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’d rather cash some juicy dividends!
Would I Do It Again Today?
At the time of writing this article (October 2nd), the market was shocked by the following graph:
Source: Ycharts
This index tracks U.S. manufacturing exports. Next time someone tells you the trade war with China is good for the economy, you may want to ask him or her about this chart. In the past 20 years, this index saw a few major drops. The Tech Bubble, the World Trade Center, and the Financial Crisis all happened around those times.
The magic bar of 50 has been crossed two other times in 2012 (Grexit and PIIGS) and late 2015 beginning of 2016 (oil crisis). In other words, you can link that index to pretty much any major bad news. Does it mean the market is going to crash in October? Please, don’t go crazy again. The ISM manufacturing exports index is one indicator, it’s not THE indicator of a potential problem.
I’m not closing my eyes and singing lullabies thinking all economic clouds will disappear shortly. I know we have a few gathering right now and some bring serious concerns which bring me to the question of the day. Back in September 2017, I invested all of my pension plan money into the stock market. No cash reserve, no exception. Would I do it again today?
Short answer: Hell Yes.
Long answer: Not too long ago, I shared the results of this decision: investing all my money at an all-time high market. We will see how August hasn’t been such a great month for my portfolio in a few minutes. However, my overall performances are still great. What has been my trading secret over the past 2 years?
“Having a clear strategy, following a straight-forward process and making trades based on concise information, to avoid paralysis by analysis.”
It is so simple it sounds stupid, right? But that’s pretty much the trading secret of anybody having success on the stock market. Spend lots of time at first defining your investing strategy and write down your investment plan. Once it’s done, you simply follow it. Always.
Market goes up? You stick to the plan (you’re allowed to smile though).
Market goes down? You stick to the plan (just don’t stare too much at your portfolio value).
Market goes sideways? (You see it coming now) You stick to the plan.
What would I do if I had another 100K to invest today? (please say it all together) I’d stick to the plan! (Now read how to invest a lump sum of money.)
The reason why I don’t try to guess what will happen next or wait until the “timing is right” is because I’m not smart enough to know the future. I don’t know what will happen next. At this point, if the U.S. puts more pressure on China, chances are it will hurt the economy, the world will fall into recession, and the stock market will (finally) crash. On the other side, if both China and the U.S. come to an agreement and celebrate Thanksgiving Day together, the economy will be saved and the market will aggressively bounce back. Which one will happen? You tell me, I have no clue.
I have no clue and I don’t really care to be honest. Those are decisions made way above my head and I have no control whatsoever on those. Therefore, I will only enjoy (or suffer) the consequences of those events. If it was as simple as defining the trade war ending, it could be feasible. Off the top of my head, I can name a dozen of factors going on at the same time and each of them could have an impact on the market:
The Brexit (will this nightmare finally end?),
The inverted yield curve,
The negative yield bonds in Europe,
The Oil mess,
Election in Canada,
Governments’ debt level,
The FED cutting rates,
The FED pouring money into the market to insure intraday liquidity,
Expensive housing market both in Canada and in the U.S.,
Household debt level,
Pension plans underwater (after 10 years of bull market),
Automobile industry slowdown,
Etc.
If I could predict all of them with accuracy, I would be both a genius and rich. Since I can’t, I would rather invest my money into great businesses. Most of my holdings are solid companies with great competitive advantages. Their value will be affected momentarily by the market, but they will show their resilience during the next recession regardless of whether it’s happens on Halloween or in three years. Once the next market crash will be over, values will go back up and it will just become another great story to tell and scare younger investors with. In the meantime, I continue to gather my dividends.
Numbers are as is on October 2nd 2019 (before the bell):
Canadian portfolio (CAD)
| Company Name | Ticker | Market Value |
| Alimentation Couche-Tard | ATD.B.TO | $6,910.96
|
| Andrew Peller | ADW.A.TO | $5,893.00 |
| National Bank | NA.TO | $5,276.00 |
| Royal Bank | RY.TO | $6,403.80 |
| CAE | CAE.TO | $6,686.00 |
| Enbridge | ENB.TO | $7,486.50 |
| Fortis | FTS.TO | $5,545.98 |
| Intertape Polymer | ITP.TO | $5,052.00 |
| Lassonde Industries | LAS.A.TO | $3,737.58 |
| Magna International | MG.TO | $4,821.60 |
| Sylogist | SYZ.V | $2,080.32 |
| Cash | $491.88 | |
| Total | $60,385.62 |
My account shows a variation of +$147.80 (+0.2%) since the last income report.
August has been somewhat boring on the market. It was summertime, not too many waves were created and everybody is waiting for the election to happen on October 21st. For some, it will be Thanksgiving in advance and for some others, it will be Halloween. When I look at my Canadian holdings, I don’t see many companies that will be affected by the result of this election.
Alimentation Couche-Tard will continue to acquire and integrate convenience store chains across the world. Andrew Peller will continue to sell wine and Lassondes will keep going with its fruit juices.
