July 2020 Portfolio Update – Tech Stocks on Fire

July was a hot month with plenty of days above 40°C with the humidex. That is finally starting to turn and it’s possible to sleep with the windows open once again.

On the investing front, it seems we’ve been on a non-stop rise in the market indices as the top tech companies have set new records on the regular. I wasn’t investing back in the late ‘90s, but I suspect there is something very different about it this time around. Cloud infrastructure and other secular growth themes are here to stay and the current best of breed companies will likely be among the huge winners in this landscape in the years to come.

I posted a solid month when it comes to dividend income which I’ll detail below.

Canadian Dividends

Company	CAD Payments ($)
Toronto Dominion Bank (TD)	158.00
RioCan Real Estate Investment Trust (REI.UN)	31.32
The Coca-Cola Company (KO)	73.98
BCE Inc. (BCE)	183.15
Canadian Imperial Bank of Commerce (CM)	17.52
Bank of Nova Scotia (BNS)	90.00
TELUS Corporation (T)	52.43
Rogers Communications Inc. (RCI.B)	27.50
Canadian Pacific Railway Limited (CP)	8.30
Chartwell Retirement Residence (CSH.UN)	5.10
A&W Revenue Royalties Income Fund (AW.UN)	4.00

Dividend Summary

I earned C$651.30 from my portfolio through the month of July. Compared to my July 2019 dividend total of $533.85 (currency-neutral), I’ve realized growth of 22.0% year over year.

Last year I had earned a dividend payment from The Walt Disney Company (DIS), but they suspended their payment this time around on account of the uncertainty related to COVID-19. As a result, all of my income this month was earned in good old Canadian dollars.

The bright spot of the month is that AW.UN has resumed its monthly distribution. They had suspended their regular payments inclusively from April to June. In resuming it, they cut the payout from C$0.159 per unit, monthly, to C$0.10. Consequently, my income from the company has thus dropped from C$6.36 per month to C$4.00. Still, I view this as a positive omen as it signals at least one company starting to see some normalization in operations and a return to normalcy. Every little bit helps.

Year To Date Progress

Taking a look at how July’s income factors into my progress through 2020, here’s how things have shaped up:

Month	Dividends ($)
January	494.10
February	86.82
March	697.25
April	691.94
May	82.82
June	708.70
July	651.30
Total	3,412.93

Averaged out, this amounts to just over $485 per month. The regular passive income from my portfolio is now reaching a pension-like level. It feels nice to have this sort of a cushion should something unexpected take place in life.

At this stage in my plan, all of this income is simply reinvested into other equities. Someday, this will supplement my income (or perhaps even be the largest piece) for retirement.

Market Activity and Cash

There really isn’t much to say as far as market activity. I’ve again stayed firmly on the sidelines and simply increased my cash position. I suspect much of the rise in the market is fueled by the huge amount of cash the Federal Reserve has been printing. This liquidity will have found its way into the markets and is currently propping things up; I see no reason to go reaching for dividend yields.

As noted earlier, we have seen technology stocks rise to the rafters. AMZN, for example, is closing in on $3,200 at the time of writing; that amounts to more than a 70% increase just since the start of the year and has the company values at nearly $1.6 trillion:

Source: Seeking Alpha

This work-from-home environment has been simply amazing for the businesses that service it.

No different than has been the case since April, I am looking forward to a pullback to continue building out positions in high quality companies. That’s the mantra that fuels our success and it’s worth sticking to in this climate.

Business and Competition

I watched with interest at the end of the month at the antitrust hearings which involved Apple (AAPL), Amazon (AMZN), Google (GOOGL), and Facebook (FB). The CEOs of each respective company had to respond to questions around whether their businesses have developed into an anti-competitive monopoly (or oligopoly, at the least, depending on the business unit in question).

Generally speaking, there is no question these companies have earned outsized positions in their respective sectors. The average person would be hard pressed to conduct commerce online without crossing one of these companies—at least—along the way.

It is hard to imagine what sort of investment and level of innovation it would require to displace these companies at this stage. Their share of the pie will likely continue to grow along the way, which is just what these antitrust hearings are designed to quell; the goal is to keep the marketplace competitive for all parties and for newcomers.

With that said, I tend to prefer government to remain apart from the business arena except in cases of clear misconduct or deceptive practices. The reality is that even the CEOs of these companies don’t have a clear picture of what the world is going to look like in another decade or two. The companies that differentiate themselves and anticipate (or create) the needs of consumers will reap the huge rewards to come.

Success of Businesses at Home is Important

I tend to agree with the testimony of, for example, Jeff Bezos. He indicated that AMZN produces hundreds of thousands of jobs with above-average benefits. AMZN is able to afford those benefits for employees because it is massively successful and continues to grow. The focus of AMZN has always been the customer, first and foremost. If you provide a top notch buying experience, you earn repeat business.

My belief is that the government should welcome companies like those currently facing these antitrust challenges; there are huge benefits to keeping them based in the U.S. What I’ve seen is that when they feel forced, companies will ship their operations elsewhere. Best to keep them at home, I feel.

Running and Personal Wellness

I hit my 60km running total that I outlined in my June article. These are not lofty totals by any means, but having a target to hit does provide some encouragement on those challenging mornings when I’d rather sleep a little later.

I’ll be targeting 60km again for August. Most mornings that I run, that means 5km. Sometimes I’ll boost it up to 10km or so to stretch the legs and provide an additional challenge, which can make for some nice variation both in the level of exertion and also by seeing a different part of the path that I normally take.

Conclusion

I’ve been keeping my eye on that $500 per month target. July’s totals demonstrate how much closer I’m inching toward that psychological threshold.

Businesses appear to be rebounding in many cases, or at least becoming increasingly sure of themselves as we work through the COVID-19 situation worldwide. It’s impossible to say exactly when we’ll be fully returned to normal—or what that normal will look like—but I have seen signs of improvement that give me a feeling of optimism when I look toward the second half of the year that we’re now in.

Thank you for reading.

– Ryan

Full Disclosure: Long TD, REI-UN, KO, BCE, CM, BNS, T, RCI.B, CP, CSH-UN, AW-UN, AMZN, GOOGL