How to Invest a Lump Sum

How to invest a lump sum. What if you buy at an all-time high right before a market crash? It can be an overwhelming anxiety-inducing puzzle. You can mitigate the risks and buy decisively.

So, you received an inheritance, sold a cottage or a boat, or ended up with a chunk of cash from dividends paid in your portfolio or from rebalancing your portfolio. Regardless of where the money came from, you want to invest it; but you’re hesitant, you don’t want to make mistakes.

You have to come up a plan that identifies where you’re going to invest and the timing of these investments.

Plan Where to Invest your Lump Sum

Before deciding when to invest you have to figure out which assets you want to invest in. To choose the right ones for you, review your investment goals and review your current portfolio. Don’t have a portfolio yet? No worries, keep reading, we’ve got you covered.

Identify your investment goals

What do you want from your investments. Income? Growth? A mix of both? In what proportion?

Goals can change; in our earlier accumulation years, we might focus on growth and be willing to take more risk with speculative or volatile investments. As we get near or are in retirement, income can become more important.

Revisiting your goals helps to determine your:

  • Asset allocation: all stocks, or a mix of stocks, ETFs, bonds, GICs/CDs, etc.
  • Sector allocation: the economic sector(s) you’re going to invest in, and in what proportion.

Review your current portfolio

If you have a portfolio, review it. Identify adjustments to make to your existing investments and areas to strengthen with your new money.

Two small trees and a large one in vast plain
Adjust overweight positions

Overweight sectors or stocks makes your portfolio more vulnerable. You could invest the lump sum into other sectors or industries to rebalance or sell some of your holdings in overweight sectors. If you have overweight stocks, think about selling some shares.

Stocks representing very little of your portfolio, e.g., 0.75%, 1.8%, don’t do much; even if they double in price, you won’t feel it. If you’re confident and like your lightweight stocks, consider buying more.

Loser stocks hurt. Examine them thoroughly and choose whether they’re worth keeping. See 7 Reasons We End Up With Loser Stocks, What To Do About It.

After reviewing, compare your portfolio to what you want it to be, and come up with your game plan. Invest more in stocks you already own, in new stocks to benefit from other sectors and industries and make your portfolio more resilient, a bit of each? Build a list of good candidates for your portfolio with this checklist.

Don’t have a Portfolio yet?

If the lump sum is seed money for your brand-new portfolio, identify your investment goals; next, find economic sectors you like and understand; then, set the percentage of the sum to invest in each of the sectors and how many stocks you want. Here are resources to help you get started.

Building an income portfolio made easy

Stock Buy Checklist to Help You Decide

Get even more in our free information-packed Recession-Proof Portfolio Workbook, download it now.

Plan When to Invest your Lump Sum

Knowing where you’re going, it’s time to choose when to click the Buy button, but your emotions get in the way. You fear putting your money in stocks only to see them plunge soon after. You hate the thought of waiting for a “good price to buy” only to see it continually rise and missing out on a good thing. You’re anxious about cash sitting in your account doing nothing.

All at once?

Financial literature says the right time to invest is today so that your money is in play, working to accrue wealth, not lying dormant. Ok then, invest all of your lump sum ASAP, done! I’m guessing you don’t feel like doing that. I understand completely.

You could end up buying stocks at the market high, soon finding yourself in the red for a while. Imagine investing 100% of your cash in July 2008, right before Lehman Brothers declared bankruptcy! That would have derailed your retirement plan completely.

What if I buy when the market is high?

Seeing your stocks down 20%, 30%, 40% doesn’t feel great, I know. However, if you’re a dividend growth investor like me, you invest in dividend growing companies with solid fundamentals and lots of potential for years to come. You focus on total return and plan on holding those stocks to enjoy the growing dividends.

With a long investment horizon, buying great stocks at a peak in the market, while not the dream scenario, might not be the disaster it would be for speculative investors eyeing quick capital gains. Eventually the market goes back up. It’ll just take longer to see stock appreciation in your portfolio.

I’ll wait for…

An hourglass
Waiting, and waiting some more?

Unsure, you wait a bit to see what happens with the market. After that bit, you decide to wait for inflation to go down before investing. But then, the market climbs. OK, you’ll just wait for it to go down; it does, a bit, do you buy? No, because maybe it’ll drop even further. A pattern develops; finding excuses to delay your investment.

Learn more, download our Recession-proof portfolio workbook.

