Investment Themes of 2023 [Podcast]

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Every year, macroeconomic events impact the entire market or some sectors differently. Unfortunately, 2023 has a whole basket of those investment themes: inflation, interest rates, recession, and more. Today, we help listeners understand them better and know how to react. We even have a game plan for you!

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You’ll Learn

  • Understanding what influences the market helps investors select the right stocks and avoid impulsive actions.
  • Will inflation and high-interest rates impact the entire year again? Should investors expect more interest raises? Which stocks can ease their impact?
  • In such uncertainties, are REITs distributions still safe? What should investors look for in a REIT to protect its distributions?
  • TINA used to be a thing for many years. With high-interest rates, new alternatives like Bonds and CD ladders exist now.
  • ESG investment has been trendy for many years but with a minimum impact. The year 2023 might change things up now that the big funds’ managers get on board!
  • Mike shares his thoughts on a recession or bear markets coming ahead. Is it impossible to avoid it?
  • Mike details the worst and best-case scenarios for the year. Let’s hope for the best!
  • We end the episode with a 5-step game plan to go through the year with confidence.

Related Content

Is it 2008 again? Which lessons did Mike learn as a financial planner in 2008 that still apply today? What can investors do?

Is It 2008 Again? [Podcast]

It is not time to change your investment plan during a recession. But if you need to rebalance, sell some losers, or if you have money to invest, which stocks to buy?

Best Stocks to Hold for the Recession [Podcast]

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This podcast episode has been provided by Dividend Stocks Rock.

The post Investment Themes of 2023 [Podcast] appeared first on The Dividend Guy Blog.

2022 Performance Review and Two Additions – December Dividend Income Report

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In September of 2017, I received slightly over $100K from my former employer, representing the commuted value of my pension plan. I decided to invest 100% of this money in dividend growth stocks.

Each month, I publish my results on those investments. I don’t do this to brag. I do this to show my readers that it is possible to build a lasting portfolio during all market conditions. Some months we might appear to underperform, but you must trust the process over the long term to evaluate our performance more accurately.

Performance in Review

Let’s start with the numbers as of January 2nd, 2023 (before the bell):

Original amount invested in September 2017 (no additional capital added): $108,760.02.

  • Portfolio value: $197,155.42
  • Dividends paid: $4,512.96 (TTM)
  • Average yield: 2.29%
  • 2022 performance: -12.08%
  • SPY= -18.17%, XIU.TO = -6.36%
  • Dividend growth: +10.83%

Total return since inception (Sep 2017-Dec 2022): 81.28%

Annualized return (since September 2017 – 64 months): 11.80%

SPDR® S&P 500 ETF Trust (SPY) annualized return (since Sept 2017): 10.44% (total return 69.86%)

iShares S&P/TSX 60 ETF (XIU.TO) annualized return (since Sept 2017): 8.45% (total return 54.16%)

Dynamic sector allocation calculated by DSR PRO as of January 2nd.

Two Additions

I sold Sylogist after the dividend cut announcement last November, and I had a few thousand dollars in my account. It was almost a good thing to sell SYZ.TO as I was overexposed to the information technology sector. I used the proceeds and dividend payments recently received to complete my position in Brookfield Renewable.

Bought 85 BEPC.TO at $42.23

By adding 85 shares of BEPC.TO, I brought my total holding to $8,400 or 4.3% of my portfolio. Since I want to hold about 20 positions in this portfolio, the ideal weight of each position would be around 5%. I started a position in BEPC.TO with a couple of thousand dollars in dividends paid and increased my position each time I had a chance. I like the dividend growth perspective and the diversification (geographic and energy source) offered by this Brookfield asset.

Bought 22 HD at $324.28

It’s not a big surprise, but I finally sold my 235 shares of Gentex (GNTX) at $28.58 following the recent confirmation that GNTX would stick to the same dividend payment and therefore will not have increased its payout since April 2020. I still love Gentex’s business model and its lack of debt. Still, I’ve learned that sticking to my investing strategy (focusing on dividend growers) is more important than anything else. My total return on GNTX is above 50% in a little over 5 years, so I can’t complain!

