February 2019 Dividend Income Report, My Dividends Have Been Cut?!

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

Last year, my February dividend income was $408.75. This year, I’m down to $270.84… what happened?

I have no intention of changing my investing strategy.

Investing is like driving, you must look at the horizon if you want to arrive at your destination.

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 would rather cash in some juicy dividends!

Portfolio holdings – Dividend Cuts????

Yikes! Last year, my February dividend income was $408.75. This year, I’m down to $270.84… what happened? Was most of my money invested in Kraft Heinz (NASDAQ:KHC)? Not at all… In fact, I didn’t suffer a single dividend cut. I just had one company (Lazard (NYSE:LAZ)) which paid its dividend on March 1st this year…

In fact, I had rather a great month with all my other companies increasing their payouts. Let’s have a look at what happened in February…

Numbers are as at March 1st 2019:

Canadian portfolio (CAD)

Company Name Ticker Market Value
Alimentation Couche-Tard ATD.B.TO $6,540.30
Andrew Peller ADW.A.TO $5,478.00
National Bank NA.TO $4,973.60
Royal Bank RY.TO $6,220.20
CAE CAE.TO $5,580.00
Enbridge ENB.TO $7,964.67
Fortis FTS.TO $4,690.62
Intertape Polymer ITP.TO $5,430.00
Lassonde Industries LAS.A.TO $3,622.50
Magna International MG.TO $4,893.70
Cash $607.81
Total $56,009.03

My account shows a variation of -$609.80 (-1%) since the last income report.

My Canadian holdings are pretty much on “neutral mode”. Lassonde Industries (OTC:LSDAF) published their latest quarterly earnings on Valentine’s Day, and the stock dropped like a rock.

Source: Ycharts

The company is facing many headwinds through its U.S. operations. Fierce competition and lower margins due to cost inflation are hurting their bottom line. Lassonde shares have been severely hit, but the core business hasn’t changed. The company is now trading at a very attractive level.

On the other side, I hold many companies that have declared dividend increases recently. Magna International (NYSE:MGA), Royal Bank (NYSE:RY) (which is part of my Top financial stocks list), Enbridge (NYSE:ENB) all increased their dividends in 2019 already. National Bank (OTCPK:NTIOF) and Andrew Peller (OTC:ADWPF) are probably the next 2 that will increase their dividends in the upcoming quarter.

Numbers are as at January 1st 2019:

U.S. portfolio (USD)

Company Name Ticker Market Value
Apple AAPL $5,368.27
BlackRock BLK $6,259.54
Disney DIS $5,123.92
Garrett Motion GTX $51.00
Gentex GNTX $4,801.05
Hasbro HAS $4,023.16
Lazard LAZ $3,904.56
Microsoft MSFT $6,718.20
Resideo Tech REZI $129.52
Starbucks SBUX $6,006.52
Texas Instruments TXN $5,298.00
United Parcel Services UPS $4,109.96
Visa V $7,432.69
Cash $168.86
Total $59,401.65

The US total value account shows a variation of +$2,09.66 USD (+3.7%) since the last income report.

Since the beginning of the year, my US holdings keep growing very fast. After a significant jump in January of 6.3%, I’m up by another 3.7% this month. This shows you how fast money goes up and down for almost no reason.

When I compare to February 2018, my Canadian holdings are still outperforming with a total return of 11.62% and my US portfolio increased by 5.77%. Those are very interesting numbers considering we had a market correction in the middle. You can read more about my strategy to boost my portfolio returns here.

Dividend income: $270.84 CAD (down from $408.75)

So the whole story about the $400+ in dividends from 2018 was about Lazard’s payment that will be arriving on March 1st, which will be included in next month’s update. However, I was able to count on all other companies’ generous dividend increases to show a strong month:

  • Royal Bank: +7.7%
  • Texas Instruments: +24%
  • Apple: +15.90%
  • Hasbro: +10.52%
  • Starbucks: +20%

Canadian Holdings payouts: $110.80 CAD

  • Royal Bank: $58.80
  • National Bank: $52.00

U.S. Holding payouts: $120.71 USD

  • Texas Instruments: $38.50
  • Apple: $22.63
  • Hasbro: $28.98
  • Starbucks: $30.60

Total payouts: $270.84 CAD

*I used a USD/CAD conversion rate of 1.3258

Considering that Lazard will pay $0.94 per share ($0.44 regular + $0.50 special dividend) on March 1st, I could add $95.88 USD or $127.12 CAD to my total dividend income. I would still be short compared to last year. Why? Because Lazard paid a $1.30 special dividend last year.

Source: Lazard’s website

This explains why I never consider special dividend payments when I use the dividend discount model valuation. The regular dividend is more easily predictable while the special dividend is more than often based on last 12 month performances. This is the extra you sometimes get, but it’s not a always the same story.

Since I started this portfolio in September 2017, I have received a total of $3,703.30 CAD in dividends. Keep in mind that this is a “pure dividend growth portfolio” as no capital can be added int his account (it’s a LIRA). Therefore, all dividend growth is coming from stocks and not from additional capital.

Final thoughts

I’ve recently discussed why I invest when I have money on hand instead of waiting for the perfect timing. I think that my dividend income report of 2019 will prove me right. When I started investing this money back in 2017, the market was at an all-time high. The stock market kept going up for a few more month until hitting its first drop in 10 years. Some started to dance on the bear song and some others, like me, didn’t do anything. Between September 2018 and December 2018, all I was doing was cashing more dividends month after month. Then January arrived and the market bounced back.

At this point, I’m only 2.5% behind my highest portfolio value (also including my RRSP and RESP account). I’ve reached my peak somewhere during July or August 2018. About 6 months later, I’m almost there again and I have no intention of changing my investing strategy. Losing money for a few months straight didn’t worry me at all because I knew the companies in my portfolio were solid.

Investing is like driving, you must look at the horizon if you want to arrive at your destination.

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.