January 2019 Dividend Income Report, A Trade and +14% Divvy Increase

In September 2017, I received slightly over $100K as a result of the commuted value of my pension plan. I decided to invest 100% of this money into dividend growth stocks. Each month, I publish my results. I don’t do this to brag, I do this to show you it’s possible to build a portfolio during an all-time high market. The market will crash… eventually. In the meantime, I rather cash some juicy dividends!

Portfolio holdings – Let’s start the year with a BANG!

When we started January, I thought that two scenarios could happen:#1 Most companies will follow Apple (AAPL), revise their guidance and will be sent down to hell. Then we can call this a real bear market.

#1 Most companies will follow Apple (AAPL), revise their guidance and will be sent down to hell. Then we can call this a real bear market.

#2 Most companies will report strong earnings and we will get back to “normal” growth.

It appears we got lucky and most companies are still doing well. The FED has confirmed it will not go trigger happy on interest rates, economic metrics are still going well and we don’t expect interest rate increases on Canadian side of the border. In fact, rates are probably be like me running outside in January; frozen for a while!

During my latest webinar about Red Flags Telling You It’s a Bad Dividend, an investor asked me about my strategy to hedge my portfolio against the next bear market. My answer?

“Dividend growth stocks are a natural hedge in any markets”

While many investors tried to get out or get in the market during the right time in 2018, I simply stayed the course. Investing is easy when you spent lots of time and energy building a real investing plan. Let’s take a look at what my portfolio did this month.

Numbers are as at February 1^st 2019:

Canadian portfolio (CAD)

Company Name	Ticker	Market Value
Alimentation Couche-Tard	ATD.B.TO	$6,115.46
Andrew Peller	ADW.A.TO	$6,071.45
National Bank	NA.TO	$4,942.00
Royal Bank	RY.TO	$6,003.60
CAE	CAE.TO	$5,600.00
Enbridge	ENB.TO	$7,802.06
Fortis	FTS.TO	$4,631.71
Intertape Polymer	ITP.TO	$5,853.00
Lassonde Industries	LAS.A.TO	$4,310.04
Magna International	MG.TO	$4,800.59
Cash		$497.01
Total		$56,618.80

My account shows a variation of +$3,911.77 (+7.4%) since the last income report.

There hasn’t been much news around my Canadian holdings in January. There are several earnings report for the S&P 500 companies in January, but very few Canadian businesses publish their earnings so early. On January 29^th, Canadian National Railway (CNR.TO / CNI) declared another substantial dividend increase (+18%). Over the past 5 years, this railroad operators has increased its payout by 115%. There is no surprise here that I found CNR in my top industrial dividend stocks list.

Founded in 1918, Canadian National Railway is the largest railway in Canada and has significant operations in the United States. The total mileage of track exceeds 20,000. It trades on both Canadian and US markets. CN is divided into 7 groups: Petroleum & Chemicals, Metals & Minerals, Forest Products, Coal, Grain & Fertilizers, Intermodal, and Automotive.

With a yield under 2%, we can’t talk about a “strong” dividend payer. However, after digging further, I realized how strong the company’s fundamentals are. CNR has a very strong economic moat as railways are virtually impossible to replicate. Therefore, you can count on increasing cash flow coming in each year. Plus, there isn’t any better way to transport most commodities than by train.

Numbers are as at February 1^st 2019:

U.S. portfolio (USD)

Company Name	Ticker	Market Value
Apple	AAPL	$5,157.47
BlackRock	BLK	$5,810.70
Disney	DIS	$5,007.14
Garrett Motion	GTX	$48.55
Gentex	GNTX	$4,946.75
Hasbro	HAS	$4,170.82
Lazard	LAZ	$4,116.72
Microsoft	MSFT	$6,157.79
Resideo Tech	REZI	$112.30
Starbucks	SBUX	$5,786.80
Texas Instruments	TXN	$5,7077.00
United Parcel Services	UPS	$3,925.70
Visa	V	$6,980.50
Cash		$48.15
Total		$57,303.99

The US total value account shows a variation of +$3,394.88 USD (+6.3%) since the last income report.

Right before their earnings report, I wrote a piece on Seeking Alpha about buying BlackRock (BLK) and Bank OZK (OZK). I put my money where my mouth is and I bought shares of both companies. BLK is in my pension plan portfolio (the one you are looking at right now) and OZK is now in my RRSP portfolio. Both companies came from of my 2019 Best picks book that I published in December 2018.

BlackRock is not only the world’s largest asset manager by assets under management (AUM), but it is also a dominant leader in one of the fastest growing investment products: ETFs. As low-cost fees and passive investing solutions tend to grow stronger, more money is being transferred toward BLK. BlackRock offers investment products in all asset classes enabling it to generate fees regardless of whether investors are bullish or bearish. The company made the top financial dividend stocks list this year.

BlackRock is a winner and a keeper for decades to come. BLK net inflow assets under management continue to increase quarter after quarter. In other words; there is always new money coming in. The company is a leader in a growing investment field (ETFs) and has a strong relationship with several institutional clients. Institutional investors are more inclined to stay with their providers for several years than switching from one company to another in the short term.

I didn’t have money to purchase BLK at first. Since my pension account is a locked-in RRSP, I can’t add more money into it. Therefore, I took the decision to sell my shares of Honeywell (HON) and combined my most recent dividend payment (from both CAD and US stocks) to enter my position in BLK.

I still think HON is a great business, but I had my eyes on BLK for several years and always found it expensive. At around $400, it was the perfect opportunity to jump in as I have no doubt shares will be back over $500 in a near future. Plus, the company is paying a higher dividend yield than HON! In a perfect world, I would have kept both, but money is a finite resources apparently, haha!

Dividend income: $106.91 CAD (up from $93.45)

To be fair, my dividend income hasn’t jumped by 14% solely based on dividend growth. My USD dividend are translated into CAD for the purpose of this graph. Last year, my brokerage account showed a conversion rate at 1.22 while this year it is at 1.30. This explains a part of the dividend payment increase.

The bulk of the growth was still coming from the companies’ generous dividend increases from last year:

Andrew Peller: +14%

Disney: +4.76%

Gentex: +10%

Canadian Holdings payouts: $21.29 CAD

• Andrew Peller: $21.29

U.S. Holding payouts: $65.45 USD

• Disney: $39.60
• Gentex: $25.85

Total payouts: $106.91 CAD

*I used a USD/CAD conversion rate of 1.3081

Since I started this portfolio in September 2017, I have received a total of $3,432.47 CAD in dividend.  Keep in mind that this is a “pure dividend growth portfolio” as no capital can be added int his account (it’s a LIRA). Therefore, all dividend growth is coming from stocks and not from additional capital.

2019 will be quite an interesting year to follow as it will be the first real life demonstration that my portfolio can grow its dividend payout without having more capital invested. I’m starting strong with my first three dividend payers of the year showing an average 9.59% dividend increase. I can’t wait for next month to see my dividend jumping over $400 again!

Final thoughts

While the year is on a great start on the stock market, it doesn’t mean that the rest of the year will be smooth and all investors will show a 8-10% returns in their portfolio. There are lessons to be learned from 2018 and to apply this year. I’ve had a great discussion on twitter with many investors about what they learned about 2018. I’ve compiled their answer in this article. This should give you a great head start for 2019!

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