Buying at Intervals

An alternative to this paralysis is to spread the purchases at intervals over a period, six to nine months for example, to get some protection.

If the market starts crashing tomorrow or next month, the downward spiral usually ends in six months. The market does not recover the lost ground after six months but stabilizes; it stops deteriorating before beginning its recovery.

Spiral staircase seen from above
Market spirals down for about six months

If you invested chunks of your lump sum regularly along the way, you caught the peak and the valley and benefited from the decline to lower your average cost per share. You’re in the red, but less than if you had bought it all at the peak, and you’ll be back in black sooner.

In contrast, if the market was starting to climb at the start of the period, you invested starting at lower prices that increased over the period, averaging out to a cost below market price at the end of the period.

Make your Plan and Buy!

Let’s say you decide to buy Fortis, Granite (a REIT) for income and Alimentation Couche-Tard and Home Depot for growth.

Choose your buying period; six to nine months, less or more if you prefer. Write down the dates when you’ll buy stock. Using a six-month period for example:

  • Now: Buy 1/3 of the total investment you plan for each company. Check which of the companies will soon announce their quarterly results; wait until you’ve reviewed them before buying, to see that nothing drastic happened recently.
  • +Three months: Review the latest quarterly results to ensure everything’s on track, then buy another 1/3 of each company.
  • +Three months: rinse and repeat with the last 1/3.

Investing a lump sum with several planned purchases at intervals over several months mitigates the risk of buying at a market high and being in the red for a while. It’s the remedy to the paralysis caused by emotions. It lets you act decisively and gets your money working for you.

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Companies that Grow through Acquisitions: Pros and Cons [Podcast]


We hit one of dividend growth investors’ favorite business model types: growth through acquisitions. While it often rhymes with dividend growth, there are pros and cons to consider and this is why we are here! This episode should help you analyse your holding’s next acquisition.

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You’ll Learn

  • Mike likes the growth by acquisition business model as it fuels companies with growth. These businesses also tend to get bigger faster and to show better margins.
  • To discuss the advantages of such companies, we pulled out concrete examples: Alimentation Couche-Tard (ATD.TO), Broadcom (AVGO), Canadian Pacific (CP), and Realty Income (O). How has this approach brought success for each of them?
  • It seems more complicated for an industrial company like CP. Railroads are hard to replicate and not so numerous. They are also asset heavy. Is it a riskier strategy for them?
  • Constellation Software (CSU.TO) is the specialist in acquiring small companies. Mike describes this unique model and the expectations that come with it.
  • Regulations can get in the way of an acquisition, which results in doubts. It was the case for Microsoft with ATVI, which brought speculations for months. We had another example with Rogers and Shaw. How should investors react?
  • There are also times when things go south. The Healthcare sector seems to have a hard time with the growth by acquisition strategy. We can think of CVS, Abbvie and Pfizer. Why is it difficult for them?
  • CAE is another example. Diversification into a business may result in some failures. Mike explains what happened.
  • We couldn’t do this episode without mentioning Enbridge. Huge debt has impacted its business and let investors confused.
  • Recently, the news spread out that Laurentian bank wanted to be bought. It turned out bad for some investors who might have “played” the market. Mike adds some words of caution.
  • Are high interest rates adding pressure on companies that grow by acquisition? Is it a good time for investors to grab some shares?
  • Mike summarized what investors should look at before buying or selling a company known for its growth-by-acquisition model?

Related Content

Here is part 2 of Mike’s thoughts on 35 Stocks. Stop hesitating on banks, groceries and restaurants, railroads, and more!

My Take on 35 Stocks Puzzling Investors – Part 2 [Podcast]

How to find the next low-yield, high-growth stock that will propel your portfolio to a new high level? Below is how I’ve picked the successful ATD.TO a while ago and how you can use it to find the next one!


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Detect Losers and Find Winners with The Dividend Triangle

We all want our portfolio to perform well, but how? Detect losers and find winners with the dividend triangle. It’s an easy way to understand why stocks underperform and detect other risks in your portfolio, like dividend traps or potential dividend cutters.

The dividend triangle also proves invaluable to find strong dividend growers that will more than make up for the few rotten apples you might have bought.

What is the Dividend Triangle?

I coined the term Dividend Triangle to refer to a trio of metrics for which there has to be a growth trend for a company to be a potential dividend grower: revenue, earnings per share (EPS), and dividend amount.

