In September of 2017, I received slightly over $100K from my former employer which represented 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 sorts of market conditions. The market will inevitably go down, as it did last year. But I continued to enjoy cashing consistent and growing dividends despite that negative market action! And, most importantly, I stayed fully invested in the market and have enjoyed the market recovery in 2020 that has continued into this new year of 2021.
As you know, I also take the opportunity during my monthly income report to add some relevant market commentary. This time, some words of caution about forecasters!
Performance in Review
Let’s start with the numbers as of October 6th, 2021 (before market opening):
Original amount invested in September 2017 (no additional capital added): $108,760.02.
- Portfolio value: $212,201.38
- Dividends paid: $3,860.20 (TTM)
- Average yield: 1.82%
- 2020 performance: +20.3%
- SPY=18.17%, XIU.TO = 5.27%
- Dividend growth: +7.7%
Total return since inception (Sep 2017- Sept 2021): 95.1%
Annualized return (since September 2017 – 49 months): 17,78%
SPDR® S&P 500 ETF Trust (SPY) annualized return (since Sept 2017): 16.52% (total return 86.67%)
iShares S&P/TSX 60 ETF (XIU.TO) annualized return (since Sept 2017): 10.97% (total return 52.98%)
Sector allocation calculated by DSR PRO
Stock Forecasters Are The Worst
Ah! We all LOVE predictions, right? There is an entire industry built on predicting the future. In a sense, you are reading blogs like this one for our forecasting abilities. After all, you count on DSR’s work or other services to facilitate your work. You have no doubt noticed, however, that I NEVER make stock price or return predictions. There is a reason for that.
Over the past few months, the fear of a potential market bubble is growing faster than the market itself. I’ve seen all kinds of fear-mongering (read market noise) with exhaustive research and convincing charts flowing around. Here’s my favorite from GMO:
No, GMO doesn’t stand for “Genetically Modified Organism”. Here, it stands for Grantham, Mayo, & van Otterloo, a Boston-based asset management firm with $62.4B of assets under management. They perform investment research, and their 7-year asset class real return forecasts are quite popular.
What’s better than knowing your future returns per asset class before reviewing your portfolio? As fear of a market crash grows (even I can’t deny that the average PE ratio for most companies is quite high), seeing several asset classes in the red for the next 7 years makes more and more sense. Considering the market is in the red since the beginning of September, this makes even more sense. Right?
This is what I would say if I was an asset manager handing this graph to you. “The market may collapse, but we will do a good job at protecting your assets”. With such forecasts, you may want a set of extra hands to handle your money.
Now that I scared you a bit, let’s take some perspective.
This is relatively the same graph from GMO but dated as of July 31st, 2013! About 8 years ago, they forecasted a very bad stock market for the years between 2013 and 2020. While GMO expected a negative annual return for the US large-cap, the S&P 500 (the 500 largest US companies) shows an annualized return of 12%!
An investor who might have fled the US market to invest in emerging market companies thinking it would be the most productive asset class must be crying right now. I get that investing in the current market is scary. Many will tell you the crash is imminent and the average valuation is also higher than usual. But the problem will also be the same if you don’t stay invested, and you get stuck on the sideline “forever”. As Ben Carlson, CFA cited in this article:
“My point here is the best way to prepare for terrible periods in the stock market is by staying invested over the long haul. The best way to offset periods of low real returns is by being invested during periods of high real returns.”
Don’t fall for GMO and other fear-mongers. They exist to create noise and get attention. They don’t deserve your attention, nor do you need to waste your time listening to their noise.
Let’s look at my CDN portfolio. Numbers are as of October 6th, 2021 (before the bell):
Canadian Portfolio (CAD)
|Company Name||Ticker||Market Value|
|Algonquin Power & Utilities||AQN.TO||6,281.67|
My account shows a variation of -$3,323.59 (-3.84%) since the last income report on September 3rd. It’s crazy how fast the market turns, right? I just celebrated how I doubled my money in 4 years and boom, I’m back a few % behind. I guess I shouldn’t have jinxed it!
Here’s my US portfolio now. Numbers are as of October 6th, 2021 (before the bell):
U.S. Portfolio (USD)
|Company Name||Ticker||Market Value|
The US total value account shows a variation of -$4,064.49 (-3.92%) since the last income report on September 3rd. Similarly, to the Canadian side of my portfolio, we see the market taking some paper profits away from me. However, there was also some great news! Microsoft (MSFT), Texas Instruments (TXN) and Starbucks (SBUX) all announced dividend increases of 10.7%, 12.75% and 8.9% respectively. This is where my focus goes when the market isn’t in the green!
My Entire Portfolio Updated for Q3 2021
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 September 2021.
Download my portfolio Q3 2021 report.
Dividend Income: $498.68 CAD (-9.7% vs September 2020)
Another month down vs last year? What is going on? Actually, a lot is going on! First, I sold my UPS shares during the past 12 months so therefore I’m missing a dividend payment of $37.37. Second, and most importantly, Intertape Polymer paid their dividend in September last year. This year, I recorded a dividend payment of $64.46 on October 1st. Therefore, it will be reported in my next update. This payment alone would have been enough to show a dividend increase this month. Third, the USD was worth a lot more last year (1.326 vs 1.258). In fact, only Sylogist shows the same dividend payment as last year. I’m willing to wait a few more quarters considering the company increased its dividend twice in 2020 by a total of 25%. I still prefer management to offer a more stable dividend increase policy.
Here’s the detail of my dividend payments.
Dividend growth (over the past 12 months):
- Fortis: +5.8%
- Enbridge: +3%
- Magna International: +2.7%
- Sylogist: 0% (red flag!)
- Alimentation Couche-Tard: +160% (shares added)
- Brookfield Renewable: new
- Visa: +6.7%
- Microsoft: +9.8%
- VF Corp: +37.8% (shares added)
- BlackRock: +13.8%
- Conversion: -7%
Canadian Holding payouts: $313.62 CAD
- Fortis: $50.00
- Enbridge: $134.44
- Magna International: $37.21
- Sylogist: $52.13
- Alimentation Couche-Tard: $31.41
- Brookfield Renewable: $8.43
U.S. Holding payouts: $147.11 USD
- Visa: $16.00
- Microsoft: $33.60
- VF Corp: $39.69
- BlackRock: $57.82
Total payouts: $498.68 CAD
*I used a USD/CAD conversion rate of 1.258
Since I started this portfolio in September 2017, I have received a total of $13,871.24 CAD in dividends. Keep in mind that this is a “pure dividend growth portfolio” as no capital can be added into this account other than retained and/or reinvested dividends. Therefore, all dividend growth is coming from the stocks and not from any additional capital.
As more dividends come in, I’m getting close to having another $1,000 in cash to deploy in the market. I’ll use this extra money to add shares to my position in Brookfield Renewable. This will happen in October. More dividends will most certainly come my way in the future!
The market may be down temporarily, but my dividends will be up continuously. Talking about growing dividends, here’s my latest video about one of my holdings. Can you guess which one is it?
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