Home » Dividend Updates » Q4 2018 Dividend Report

My Background

Each investor faces a different set of circumstances. Now 31, 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 26 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 made a grand total of five purchases of dividend paying equities during the quarter–down by one from the previous quarter–which I will detail further below. Each of these will, over time, contribute further to the financial fortress I am building.

CAD Dividends

CompanyCAD Payments ($)Div Increase (%)
Toronto-Dominion Bank (TD)53.60
RioCan Real Estate Investment Trust (REI.UN)93.96
The Coca-Cola Company (KO)136.06
Johnson & Johnson (JNJ)76.54
BCE Inc. (BCE)166.10
Canadian Imperial Bank of Commerce (CM)16.322.26
Corby Spirit and Wine Ltd. (CSW.B)50.60
Bank of Nova Scotia (BNS)85.003.66
TELUS Corporation (T)36.75
Rogers Communications Inc. (RCI.B)26.40
Fortis Inc. (FTS)72.005.88
Canadian Utilities Ltd. (CU)78.66
Canadian National Railway Company (CNR)6.83
Canadian Pacific Railway Limited (CP)3.90
Hydro One Ltd. (H)59.80
Chartwell Retirement Residences (CSH.UN)14.70
Metro, Inc. (MRU)3.60
Brookfield Renewable Partners L.P. (BEP)123.83

USD Dividends

CompanyUSD Payments ($)Div Increase (%)
Waste Management Inc. (WM)19.77
McDonald's Corporation (MCD)20.7114.86
Yum! Brands (YUM)11.94
Yum China (YUMC)3.9820.00
Visa Inc. (V)2.1319.05

Dividend Summary

I hit $1,104.65 CAD and $58.53 in the fourth quarter. In currency-neutral terms, this brings me to a sum of $1,163.18 and represents the culmination of a buying-frenzy early on in the year. I was very aggressive committing capital through 2018 and the sums this quarter demonstrate that in comparison with previous periods.

I should note, though, that KO made two payments this quarter and so the total does come out a bit top-heavy as a result.

Standouts

While it has been a great year overall for dividend increases, Q4 had three sizeable increases for my portfolio. MCD, YUMC, and V, were all able to provide healthy double digit gains. The downside is, of course, that these are smaller positions in my portfolio. I would, though, like to increase my position in V subject to better pricing opportunities and cash flow availability. I feel it is one of the best companies in the world and think it makes sense to double down when I am able.

Quarterly Buys/Sells

BEP: I grabbed another 85 shares this quarter in two tranches at a total cost of $3,170.80. Based on the current quarterly dividend of $0.49 USD, This should come out to approximately $54.15 CAD quarterly or $216.60 CAD annually. While the dividend is paid and calculated in USD, I receive my dividends in CAD and so there is foreign exchange to account for when receiving these payments.

AbbVie Inc. (ABBV): I initiated a position in ABBV back in mid-November. The share price had declined considerably from highs reached earlier in the year and I felt that, coupled with its healthy dividend yield, it would be a great opportunity to get further exposure into the biopharmaceutical sector. I shared my thesis on the company back in my November Portfolio Update when I made the purchase.

I picked up 20 shares of ABBV for $1,766.75 USD. Based on the $1.07 USD quarterly dividend, I am expecting this one to bring in $21.40 USD quarterly or $85.60 USD annually. If the price were to decline significantly or even hover in a range around my purchase price, I would consider adding to the position.

Q1 2019 Stock Considerations

While the media has been portraying October and the period since as having been a bad time to be invested in the stock market, I love times when stocks decline. It simply means I have an opportunity to get my money invested at lower prices. Since I plan to be buying stocks anyway, it simply helps me in the long run for there to be short term pricing weakness.

The way I think of the stock market, it is effectively the same as a grocery store or a retail store where, when I walk in, I am glad to see there is a sale on the things I want to buy. Since I was planning to buy the goods anyway, it simply means I get to either spend less money than I intended, or spend the same amount but get more goods for the same amount of money. I love a good bargain. Low prices should only concern someone if they are planning to sell; I’m not planning to sell and so it’s a win-win proposition from my vantage point.

The first thing I do when looking to make a purchase is review my own portfolio. My favourite stocks to buy are ones I already own which have had a pullback for no justifiable reason aside from the manic activity on Wall Street or Bay Street. Just because other people are selling doesn’t mean I should be also. It’s important to think differently. Behave differently. Following the crowd is expensive.

At this point in time, the financial sector has been hit pretty hard. Companies like TD and BNS are looking very attractive to me, though I did already invest a fair amount in BNS through the year. There is a good chance I’ll dip my toes back into the water in the coming weeks, hopefully at even better prices.

Cash Position

One of my banks has increased its interest rate on savings to 3%. As a result, I’ve transferred to my liquid savings to take advantage. This runs until the end of March and so I will benefit at least until that time. Rising interest rates do have their advantages, particularly when you have no debt.

Conclusion

Three stock purchases this quarter represents a slower period than earlier in 2018. Either way, it is always great to stay on track and remain active.

The current stock market “weakness” represents a timely opportunity to double down on high quality investments at attractive prices. I fully intend to be a buyer in the near future to not let the opportunity slip past.

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, WM, MCD, YUM, YUMC, PEP, WMT, V, CSH.UN, MRU, BEP, ABBV

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