The dividend triangle is a strong indicator of the likelihood of a dividend cut and can, at a glance, reveal the cause of a stock’s performance, good or bad. It also makes finding good stocks much easier. Searching for a great combination of its three metrics quickly narrows down your search from thousands of stocks to hundreds, which you narrow down further using other criteria.

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Why These Three Metrics Specifically?

Revenue, EPS, and dividend payments are the three pillars that quickly reveal whether a company might be a worthwhile investment for a dividend growth strategy.


I want to invest in growing and market-leading companies that benefit from innovation, R&D, solid marketing, and/or economies of scale. Revenue growth is a good indicator of such qualities.

Series of growing seedlings from the shortest to the tallest
It’s all about sustained growth

So, I look for companies with several growth vectors that ensure consistent sales increases year after year. Revenue growth in the recent past signals that the business model is doing well and that, should a recession arise, it wouldn’t enter it in a position of weakness.

Earnings per share

Companies can’t pay dividends if they don’t earn profits. If earnings don’t grow, dividends won’t increase indefinitely. The EPS trend gives a quick picture of what’s going with a company’s profit; is it increasing, falling, flat?

EPS is flawed in that it’s calculated based on accounting principles (GAAP), which include non-cash charges and irregular expenses unlikely to recur, such as a product recall. Consequently, EPS can be misleading. To compensate for this:

  • Review the EPS trend over 3 and 5 years. Some companies might “play around” with earnings for a year or two, but they can’t create a trend out of thin air.
  • Review Adjusted EPS; it disregards irregular items, thus reflecting more accurately profit recurring from the company’s operations.


I want to invest in companies that share their wealth. Dividend growth points precisely to that and shows that the company is robust and its management confident. I focus on how the dividend grows year after year, not on dividend amounts or yields.

Dividend growers are confident in their business model. They make enough money to grow their business, reward shareholders, meet their financial obligations, and invest in new projects. A responsible management team won’t increase the dividend if they lack the cash to run the business.

What Does a Strong Dividend Triangle Look Like?

With a stock screener, it’s easy to find companies with positive and high 3-year or 5-year growth for revenue, EPS, and dividend. Does that mean their dividend triangle is strong? Not necessarily. The dividend triangle is really about the trend for each of its metrics over the past 5 years, not just whether there was growth between the start and end of the 5-year period.

Microsoft's strong dividend triangle
Microsoft’s strong dividend triangle

Here, we see a near-perfect dividend triangle, Microsoft’s. Steady growth over 5 years for revenue, EPS, and dividend payment.

Five years is long enough to see the relevant trend and notice unusual jumps or drops. To find out what caused these anomalies in the trends, consult the company’s quarterly results.

What if one Metric Isn’t as Good as the Others?

The three metrics don’t always trend the same way: for example, revenue growth but flat EPS, a rising dividend despite flat EPS, etc.

Dividend growth reigns supreme over other trends. If dividend growth slows down or pauses, I find out why and keep an eye on that stock. When a dividend is cut, I rarely keep the stock.

Lagging revenue growth, but healthy EPS and dividend growth show the company’s improving its margins through cost measures or restructuring, rather than revenue growth. This could be temporary because of a slowing economy. I’d verify that the company has growth vectors. If not, revenue growth is in jeopardy.

What about new Dividend Payers?

It’s hard to assess the dividend growth potential of new dividend payers. Many dividend investors won’t consider them at all. However, if revenue growth is such that a company starts paying dividends and keeps wiggle room with a healthy payout ratio, e.g., 50 to 60%, its management is confident. Might be worth a look.

Dividend Triangle more Important than Yield?

Absolutely! I prefer companies that increase my paycheck. Don’t we all? A high yield stock that doesn’t grow its dividend much or at all makes me miss out on better growth elsewhere and might be headed toward a dividend cut.

I prefer a growth stock’s lower yield dividend that keeps growing, and the capital appreciation that goes with it.

Build your portfolio to provide you with income reliably. Download our Dividend Income for Life guide.

Can you Find a Perfect Dividend Triangle?

We’d all love perfect dividend triangles over 5 and even 10 years. Our cyclical economy and the market’s many surprises make such perfection quite rare, and short-lived.

Most triangles, even very strong ones, show the occasional slow down in growth, or declining revenue or EPS. They might be temporary, caused by unusual or external factors such as pandemic lockdowns and recessions, or by mistakes the company made but that it can fix. The triangle gives you hints on what went well and what didn’t go as planned during that period.

