Revisiting My Investment Rules - January 2023 Dividend Income Report

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In September of 2017, I received somewhat complete $100K from my erstwhile employer, representing nan commuted worth of my pension plan. I decided to put 100% of this money successful dividend maturation stocks.

Each month, I people my results connected those investments. I don’t do this to brag. I do this to show my readers that it is imaginable to build a lasting portfolio during each marketplace conditions. Some months we mightiness look to underperform, but you must spot nan process complete nan agelong word to measure our capacity much accurately.

Performance successful Review

Let’s commencement pinch nan numbers arsenic of February 2nd, 2023 (before nan bell):

Original magnitude invested successful September 2017 (no further superior added): $108,760.02.

  • Portfolio value: $211,332.79
  • Dividends paid: $4,503.31 (TTM)
  • Average yield: 2.13%
  • 2022 performance: -12.08%
  • SPY = -18.17%, XIU.TO = -6.36%
  • Dividend growth: +10.83%

Total return since inception (Sep 2017-Feb 2023): 94.31%

Annualized return (since September 2017 – 65 months): 13.05%

SPDR® S&P 500 ETF Trust (SPY) annualized return (since Sept 2017): 11.74% (total return 82.46%)

iShares S&P/TSX 60 ETF (XIU.TO) (XIU:CA) annualized return (since Sept 2017): 9.71% (total return 65.21%)

Dynamic assemblage allocation calculated by DSR PRO arsenic of January 2nd.

Dynamic assemblage allocation calculated by DSR PRO arsenic of January 2nd.

Kissing AQN GoodBye + More of What Works

I sold my shares of Algonquin Power (AQN) (AQN:CA) aft listening to nan investors’ update call. Everything has been written connected Algonquin and it’s clip for maine to move on. A fewer days aft that trade, I bought much shares of Fortis (FTS) (FTS:CA).

Bought 72 shares of FTS.TO astatine $56.48/share.

While 1 whitethorn deliberation I replaced 1 inferior banal pinch different from nan aforesaid sector, nan 2 trades are coincidental. I wanted to bolster my position successful Fortis for 2 reasons. The first 1 is that while my portfolio worth has almost doubled since 2017, my shares of Fortis haven’t followed that trend. Fortis is simply a stabilizer successful my portfolio and pays a generous dividend compared to nan remainder of my holdings.

By adding much shares of FTS, I reduced nan volatility of my portfolio and accrued my vulnerability to a semipermanent dividend grower. Sometimes, you don’t person to spell for a caller banal to adhd to your portfolio, arsenic you whitethorn person nan reply correct successful beforehand of you. Fortis shows a robust business exemplary and has proven its expertise to summation its dividends passim immoderate economical environment.

Revisiting My Investment Rules

2022 was an abnormally bad twelvemonth for my portfolio. It’s normal to spell done bad years (and my portfolio did somewhat amended than nan market), but I made 2 mistakes back-to-back pinch AQN and Sylogist (SYZ:CA) (OTCPK:SYZLF). I decided to spell backmost and revisit my finance rules to spot what I mightiness person been missing.

Asset & Sector Allocation

I started investing nan week aft completing my bachelor’s degree. I sewage my occupation and opened a brokerage relationship correct away. Since 2003, I’ve been 100% invested (no rate connected nan side) and 100% successful equities. The caller marketplace fluctuations person not changed my mind astir my plus allocations. Bad years are portion of nan statement you motion erstwhile you put successful stocks. Fortunately, bully years are besides portion of nan deal, and I must stay patient.

In an perfect world, my assemblage allocation would see respective sectors pinch little than 20% invested successful each. My knowing and attraction towards accusation exertion companies is simply a blessing and a curse. It’s a blessing because it helped maine thrust beardown results complete nan past 5 years. It’s a curse because my tech holdings person thrived much than different sectors and I now person 28% vulnerability to that sector. I’d opportunity it’s a bully problem to person and I don’t expect to modify my assemblage allocation astatine this point.

The different facet to see is that Visa (V), which is astir 7% of my portfolio, is classified arsenic a tech stock. Technically, we could reason that Visa will not move on pinch Apple (AAPL), Microsoft (MSFT) and Texas Instruments (TXN).

When looking astatine my 4 tech stocks, I spot vulnerability to user habits (Visa), smartphones and exertion products (Apple), cloud, computer, and gaming (Microsoft), and semiconductors (Texas Instruments). There is small plagiarism crossed my portfolio.