I decided to go with HD for the reasons I’ve discussed in my Top stock ideas:

I know; why would I pick Home Depot as a buy when the housing market is under such pressure. It’s counterintuitive, but I have a very good reason to think that Home Depot is a great buy right now. I can’t tell if it will take more than a year to reward shareholders. HD may continue to struggle in 2023, but the stock trades at its lowest valuation in the past 10 years (it reached a PE ratio of 19 during the bear market in 2018 and the 2020 crash). Indeed, HD’s numbers are somewhat tied to the housing market. However, now that millions of Americans are locked into 30-year mortgages at incredibly low rates, what do you think will happen? They won’t want to sell their house and pay a 6%+ mortgage on the new one unless they have to. It means they will likely renovate their current home. This should support organic growth for a while.

HD shows a perfect dividend triangle, but I expect sales and earnings to slow down in 2023. It will create more uncertainty which is always good for the stock price if you are a long-term investor. HD has built a strong relationship with PRO contractors by being their “convenience store for all products”. Whenever a PRO misses something on a job, he can quickly grab everything he needs in a Home Depot and won’t have to delay the job. HD is the largest home improvement retailer and there is a Home Depot close to 90% of the U.S. population.

2022 Performance Review

I don’t pay much attention to short-term performance as it is mostly driven by luck (e.g., where the market goes). Long-term performance (more than 5 years) speaks louder, but it’s important to understand what happens yearly to know if I am still on the right path. There are two numbers to remember from last year: -12% and +11%. Let’s start with the bad one:

Portfolio down 12%

As you know very well, I’m “mortal” too! It hasn’t been an easy year for my portfolio either and I feel your pain. When I look at my performance, I’m still happy. I’m happy because I beat the market even though I’m showing a loss. While the Canadian market was only down 6% (thanks to the energy sector), the S&P 500 was down 18% (and I will spare you the NASDAQ performance). With a 50-50 allocation, my benchmark is down 12.26% while my portfolio is down 12.08%. If I want to “geek in” and use my January 2022 CAD-USD allocation, I should compare myself to a benchmark at 58.67% US and 41.33% CAD. That benchmark would be -13.29%. In all cases, I have done okay vs. a bad year on the market.

I would have done a lot better if I didn’t keep riskier investments like Sylogist and Algonquin in my portfolio. Both came with risks I highlighted many times in my stock review and at DSR, but I liked the reward potential. I’ve reviewed AQN call and the lessons to learn from it in the video below.

My exposure to tech stocks also hurt my overall performance. It’s good that I trimmed a bit at the end of 2021 to invest in Activision Blizzard and boosted my exposure to National Bank.

Couche-Tard, Activision Blizzard, and Intertape Polymer (acquired throughout the year) were my top performers for 2022.

Dividend up 11%

It’s no surprise, but the increase in dividends is worth a lot more to me than how my portfolio did in 2022. Over the past twelve months, I generated $4,500 in dividends. That’s 50% better than what I generated in 2018 ($3,000). The increase comes mostly from dividend increases by companies and from reallocation towards higher-yielding companies (e.g., selling shares of Apple and Microsoft and buying shares of Brookfield and National Bank, for example).

My current yield is 2.30% and my yield on cost is 4.15%. While the yield on cost is a “feel good metric”, we need some light to go through the bear market tunnel. The yield on cost also proves that focusing on dividend growers works over the long haul. That portfolio alone will likely generate over $30,000/year of income at retirement without touching the capital. Considering I also have a RRSP (retirement account) + my business, I can sleep well thinking of how much income I’ll be generating at my retirement!  

Smith Manoeuvre Update

So far, I’m almost breaking even with my strategy. I must admit that I didn’t expect much from this portfolio over the first few months. I still need to give it some time to perform especially considering this crazy market.

I previously initiated a pause in my SM contributions. I will maintain my investment update in the coming months, but I will not add another $500 monthly for a while. My trip to Africa got out of control and I must take a few months to recover financially. When you do a leveraged strategy, you should never invest money you don’t have. I’m following my own advice, so I’ll resume my monthly investments shortly, but I would rather play it safe for the time being.

Fortunately, my investments are doing well, and my finances are slowly but surely getting back under control, so I expect to resume my strategy in the second quarter of 2023.

