Recent Buy #1

With dividend growth investing there are three basic ways to increase the amount of dividends passively rolling into your account:

1. Buy additional stock which pays dividends.
2. Reinvest your dividends (either actively or through a DRiP).
3. The company you already own increases the dividend payment.

While I haven’t typically provided update articles for recent purchases which addresses the first point above, I intend to begin doing so. Since the beginning of 2017, I have made three stock purchases totaling just under $5,000 in committed capital. I’ll cover these purchases in this article.

Chartwell Retirement Residences (CSH.UN)

CSH.UN identifies itself as the “largest operator in the Canadian senior living sector”. It has facilities which cover the spectrum from independent living through to long term care.

I am aware of this company through my work in the healthcare field. Seeing so many patients who live at a Chartwell facility really opened my eyes to the opportunity in this sector. The fact is that the population is going to continue to age and there will be an even greater need for companies like this one when looking out a decade or more into the future.

The distribution history on this one has seen some increases but hasn’t been consistent. Nevertheless, the distribution currently stands at $0.04681 and pays out monthly. On the 100 shares I purchased and assuming a twelve month period, this purchase should provide $56.17 in annual income.

Fortis Inc (FTS)

Following my purchase of CSH.UN, I was still on the hunt for some more safe yield. FTS fit the bill as it was yielding nearly 4%. This is one I had been looking to add to my position with over the past few years, but the price has never been quite right and other opportunities have taken my attention.

FTS is Canadian based and operates in the electric and gas industry. It owns an electric company in my hometown which gives me all the more incentive to have some shares in my portfolio. With nearly $50 billion in assets, the company identifies as being weighted 81% Electric, 16% Gas, and 3% Generation.

One of the nice things about FTS is that it actually projects its dividend growth going forward. The target through 2021 is 6% annually. I can certainly live with that. If you believe that total return over the years amounts to dividend yield + dividend growth +/- changes in valuation, then I can project roughly a 10% return going forward (~4% (yield) + 6% (div growth) +/- x (change in valuation which I can’t predict)). There is no guarantee and these figures are purely my own speculation. There is no “sure thing” as an investor.

Adding 40 shares with the quarterly dividend currently listed at $0.40, this purchase should bring in upwards of $64.00 annually.

Canadian Utilities Limited (CU)

CU is another example of my mindset with FTS above. I was again looking to add some more protected yield to my portfolio. CU has three global business units: Structures & Logistics, Electricity, and Pipelines & Liquids. These are the kind of “boring” sectors that can often churn off predictable returns for investors–which is exactly what I’m after.

Like FTS, again, I was adding to a pre-existing position with this one. I was impressed by CU’s recent 10% dividend increase which feels like icing on the cake when you consider that the company has been increasing its dividend every year consecutively since 1972.

The company currently yields nearly 4% with its $0.3575 quarterly dividend. On the 50 shares I purchased, this purchase should bring in around $71.50 in annual income.

Conclusion

Despite the market’s elevated levels, I still feel it is important to be continuously investing. There needs to be a balance of cash on the sidelines waiting for opportunities alongside active investment. Opportunities are always sitting out there waiting to be taken advantage of.

The way I manage my portfolio allows me to invest with confidence that even if the market were to take a 20% haircut tomorrow, it still wouldn’t mean the purchases listed above were poorly made. Since I am planning to hold them for their recurring cash flows, I don’t need to worry about the daily market gyrations. If anything, I could simply add more at better prices if such conditions were to come about.

As long as the dividends/distributions of the companies I’ve purchased are able to hold steady, these buys will generate ~$191.67 in annual income.

What do you think of the purchases I’ve made to kick off the year?