After reading quarterly results on a company’s website, you’re better equipped to understand where the company is headed. You don’t need an accounting degree to understand quarterly updates. You’ll find most answers in the press release and the investors presentation.

Protector of your Capital

Sculpture of animal protecting an ornate ancient building

If you’re like me, you hate losing your hard-earned money. The dividend triangle helps me protect my portfolio from the inevitable storms.

Revenue trends reveal when companies are losing market share. It’s very rare to report growing revenues year after year when losing market share. There are justifiable reasons for weaker results; end of a cycle, a change in the business model, or simply the economy slowing down. However, if this persists for years and management can’t find growth vectors, that’s a red flag.

The same goes for EPS. If, for several years, a company cannot generate growing EPS, odds are dividend growth won’t happen either. Because of the flaws of the EPS, it’s good to also review cash flow metrics to see what’s really going on. What happens with companies generating strong free cash flows? They tend to have a rising stock price over the long haul, a reliable dividend growth policy, and make you a richer investor.

The post Detect Losers and Find Winners with The Dividend Triangle appeared first on The Dividend Guy Blog.

My Take on 35 Stocks Puzzling Investors – Part 2 [Podcast]


Last week, we started sharing Mike’s thoughts on 35 stocks that are puzzling investors. There was so much to cover that we were not able to finish, so here is part 2! Stop hesitating on banks, groceries and restaurants, railroads, and more!

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You’ll Learn

  • It has been the name of the game this year, high interest rates and the current state of the Economy raise some questions about Canadian Banks. Mike discusses the big 6: Royal Bank (RY), TD Bank (TD), BMO (BMO), ScotiaBank (BNS), CIBC (CM), National Bank (NA.TO). We also add a note on EQBank (EQB) and GoEasy (GSY).
  • Consumer Discretionary stocks are not to be left aside. Questions about A&W Royalties (AW.UN.TO) and McDonald’s (MCD) keep coming back. Are they in trouble?
  • Magna International (MG.TO) used to be liked by Mike. Is it still the case?
  • Some investors are looking for buying opportunities and the Consumer Staples sector may be a good place to do so. Metro (MRU.TO), Dollarama (DOL.TO), and Costco (COST) have been mentioned a few times. Are they worth it?
  • However, it’s not going well for Walgreens (WBA), you even quickly mentioned it last week. Is it the end of it?
  • Let’s talk about some industrial stocks! One of the regular questions is: CP or CNR?
  • Vero ends by throwing a few controversial names at Mike: MSM Industrial (MSM), TFI International (TFII), CAE, and 3M (MMM).
  • Mike is a shareholder of CAE, which suspended its dividend. Is he thinking of selling?
  • To end the episode, Mike is adding a few tips on understanding the metrics vs the company’s story.

Related Content

Go back to part 1 not to miss any of Mike’s thoughts!

My Thoughts on 35 Stocks – Part 1 [Podcast]

Many investors have doubts about Brookfield stocks, especially Brookfield Infrastructure (BIP). Mike did a complete video on it.


The Best Dividends to Your Inbox!

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The post My Take on 35 Stocks Puzzling Investors – Part 2 [Podcast] appeared first on The Dividend Guy Blog.

What’s Going on with Telcos? – October 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.

This month, I also took a deeper look at telecoms. Don’t miss it!

Performance in Review

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

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

  • Portfolio value: $221,331.59
  • Dividends paid: $4,613.03 (TTM)
  • Average yield: 2.20%
  • 2022 performance: -12.08%
  • SPY= -18.17%, XIU.TO = -6.36%
  • Dividend growth: +10.83%

Total return since inception (Sep 2017-Nov 2023): 103.5%

Annualized return (since September 2017 – 74 months): 12.21%

SPDR® S&P 500 ETF Trust (SPY) annualized return (since Sept 2017): 11.46% (total return 95.24%)

iShares S&P/TSX 60 ETF (XIU.TO) annualized return (since Sept 2017): 8.08% (total return 61.49%)

Dynamic sector allocation calculated by DSR PRO as of November 2nd 2023.
Dynamic sector allocation calculated by DSR PRO as of November 2nd 2023.

What’s Going on with Telcos?

