Best Month Ever! December Dividend Income Report

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Includes: AAPL, ENB, FTS, HON, OTEX
by: The Dividend Guy
Summary

On average, the market posted a total return of -6.20% (CDN and US together).

The energy sector is going down once again, and it drags a good part of the Canadian market with it.

Apple has probably been my worst performer this month, but it happens each time analysts claim the iPhone is dead.

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 - Year End Recap

Before I get to what happened in December, let's take a moment to look at my total return for 2018. Unfortunately, my broker account gives me my total return as of December 28th, 2018, as the full return will be available only in a few more days. Still, knowing that the 31st was a great day on the market, my year-end results will only be better. Keep in mind I have a Canadian and a US account that shows return separately:

Source: Ycharts

On average, the market posted a total return of -6.20% (CDN and US together). On my side, I show a total return of +4.4%. I must admit that I'm quite proud of posing positive return this year. Funny enough, half of my total return comes from the dividend. Is there a link with my overall performance? I'll let you make your own conclusions.

I would also like to add that I don't publish my returns in this article to brag and tell you that I'm a great investor. In fact, I believe I'm a decent investor following a strong and meticulous dividend growth investing strategy. The year 2018 was another good year in my portfolio because I stayed on the course during the storm. If winter is coming, you better get your coat on and keep moving forward.

After looking at my total return, the first thing that came to my mind was "hum… it wasn't that bad". When I read all the apocalyptical articles written for the past 6 months (all right, I'll be honest, I don't read most of them! Haha), I thought something really bad was happening on the market. I bet you were too, right? But when you take a look at the forest behind the tree, you notice 2018 wasn't a catastrophic year. Being in the red by mid-single-digits doesn't hurt your portfolio if have been carefully following your investing strategy for the past 5 or 10 years. Maybe there is more bad news to come, and the market will continue to dive in 2019. Or maybe the next earnings season will pump the market back up, and we will have a great year. Who knows? This is why I rather focus on what I know; holding great companies and getting paid for waiting!

Let's take a look at what happened in December. It was obviously a very bad month in term of total returns, but I cashed my largest month in term of dividends!

Numbers are as at January 1st, 2019:

Canadian portfolio (CAD)

Company Name

Ticker

Market Value

Alimentation Couche-Tard

ATD.B.TO

$5,840.25

Andrew Peller

ADW.A.TO

$5,681.35

National Bank

NA.TO

$4,484.00

Royal Bank

RY.TO

$5,606.40

CAE

CAE.TO

$5,018.00

Enbridge

ENB.TO

$6,828.00

Fortis

FTS.TO

$4,505.49

Intertape Polymer

ITP.TO

$5,076.00

Lassonde Industries

LAS.A.TO

$4,183.62

Magna International

MG.TO

$4,337.89

Cash

$1,146.03

Total

$52,707.03

My account shows a variation of -$1,658.17 (-3%) since the last income report.

The impact on my Canadian portfolio was minimal. After showing a positive variation of $1.2K in November, I'm taking a step back in December. The energy sector is going down once again, and it drags a good part of the Canadian market with it. Fortunately, for me, I have never been a big energy stock fan. I hold shares of Enbridge (NYSE:ENB) for its high (and increasing) dividend, but I would not increase y position in this sector.

As my cash position grows, I may look at adding a small position in Open Text (NASDAQ:OTEX). OTEX is a leader in the EIM industry. It helps over 100,000 customers to share, store, retrieve and analyze their company's information. Open Text is Canada's largest enterprise software company. The company is currently improving its recurring revenues. It is one of the rare Canadian tech dividend paying stocks.

Numbers are as at January 1st, 2019:

U.S. portfolio (USD)

Company Name

Ticker

Market Value

Apple

AAPL

$4,889.94

Disney

DIS

$4,934.25

Garrett Motion

GTX

$37.01

Gentex

GNTX

$4,749.35

Hasbro

HAS

$3,737.50

Honeywell

HON

$4,277.84

Lazard

LAZ

$3,764.82

Microsoft

MSFT

$6,094.20

Resideo Tech

REZI

$102.75

Starbucks

SBUX

$5,474.00

Texas Instruments

TXN

$4,725.00

United Parcel Services

UPS

$3,608.61

Visa

V

$6,597.00

Cash

$966.84

Total

$53,909.11

The US total value account shows a variation of -$4,763.17 USD (-8%) since the last income report.

My US portfolio took a real hit this month. There wasn't anything in particular about my holdings as most stocks drop in a similar manner. Apple (NASDAQ:AAPL) has probably been my worst performer this month, but it happens each time analysts claim the iPhone is dead. Funny enough, the same story seems to resonate with investors over and over again. I'm personally more interested in its double-digit growing service business.

I'm also considering selling my shares of Honeywell (NYSE:HON). Not because I don't like HON, but because I've found a few good stocks that I've gotten hurt a lot more than HON recently. Constellation Brands (NYSE:STZ) shows a very interesting profile and is part of my 2019 Best picks.

Dividend income: $421.18 CAD (up from $93.45)

To be fair, my money wasn't fully invested back in December 2017. The real comparison will start in January as my portfolio was fully invested in January 2018. High yielding companies such as Fortis (NYSE:FTS) and Enbridge weren't in my portfolio in time to contribute last year. You can read this article to get my trick to pick "safe" high yielding stocks. Still, it's looking good to say that December was my largest dividend-paying month of the year! I can't wait to see how 2019 will look like!

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

Canadian Holdings payouts: $284.81 CAD

  • Fortis: $44.55

  • Enbridge: $108.03

  • Magna Intl: $30.58

  • Lassonde: $17.01

  • Alimentation Couche-Tard: $8.60

  • Intertape Polymer: $56.04

  • CAE: $20.00

U.S. Holding payouts: $100.01 USD

  • Visa: $12.50

  • UPS: $33.67

  • HON: $26.24

  • MSFT: $27.60

Total payouts: $421.18 CAD

*I used a USD/CAD conversion rate of 1.3636

Since I started this portfolio in September 2017, I have received a total of $3,325.53 in a dividend. Keep in mind that this is a "pure dividend growth portfolio" as no capital can be added into his account (it's a LIRA). Therefore, all dividend growth is coming from stocks and not from additional capital.

Final thoughts

2018 confirmed what I thought for a while; stay invested in strong dividend growth companies and you will not cry during the storm. I believe there was a part of luck and a part of a good strategy in my results. Luck (or bad luck) is often a big factor explaining short-term performance. Meticulous investing takes over during the long haul.

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.

I hope I'll keep posting strong numbers in 2019! What about you? Have you finished the year in positive territories?

Disclosure: The summary bullets for this article were chosen by Seeking Alpha editors.