Both National Bank and Royal Bank will continue to grow through their wealth management services, National Bank will grow through their latest investment in Cambodia, and Royal Bank will keep being the bank leader in Canada.
CAE will continue to train pilots. Intertape Polymer will sell duct tapes and Magna will sell auto parts. Sylogist will keep selling ERP software and grow their recurring revenues. Fortis? It will keep on generating more power.
The only company that could face a problem, or an opportunity, would be Enbridge. However, the management team is more than experienced with changes in governments or regulations. This is pretty much business as usual for them.
This this reason I’m not making any moves on my Canadian holdings to prepare for the election.
You can read about how I managed my portfolio as a Canadian (e.g. mixing both CDN and US investments): Investing the Canadian Way – Tricks I use to Boost My Returns. I discuss my sector allocation, how I manage currency fluctuations, and my favorite sectors.
Numbers are as is at October 2nd 2019 (before the bell):
U.S. portfolio (USD)
| Company Name | Ticker | Market Value |
| Apple | AAPL | $6,962.29 |
| BlackRock | BLK | $6,071.66 |
| Disney | DIS | $5,829.75 |
| Garrett Motion | GTX | $29.22 |
| Gentex | GNTX | $6,417.85 |
| Hasbro | HAS | $5,386.60 |
| Lazard | LAZ | $3,479.22 |
| Microsoft | MSFT | $8,224.20 |
| Resideo Tech | REZI | $67.85 |
| Starbucks | SBUX | $7,353.35 |
| Texas Instruments | TXN | $6,429.50 |
| United Parcel Services | UPS | $4,284.97 |
| Visa | V | $8,714.50 |
| Cash | $361.24 | |
| Total | $69,612.20 |
The U.S. total value account shows a variation of -$1,273.03 USD (-1.8%) since the last income report.
The U.S. market is clearly getting nervous. I wrote this article in the morning on October 2nd while the market kept falling due to the fear of an upcoming recession. The day is not even done yet and the SPY shows no return over the past 12 months:
Source: Ycharts
After a big drop in the end of 2018 and a huge recovery in 2019, we found ourselves exactly where we were last year. Interesting enough, my total portfolio is up to $152,412.95 CAD from $135,735.47 CAD last year (+12.3%). About half of my return is explained by dividends received ($3,581.88 or 2.6%) and currency fluctuation (+3.7%). I guess we can say that dividends matter.
My entire portfolio quarterly updated!
Each quarter, we run an exclusive report for Dividend Stocks Rock (DSR) members 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 giving all the information about all my holdings. Results have been updated as of September 10th.
Download my portfolio Q3 2019 report.
Dividend income: $481.45 CAD (+20%)
Here’s another great month where my dividend paid increased significantly. While most of my holdings have increased their dividend in the past 12 months, I also sold Honeywell (HON) and bought BlackRock (BLK) and Sylogist (SYZ) which bring the total a bit higher. Keep in in mind that I can’t add more money in this account. All dividends are coming from the original $108K invested in this portfolio.
Here is the dividend growth detailed. The growth is compared to September 2018 (not a necessarily a recent dividend increase):
- Fortis: +5.9%
- Enbridge: +10%
- Magna International: +10.7%
- Sylogist: new
- Lassonde: -26.50% (variable dividend)
- Alimentation Couche-Tard: +25%
- Intertape Polymer: +7.7%
- CAE: +10%
- Visa: +19%
- UPS: +5.5%
- Microsoft: +9.5%
- BlackRock: new
- Currency factor: +3.7%
When you combine both dividend growth and capital growth in this portfolio, you get great results! I have never looked for high yielding stocks. I think the balance between dividend growth and capital growth is important in one’s portfolio.
Canadian Holdings payouts: $320.38 CAD
- Fortis: $44.55
- Enbridge: $118.82
- Magna International: $33.24
- Sylogist: $19.70
- Lassonde: $12.50
- Alimentation Couche-Tard: $10.75
- Intertape Polymer: $58.82
- CAE: $22.0
U.S. Holding payouts: $121.82 USD
- Visa: $12.50
- UPS: $35.52
- Microsoft: $27.60
- BlackRock: $46.20
Total payouts: $481.45 CAD
*I used a USD/CAD conversion rate of 1.3222.
Since I started this portfolio in September 2017, I have received a total of $6,088.80 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.
Final thoughts
When I started this portfolio, my average yield was about 2.5%. Two years later, the current yield is about the same, but my yield on cost is now ~3.3%. I calculated my yield on cost by adding up the past 12 months of dividends paid (~$3.6K) and by dividing it on my original capital invested (~$108.6K). This shows you the power of dividend growth investing. Once you have selected the right companies, your dividends will increase over time while your portfolio will continue to grow in value too! Isn’t the best of both worlds?
If you are worried it will happen, I suggest you read “Sell Now – It’s About Time Someone Tell You This.” This article will tell you what you should toss in your portfolio and what you should keep.
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