I have been asked this question often over the past few months. Most specifically around BCE and Telus, but I thought of doing a broader review including Rogers, Verizon and AT&T. They all have a few things in common:

  • Most of their revenue and growth originate from wireless services.
  • They have all invested massively to expand their networks and develop the 5G technology.
  • Their balance sheets are heavy in debt, not to mention the interest charges’ effects on earnings.
  • Most importantly they all struggle to attain significant growth.

However, the situation isn’t as bad as investors make it seem when they sound concerned and ask questions. Here’s Telcos’ total returns (including dividends) over the past 12 months.

Telecom stocks 2023 total return.
Telecom stocks 2023 total return.

It’s definitely not great but being down 5% – 10% may be just normal. However, the biggest problem is the price anchoring bias. When investors ask me about telcos, they don’t see Rogers at +1.83% and Verizon at +3.88%. They see it at -16.96% and -15.32%, respectively. How do they get those numbers?

  1. They look at the all-time-high price (May 1st for Rogers and January 6th for Verizon)
  2. They ignore dividends paid during the timeframe (and just consider stock price movements)

Along the same train of thought, while BCE (-5.85%), AT&T (-7.48%) and Telus (-10.69%) haven’t done great in the past 12 months, many investors see them at -17.10%, -22.92% and -17.24%, respectively. While their returns have been negatively amplified by price anchoring, I’m not going to tell you that everything is pinky.

Did telcos perform well in the past 12 months? – NO

Why do they lag the market? – Poor growth and higher interest charges

But the problem is deeper – they haven’t done well in a long time:

Telecom stocks 5-yr total return.
Telecom stocks 5-yr total return.

Ironically, BCE and Telus are the only ones with decent returns over the past 5 years. Even then, they lag the TSX by a wide margin. For the record, the iShares XIU.TO tracking the TSX 60 is up 53.73% (total return) in the past 5 years and the SPDR S&P 500 SPY is up 72.67%.

There is definitely something wrong with telcos.

Now let’s do a quick overview to understand what’s is going on and which metrics we must follow going forward.

Verizon is slowly dying?

Verizon is part of our US retirement portfolio and it’s probably the position I dislike the most. What’s the problem? The company is seriously lacking growth vectors. Revenue has grown by less than 2% annually over the past 5 years. While the EPS growth is better (7.65% CAGR), most of it happened 4-5 years ago. Therefore, the 5-year growth will slow down going forward if the company doesn’t change its course. The company is stuck between a rock and a hard place: on one side, it must continue to invest in its network, on the other side, paying down debt would be a smart idea. Paying down debt would strengthen Verizon’s balance sheet, but limit growth vectors. The company has an urgent need to find growth.

Verdict: the situation isn’t catastrophic as VZ counts on predictable cash flow coming from its customers. I believe Verizon will continue its course and I don’t expect much capital appreciation, but a solid dividend. It’s important to monitor VZ quarterly.

AT&T is like Verizon, but worse

AT&T is in the exact same situation as Verizon, but it must carry the burden of several bad management decisions. Its adventure in the media business (hello Direct TV!) destroyed a lot of value. Here we are about a year and a half after AT&T tried to repair its mistake after spinning off Warner Bros Discovery (WBD) and going back to what management knows best: wireless and wireline services. The most optimistic would say T is generating more cash flow and started to pay off its debt. Similar to Verizon, AT&T generates tons of cash flow quarterly. Again, AT&T must get that debt down while continuing to invest in its network. T has the advantage of having a stronger wireline business than Verizon to “attach” its customers.

Verdict: Dividend cutters have no place at DSR. AT&T failed investors once and has offered poor results ever since. I’ll reconsider my position if and when the company shows a strong dividend triangle again. Until I see revenue, EPS and dividend growth, AT&T will remain dead to me.

Rogers going big or going bust?

It’s no secret I have had little interest in Rogers for many years. In my view, Rogers is like BCE without the dividend growth. The company has produced one dividend increase over the past 5 years and won’t likely reward shareholders with additional increases in the future considering its recent acquisition of Shaw.

The acquisition gives more size and scale to expand Rogers’ empire and improve margins. The early days of Shaw’s integration already show some solid synergy. Rogers faces steep competition coming from BCE and Telus and it won’t end anytime soon. With a larger exposure to media than its competitors, I can’t see how Rogers will grow faster. The media business is struggling and there is not clear direction toward strong profits.

Verdict: Rogers isn’t really on my radar due to its lack of dividend growth. If the integration of Shaw doesn’t go as well as management expects, this story will quickly turn sour.