Here’s my portfolio as of January 2nd, 2022 (before the bell):

Company Name Ticker Sector Market Value
Canadian Net REIT NET.UN. V Real Estate $384.40
National Bank NA.TO Financials $547.38
Exchange Income EIF.TO Industrials $578.93
Brookfield Infrastructure BIPC.TO Utilities $474.03
Great-West Lifeco GWO.TO Financials $532.10
Cash (Margin) $22.82
Total $2,539.66
Amount borrowed -$2,500.00

Let’s look at my CDN portfolio. Numbers are as of January 2nd, 2022 (before the bell):

Canadian Portfolio (CAD)

Company Name Ticker Sector Market Value
Algonquin Power & Utilities AQN.TO Utilities $3,677.94
Alimentation Couche-Tard ATD.B.TO Cons. Staples $21,360.50
Brookfield Renewable BEPC.TO Utilities $8,423.02
CAE CAE.TO Industrials $5,238.00
Enbridge ENB.TO Energy $8,520.12
Fortis FTS.TO Utilities $5,363.82
Granite REIT GRT.UN.TO Real Estate $8,842.24
Magna International MG.TO Cons. Discre. $5,324.20
National Bank NA.TO Financials $11,038.83
Royal Bank RY.TO Financial $7,638.00
 
Cash 95.71
Total   $85,522.38

 My account shows a variation of -$6,282.77 (-6.84%) since the last income report on December 2nd. My focus this year for the Canadian segment will be directed toward Algonquin and CAE. I’m waiting to know how management will allocate capital for both companies. If CAE doesn’t open the door to paying dividends this year, I’ll have no other choice but to get rid of it even if it is the dominant player in the aviation training market.

Here’s my US portfolio now. Numbers are as of January 2nd, 2022 (before the bell):

U.S. Portfolio (USD)

Company Name Ticker Sector Market Value
Activision Blizzard ATVI Communications $8,879.80
Apple AAPL Inf. Technology $9,795.55
BlackRock BLK Financials $9,920.82
Disney DIS Communications $3,909.60
Home Depot HD Cons. Discret. $6,948.92
Microsoft MSFT Inf. Technology $13,190.10
Starbucks SBUX Cons. Discret. $8,432.00
Texas Instruments TXN Inf. Technology $8,261.00
VF Corporation VFC Cons. Discret. $2,236.41
Visa V Inf. Technology $10,388.00
Cash $323.77
Total   $82,235.17

The US total value account shows a variation of -$4,816.93, (-5.53%) since the last income report on December 2nd. For the US segment, my attention will be focused on Activision Blizzard, Disney, and VF corporation. I hope the deal between Microsoft and ATVI will close, but if it does not, ATVI will still get between $2B and $3B in cash as a termination fee. For Disney, I expect Bob Iger’s return and more blockbuster movies to support stronger performance. As for VF Corp, it will be a tough year, but I will not tolerate an absence of dividend growth.

My Entire Portfolio Updated for Q4 2022

Each quarter we run an exclusive report for Dividend Stocks Rock (DSR) members who subscribe to our very special additional service called DSR PRO. The PRO report includes a summary of each company’s earnings report for the period. We have been doing this for an entire year now and I wanted to share my own DSR PRO report for this portfolio. You can download the full PDF showing all the information about all my holdings. Results have been updated as of January 2nd, 2022.

Download my portfolio Q4 2022 report.

Dividend Income: $610.65 CAD (+2.6% vs December 2021)

There were a lot of different factors affecting this month vs. last year. In 2021, I had Intertape Polymer and Sylogist payments. This year, I increased my position in Brookfield Renewable, I benefited from many dividend increases and a jump of 8.8% of the USD vs CAD.

I can now also count on a $33 distribution coming monthly from Granite!

Here are the detail of my dividend payments.