Strong dividend triangle

When I deliberation of AQN and SYZ.TO, I now recognize that I didn’t travel my ain rules. Both companies didn’t show a beardown dividend triangle. If I had focused connected companies pinch beardown dividend triangles, I would person suffered less! I decided to reappraisal nan dividend triangle of each of my holdings, and present are nan weakest pinch comments connected them.

Activision Blizzard (ATVI): This was an knowledgeable conjecture made erstwhile nan institution had galore HR guidance problems successful precocious 2021. I’m presently holding this information until I cognize what will hap pinch Microsoft’s projected acquisition of nan company. I will either waste it astatine $95 (if nan woody clears) aliases I will waste aft ATVI cashes nan $3B termination interest paid by Microsoft if nan woody is declined by regulators. I spot that arsenic a win-win proposition.

V.F. Corp (VFC): I’ve declared this institution a falling knife. I person a mini position successful this 1 and it won’t importantly effect my full return. On February 7th, VFC announced a 41% dividend cut. The banal was sold upon that news that happened aft this February update.

Disney (DIS): This institution is backmost pinch gross growth, but EPS continues to beryllium very low. Considering blockbuster movies are backmost and truthful is Mr. Iger, it will apt return a afloat twelvemonth earlier we spot improvements successful their earnings. I expect to spot immoderate improvements successful 2023.

CAE (CAE:CA)(CAE): It’s difficult to person a coagulated dividend triangle pinch nary dividend. CAE has until nan extremity of 2023 to show stronger metrics. Revenue maturation is back, but EPS remains very low.

Enbridge (ENB) and Magna International (MGA) show uneven growth, but some companies show safe payout ratios of nether 75%.

Dividend trim = sell

In nan past 13 years, I person made 2 exceptions to this rule: Disney and CAE arsenic they some suspended their dividends owed to nan lockdowns successful 2020. Three years later, they are some getting person to being sold. Interestingly, they were some trading astatine all-time highs successful 2021 earlier dropping again. I was correct to beryllium diligent backmost then, but possibly I person been excessively patient?

Robust finance thesis

My last, but surely not nan slightest finance norm is to ever support stocks pinch a robust finance thesis and waste immoderate companies that extremity gathering my original thesis. At this point, my finance theses astir Enbridge and V.F. Corporation are nan “weakest”. While Enbridge is simply a coagulated deluxe enslaved (not overmuch superior appreciation, but bully dividends), I whitethorn beryllium tempted to upgrade my portfolio pinch much maturation successful 2023.

Smith Manoeuvre Update

So far, I’m almost breaking moreover pinch my strategy. I must admit that I didn’t expect overmuch from this portfolio complete nan first fewer months. I still request to springiness it immoderate clip to execute particularly considering this crazy market.

I antecedently initiated a region successful my SM contributions. I will support my finance update successful nan coming months, but I will not adhd different $500 monthly for a while. My travel to Africa sewage retired of power and I must return a fewer months to retrieve financially. When you do a leveraged strategy, you should ne'er put money you don’t have. I’m pursuing my ain advice, truthful I’ll resume my monthly investments shortly, but I would alternatively play it safe for nan clip being.

Fortunately, my investments are doing well, and my finances are slow but surely getting backmost nether control, truthful I expect to resume my strategy successful nan 2nd 4th of 2023.

Here’s my portfolio arsenic of February 2nd, 2023 (before nan bell):

Company Name Ticker Sector Market Value
Canadian Net REIT [[NET.UN:CA]] Real Estate $418.50
National Bank NA:CA Financials $603.12
Exchange Income EIF:CA Industrials $599.83
Brookfield Infrastructure BIPC:TO Utilities $522.36
Great-West Lifeco GWO:CA Financials $594.32
Cash (Margin) $32.73
Total $2,770.86
Amount borrowed -$2,500.00

Let’s look astatine my CDN portfolio. Numbers are arsenic of February 2nd, 2023 (before nan bell):

Canadian Portfolio (CAD)

Company Name Ticker Sector Market Value
Alimentation Couche-Tard ATD.B.TO Cons. Staples $21,540.00
Brookfield Renewable BEPC.TO Utilities $9,376.74
CAE CAE.TO Industrials $6,030.00
Enbridge ENB.TO Energy $8,713.32
Fortis FTS.TO Utilities $9440.91
Granite REIT GRT.UN.TO Real Estate $10,924.80
Magna International MG.TO Cons. Discre. $6,295.10
National Bank NA.TO Financials $12,162.92
Royal Bank RY.TO Financial $8,189.40
Cash 158.68
Total $92,831.87

My relationship shows a variety of +$7,309.49 (+8.55%) since nan past income study connected January 2nd. I’ll screen my Canadian holdings net results successful my March update since astir of them haven’t reported their numbers yet.