BCE is a slow elephant

I often describe BCE as a “deluxe bond”: a stock with limited capital appreciation, but with a good dividend yield and decent dividend growth. It’s still true today, but the market is eager to see a better cash flow picture. The story is the same for all telcos at the moment: strong cash flow from operations + high capital expenditure = smaller free cash flows and less room for dividend growth. The recent quarters show a small improvement in that regard (e.g., smaller CAPEX leads to stronger free cash flow), but we will need a clear trend going forward before we celebrate. While BCE generates some revenue from media, we are talking about 13-15% of its total revenues. The bulk of its cash flow comes from wireline and wireless services.

Verdict: BCE remains a deluxe bond. If I was looking for income, I wouldn’t have a problem holding BCE right now. As long as the company shows improvement with its cash flow metrics, I would sleep well at night.

Telus’ growth vectors are hurting the business!?!

On top of dealing with higher interest charges along with weak growth like other telcos, Telus is facing an additional problem: its growth vectors are actually shrinking! Telus Healthcare, Agriculture and International aren’t contributing to Telus’ success right now, and in fact quite the opposite is true. As many companies expect a recession, they are building their war chest instead of spending on technology. Therefore, Telus International had to review its guidance and report weaker earnings during the entire year of 2023. They are not losing market share, but they are in a down investment cycle which has had a great impact on their results and reflects on Telus. The company reported a good quarter where free cash flow was up 7%, mostly driven by a reduction of CAPEX. The company also announced its second dividend increase of the year, bringing its yearly dividend increase to 7% in 2023.

Verdict: Telus keeps me smiling as management keeps showing confidence in its business with a second dividend increase this year. Since their cash flow metrics are improving a little each quarter, we may see the company doing a lot better in the second half of 2024.

What to look for going forward

As you can see, the entire sector faces the same challenges. The dividend triangles are similar as well (e.g., they show EPS growth weakness and some dividend trends aren’t as strong as they used to be). In this situation, I prefer to go with the one with the strongest dividend growth trend (Telus), but that’s just me. However, going forward, they must all show strong metrics. To help you monitor them, I’ve made a quick list:

Cash from operations: They all made the same promise: “we’ll get as much cheap debt as possible to invest in our network and we will later generate tons of cash flow”. Well, we are now “later” and it’s time to show that growth.

Capital expenditure (CAPEX): Again, the promise was to invest massively and then slow down to generate higher cash flow. While telcos will continue to be capital-intensive businesses (e.g., for network maintenance), they should slow down their expenses as their 5G networks are now well-developed.

Free cash flow: If we see cash from operations going up and CAPEX going down, free cash flow should increase. In an ideal world, telcos should show enough free cash flow to cover the dividend. In other words, they should be able to generate enough cash from operations to cover their expansion and maintenance (CAPEX) along with their dividend payments.

Dividend growth: If all goes well, a company should not see any problem in increasing its dividend. Any slowdown or absence of dividend growth is definitely a red flag here. If cash flow metrics improve and the dividend growth remains, I’m not going to worry much about the stock price fluctuation.

Bonuses: If one telco goes with a share-buyback program or a debt payoff announcement, it would make it my favorite play by far. However, in order to do that, each telco must generate stronger cash flow and spend less… That’s a tall order!

Smith Manoeuvre Update

Slowly but surely, the portfolio is taking shape with 9 companies spread across 7 sectors. My goal is to build a portfolio generating 4-5% in yield across 15 positions. I will continue to add new stock monthly until I reach that goal. My current yield is 4.85%.

Smith Manoeuvre Sector Allocation.
Smith Manoeuvre Sector Allocation.

Added 5 Shares of Canadian Natural Resources (CNQ.TO)

Canadian Natural Resources just announced another 11% dividend increase. The company is rapidly paying back its debt and buying back shares on top of increasing its dividend. It’s a rare “income play” that shows interesting growth right now.

