in the heart of the financial crisis back in May of 2009. I purchased 40 shares (80, split-adjusted) of Toronto-Dominion Bank (TD). However, for years before making that purchase I had been researching the best methods available for both wealth creation and preservation.

I don’t believe in taking unnecessary risks and felt the whims of the stock market were too fickle as far as capital gains are concerned to base my aspirations of financial freedom on. Dividend growth investing stands out as it is far more predictable that a healthy company might increase its dividend by 6% than to make any sort of prediction about stock price volatility in the near term.

On this basis and from my initial foray into the markets with TD, I’ve built a portfolio of 29 cash flowing equities. My goal is ultimately to have a stock market portfolio which provides enough income to cover all of my expenses. While some feel that it only requires ten companies to achieve ultimate diversification, I believe there is room for a healthy level of redundancy to avoid the hiccups involved with company-specific performance. Regardless, I endeavour to always own the best of breed companies in their respective industries. I can live with a bit slower growth if it means greater security for my invested dollars.

This is a strategy I have researched over time and came to trust because it can work for me both as a young investor and likewise carry me through the decades to come. While it may not turn heads at a dinner party, it has proven its value over the past few hundred years and remains as relevant as ever today in our digital age.

Having noted the above, it is truly a great time to be a dividend growth investor. The companies I own are committed to rewarding shareholders and I love nothing more than to reinvest back into them to further increase the compounding power in my portfolio

I opened two new positions this quarter.

CAD Dividends

CompanyCAD Payments ($)Div Increase (%)
Toronto-Dominion Bank (TD)59.20
RioCan Real Estate Investment Trust (REI.UN)93.96
The Coca-Cola Company (KO)69.59
Johnson & Johnson (JNJ)79.39
BCE Inc. (BCE)174.35
Canadian Imperial Bank of Commerce (CM)16.80
Corby Spirit and Wine Ltd. (CSW.B)50.60
Bank of Nova Scotia (BNS)87.00
TELUS Corporation (T)50.633.21
Rogers Communications Inc. (RCI.B)27.50
Fortis Inc. (FTS)72.00
Canadian Utilities Ltd. (CU)84.54
Canadian National Railway Company (CNR)8.06
Canadian Pacific Railway Limited (CP)4.9827.69
Hydro One Ltd. (H)62.79
Chartwell Retirement Residences (CSH.UN)15.00
Metro, Inc. (MRU)4.00
Brookfield Renewable Partners L.P. (BEP)130.09
Brookfield Asset Management (BAM.A)3.18
Brookfield Infrastructure Partners L.P. (BIP.UN)13.36

USD Dividends

CompanyUSD Payments ($)
Waste Management Inc. (WM)21.79
McDonald's Corporation (MCD)20.71
Yum! Brands (YUM)13.93
Yum China (YUMC)3.98
PepsiCo, Inc. (PEP)8.12
Walmart Inc. (WMT)6.76
Visa Inc. (V)2.13
AbbVie Inc. (ABBV)40.02
The Walt Disney Company (DIS)7.48

Dividend Summary

I reached figures of C$1,107.02 and U$124.92 in the third quarter, rounding out to $1,231.94 in currency-neutral terms. Nothing too flashy from any of the companies—just the usual tick tock of high quality companies in their regular rhythm of sharing their gains with shareholders.

Just taking a quick skim down the list, it’s nice to see so many of my holdings closing in on the $100 mark with their quarterly payments. While it may be an arbitrary marker in and of itself, it is a meaningful sum all the same when I look at it through the lens of how little I was earning just a few short years ago from the same companies.

Standouts

CP’s huge +27% dividend increase was a great signal from the company. As the saying goes, men lie and women lie, but numbers don’t lie. It is one thing for a company’s management to express the desire to be “shareholder friendly”, but it’s quite another for them to follow through in as meaningful a way as this.

Despite the boost, CPs’ dividend yield itself is still pitifully low at the present moment as it has been hovering at just over 1%. Nevertheless, with my investing time frame being measured in decades, I have time to wait for the compounding to work its magic and eventually deliver a meaningful cash outlay.

Quarterly Buys/Sells

It was once again a rather tame quarter as far as market purchases. With prices remaining elevated, I decided to initiate positions in two companies within the Brookfield ecosystem of businesses.

Brookfield Asset Management (BAM.A): I picked up 15 shares for a total cost C$969.50. On the U$0.16 quarterly dividend, this should bring in somewhere around C$3.13 quarterly or C$12.53 annually.

Brookfield Infrastructure Partners L.P. (BIP.UN): I bought 20 shares for a cash outlay of C$1,129.95. On the U$0.5025 quarterly dividend, I’m expecting around C$13.12 quarterly or C$52.48 annually.

Again, the expected payments listed above are approximations as they will always need to account for foreign exchange, which fluctuates. My intention with these nibbles is to just set a base on which to build. I’ve been intending to grow my stake with Brookfield since picking up BEP.UN last year. The companies tend to have experienced management teams, decent yields, growth, and an overall commitment to shareholder returns. That tends to be a great combination for shareholders.

I covered my rationale for these Brookfield purchases in my July 2019 Portfolio Update.

Q4 2019 Stock Considerations

Although at the time of writing I have already made some purchases in Q4, I will still comment on general strategy. The market has been a bit more volatile recently with companies in my portfolio. I continue to look for opportunities to double down on what I already own; I’d like to consolidate existing positions with larger stakes, preferably at lower prices.

As noted previously, I’ve been rethinking my strategy around investments in technology firms. With cloud computing becoming an integral part of doing business, firms which offer these services and have a proven track record will become increasingly important to have a piece of. I continue to keep my eyes open for a pullback in Microsoft Corporation (MSFT), which I consider one of the best of breed companies in this space.

Cash Position

Cash levels have remained steady given I have been investing at around the same rate as I have been putting money aside from earned income. Given that time in the market tends to be more important than timing the market and considering my lengthy investment horizon, it is important to not become overly passive and build a huge cash stockpile instead of investing.

Conclusion

Once again reaching a new quarterly high for dividends received provides further evidence of the strength of the dividend growth investing strategy. Raking in over $1,200 without needing to lift a finger is a solid haul. Knowing that I’m simply reinvesting that back into the market is even better.

This was a decent quarter in terms of market activity. Expanding my share of Brookfield’s companies is something I have had on my mind for quite a while and it feels great to pull the trigger.

Thank you for reading.

Ryan

Full Disclosure: Long TD, REI.UN, KO, JNJ, BCE, CM, CSW.B, BNS, T, RCI.B, FTS, CU, CNR, CP, H, CSH.UN, MRU, BEP.UN, BAM.A, BIP.UN, WM, MCD, YUM, YUMC, PEP, WMT, V, ABBV

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