Here’s my US portfolio now. Numbers are arsenic of February 2nd, 2023 (before nan bell):

U.S. Portfolio (USD)

Company Name Ticker Sector Market Value
Activision Blizzard ATVI Communications $8,897.20
Apple AAPL Inf. Technology $10,907.25
BlackRock BLK Financials $10,676.82
Disney DIS Communications $4,922.55
Home Depot HD Cons. Discret. $7,217.98
Microsoft MSFT Inf. Technology $13,901.25
Starbucks SBUX Cons. Discret. $9,349.15
Texas Instruments TXN Inf. Technology $9,105.00
V.F. Corporation VFC Cons. Discret. $2,562.84
Visa V Inf. Technology $11,545.00
Cash $323.77
Total $89,085.04

The US full worth relationship shows a variety of +$6,849.87 (+8.33%) since nan past income study connected January 2nd. It was a bully period for some portfolios! However, not each companies reported awesome earnings. Here’s a speedy circuit of what companies had to opportunity astir their latest quarter.

Apple is facing headwinds

Apple is experiencing a slowdown crossed its business segments and reported income down 5.5% and EPS down 10.5%, which missed their analysts’ estimates. The institution is facing galore headwinds, notably proviso concatenation disruptions and rate headwinds. In November, Apple warned that nan iPhone 14 Pro would beryllium supply-constrained owed to nan COVID-19 pandemic and its drastic effect connected China. Mac (-28.7%) and Wearables businesses (-8.3%) were nan different 2 struggling segments this quarter. On a affirmative note, iPad income jumped by 30% and AAPL reported a grounds $20B+ successful income for its Services division. AAPL has now surpassed much than 2B progressive devices arsenic portion of its installed base.

BlackRock is slowing down

BlackRock reported double-digit declines successful gross of -15% and EPS of -17% but met analysts’ expectations. The driblet successful gross is related to nan market’s diminution by lowering its assets nether guidance and capacity fees. Technology services, including Aladdin, produced $353M successful gross successful nan 4th vs. $338M successful Q3 and $339M successful Q4 2021. Management mentioned it saw grounds income for Aladdin this quarter. Assets nether guidance were astatine $8.59T up from AUM of $7.96T astatine nan extremity of Q3, while nan mean AUM of $8.42T was down from $8.48T astatine nan extremity of Q3.

Microsoft has a batch connected its plate

Microsoft reported mixed results this quarter, pinch gross +2%, and EPS -6%. While Revenue successful Productivity and Business Processes was up 7% and Cloud was up 18%, gross successful More Personal Computing was down 19%. MSFT numbers were besides affected by antagonistic rate headwinds. The institution has galore issues: it announced a 10,000-person lay-off successful precocious 2022, it continues its quest to get Activision Blizzard and it precocious announced it would statesman integrating ChatGPT into its Azure unreality service. This move towards artificial intelligence could beryllium different leap toward a decade of maturation for Microsoft.

Starbucks is doing good successful North America, but not successful China

Starbucks reported world comparable shop income roseate 5%, but China wounded results. The mean summons was up 7% to offset a 2% diminution successful transactions during nan quarter. Comparable income successful North America accrued by 10% driven by a 9% summation successful mean tickets and transactions were up 1%. Operating separator fell to 18.5% of sales, from 18.9% a twelvemonth agone pinch labour and input costs moving higher. International comparable shop income decreased by 13% driven by a 12% diminution successful comparable transactions and a 1% diminution successful mean tickets (China was down 29%). Active rank successful Starbucks Rewards successful nan U.S. roseate 15% to 30.4M and SBUX opened 459 nett caller stores during nan quarter.

Texas Instruments is doing amended than its peers

When we comparison TXN’s results pinch different players successful nan semiconductor manufacture (hello Intel!), nan institution did okay pinch gross down 3% and EPS down 6%. Results bespeak weaker request successful each extremity markets isolated from for automotive. The marketplace was disappointed by anemic guidance arsenic well. TI’s first 4th outlook is for gross from $4.17 cardinal to $4.53 cardinal vs. statement of $4.42B and net per stock betwixt $1.64 and $1.90 vs. statement of $1.87. However, numbers could alteration quickly arsenic galore analysts expect nan adjacent finance rhythm to commencement towards nan extremity of nan year.