Here’s my SM portfolio as of November 6th, 2023 (before noon):

Company Name Ticker Sector Market Value
Brookfield Infrastructure BIPC.TO Utilities $845.60
Canadian National Resources CNQ.TO Energy $1,013.54
Canadian Tire CTA.A.TO Consumer Disc. $433.98
Exchange Income EIF.TO Industrials $501.93
Great-West Lifeco GWO.TO Financials $676.43
National Bank NA.TO Financials $530.76
Nutrien NTR.TO Materials $965.77
Telus T.TO Communications $921.12
TD Bank TD.TO Financials $1,135.33
Cash (Margin) $20.21
Total $7,044.67
Amount borrowed -$7,000.00

Let’s look at my CDN portfolio. Numbers are as of November 2ND, 2023 (before the bell):

Canadian Portfolio (CAD)

Company Name Ticker Sector Market Value
Alimentation Couche-Tard ATD.B.TO Cons. Staples $28,002.00
Brookfield Renewable BEPC.TO Utilities $8,833.92
CAE CAE.TO Industrials $5,856.00
CCL Industries CCL.B.TO Materials $7,722.40
Fortis FTS.TO Utilities $9,788.04
Granite REIT GRT.UN.TO Real Estate $8,454.40
Magna International MG.TO Cons. Discre. $4,715.90
National Bank NA.TO Financials $10,707.29
Royal Bank RY.TO Financial $7,461.35
Cash $353.33
Total   $91,894.63

My account shows a variation of +$4,338.85 (+4.96%) since the last income report on October 3rd.

Here’s a quick review of companies that declared their earnings (the rest will be in my December update).

Brookfield Renewable is ready

Brookfield reported an acceptable quarter as funds from operations grew by 7%, but the FFO per share remained flat. The results reflect strong operating activities as BEP benefitted from its highly diversified operating platform, inflation-indexed contracts and development in-line with plan. I appreciated that management addressed the poor stock performance on the market. BEP reaffirmed its conviction in generating a strong return on its capital invested. It is also confident in making additional acquisitions as the renewables industry is struggling. Speaking of which, BEP ended the quarter with more than $4B in available liquidity.

Magna International surprises the market

Magna International pleased investors with this quarter: revenue up 15% and EPS up 36%!  Revenues were driven by higher sales of light vehicles and positive currency rates. Revenues were up 10% in constant dollars. After a difficult start in 2023, Magna focused on optimization and cost reductions to expand its margin quickly. Their ongoing focus on operational excellence and cost initiatives helped drive strong earnings on higher sales. Management also revised its guidance for 2023 showing stronger revenue expectations and better margins. The stock now trades at a forward PE of 10.

Fortis is a King!

Fortis had good news to announce to its shareholders as it reported an EPS jump of 18%! The increase reflects the new cost of capital parameters approved for the FortisBC utilities in September 2023 retroactive to January 1, 2023. Earnings growth was also supported by a strong performance in Arizona, due to warmer weather and new customer rates. Finally, a higher USD boosted results translated into CAD. The company is on track with its $4.3B CAPEX plan for 2023 with $3B invested through September. Finally, Fortis announced a dividend increase of 4.4% in September of 2023 making it its 50th consecutive dividend increase. Congrats!

Here’s my US portfolio now. Numbers are as of November 2nd, 2023 (before the bell):

U.S. Portfolio (USD)

Company Name Ticker Sector Market Value
Apple AAPL Inf. Technology $13,317.75
BlackRock BLK Financials $9,022.86
Brookfield Corp. BN Financials $11,017.16
Disney DIS Communications $3,748.05
Home Depot HD Cons. Discret. $8,835.90
Microsoft MSFT Inf. Technology $19,157.60
Starbucks SBUX Cons. Discret. $8,500.85
Texas Instruments TXN Inf. Technology $7,365.50
Visa V Inf. Technology $12,162.50
Cash $351.36
Total   $94,479.53

My account shows a variation of +$4,492.07 (+5%) since the last income report on October 3rd.

Most of my holdings reported their earnings, let’s have a look!

Apple warns investors of what’s coming ahead

Apple reported a mixed quarter as EPS jumped by 13%, but revenue was down by 1%. Net sales by category: iPhone revenue: $43.8B (2.7 Y/Y %); Mac revenue: $7.61B (-33.9 Y/Y %); iPad revenue: $6.44B (-10.2 Y/Y %); Wearables, home and accessories: $9.32B (-3.4 Y/Y %); Service revenue: $22.31B (16.3 Y/Y %). We continue to see weakness coming from China. Revenue in China totaled $15.084B compared to the average analyst estimate of $17B and versus $15.42B a year earlier. International revenue was also affected by a strong USD. Going forward, we should see stagnant revenue in this uncertain economy.

