As a dividend growth investor (DGI), I am driven to keep track of both my inflows and outflows. Increases in investment income represent one measure to assess whether I am winning or losing the game of money. While I have been diligent to track my progress on a quarterly and annual basis over the past few years, through 2018, I have also been providing monthly income updates.
October is the final leg of the Jan.-Apr.-July-Oct. quarterly cycle and so offers an opportunity to see where I was able to get to after a year of portfolio consolidation; adding to existing holdings while trimming that which truly fell outside my investment wheelhouse. Bank of Nova Scotia (BNS) is the standout grower on this schedule as I did add to this position in four tranches through 2018.
|Company||CAD Payments ($)||Div Increase (%)|
|Toronto-Dominion Bank (TD)||53.60|
|RioCan Real Estate Investment Trust (OTCPK:RIOCF)||31.32|
|The Coca-Cola Company (KO)||66.88|
|BCE Inc. (BCE)||166.10|
|Canadian Imperial Bank of Commerce (CM)||16.32||2.26|
|Bank of Nova Scotia (BNS)||85.00||3.66|
|TELUS Corporation (TU)||36.75|
|Rogers Communications Inc. (RCI)||26.40|
|Canadian Pacific Railway Limited (CP)||3.90|
|Chartwell Retirement Residence ()(TSE:CSH.UN)||4.90|
I once more earned a record total for dividend income through the month of October. I raked in $491.17 CAD from a total of ten companies.
It is worth noting that the dividend increases for both CM and BNS are their second of the year. These two Canadian banks tend to bump their payout at least twice per year. For CM, the quarterly dividend has moved from $1.30 to $1.36 and so represents a total gain of 4.62% year-over-year (YOY). BNS has shown healthier growth with its quarterly dividend moving from $0.79 to $0.85 from last October, posting a 7.59% YOY gain.
When viewing my dividend income from a holistic perspective, I feel I should be looking to add more dividend income on the USD side of the equation as this month provides no foreign dividends. One company I have on the radar to fill this gap is Nike Inc. (NKE) which has become even more interesting to me after reading Phil Knight's biography "Shoe Dog" which outlined the company's rise from an idea to a multinational phenom. That said, NKE's initial dividend yield is a bit light and so I will certainly be looking to add selectively on weakness, should the opportunity present itself.
After taking a breather in September in terms of stock buying, I dipped my toes back into the water with one purchase in October.
After initiating a position in Brookfield Renewable Partners L.P. (BEP) back in July, the share price has steadily pulled back. As that has happened, I've continued buying to average down on price as dividend yield has risen. I added 40 shares for a total cost of $1,536.35 CAD. On the current quarterly dividend of $0.49 USD, these shares should produce roughly $25 CAD quarterly or $100 CAD annually, subject to foreign exchange fluctuations.
I felt comfortable adding to BEP as the company has an incredibly transparent shareholder-friendly policy of intending to earn 12-15% overall returns to investors while boosting the dividend by 5-9% annually. On a starting yield hovering around the 7% range, there is real cash flow potential if they are able to execute on their plans. Incidentally, CEO Sachin Shah expressed plenty of confidence that they will be able to do just that on the Q3 2018 Earnings Conference Call this past Wednesday:
Overall our strategy remains the same. We look for investment opportunities in our core markets globally, where we can surface 12% to 15% returns on a per unit basis using our operational expertise. We maintained strong access to public and private sources of debt and equity and investment grade balance sheet and surface value through the monetization of mature assets.
This strategy has served us well for almost 20 years and our business has been resilient through multiple investment cycles and the numerous investment trends that have permeated the renewable power sector over that time. As a result, we have delivered 15% total return on a per unit basis to our unit holders since our inception in 1999.
Aside from BEP, many other companies have been on the decline over the past while and so I believe there will still be ample opportunities as 2018 winds down. I highlighted three (including BEP) in my recent Q4 Watchlist article.
In times like these, it is important to have cash on the sidelines ready to deploy. While investing efficiently means sometimes waiting, there are times when it is important to capitalize on opportunities to take advantage of what Mr. Market offers up.
Although the rising interest rate environment seems to have placed pressure on utility stocks, it bodes well for individuals looking to get more out of what they have sitting on the sidelines. While I am currently earning 2.5% through the end of the year from my bank, I have already been seeing 3% promotional rates being floated around and so I will need to be ready to renegotiate my rate come the end of December.
Part of a healthy financial strategy involves having cash sitting back earning less than it otherwise might. This cash can eventually be used to take advantage of timely opportunities and, most of all, it provides financial security to buffer against the vicissitudes of life.
My monthly dividend income is once again knocking on the door of $500 which would be a solid milestone to achieve. The BEP purchase I made this month should position me to meet that level as I look forward to December, and so I'm already feeling anxious to get those totals counted.
It felt good to get investing again after taking a break in September to build up my cash reserves. Rising interest rates make it slightly more attractive to hold cash in the current environment for those able to finagle a solid rate. However, declining stocks get my trigger-finger ready to double down on positions as the dividend yields are elevated at the moment and so I may well find myself deploying more capital over the remainder of the year.
Thank you for reading.
Disclosure: I am/we are long TD, RIOCF, KO, BCE, CM, BNS, TU, RCI, CP, TSE:CSH.UN, BEP.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: All Canadian companies owned in CAD on Canadian exchanges.