November 2018 Portfolio Update

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Includes: ABBV, BEP, CWSRF, JNJ, MTRAF, PFE, RIOCF
by: Get Rich Brothers
Summary

November proved to be a challenging month for dividend income.

I have begun with the inclusion of a Monthly Dividend graph for portfolio updates.

I have made the addition of one stock which will bulk up November dividends in the future.

The dividend growth investing philosophy is built around consistency and compounding. Those who put it best to use are the investors who are diligent about the inflow of dividends, contributing new capital to their portfolios, and allowing time to do its magic with the right selection of high-quality companies.

Coming into November this time around, I was hopeful from the outset that markets would continue their trend of volatility, which accelerated through October. I have been diligent in loading up my cash reserves over time and love putting capital to work at bargain prices.

On that note, let's take a look at actual dividends received in the month.

CAD Dividends

Company CAD Payments ($)
RioCan Real Estate Investment Trust (OTCPK:RIOCF) 31.32
Chartwell Retirement Residences (OTC:CWSRF, TSE:CSH.UN) 4.90
Metro Inc. (OTCPK:MTRAF) 3.60

Dividend Summary

I earned $39.82 CAD in dividends from three businesses through November. This is the lowest November dividend total I have had since 2013, and comes as a result of the amalgamation of Jean Coutu (OTCPK:JCOUF) into MTRAF. I had previously been building up a position in the former, which paid dividends on the Feb-May-Aug-Nov payment schedule, and have now to account for the drop-off.

Here’s a glimpse at my November dividend track record:

November 2018 Dividends

I have, however, taken steps to shore up this dividend drought in my portfolio.

Market Activity

While I have previously stated that I would never buy a company simply to fill a gap in my monthly income payments, I have nevertheless started paying closer attention to when companies make dividend payments during the normal course of my research. One current standout in my mind is AbbVie Inc. (ABBV).

ABBV is a research-based biopharmaceutical which was spun out of Abbott Laboratories (ABT) back at the start of 2013. The purpose of the split was to give investors a choice between two companies with distinctly different risk and growth profiles.

ABBV is best known for its blockbuster Humira medication, which treats rheumatoid arthritis along with a host of other ailments. The drug is pushing $20 billion per year in global sales and represents a sizeable portion of the company’s business at this time. Although ABBV is building many other drugs to offset the eventual patent cliff for Humira, it is nevertheless leveraging its intellectual property with the drug by developing patent license agreements. Just this past week, the company announced a non-exclusive license with Pfizer Inc. (PFE), under which PFE will pay royalties to ABBV for its proposed biosimilar adalimumab product beginning late 2023. While the terms of the deal are private, this is the seventh such agreement and demonstrates ABBV’s ability to work harmoniously with global competitors to protect future cash flows.

At this time I am satisfied to have initiated a position in ABBV, but I would also be interested in averaging down subject to market opportunities. The company seems to have a healthy runway of growth in the pipeline as it prepares for the decline in income from Humira. That is something I would love to remain a part of in the years to come. At the time of writing, it seems I may not get an opportunity to increase my stake at favourable prices anytime soon given the PFE deal helped push the shares up nearly 5% toward the end of the week.

A side benefit of making this purchase is that it will add income to my “off months”, which stick out like a sore thumb when providing my monthly portfolio updates. It definitely motivates me to earn more when I realize I am putting out for the world to see that I brought in less than $50 in a given month.

While ABBV didn’t make it onto my Q4 Stock Watchlist, this purchase is a great example of remaining flexible and taking advantage of what the market offers up. As an investor, it is critical to keep an open mind and recognize that conditions are always changing. A rigid strategy is one that is likely to get broken along the way.

Having noted the above, let’s take a quick look at the two purchases I made in November and see what they mean to the overall dividend growth portfolio.

ABBV: I initiated my position with 20 shares at a total cost of $1,766.75 USD. Based on the current quarterly dividend of $1.07 USD, I am expecting this purchase to yield $21.40 quarterly, or $85.60 annually.

Brookfield Renewable Partners L.P. (BEP): I made what I regard in the near term as my final purchase of BEP by picking up 45 shares at a total cost of $1,634.45 CAD. With the current quarterly dividend set at $0.49 USD, I am approximating quarterly income of $28.67 CAD, or $114.68 CAD annually, with a 30% FX conversion estimated (though this is, of course, volatile and will fluctuate over time). For clarity’s sake, it is worth stating that while I own BEP in CAD and receive dividends in this currency, the company announces its dividend in USD, and so, there is always FX to consider on my side.

In aggregate, these purchases represent $3,401.20 in currency-neutral invested capital. Given that they occurred toward the end of 2018, it won’t be until 2019 that their full effects are felt over an entire year.

Cash Cushion

I continue to earn 2.5% on liquid savings at the present time from my online bank. This offer ends at the end of December, and so, I am currently on the lookout for another opportunity to put my cash to work.

As interest rates trend higher, it should become easier to find reasonable rates of return on my “float” while I comb the globe for stock market deals.

Conclusion

November was a slow month for dividend income. It brought in more than ten times less the preceding two months, based strictly on the timing of dividend payments from companies in my portfolio. With that said, I am nevertheless grateful for the cash flow I did receive and am certainly looking forward to December for those year-end payouts; I anticipate it will be a banner month for the portfolio dividends.

The highlight of the month was my purchase of ABBV, primarily because I am excited about the opportunity to deepen my pharmaceutical exposure beyond Johnson & Johnson (JNJ) and because it will bulk up my dividend income in what are otherwise soft payment periods. Making this purchase along with the BEP addition fuels my enthusiasm to close out the year strongly in December. I am hoping late tax-related sales by traders offer up opportunities for someone such as myself with a genuine long-term mindset.

Thank you for reading.

Disclosure: I am/we are long RIOCF, TSE:CSH.UN, MTRAF, ABBV, BEP, JNJ. 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.