Trades… Many Trades! – 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.

This month, my update is full of trades!

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Performance in Review

Let’s start with the numbers as of January 9th 2024 (before the bell):

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

  • Portfolio value: $239,645.24
  • Dividends paid: $4,591.41 (TTM)
  • Average yield: 1.92%
  • 2023 performance: +20.69%
  • SPY= +26.19%, XIU.TO = +11.87%
  • Dividend growth: +1.7%

Total return since inception (Sep 2017-Dec 2023): 120.34%

Annualized return (since September 2017 – 76 months): 13.29%

SPDR® S&P 500 ETF Trust (SPY) annualized return (since Sept 2017): 12.74% (total return 113.7%)

iShares S&P/TSX 60 ETF (XIU.TO) annualized return (since Sept 2017): 9.03% (total return 72.89%)

Dynamic sector allocation calculated by DSR PRO as of January 9th 2024.
Dynamic sector allocation calculated by DSR PRO as of January 9th 2024.

Trades… Many Trades!

This is the time of the year where I make most of my trades! You probably saw them coming if you followed last month’s update, so there should not be any big news ?.

Sell Disney & CAE

Both companies suspended their dividend during covid and they were the two exceptions I made in ages to my hard rule “sell upon a dividend cut”. As I mentioned before, I still believe in both businesses’ models, but it’s time to let go of those two small holdings and improve my portfolio’s health and yield!

Sold 200 CAE.TO @ $28.11

Sold 45 DIS @ $94.74

Trimm some Alimentation Couche-Tard, Apple and Microsoft

During my yearly review, I always make sure I’m not over exposed to any single stock. Apple and Alimentation Couche-tard were above 10% of all my portfolios (not just my pension plan) and I thought of selling a few shares of Microsoft to create more capital to invest in my new U.S. ideas.

Sold 60 ATD.TO @ $74.36

Sold 35 AAPL @ $197.70

Sold 8 MSFT @ $365.34

Buy Stella-Jones (SJ.TO)

Stella-Jones has been on my radar for a while but I didn’t have liquidity to add it to my portfolio. The combination of the sales of CAE and ATD created enough capital to open a decent position.

With its main customers being utilities and railroads, the company will continue to obtain sizable orders and get paid. In 2023, the company reported impressive numbers as demand for infrastructure products are surging. Management recently announced they were looking for more acquisition targets. With 15 facilities in Canada and 25 on U.S. soil, the company can deliver its products promptly. The company has proven to be a defensive pick during the pandemic. The “lumber COVID-hype” is over, but SJ remains a solid business and benefits from multiple growth vectors. While residential construction may slow down due to higher interest rates, the need for more infrastructure and major projects continues to drive sales higher. Management mentioned they were seeking acquisition targets and we like that! For their latest quarters, a portion of SJ’s growth was fueled by recent acquisitions and margin expansion.

Bought 146 SJ.TO @ $73.16

Buy Automatic Data Processing (ADP)

Automatic Data Processing is the largest US-based payroll services provider. The company enjoys a sticky business model where most corporations will use ADP services for years. Once your payroll setup is rolling, why would you change it? Tight labor markets have worked in ADP’s favor, leading to improved financial performance with a rebound in new bookings. ADP’s recent efforts to increase investment in existing platforms and sales capacity should help boost growth.

ADP exhibits a very strong dividend triangle with a 5yr. annual revenue growth rate of 6.05%, EPS growth of 11.85% and dividend growth of 13.70%. The company is close to becoming a Dividend King with 48 consecutive years of dividend increases. While ADP has continued to grow, its stock price has hovered between $200 and $250 per share for the past two years. Its 5-year average PE ratio is 31.48 while its current forward PE is at 24.45. There is nothing like buying a great company at a good price.

Bought 38 ADP @ $235.54

Buy LeMaitre Vascular (LMAT)

You heard me talk about LMAT several times over the past few years. I finally got some money to initiate a small position. Note that it’s a small company and therefore, I didn’t invest in this one massively.

Since debt isn’t a popular topic these days, I decided to go with a small cap with a stellar balance sheet. LMAT is a niche company selling a dozen products being used in surgeries on veins and arteries outside of the heart. In other words, they deal with hospitals and surgeons who don’t have much time to shop around and change suppliers. Most of its products are #1 or #2 in their respective markets. The company doesn’t hesitate to grow by acquisition or to spend more on hiring sales representatives. You can rest assured your interests are aligned with management as M. LeMaitre owns more than 10% of all shares.

Bought 100 LMAT @ $56.28

I have discussed more details about my trades in this YouTube video:

Smith Manoeuvre Update

Slowly but surely, the portfolio is taking shape with 10 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 4.98%.

Dynamic sector allocation calculated by DSR PRO as of January 9th 2024.
Dynamic sector allocation calculated by DSR PRO as of January 9th 2024.

Adding 15 shares of Capital Power (CPX.TO) @ $38.24

This move increased my exposure to utilities, but I just could not let this opportunity pass by without taking action. Down the road, I’ll likely sell some utility stocks and cash a gain. But in the meantime, I don’t mind seeing this sector taking more and more space in my Smith Manoeuvre portfolio. Since I operate a leveraged strategy, I must be more aggressive with many investments. CPX is not only a great utility with good growth vectors with natural gas assets and renewable energy sources, but its yield fits perfectly in an SM strategy.