Visa is… Visa!

Visa reported different beardown 4th pinch double-digit gross maturation of 12% and EPS maturation of 20%, which hit their analysts’ expectations. Cross-border recreation continued to retrieve from nan pandemic and processed transactions grew 10% Y/Y. Payments measurement successful Q1 roseate 7% Y/Y successful changeless dollars, pinch cross-border measurement up 22% and processed transactions up 10%. That compares pinch Q4’s payments measurement maturation complaint of 10%, cross-border maturation of 36%, and processed transactions summation of 12%. We expect Visa to slow down successful 2023 arsenic location is still a consequence of a recession, but nan institution remains very strong.

My Entire Portfolio Updated for Q4 2022

Each 4th we tally an exclusive study for Dividend Stocks Rock (DSR) members who subscribe to our typical further service, DSR PRO. The PRO study includes a summary of each company’s net study for nan period. We person been doing this for an full twelvemonth now and I wanted to stock my ain DSR PRO study for this portfolio. You tin download nan afloat PDF showing each nan accusation astir each my holdings. Results person been updated arsenic of January 2nd, 2023.

DSR PRO report

Download my portfolio Q4 2022 report.

Dividend Income: $134.06 CAD (-6.7% vs January 2022)

 $134.06 CAD (-6.7% vs January 2022)

January was somewhat down vs. past twelvemonth owed to galore transactions successful nan past 12 months. First, I sold my shares of Andrew Peller (OTCPK:ADWPF) ($36.04) and Gentex (GNTX) ($28.20 USD) successful 2022. Second, I added much shares of Algonquin earlier successful 2022. Now that I person sold my shares of Algonquin, I person nary different companies but Granite (GRT.UN:CA) that will salary maine successful January. However, my wide portfolio is stronger successful its existent form!

Here is nan item of my dividend payments.

Dividend maturation (over nan past 12 months):

  • Algonquin: +39%
  • Granite: new
  • Currency factor: N/A

Canadian Holding payouts: $134.06 CAD.

  • Algonquin: $99.92
  • Granite: $34.14

U.S. Holding payouts: $0.00 USD.

  • No dividend paid successful this account!

Total payouts: $134.06 CAD.

*I utilized a USD/CAD conversion complaint of 1.3302

Since I started this portfolio successful September 2017, I person received a full of $19,656.15 CAD successful dividends. Keep successful mind that this is simply a “pure dividend maturation portfolio” as nary superior tin beryllium added to this relationship different than retained and/or reinvested dividends. Therefore, each dividend maturation is coming from nan stocks and not from immoderate further superior being added to nan account.

cumulative dividends paid

Final Thoughts

Interestingly, while we will each retrieve 2022 arsenic a bad year, nan marketplace has already recovered a important portion of that loss. The TSX 60 (Canadian market) is comparatively level from January 2022 to February 2nd, 2023, while nan S&P 500 (US market) is down 11% aft being down much than 20% past year!

When I look astatine my portfolio, I’m not excessively acold from my all-time-high values either ($225K vs. $211K for this update). I will proceed to travel diligently nan stocks discussed earlier successful this newsletter and will apt make much modifications to my portfolio later this year.

Original Post

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

Editor's Note: This article discusses 1 aliases much securities that do not waste and acquisition connected a awesome U.S. exchange. Please beryllium alert of nan risks associated pinch these stocks.

This article was written by

The Dividend Guy floor plan picture

My sanction is Mike and I’m nan writer of The Dividend Guy Blog & The Dividend Monk on pinch nan proprietor and portfolio head present astatine Dividend Stocks Rock (DSR). I earned my bachelor grade successful finance-marketing, ain a CFP title on pinch an MBA successful financial services. Besides being a passionate investor, I’m besides happily joined pinch 3 beautiful children. I started my online task to amended group astir investing and to beryllium capable to walk much clip pinch my family. I started my profession successful nan financial manufacture backmost successful 2003. I earned respective promotions on pinch a bully heap of diplomas. I had tons of nosy moving pinch clients successful backstage banking for half a decade, but thought I could do much pinch my life. In 2016, I decided to return a leap of religion and near everything down to recreation crossed North America and Central America pinch my family. We drove done 9 countries and stayed 3 months successful Costa Rica earlier returning home. This was an eye-opening escapade that led maine successful 2017 to discontinue my occupation successful nan financial manufacture and prosecute my dream; helping others pinch their individual finance done my investing websites. You conscionable recovered nan logic why I discontinue my suit & necktie job!

Editor: Naga

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