November Dividend Income Report

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Includes: AAPL, ADWPF, ANCTF, ANCUF, CAE, DIS, ENB, FTS, GNTX, GTX, HAS, HON, ITPOF, LAZ, LSDAF, MGA, MSFT, NTIOF, REZI, RY, SBUX, TXN, UPS, V
by: The Dividend Guy

In September 2017, I received slightly over $100K as a result of the commuted value of my pension plan. I decided to invest 100% of this money into dividend growth stocks. Each month, I publish my results. I don't do this to brag, I do this to show you it's possible to build a portfolio during an all-time high market. The market will crash… eventually. In the meantime, I rather cash some juicy dividends!

Portfolio Holdings

I've been reading lots of negative headlines recently. Lowe's (NYSE:LOW) closed stores, Bombardier (BBD.A.TO) (OTCQX:BDRAF) (OTCQX:BDRBF) and General Motors (NYSE:GM) have gone through massive lay-offs and a bunch of companies have declared dividend cuts (BUD, LB, OMI, GE, BPL and so on…). Over the past 3 months, stock markets haven't been very kind to investors either:

Source: Ycharts

I admit that my own account has shown stronger numbers a few months ago. But still, I really don't understand the wind of panic. When you have a strong investment process in place, you are always better off to ignore the noise and keep your money where it works best; in the market. It's even better when you are a dividend growth investor; you get paid to wait! Let's take a look at what November had in store for me.

Numbers are as at December 1st, 2018:

Canadian portfolio (CAD)

Company Name

Ticker

Market Value

Alimentation Couche-Tard

ATD.B.TO, OTCPK:ANCUF, OTCPK:ANCTF

$5,996.78

Andrew Peller

ADW.A.TO, OTC:ADWPF

$5,847.35

National Bank

NA.TO, OTCPK:NTIOF

$4,848.00

Royal Bank

RY

$5,845.20

CAE

CAE

$5,396.00

Enbridge

ENB

$7,029.26

Fortis

FTS

$4,568.85

Intertape Polymer

ITP.TO, OTCPK:ITPOF

$5,067.00

Lassonde Industries

LAS.A.TO, OTC:LSDAF

$4,263.84

Magna International

MG.TO, MGA

$4,641.70

Cash

$802.42

Total

$54,365.20

My account shows a variation of +$1,025.70 (+2%) since the last income report.

I'm quite happy with my Canadian portfolio so far. In the past few weeks, Canadian banks have published their earnings and they were quite positive! They are definitely my favorite picks in the financial sector.

Royal Bank posted another solid quarter as Personal & Commercial banking (+10%), Capital Markets (+14%) and Wealth Management (+13%) showed strong performances. The bank shows double-digit growth compared to last year, but net income and EPS are also up 5% from Q3. RY's core business (P&C banking) results were driven by solid growth in residential mortgages, commercial lending and deposit products. Their insurance segment is smaller ($318M net income), but is growing fast too at +20%.

Fortis posted a great quarter and management announced a dividend increase to make everybody smile. Strong performance at the U.S. utilities during the third quarter of 2018 was driven by capital investment at ITC as well as favourable electricity sales at UNS Energy associated with weather. FTS is probably one of the most solid utilities on that list.

Management was quite reassuring after Enbridge beat both EPS and revenue estimates. The company completed the sale of $5.7B of non-core assets and still has $1.8B of assets on the block. While ENB suspended its DRIP plan, management claims no additional equity capital was required to fund the current $22 billion secured growth program. ENB generates more cash flow and management expects to meet its 2018 guidance. You can put ENB on your dividend growth list for 2019.

Numbers are as at December 1st, 2018:

U.S. portfolio (USD)

Company Name

Ticker

Market Value

Apple

AAPL

$5,535.98

Disney

DIS

$5,197.05

Garrett Motion

GTX

$34.50

Gentex

GNTX

$5,292.20

Hasbro

HAS

$4,186.00

Honeywell

HON

$4,696.00

Lazard

LAZ

$4,092.24

Microsoft

MSFT

$6,653.40

Resideo Tech

REZI

$103.15

Starbucks

SBUX

$5,671.20

Texas Instruments

TXN

$4,992.50

United Parcel Services

UPS

$4.265.72

Visa

V

$7,085.50

Cash

$866.53

Total

$58,672.28

The U.S. total value account shows a variation of +US$1,304.93 (+2.2%) since the last income report.

While AAPL is getting hammered right, left, and center, I have other stocks pushing my portfolio higher. Fears around Texas Instruments have been dissipated as the stock gained almost 11% since its lowest point at $90.18. Tech stocks from this list will continue to kill it next year.

Disney, one of my favorite cyclical stock, increased its dividend by 5%. I would have preferred a strong pay raise, but I'll definitely take it! DIS will be a killer stock to hold next year with their streaming services, a new Star Wars and Frozen 2 (oh, I probably forgot a few Marvel movies!).

Starbucks' shares are finally back on a growth trend as results were better than expected. Global comparable sales by region: Americas +4% vs. +2.9% expected, China/Asia-Pacific +1% vs. +0.1% consensus, EMEA +2% vs. +1.0% consensus. The company opened 604 new stores in Q4 (mostly in China, but it expects to open more stores in Italy in 2019). The Starbucks Rewards loyalty program grew to 15.3 million active members in the U.S., up 15% year over year.

Finally, Visa met analysts' expectations, with EPS up by 34% and revenue growth of 10% (missed by $10M). The company showed double-digit growth in payments volume, cross-border volume and processed transactions for Q4 and full year. Ask me for the definition of perfect dividend growth and I'll tell you V! Visa did it again with another +19% this quarter! Dividend almost doubled in 3 years… I think you can forgive the low yield!

Dividend Income: C$288.40 (up $90.33 or +46%)

To be fair, my money wasn't fully invested back in November 2017. If I remember correctly, I had about $76K out of the $108K invested. Still, I'll take the +46% dividend increase with a smile! The real comparison will start in January as my portfolio was fully invested in January 2018.

Let's take a look at which companies paid me this month:

Canadian Holdings Payouts: C$58.80

  • Royal Bank: $58.80
  • *National Bank paid the dividend on November 1st, but it was included on my October report. This is why it's not showing here.

U.S. Holding Payouts: US$172.80

  • Resideo Technologies: $7.21
  • Hasbro: $28.98
  • Apple: $22.63
  • Lazard: $44.88
  • Texas Instruments: $38.50
  • Starbucks: $30.60

Total payouts: C$288.40

*I used a USD/CAD conversion rate of 1.3287

Since I started this portfolio in September 2017, I have received a total of $2,904.35 in dividend. Keep in mind that this is a "pure dividend growth portfolio" as no capital can be added in this account (it's a LIRA). Therefore, all dividend growth is coming from stocks and not from additional capital.

Final thoughts

Another interesting fact, my total portfolio shows a value of C$132,323.06, a 22% increase since I started investing that money last year. This means that it would take a value drop of 17% to bring me back to my original amount. I think this is a great example that shows that waiting is not always the best strategy.

The key is to find companies that will not fail you and keep increasing their dividend (instead of cutting them!). I recently wrote a quick guide on how to avoid companies that are about to declare a dividend cut. You can read it here.