Dividend growth (over the past 12 months):

  • Fortis: +5.6%
  • Enbridge: +3%
  • Magna: +10%
  • Granite: (new)
  • Alimentation Couche-Tard: +27.3%
  • Brookfield Renewable: +273% (more shares)
  • Visa: +20%
  • Microsoft: 0% (I sold shares)
  • VF Corp: +2%
  • BlackRock: +18%
  • Currency factor: +8.8%

Canadian Holding payouts: $380.51 CAD

  • Fortis: $55.94
  • Enbridge: $138.46
  • Magna: $41.84
  • Granite: $33.06
  • Alimentation Couche-Tard: $50.26
  • Brookfield Renewable: $60.95

U.S. Holding payouts: $169.53 USD

  • Visa: $22.50
  • Microsoft: $37.40
  • VF Corp: $41.31
  • BlackRock: $68.32

Total payouts: $610.65 CAD

*I used a USD/CAD conversion rate of 1.3575

Since I started this portfolio in September 2017, I have received a total of $19,522.09 CAD in dividends.  Keep in mind that this is a “pure dividend growth portfolio” as no capital can be added to this account other than retained and/or reinvested dividends. Therefore, all dividend growth is coming from the stocks and not from any additional capital being added to the account.

Final Thoughts

It’s very motivating to see my total dividends received since I created this account getting close to $20,000. I can see the snowball getting bigger and bigger. I will consider selling a few more tech stocks throughout the year to reduce my exposure to this sector.

As you can see, following a portfolio is an ever-evolving journey!

Cheers,

Mike.

The post 2022 Performance Review and Two Additions – December Dividend Income Report appeared first on The Dividend Guy Blog.

Too Rich to Be Stressed – An Interview with Dividend John [Podcast]

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 After 20 years of investing, Dividend John has a portfolio of 1.4 million generating 65K in dividends. From a young age, he knew he wanted a comfortable financial situation and achieved it with a simple, straightforward, easy-to-apply strategy. Today, the successful investor shares his journey from childhood to being the author of the book Too Rich to Be Stressed: Freedom with Dividend Investing.

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Too Rich to Be Stressed Book by Dividend John

You’ll Learn

  • Dividend John explains how coming from a modest childhood surrounded by wealthy kids at school lit a fire in his belly to be in a better financial situation as a grown-up.
  • The millionaire goes through his failures as a young investor and how this losing game led him to feel depressed.
  • Mike and Dividend John discuss the power of compounding interest and how it was an essential aspect of growing his portfolio.
  • The author firmly believes everyone has something unique and special that can augment their income rapidly. He also discusses the balance between savings and treating yourself.
  • Building up different scenarios with a good accountant was how Dividend John started to build up a long-term plan including dividend growers.
  • Bad years like 2022 can be stressful for investors. However, Dividend John was pretty relaxed and zen trusting the process. Last year, his portfolio was down, but his dividend income was up.
  • Mike asks what his criteria are for buying stocks and explains how their strategy are similar.
  • Mike challenges some of Dividend John’s picks and strategies, such as having a limited number of positions in his portfolio but holding all the big 6 Canadian Banks.
  • Dividend John answers rapid-fire questions from Mike’s Twitter followers.

Related Content

Many investment strategies work… some others not so much! Bad years may lead investors to search for miracle solutions or shortcuts to make money. Here are the most dangerous investment strategies in the hopes that you won’t fall into them.

The Most Dangerous Investment Strategies [Podcast]

Why would you want to become a Dividend Growth Investor? While it’s not the only route to a stress-free retirement, dividend growth investing is a good one. Here are the 5 most important reasons to be a dividend growth investor.

Why Should You Be a Dividend Growth Investor and Nothing Else [Podcast]

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The Best Dividends to Your Inbox!

Download our Top Stocks for 2023 booklet now and do not miss out on the good stuff! Receive our Portfolio Workbook and weekly emails including our latest podcast episode!

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Have Ideas? 

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This podcast episode has been provided by Dividend Stocks Rock.

The post Too Rich to Be Stressed – An Interview with Dividend John [Podcast] appeared first on The Dividend Guy Blog.

Top 6 Stocks for 2023 [Podcast]

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If you didn’t do it yet, it is time to update your buy list and know what to buy in 2023. To help you out, we have pulled out 6 stock ideas from 6 different sectors. These should do well this year and be great in the long run!

