Q1 2018 Dividend Report

by: Get Rich Brothers

Summary

I've made six purchases of dividend-paying equities through the quarter.

The market has been showing recent signs of weakness, which come as a welcome opportunity.

I detail the income from my entire portfolio.

My Background

Each investor faces a different set of circumstances. While I recently turned 31, I have been investing since I was 22. 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 (NYSE: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 to base my aspirations of financial freedom on. Dividend growth investing stood out as it seemed far more predictable that a healthy company might increase its dividend by 6% than to make any sort of prediction about stock price volatility over the short term.

On this basis and from my initial foray into the markets with TD, I’ve built a portfolio of 24 cash-flowing equities. My goal is ultimately to have a stock market portfolio that 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 endeavor 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 to 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.

It is truly a great time to be a dividend growth investor. As I have let the dividends roll into my account since taking myself off of the DRiP at my discount broker, I have had ever increasing amounts of cash flow to invest to further compound the snowball of wealth.

I made a grand total of six purchases of dividend-paying equities during the quarter - up from three in the previous quarter - which I will detail below. Each of these will, over time, contribute further to the financial fortress I am building.

CAD Dividends

Company CAD Payments ($)
Toronto-Dominion Bank 48.00
RioCan Real Estate Investment Trust (OTCPK:RIOCF) 93.31
Johnson & Johnson (JNJ) 68.36
BCE Inc. (BCE) 157.85
Canadian Imperial Bank of Commerce (CM) 15.60
Jean Coutu Group Inc. (OTCPK:JCOUF) 29.51
Corby Spirit and Wine Ltd. (OTCPK:CBYDF) 38.50
Bank of Nova Scotia (BNS) 19.75
TELUS Corporation (TU) 35.35
Rogers Communications Inc. (RCI) 26.40
Fortis Inc. (FTS) 46.75
Canadian Utilities (OTCPK:CDUAF) 53.10
Canadian National Railway Company (CNI) 6.83
Canadian Pacific Railway Limited (CP) 3.38
Hydro One Ltd (OTC:HRNNF) 33.00
Chartwell Retirement Residences (TSE:CSH.UN) 14.40

USD Dividends

Company USD Payments ($)
Waste Management Inc. (WM) 19.77
McDonald's Corporation (MCD) 18.03
Yum! Brands (YUM) 11.94
Yum China (YUMC) 3.32
PepsiCo Inc. (PEP) 6.85
Walmart Inc. (WMT) 6.51
Visa Inc. (V) 1.79

Dividend Summary

The quarter has shown grand totals of $690.09 CAD and $68.21 USD. This is the highest-earning quarter that I have on record. Much of the growth has been fueled by purchases I made through the middle-part of the year and which are now providing me earnings as the dividends tick on their quarterly schedules.

Standouts

WM also earns a spot on the honor roll for upping its dividend payment by 9.41%. It is the largest increase I have earned so far from the company since purchasing it around eight years ago.

YUM bumped its dividend by 20% for the March payment which was higher than I was expecting. Before breaking off YUMC, the company had indicated it was proud of the “legacy” record of dividend boosts of 10% or better, but crossing into 20% territory is a statement of strength.

Although the payment increase was only 2.13% from RIOCF, this is a standout as it is the first boost to the payout since 2013. It is a positive signal from the company and hopefully it is able to get back to the more regular schedule of increases it maintained pre-financial crisis.

Quarterly Buys/Sells

All activity made in CAD on the Toronto Stock Exchange.

BNS: At a cost of $1,233.05, I nibbled for 15 shares at a reasonable price healthy and rising dividend. On the $0.79 quarterly dividend, I am looking for this purchase to bring in $11.85 quarterly or $47.40 annually.

CBYDF: I made two separate purchases this quarter totalling $2,127.75 which allowed me to average down on my cost basis. In total, I acquired 105 shares. On the current quarterly dividend of $0.22, I expect these purchases to generate $23.10 quarterly or $92.40 annually.

