December Dividend Income Report

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Includes: AAPL, ADWPF, ANCUF, DIS, ENB, FTS, GNTX, HAS, HON, LAZ, LSDAF, MGA, MSFT, RY, SBUX, SHOP, TXN, UPS, V
by: The Dividend Guy

The year ended well on the stock market except for one type of investor - the one who decided to sit on the sidelines! Back in September, I received slightly over $100,000 as a result of the commuted value of my pension plan. So, I decided to invest 100% of this money into dividend growth stocks. Each month, I publish my results. I don't share this to brag, I share this to show you that it is possible to build a portfolio during an all-time high market. The market will crash... eventually. In the meantime, I would rather cash some juicy dividends!

Portfolio Holdings

I started this pension portfolio in September 2017 with the sum of $108,760.02. As of January 10, 2018, my portfolio shows a total value of $124,736.55 (after my US portfolio converted into CAD). This is nearly a $16,000 increase in 4 months. I hope I will continue to do that well!

Canadian Portfolio (CAD):

Company Name Ticker Market Value
Alimentation Couche-Tard (OTCPK:ANCUF, ATD.B.TO) $5,714.70
Andrew Peller (OTC:ADWPF, ADW.A.TO) $6,743.75
Royal Bank (RY, RY.TO) $6,290.40
Mistery Stock N/A $7,782.95
Enbridge (ENB, ENB.TO) $5,518.70
Fortis (FTS, FTS.TO) $4,435.20
Lassonde Industries (OTC:LSDAF, LAS.A.TO) $5,281.92
Magna International (MGA, MG.TO) $5,167.39
Shopify (SHOP, SHOP.TO) $5,517.60
Cash $725.25
Total $53,177.86

U.S. Portfolio (USD):

Company Name Ticker Market Value
Apple AAPL $5,404.23
Disney DIS $4,947.30
Gentex GNTX $5,104.20
Hasbro HAS $4,321.24
Honeywell HON $4,992.32
Lazard LAZ $5,817.06
Microsoft MSFT $5,293.20
Starbucks SBUX $5,030.30
Texas Instruments TXN $5,519.50
United Parcel Services UPS $4,777.07
Visa V $5,955.50
Cash $546.70
Total $57,708.62

As you can see from my previous income report, I have moved some monies from my U.S. account to my Canadian one. This is because I found a few buying opportunities. I also included a "mystery stock," which is already up 40% because I bought it in January. This "mystery stock" will be part of my next dividend income report! Yeah... up 40% in a week! The market is really crazy. During December 2017, I completed two more transactions on the Canadian side.

Bought 70 Shares of Magna International (MG.TO/MGA) @ $71.42

You may not have heard of Magna International, as it is a Canadian company, but it trades on the NYSE under MGA. The stock price jumped by 20% in 2017 and by 188% over the past 5 years. Still, I believe there is room to grow for this super-powered dividend stock.

Magna International is an international automobile part supplier, but it also designs, develops, manufactures, assembles and engineers automobile parts. The company sells to original equipment manufacturers (OEMs) in 26 countries. It also offers 86 products that go from seating to roofing systems.

Magna is a leader in the auto parts industry, and this serves it well, as many manufacturers tend to concentrate their processes, with fewer suppliers offering wider product ranges. With a market cap of $19.5 billion, Magna is often chosen for its size and its stability. Car manufacturers are looking for suppliers that will follow them for several years, not just for a short ride.

There is a high switching cost for automakers to change to manufacturers such as Magna and since the car industry is capital-intensive, every detail helps to control costs. Working with the same small group of suppliers helps to control costs. This makes its niche a highly repetitive and stable market.

In addition to rewarding its shareholders with dividend payments, the company uses its money for capital expenditures and making strategic acquisitions. This is largely a result of Magna's excellent track record of converting earnings into strong cash flow from operations. Even during the severe downturn of 2008-2009, it was able to generate impressive operating cash flow.

Bought 99 Shares of Fortis (FTS.TO) @ $45.82

Fortis is a utility distribution company mainly operating in Canada. It serves over 2,000,000 gas and electric customers. Fortis is the main electricity supplier for Newfoundland and Prince Edward Island provinces. Since 2012, FTS has made two acquisitions in the U.S., and it now shows 60% of its revenue coming from the United States.

Fortis management recently announced another 6.25% dividend increase. Management also declared that it expects to increase dividends by 6% annually until 2022. I like when companies show motivation for growth (through acquisitions) and to reward shareholders at the same time. After all, Fortis is among the rare Canadian companies which can claim it has increased its dividend for 43 consecutive years.

It aggressively invested over the past few years, resulting in strong and solid growth of its core business. You can expect Fortis revenue to continue to grow as it is expanding. Strong from its Canadian base business, the company is able to generate sustainable cash flow, leading to four decades of dividend payments. The company has a 5-year capital investment plan of approximately $14.5 billion for the period 2018 through 2022, up $1.5 billion from the prior year's plan. Chances are most of its acquisitions will happen south of our border.

Dividend income: $93.45

When I reported my first dividend income report in October, I forgot that the dividend that was paid in USD. I understand that now, since I received both CAD and USD dividend this month. Therefore, I will now post the dividend received by each company in its currency, but use a total dividend payout in CAD. The conversion rate will also be shared for transparency purposes.

Canadian Holdings payouts: $20.55 CAD

Alimentation Couche-Tard: $7.74

Lassonde Industries: $12.81

U.S. Holdings payouts: $58.79 USD

Visa: $9.75

Honeywell: $23.84

Microsoft: $25.20

Total payouts: $93.45 CAD

USD/CAD conversion rate = 1.24

In only 3 months, I have generated over $300 in dividend income. This will start to get really interesting this year, as I will know how much my portfolio can generate in a full year, and I will start seeing the power of dividend growth toward the end of 2018. I just can't wait!

Final Thoughts

In early January, I have completed my portfolio with my last trade. Going forward, it will just be a matter of following my investments and cashing my dividend. However, I do not expect to hold my "mystery stock" for a while. This one was what I call a "risk/reward" pick that does not fit my investment strategy. For this reason, I have already put a stop sell on it to protect my investment. It was a good move, but I do not want to take additional risk at this time. Stay tuned for my next dividend income report and you will know all about that trade!

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.