Here’s my SM portfolio as of January 9th, 2024:

Company Name Ticker Sector Market Value
Brookfield Infrastructure BIPC.TO Utilities $969.00
Canadian National Resources CNQ.TO Energy $961.84
Capital Power CPX.TO Utilities $572.10
Canadian Tire CTA.A.TO Consumer Disc. $427.71
Exchange Income EIF.TO Industrials $1,029.38
Great-West Lifeco GWO.TO Financials $738.31
National Bank NA.TO Financials $609.54
Nutrien NTR.TO Materials $967.07
Telus T.TO Communications $919.98
TD Bank TD.TO Financials $1,216.46
Cash (Margin) -$3.51
Total $8,407.88
Amount borrowed -$8,000.00

Let’s look at my CDN portfolio. Numbers are as of January 9th, 2024:

Canadian Portfolio (CAD)

Company Name Ticker Sector Market Value
Alimentation Couche-Tard ATD.B.TO Cons. Staples $23,925.98
Brookfield Renewable BEPC.TO Utilities $10,534.14
CCL Industries CCL.B.TO Materials $8,100.40
Fortis FTS.TO Utilities $9,587.97
Granite REIT GRT.UN.TO Real Estate $9,902.08
Magna International MG.TO Cons. Discre. $5,356.40
National Bank NA.TO Financials $12,292.39
Royal Bank RY.TO Financial $8,794.50
Stella Jones SJ.TO Materials 11,417.20
 
Cash $273.25
Total   $100,184.31

My account shows a variation of +$5,625.95 (+5.95%) since the last income report on December 6th.

Here’s my US portfolio now. Numbers are as of January 9th, 2024:

U.S. Portfolio (USD)

Company Name Ticker Sector Market Value
Apple AAPL Inf. Technology $7,422.40
Automatic Data Processing ADP Industrials $8,996.88
BlackRock BLK Financials $11,160.66
Brookfield Corp. BN Financials $13,352.99
Home Depot HD Cons. Discret. $10,437.90
LeMaitre Vascular LMAT Healthcare $5,588.00
Microsoft MSFT Inf. Technology $17,610.43
Starbucks SBUX Cons. Discret. $8,006.15
Texas Instruments TXN Inf. Technology $8,427.00
Visa V Financials $13,127.00
Cash $234.08
Total   $104,363.49

My account shows a variation of +$3,152.15 (+3.11%) since the last income report on December 6th.

We’ll cover earnings in February.

My Entire Portfolio Updated for Q4 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 January 10th, 2024.

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

Download my portfolio Q3 2023 report.

Dividend Income: $696.27 CAD (+25% vs December 2022)

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

There were a lot of changes vs last year. Throughout 2023, I made several trades to strengthen my portfolio (selling AQN.TO, VFC, SYZ.TO, ENB.TO, buying HD, COST, CCL.B.TO and more of FTS.TO and BEPC.TO). I also benefitted from several strong dividend growers such as ATD.TO (+25%), V (+16%), MSFT (+10%).

Dividend growth (over the past 12 months):

  • Magna Intl: +2.65%
  • Fortis: +80.35% (more shares)
  • Granite: +3.27%
  • Alimentation Couche-Tard: +25%
  • CCL: new
  • Brookfield Renewable: +94% (more shares)
  • Visa: +15.56%
  • Microsoft +10.29%
  • Home Depot: new
  • BlackRock: +2.5%
  • Brookfield: new
  • Currency: -2%

Canadian Holding payouts: $393.18 CAD.

  • Magna Intl: $42.95
  • Fortis: $100.89
  • Granite: $34.14
  • Alimentation Couche-Tard: $62.83
  • CCL: $37.10
  • Brookfield Renewable: $118.27

U.S. Holding payouts: $224.57USD.

  • Visa: $26.00
  • Microsoft $41.25
  • Home Depot: $62.70
  • BlackRock: $70.00
  • Brookfield: $24.62

Total payouts: $696.27 CAD.

*I used a USD/CAD conversion rate of 1.3363

Since I started this portfolio in September 2017, I have received a total of $24,113.50CAD 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.

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

Final Thoughts

2023 was the year of a great comeback. I have followed my investment rules to the dot and it has born fruit. I’m entering 2024 with strong confidence that I have the right portfolio for whatever will come my way.

As you read this update, I’m probably eating a good steak with a good Malbec or Cabernet in my hand in Argentina. I raise my glass to all dividend growth investors for another successful year on the market!

Cheers,

Mike.

Find out about 6 companies that will crush 2024

Cover page of the DSR 2024 Top Dividend Stocks - Best Ideas for Three Sectors booklet

I compile a list of stocks expected to do better than the market for Dividend Stocks Rock members each year. This year, I’ve reviewed the 11 sectors for them and included top picks for each. I’ve decided to share three of them with you: Consumer Discretionary, Financials, and Industrials.

You can download 6 of my top 24 for 2024 right here:

The post Trades… Many Trades! – December Dividend Income Report appeared first on The Dividend Guy Blog.

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