Not too long ago, I told you I had 108K to invest in the stock market. If you didn’t follow me through summer time, I received this money when I quit my job to work full-time on my investing websites. This money was what my pension plan was worth and I decided to take it with me instead of leaving it for a small pension.
Many of you told me I should be patient and that I should wait for the next market crash. Fair point: we are at the summit of a bull market, and there is no other way to go but down…or is there?
What My Portfolio Looks Like Now
I told you that my strategy was to buy as many companies as possible within the first month. I kept my promise. I’ve invested 70% of this account in the first 4 weeks. My portfolio is already well-diversified as you can see from this chart:
Numbers have been converted in US dollars. At the time of writing this post, I have invested $21,126 CAD into four different companies and $45,398 USD into nine companies. Each position is equally weighted for about $5,000 CAD each. The Canadian average dividend growth portfolio stands at 1.78%, while last year dividend growth average was 14%. The US part shows an average yield of 2.53% and last year’s dividend growth at 13%.
As you can see, I don’t focus on dividend yield but rather on dividend growth. Why? Because winter is coming.
The Only Way to Shield My Money Against the Next Correction is to Hide Behind the Strongest Army: Dividend Growth Soldiers
You know that I’m an eternal optimist and that I really believe we will continue to ride this bull market for a while. I’ll play nice and agree with you just for a few minutes. But what will happen if the market crashes in the upcoming months? After all, we have almost finished going through the worst two months of the year.
Nothing. Nothing will happen. Not to my portfolio anyway.
When I carefully picked those 13 companies, I made sure that both of them were not only strong dividend growers, but that they also had two other things in common:
#1 Each company must show strong growth vectors for the future.
#2 Each company must have plenty of room for future dividend raise.
When I write down my investment thesis for each stock, I make sure I find solid growth vectors. I’m not looking for companies that are simply surfing the current bull market. I’m looking for companies that will grow based on what they are doing differently.
Then, I make sure each company has a strong dividend triangle. Growing revenues lead to growing earnings that lead to growing dividends. I also review payout and cash payout ratios to make sure management wasn’t playing with shareholders’ sentiments with generous increases that will suddenly stop. I am not looking at old timers increasing their dividend for the past 40 years; I prefer younger ones like the Dividend Achievers. I even look at companies that started raising their dividend during the latest bull market (less than eight years). Why? Because I don’t want to miss great opportunities like Lazard (LAZ), Starbucks (SBUX) and Disney (DIS).
Dividend Growth Stocks are Perfect for the Next Winter
The reason why I’ve picked only dividend growth stocks for this portfolio is because I know payments will keep coming in. I’m no fool; I know that at one point, the market is going to drop. Look at how it reacted over time:
When I look at the latest wave, I have a feeling it will hurt when it hits the bottom. However, I know how strong my companies are and I know that all of them will continue to pay their juicy distribution.
Aren’t You Curious?
I bet you have been reading this post all the way to here wondering when I will share my list, right? So without further delay, here’s the list of my holdings:
Canadian Stocks (CAD)
|ADT.B||Alimentation Couche-Tard||Consumer Defensive||$ 5,083.46||0.61%|
|ADW.A||Andrew Peller||Consumer Defensive||$ 5,042.25||1.48%|
|RY||Royal Bank||Financial||$ 5,889.00||3.71%|
|LAS.A||Lassonde Industries||Consumer Defensive||$ 5,082.00||1.01%|
US Stocks (USD)
|DIS||Disney||Consumer Cyclical||$ 4,455.45||1.58%|
|GNTX||Gentex||Consumer Cyclical||$ 4,724.67||1.99%|
|HAS||Hasbro||Consumer Cyclical||$ 4,445.90||2.36%|
|SBUX||Starbucks||Consumer Cyclical||$ 4,742.14||1.79%|
|TXN||Texas Instruments||Industrial||$ 4,589.00||2.70%|
|UPS||United Parcel Service||Industrial||$ 4,370.80||2.81%|
Readers, I’d like to know what you think of my choices. Do you have any suggestions?