Revisiting my Investment Rules – January 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 February 2nd, 2023 (before the bell):

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

  • Portfolio value: $211,332.79
  • Dividends paid: $4,503.31 (TTM)
  • Average yield: 2.13%
  • 2022 performance: -12.08%
  • SPY= -18.17%, XIU.TO = -6.36%
  • Dividend growth: +10.83%

Total return since inception (Sep 2017-Feb 2023): 94.31%

Annualized return (since September 2017 – 65 months): 13.05%

SPDR® S&P 500 ETF Trust (SPY) annualized return (since Sept 2017): 11.74% (total return 82.46%)

iShares S&P/TSX 60 ETF (XIU.TO) annualized return (since Sept 2017): 9.71% (total return 65.21%)

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

Kissing AQN GoodBye + More of What Works

I sold my shares of Algonquin Power after listening to the investors’ update call. Everything has been written on Algonquin and it’s time for me to move on. A few days after that trade, I bought more shares of Fortis.

Bought 72 shares of FTS.TO at $56.48/share.

While one may think I replaced one utility stock with another from the same sector, the two trades are coincidental. I wanted to bolster my position in Fortis for two reasons. The first one is that while my portfolio value has almost doubled since 2017, my shares of Fortis haven’t followed that trend. Fortis is a stabilizer in my portfolio and pays a generous dividend compared to the rest of my holdings.

By adding more shares of FTS, I reduced the volatility of my portfolio and increased my exposure to a long-term dividend grower. Sometimes, you don’t have to go for a new stock to add to your portfolio, as you may have the answer right in front of you. Fortis shows a robust business model and has proven its ability to increase its dividends throughout any economic environment.

Revisiting My Investment Rules

2022 was an abnormally bad year for my portfolio. It’s normal to go through bad years (and my portfolio did slightly better than the market), but I made two mistakes back-to-back with AQN and SYZ.TO. I decided to go back and revisit my investment rules to see what I might have been missing.

Asset & Sector Allocation

I started investing the week after completing my bachelor’s degree. I got my job and opened a brokerage account right away. Since 2003, I’ve been 100% invested (no cash on the side) and 100% in equities. The recent market fluctuations have not changed my mind about my asset allocations. Bad years are part of the contract you sign when you invest in stocks. Fortunately, good years are also part of the deal, and I must remain patient.

In an ideal world, my sector allocation would include several sectors with less than 20% invested in each. My understanding and attraction towards information technology companies is a blessing and a curse. It’s a blessing because it helped me drive strong results over the past five years. It’s a curse because my tech holdings have thrived more than other sectors and I now have 28% exposure to that sector. I’d say it’s a good problem to have and I don’t expect to modify my sector allocation at this point.

The other factor to consider is that Visa (V) which is about 7% of my portfolio is classified as a tech stock. Technically, we could argue that Visa will not move along with Apple (AAPL), Microsoft (MSFT) and Texas Instruments (TXN).

When looking at my 4 tech stocks, I see exposure to consumer habits (Visa), smartphones and technology products (Apple), cloud, computer, and gaming (Microsoft), and semiconductors (Texas Instruments). There is little duplication across my portfolio.

Strong dividend triangle

When I think of AQN and SYZ.TO, I now realize that I didn’t follow my own rules. Both companies didn’t show a strong dividend triangle. If I had focused on companies with strong dividend triangles, I would have suffered less! I decided to review the dividend triangle of each of my holdings, and here are the weakest with comments on them.

Activision Blizzard (ATVI): This was an educated guess made when the company had many HR management problems in late 2021. I’m currently holding this security until I know what will happen with Microsoft’s proposed purchase of the company. I will either sell it at $95 (if the deal clears) or I will sell after ATVI cashes the $3B termination fee paid by Microsoft if the deal is declined by regulators. I see that as a win-win proposition.

VF Corp (VFC): I’ve declared this company a falling knife. I have a small position in this one and it won’t significantly impact my total return. On February 7th VFC announced a 41% dividend cut. The stock was sold upon that news that happened after this February update.

Disney (DIS): This company is back with revenue growth, but EPS continues to be very low. Considering blockbuster movies are back and so is Mr. Iger, it will likely take a full year before we see improvements in their earnings. I expect to see some improvements in 2023.

