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October 2022 Portfolio Update – Interest Rates Again

Chateau de Chillon near Geneva in Switzerland
Chillon Castle, Switzerland

Heading into Q4, I’ve been spending a fair amount of time following the drama with Elon Musk’s takeover of Twitter. His immediate removal of the company’s top executives and plans to initiate mass layoffs will be a business case study to examine for years to come. Particularly once we’ve seen how it all shakes out.

With regard to my own portfolio, things have been far more stable. It’s mostly been about receiving dividends and selectively reinvesting them where fit.

Dividend Summary

Once more, I earned dividend income from ten Canadian companies and one from the US.

CAD Dividends

CompanyCAD Payments ($)
Toronto Dominion Bank (TD)178.00
RioCan Real Estate Investment Trust (REI-UN)22.19
The Coca-Cola Company (KO)80.74
BCE Inc. (BCE)202.40
Canadian Imperial Bank of Commerce (CM)19.92
Bank of Nova Scotia (BNS)103.00
TELUS Corporation (T)72.80
Rogers Communications Inc. (RCI-B)27.50
Canadian Pacific Railway Limited (CP)9.50
Chartwell Retirement Residence (CSH-UN)5.10
A&W Revenue Royalties Income Fund (AW-UN)6.20

* KO pays its dividends to me in CAD, as this is the currency I purchased it in.

I earned $727.35 in dividends. This marks a 9.27% increase over my October 2021 dividend totals. Knocking on the door of a double-digit increase, driven mostly through organic dividend growth, is just the way I like it.

This is a typically quiet period where no new dividend boosts hit the books. October’s simply a steady earner that sets the stage for year-end.

Year To Date Progress

October brought with it a nice bump in the dividend graph. I love when I can see a healthy amount of white space between the current month and the same period from a year prior. It means there has been sizeable growth:

October 2022 dividend portfolio graph

Despite the market volatility, best of breed companies continued shelling out cash flow for their investors.

I’ve raked in well over $5.4k in dividend income with two months left in the tank:

MonthDividends ($)
January645.55
February101.85
March750.44
April720.76
May103.31
June765.11
July721.84
August103.31
September782.04
October727.35
Total5,421.56

Market Activity and Cash

I’ve continued to accumulate cash, despite one stock purchase which I’ll detail below. It’s quite nice to actually see earnings make a few more dollars than they used to when sitting on the sidelines. Of course, purchasing power is being eroded rapidly through the effects of inflation, but the nominal values are still nice to see.

I don’t have any specific plans for setting cash aside at the moment. The main thing is going to be opportunistically ready for volatility. Though, that’s nothing new for us, right?

Fortis Inc. (FTS)

When I think about the world’s biggest issues facing it today and what will matter in the next few decades, I think about energy infrastructure. Technology is scaling faster than it ever has, and all economies need plenty of power.

While I bought some Brookfield Infrastructure Corporation (BIPC) back in August, this time around I set my sights on FTS, another top-flight energy name. I’ve been accumulating FTS since 2015 and this time picked up a flat 15 shares.

With a starting dividend yield of ~4.4% and dividend guidance through 2027 of 4–6% raises, this is a solid name I am confident to trust. Further, the company’s recent dividend increase was its 49th consecutive, meaning it’s on the verge of earning the vaunted Dividend King status. That’s as steady as things come in the investing world.

Interest Rate Increases

The Bank of Canada was projected to increase its overnight rate by 0.75% this month. It surprised to the downside with a tepid 0.50% boost.

After incredibly hawkish language earlier this year about front-loading the path to higher interest rates, this pullback suggests to me that they are concerned about a slowing economy.

More than listening to what people say, I’ve found it far more instructive to watch what they do.

The bottom line is that they’d have pressed forward with 75 basis points if they thought they could reasonably get away with it. At this point, our Canadian central bankers are clearly signaling that they want to let more data roll in to see how much impact their earlier actions have already had.

It’s important to remember that these broad macro-changes take months and even years to truly manifest their impacts. We’ve already seen housing prices cooling and we’ll further see how all of this impacts the labour markets.

Conclusion

As I like to say, another month with the better part of a thousand dollars rolling in passively suggests the dividend growth model is working. My portfolio continues to grow organically, along with fresh capital infusions from the sidelines.

Adding some more FTS shares is consistent with my strategy and should continue to drive future earnings in the decades ahead.

Amid the market turbulence, stick to your strategy. Be patient, focus on high-quality companies, and be willing to ride the waves.

Ryan

Full Disclosure: TD, REI-UN, KO, BCE, CM, BNS, T, RCI-B, CP, CSH-UN, AW-UN, FTS, BIPC

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