CDUAF: I added to my position with another 35 shares for $1,266.80. With the $0.3933 quarterly dividend, this should generate $13.77 quarterly or $55.06 annually.

FTS: I added 30 shares for $1,291.25. With the $0.425 quarterly dividend, I have this slated to pull in $12.75 quarterly or $51.00 annually.

HRNNF: For my final purchase of the quarter, I added to yet another utility within my portfolio for $1,037.45. I added 50 shares here. On the current $0.22 quarterly dividend, this should bring in $11.00 quarterly or $44.00 annually. I should also mention that I am expecting a dividend increase preceding the June payment. Last year’s increase was 4.76%.

Quarterly Dividend Increase: I made six total purchases in five different positions through Q1. Taken in aggregate, I am expecting $72.47 of additional income to be generated quarterly or $289.88 annually, notwithstanding further dividend increases. In total, it cost me $6,956.30 to purchase this dividend income stream.

As I discussed in the update to my Five Year Plan back in early January, my theme for this year has been to refocus on dividend growth equities and move away from the speculation fever that I caught in late 2017. Accordingly, I’ve made two sales to lock in profits I have made with cannabis stocks.

I sold 75 shares of Aurora Cannabis Inc. (OTCQX:ACBFF) and 25 shares of Canopy Growth Corporation (OTCPK:TWMJF) at $13.59 CAD and $41.10 CAD per share, respectively, both on the Toronto Stock Exchange. I am left with shares of ACBFF and 30 shares of TWMJF. As a result of these sales, I have locked in a 25% profit on cannabis investments even if, hypothetically, my remaining shares went to zero. From this point I am likely to hang onto my remaining investment for the foreseeable future. I would consider adding to either of these positions if either of them were to take a nosedive.

Q2 2018 Stock Considerations

I was highly acquisitive through Q1. I look to continue this trend into the next quarter. As I write this on April 2, the market is showing signs of weakness which can represent buying opportunities in the right companies. From my perspective, the most important thing is the safety of a company’s dividend since this is the juice that will eventually pay for my financial independence.

I have my eye on BNS as I would be interested in stocking up a bit more on this dividend stalwart if the price continues trending lower. With their routine dividend increases on a bi-quarterly basis, it is nice to see the income snowball steadily mushroom.

CDUAF is another stock that is hot on my watchlist. The company recently boosted its dividend by 10.01% on top of the 10% increase last year. Dividends send signals to the astute investor. This company has already managed over 40 consecutive years of dividend increases and is still pumping out double digit growth. To me, that is a sign of both an enduring business model and current-day strength.

Conclusion

I came out of the gates this year swinging. With just under $7,000 plowed into high-quality dividend-paying equities, I have added to my foundation of growth. While I suspect I will be a bit less aggressive in the coming quarter, I will take what the market gives me and act accordingly.

If and when the market goes on sale, I have a stockpile of cash on hand ready to deploy. The weakness in Canadian Utility stocks has been a welcome gift to kick off 2018 as I’ve already made three purchases. I will continue to keep them front-and-center in my mind if the attractive valuations persist.

Adding $289.88 to my annual dividend income brings me yet another step closer to my goal of financial freedom. Every dollar earned and reinvested provides the chance for me to benefit from compounding and organic growth from dividend increases at my invested companies.

Thank you for reading.

Full Disclosure: Long TD, RIOCF, KO, JNJ, BCE, CM, JCOUF, CBYDF, BNS, TU, RCI, FTS, CDUAF, CNI, CP, WM, MCD, YUM, YUMC, PEP, WMT, V, CSH.UN, TWMJF, ACBFF

All Canadian companies are held in CAD on Canadian exchanges.

Disclosure: I am/we are long TD, RIOCF, JNJ, BCE, CM, JCOUF, CDUAF, BNS, TU, RCI, FTS, CNI, CP, HRNNF, WM, MCD, YUM, YUMC, PEP, V, ACBFF, TWMJF.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.