CAE (CAE.TO): It’s hard to have a solid dividend triangle with no dividend. CAE has until the end of 2023 to show stronger metrics.  Revenue growth is back, but EPS remains very low.

Enbridge and Magna International show uneven growth, but both companies show safe payout ratios of under 75%.

Dividend cut = sell

In the past 13 years, I have made two exceptions to this rule: Disney and CAE as they both suspended their dividends due to the lockdowns in 2020. Three years later, they are both getting closer to being sold. Interestingly, they were both trading at all-time highs in 2021 before dropping again. I was right to be patient back then, but maybe I have been too patient?

Robust investment thesis

My last, but certainly not the least investment rule is to always keep stocks with a robust investment thesis and sell any companies that stop meeting my original thesis. At this point, my investment theses around Enbridge and VF Corporation are the “weakest”. While Enbridge is a solid deluxe bond (not much capital appreciation, but good dividends), I may be tempted to upgrade my portfolio with more growth in 2023.

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 February 2nd, 2023 (before the bell):

Company Name Ticker Sector Market Value
Canadian Net REIT NET.UN. V Real Estate $418.50
National Bank NA.TO Financials $603.12
Exchange Income EIF.TO Industrials $599.83
Brookfield Infrastructure BIPC.TO Utilities $522.36
Great-West Lifeco GWO.TO Financials $594.32
Cash (Margin) $32.73
Total $2,770.86
Amount borrowed -$2,500.00

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

Canadian Portfolio (CAD)

Company Name Ticker Sector Market Value
Alimentation Couche-Tard ATD.B.TO Cons. Staples $21,540.00
Brookfield Renewable BEPC.TO Utilities $9,376.74
CAE CAE.TO Industrials $6,030.00
Enbridge ENB.TO Energy $8,713.32
Fortis FTS.TO Utilities $9440.91
Granite REIT GRT.UN.TO Real Estate $10,924.80
Magna International MG.TO Cons. Discre. $6,295.10
National Bank NA.TO Financials $12,162.92
Royal Bank RY.TO Financial $8,189.40
Cash 158.68
Total   $92,831.87

My account shows a variation of +$7,309.49 (+8.55%) since the last income report on January 2nd. I’ll cover my Canadian holdings earnings results in my March update since most of them haven’t reported their numbers yet.

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

U.S. Portfolio (USD)

Company Name Ticker Sector Market Value
Activision Blizzard ATVI Communications $8,897.20
Apple AAPL Inf. Technology $10,907.25
BlackRock BLK Financials $10,676.82
Disney DIS Communications $4,922.55
Home Depot HD Cons. Discret. $7,217.98
Microsoft MSFT Inf. Technology $13,901.25
Starbucks SBUX Cons. Discret. $9,349.15
Texas Instruments TXN Inf. Technology $9,105.00
VF Corporation VFC Cons. Discret. $2,562.84
Visa V Inf. Technology $11,545.00
Cash $323.77
Total   $89,085.04

The US total value account shows a variation of +$6,849.87 (+8.33%) since the last income report on January 2nd. It was a good month for both portfolios! However, not all companies reported great earnings. Here’s a quick tour of what companies had to say about their latest quarter.

Apple is facing headwinds.

Apple is experiencing a slowdown across its business segments and reported sales down 5.5% and EPS down 10.5%, which missed their analysts’ estimates. The company is facing many headwinds, notably supply chain disruptions and currency headwinds. In November, Apple warned that the iPhone 14 Pro would be supply-constrained due to the COVID-19 pandemic and its drastic impact on China. Mac (-28.7%) and Wearables businesses (-8.3%) were the other two struggling segments this quarter. On a positive note, iPad sales jumped by 30% and AAPL reported a record $20B+ in sales for its Services division. AAPL has now surpassed more than 2B active devices as part of its installed base.

BlackRock is slowing down.

BlackRock reported double-digit declines in revenue of -15% and EPS of -17% but met analysts’ expectations. The drop in revenue is related to the market’s decline by lowering its assets under management and performance fees. Technology services, including Aladdin, produced $353M in revenue in the quarter vs. $338M in Q3 and $339M in Q4 2021. Management mentioned it saw record sales for Aladdin this quarter. Assets under management were at $8.59T up from AUM of $7.96T at the end of Q3, while the average AUM of $8.42T was down from $8.48T at the end of Q3.