BlackRock remains a solid investment

BlackRock reported a solid quarter with EPS up 14% and revenue up 5%. EPS growth reflected a lower effective tax rate, partially offset by lower non-operating income in the current quarter. The 5% increase in revenue was primarily driven by organic growth and the impact of market movements over the past twelve months on average AUM and higher technology services revenue. However, long-term quarterly net inflows were only $3B, slowing from the $80B of inflows in Q2 and reflecting $49B of net outflows from lower-fee institutional index equity strategies. Clients are happier in cash right now and they prefer to wait.

Microsoft is the beast!

Microsoft reported another killer quarter with EPS up 27% and revenue up 13%, soundly beating analysts’ expectations. In September, MSFT also announced a 10% dividend increase (that makes a perfect dividend triangle for the quarter!). Revenue in Productivity and Business Processes increased by 13%, driven by Office commercial products (+15%) and Dynamics (+22%). Intelligent Cloud jumped by 19%, driven by Azure (+29%). Revenue in More Personal Computing was up 3% driven by Xbox (+13%) and Windows (+5%), but partially offset by Devices (-22%). MSFT is set for another year of growth!

Starbucks is opening more stores!

Starbucks reported a strong quarter with revenue up 11% and EPS up 31%, beating analysts’ expectations. Comparable store sales rose 8% as the average ticket was up 4% and transactions were up 3% during the quarter. Surprisingly, inflation didn’t slow down Americans and Canadians from buying their latte at Starbucks as comparable sales were up 8% in North America! International comparable sales rose 5%. China comparable store sales increased by 5%. Active membership in Starbucks Rewards in the U.S. rose 14% to 32.6M.  There is more growth to come as SBUX opened 816 stores this quarter! SBUX also announced a 7.5% dividend increase in September!

Texas Instruments disappoints

This wasn’t the quarter we wanted from Texas Instruments. The company saw its revenue decline by 14% and EPS was down by 38%. The company’s results were affected by weaker demand from the automotive and industrial segments. We can feel a recession is brewing. Looking ahead, Texas Instruments expects fourth-quarter sales to be between $3.93B and $4.27B, below the $4.49B that analysts were anticipating. The company said that during the third-quarter, weakness in the industrial space “broadened.” At least, TXN offered a 5% dividend increase, but I’ll put this one on my radar as the dividend triangle is weakening.

Copy/paste for Visa

11-03-2023, I could literally copy/paste our comment about Visa quarterly earnings from one quarter to another! Another impressive quarter with revenue up 11% and EPS up 21%! The icing on the cake was a 16% dividend increase. Payments’ volume increased 9% Y/Y in constant dollars with cross-border volume up 16% and processed transactions increasing 10%. That compares with Q3 payments volume growth of 9%, cross-border volume growth of 17%, and process transactions growth of 10%. The growth isn’t over as management expects good numbers for 2024: EPS growth in the low teens and revenue growth in the high single-digits to low double-digits.

My Entire Portfolio Updated for Q3 2023

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 October 3rd, 2023.

DSR PRO Portfolio Report Example.
DSR PRO Portfolio Report Example.

Download my portfolio Q3 2023 report.

Dividend Income: $34.14 CAD (-81% vs October 2022)

Pension Dividend Income since Inception by month.
Pension Dividend Income since Inception by month.

What happened to October????

I’m down 81% on that month! If we go back in time, we will remember that Algonquin and Gentex were part of my portfolio last year. While AQN reminds me of my mistake, I still smile when I think of GNTX.

I sold the first one after a painful dividend cut and I sold the latter since it forgot its dividend growth policy. On one side, I lost about 50% and on the other, I made about 50% profit. But both stocks weren’t in line with my investment strategy (e.g., dividend growth investing). Focusing on the process is more important than focusing on a single stock’s returns.

Here are the details of my dividend payments.

Dividend growth (over the past 12 months):

  • Granite: +3.2%
  • Currency: +1.22%

Canadian Holding payouts: $364.55 CAD.

  • Granite: $34.14

U.S. Holding payouts: $0 USD.

Total payouts: $662.29 CAD.

*I used a USD/CAD conversion rate of 1.3744

Cumulative Dividends Paid since inception.
Cumulative Dividends Paid since inception.

Since I started this portfolio in September 2017, I have received a total of $22,994.54 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

After looking at what is going on over the past two months on the market, one thing I can tell you is that we are far from being done with volatility. The only thing you can do now is to make sure you are comfortable with your portfolio and to focus on the long term.

Get rid of that price anchoring bias and get back to looking at metrics such as the dividend triangle. Numbers are stronger than stories.



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