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You’ll Learn

  • The communication sector has been hit hard after the pandemic. Mike went outside the scope and picked up a video games company: ActivisionBlizard (ATVI). Let’s see why he believes ATVI will thrive no matter the outcome of the Microsoft offer.
  • Brookfield Corporation (BN / BN.TO) is a newcomer on the market, yet this new symbol doesn’t change an entirely robust business model. The financial sector will be well served again this year!
  • Tyson Foods (TSN) is easy to understand and shows some upside potential. It might be the boring company you’ve been waiting to add in Consumer Staples.
  • The Information Technology sector is well-known for its large American businesses. How about a new idea with Constellation Software (CSU.TO)? Its dividend growth is small and so is its yield, but this 45B market cap company deserves to be known!
  • The beauty behind the Equinix (EQIX) business model is that it is both poised for solid growth and hard to replicate. This REIT is worth the attention The Canadian Investor Podcast has been giving.
  • The large Caterpillar dealership Toromont Industries (TIH.TO) operates in a cyclical sector: Industrials. However, this Canadian Dividend Aristocrat shows a rare price weakness.

 Related Content

Activision Blizzard (ATVI) currently trades around $75-80. However, Microsoft (MSFT) offered $95/share The transaction is expected to close in the second half of 2023. Pretty nice premium, right? Is there a catch?

A potential long bear market will impact two types of investors: those invested and those who have cash on the side. Here’s a playbook for each of them.

What Should a Dividend Growth Investor Buy in 2023?

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The Best Dividends to Your Inbox!

Download our Top Stocks for 2023 booklet now and do not miss out on the good stuff! Receive our Portfolio Workbook and weekly emails including our latest podcast episode!

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Follow Mike, The Dividend Guy, on:

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  • Facebook

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Have Ideas? 

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This podcast episode has been provided by Dividend Stocks Rock.

The post Top 6 Stocks for 2023 [Podcast] appeared first on The Dividend Guy Blog.

How to Invest in 2023 [Podcast Series]

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We are ready to help you start the New Year on the right foot with our special mini-series on How to Invest in 2023! From January 1st to January 6th, we will have daily 10 to 15 minutes episodes filled with small and easy actions for you to be fully prepared for the year. Having stock categories in your portfolio, using a checklist, improving your portfolio in 3 steps, and getting some stock ideas should set the table for your investment.

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Download the DSR Stock Checklist

You’ll Learn

  • The first episode will guide you into putting your holdings into three very easy-to-understand categories so you get a realistic picture of your portfolio.

  • Then, we will provide you with the advantages of having a stock checklist, especially with the uncertainties around the market this year. You’ll even get a link to download our own DSR Stock Checklist.

  • For the third episode, we will share 3 things to boost your portfolio now. Learn how to improve your dividend yield, your dividend growth and your sector allocation.

  • Finally, we’ll discuss Mike’s best Canadian and US picks for the last two episodes.

Related Content

There’s also a series about retirement happening on our YouTube Channel.

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After over a decade of double-digit returns, many companies saw their stock price drop. Added to inflation and interest uncertainties, it seems complicated to find safe buying opportunities. Should you still take some risks? Investors can classify their holdings into Core companies, Educated guesses and Falling Knives or Speculative Plays to help assess their portfolio risk.

Are You Allowed to Speculate in a Dividend Portfolio? [Podcast]

The Dividend Triangle consists of three metrics: revenue growth, earnings growth and dividend growth. It can help investors to narrow down their stock research and to find leaders in their market. In other words, it is a good start for your dividend growth stock analysis!

[Podcast] DGB 02: What The Hell is The Dividend Triangle?

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The Best Dividends to Your Inbox!

Download our Top Stocks for 2022 booklet now and do not miss out on the good stuff! Receive our Portfolio Workbook and weekly emails including our latest podcast episode!

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Follow Mike, The Dividend Guy, on:

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  • Facebook

_________________________________________________________________________

Have Ideas? 

If you have ideas for guests, topics for The Dividend Guy Blog podcast, or simply to say hello, then shoot me an email.

_________________________________________________________________________

This podcast episode has been provided by Dividend Stocks Rock.

 

The post How to Invest in 2023 [Podcast Series] appeared first on The Dividend Guy Blog.