Microsoft has a lot on its plate.

Microsoft reported mixed results this quarter, with revenue +2%, and EPS -6%. While Revenue in Productivity and Business Processes was up 7% and Cloud was up 18%, revenue in More Personal Computing was down 19%. MSFT numbers were also affected by negative currency headwinds. The company has many issues: it announced a 10,000-person lay-off in late 2022, it continues its quest to acquire ActivisonBlizzard and it recently announced it would begin integrating ChatGPT into its Azure cloud service. This move towards artificial intelligence could be another leap toward a decade of growth for Microsoft.

Starbucks is doing well in North America, but not in China.

Starbucks reported global comparable store sales rose 5%, but China hurt results. The average ticket was up 7% to offset a 2% decline in transactions during the quarter. Comparable sales in North America increased by 10% driven by a 9% increase in average tickets and transactions were up 1%. Operating margin fell to 18.5% of sales, from 18.9% a year ago with labor and input costs running higher. International comparable store sales decreased by 13% driven by a 12% decline in comparable transactions and a 1% decline in average tickets (China was down 29%). Active membership in Starbucks Rewards in the U.S. rose 15% to 30.4M and SBUX opened 459 net new stores during the quarter.

Texas Instruments is doing better than its peers.

When we compare TXN’s results with other players in the semiconductor industry (hello Intel!), the company did okay with revenue down 3% and EPS down 6%. Results reflect weaker demand in all end markets except for automotive. The market was disappointed by weak guidance as well. TI’s first quarter outlook is for revenue from $4.17 billion to $4.53 billion vs. consensus of $4.42B and earnings per share between $1.64 and $1.90 vs. consensus of $1.87. However, numbers could change quickly as many analysts expect the next investment cycle to start towards the end of the year.

Visa is… Visa!

Visa reported another strong quarter with double-digit revenue growth of 12% and EPS growth of 20%, which beat their analysts’ expectations. Cross-border travel continued to recover from the pandemic and processed transactions grew 10% Y/Y. Payments volume in Q1 rose 7% Y/Y in constant dollars, with cross-border volume up 22% and processed transactions up 10%. That compares with Q4’s payments volume growth rate of 10%, cross-border growth of 36%, and processed transactions increase of 12%. We expect Visa to slow down in 2023 as there is still a risk of a recession, but the company remains very strong.

My Entire Portfolio Updated for Q4 2022

Each quarter we run an exclusive report for Dividend Stocks Rock (DSR) members who subscribe to our special additional service, 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, 2023.

Download my portfolio Q4 2022 report.

Dividend Income: $134.06 CAD (-6.7% vs January 2022)

January was slightly down vs last year due to many transactions in the past 12 months. First, I sold my shares of Andrew Peller ($36.04) and Gentex ($28.20 USD) in 2022. Second, I added more shares of Algonquin earlier in 2022. Now that I have sold my shares of Algonquin, I have no other companies but Granite that will pay me in January. However, my overall portfolio is stronger in its current form!

Here is the detail of my dividend payments.

Dividend growth (over the past 12 months):

  • Algonquin: +39%
  • Granite: new
  • Currency factor: N/A

Canadian Holding payouts: $134.06 CAD.

  • Algonquin: $99.92
  • Granite: $34.14

U.S. Holding payouts: $0.00 USD.

  • No dividend paid in this account!

Total payouts: $134.06 CAD.

*I used a USD/CAD conversion rate of 1.3302

Since I started this portfolio in September 2017, I have received a total of $19,656.15 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

Interestingly, while we will all remember 2022 as a bad year, the market has already recovered a significant part of that loss. The TSX 60 (Canadian market) is relatively flat from January 2022 to February 2nd, 2023, while the S&P 500 (US market) is down 11% after being down more than 20% last year!

When I look at my portfolio, I’m not too far from my all-time-high values either ($225K vs $211K for this update). I will continue to follow diligently the stocks discussed earlier in this newsletter and will likely make more modifications to my portfolio later this year.



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