In September 2017, a former employee received slightly over $100K, representing the commuted value of a pension plan. The decision to invest 100% of this money in dividend growth stocks was bold and daring.
Each month is an opportunity to showcase the results of those investments. This isn’t about bragging; it’s about demonstrating the possibility of building a lasting portfolio during all market conditions. Some months may seem to underperform, but the focus remains on trusting the process over the long term to evaluate performance more accurately in the grand scheme of things.
Performance Overview
Let’s start with the exhilarating numbers as of January 9, 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%
- Total return since inception (Sept. 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) (XIU:CA) annualized return (since Sept 2017): 9.03% (total return 72.89%)
Trades Galore!
This is the time of the year when most of the trades happen. The aficionados of last month’s update probably anticipated these moves, so there aren’t any groundbreaking revelations here. It’s all part and parcel of the electrifying dance of investment decisions.
Selling Disney & CAE
Both companies suspended their dividends during COVID-19, deviating from the norm. While still firm believers in both businesses’ models, it’s time to bid farewell to these two small holdings and enhance the portfolio’s health and yield.
Sold 200 CAE.TO (CAE) @ $28.11
Sold 45 DIS @ $94.74
Trimming some Alimentation Couche-Tard, Apple, and Microsoft
During the yearly review, it was imperative to ensure not being over-exposed to any single stock. Apple (AAPL) and Alimentation Couche-Tard (ATD:CA) had exceeded 10% of all portfolios, not just the pension plan. The decision was made to sell a few shares of Microsoft (MSFT) to create more capital to invest in the new U.S. ideas.
Sold 60 ATD.TO @ $74.36
Sold 35 AAPL @ $197.70
Sold 8 MSFT @ $365.34
Buying Stella-Jones (SJ.TO)
Stella-Jones (SJ:CA) has been on the radar for a while, but there wasn’t enough liquidity to add it to the portfolio. However, the sales of CAE and ATD created enough capital to open a decent position. With 15 facilities in Canada and 25 on U.S. soil, the company delivers its products promptly, an undeniable testament to their robust business model.
Bought 146 SJ.TO @ $73.16
Buying Automatic Data Processing (ADP)
Automatic Data Processing is the largest US-based payroll services provider. The business model, characterized by its adhesive nature, ensures corporations continue using their services for years. It was an opportunity to buy a great company at a good price, given its stable stock price over the past two years.
Bought 38 ADP @ $235.54
Buying LeMaitre Vascular (LMAT)
LMAT finally made it to the portfolio after ample discussion over the past few years. Being a small company, a measured approach was taken with the investment. Given the current trends, a niche company with a stellar balance sheet seemed like the way forward.
Since debt isn’t a popular topic these days, a small cap with a stellar balance sheet felt like the right direction. LMAT deals with hospitals and surgeons who don’t have much time to shop around and change suppliers. This level of reliability coupled with being a market leader in several product categories makes it a captivating prospect.
Investment Portfolio Updates and Strategy
Building a Strong Portfolio
Building a diversified, high-yield portfolio is akin to meticulously crafting a fine wine. The process is slow but deliberate, much like the Smith Manoeuvre strategy that aims to achieve a balanced 4-5% yield across 15 carefully chosen positions. As of the latest update, the portfolio is shaping up with 10 companies spread across 7 sectors, displaying an impressive current yield of 4.98%.
Strategic Additions
In a move signaling strategic foresight, the addition of 15 shares of Capital Power demonstrates a keen eye for opportunity. While this increased exposure to utilities may seem unconventional, the decision aligns with an overarching strategy. With a plan to trim utility stocks and capitalize on gains in the future, the current focus on the utility sector reflects a carefully calculated and aggressive leveraging strategy. Notably, Capital Power’s growth vectors, natural gas assets, and renewable energy sources position it as an ideal fit for the Smith Manoeuvre strategy.
Portfolio Breakdown
The present state of the Smith Manoeuvre portfolio as of January 9, 2024, reveals a well-rounded distribution across various sectors, with significant market value attributed to each holding. This balanced perspective sets the stage for sustainable growth and diversified income generation, in line with the overarching investment goal.
| Company Name | Ticker | Sector | Market Value |
Canadian Portfolio
The Canadian portfolio, as of January 9, 2024, stands as a monument of diversification. With notable market values assigned to various holdings across sectors, this portfolio demonstrates a robust and well-balanced approach to investment.
| Company Name | Ticker | Sector | Market Value |
As of January 9, 2024, the account reflects a positive variation indicative of a 5.95% increase since the previous income report in December.
U.S. Portfolio
The U.S. portfolio mirrors a carefully constructed tapestry, with holdings across various sectors boasting significant market value. This strategic distribution forms the bedrock for sustained growth and income generation.
| Company Name | Ticker | Sector | Market Value |
The account reflects a positive variation indicative of a 3.11% increase since the previous income report in December, exemplifying a steady trajectory of growth and performance.
Insightful Analysis
Each quarter, an exclusive report is crafted for Dividend Stocks Rock (DSR) members subscribed to the special additional service, DSR PRO. With comprehensive insights into the earnings reports of each company, this in-depth analysis provides valuable perspective and guidance for astute investors.
As an investor, it’s easy to feel like a farmer patiently nurturing the soil, waiting for the long-awaited harvest. In the realm of dividend growth investing, Mike, a seasoned investor, has reaped the rewards of his carefully tended portfolio, marking a substantial 25% increase in his dividend income over the past year.
A Bountiful Harvest: Dividend Income Soars
Amidst a flurry of strategic trades, Mike diligently outlined his investment journey. Notable shifts included parting ways with AQN.TO, VFC, SYZ.TO, and ENB.TO, and embracing acquisitions such as HD, COST, and CCL.B.TO, and bolstering his stakes in FTS.TO and BEPC.TO. The year also welcomed robust dividend growth in stalwarts like ATD.TO (+25%), V (+16%), and MSFT (+10%).
Cultivating Growth: A Flourishing Portfolio
- 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: A Flourishing Yield
- 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: Earning in Dollars
- Visa: $26.00
- Microsoft $41.25
- Home Depot: $62.70
- BlackRock: $70.00
- Brookfield: $24.62
Total Payouts: A Fruitful Harvest of $696.27 CAD
Mike took pride in the fact that, since the inception of his portfolio in September 2017, he has amassed a total of $24,113.50 CAD in dividends. Noteworthy is the fact that this is a “pure dividend growth portfolio,” with no additional capital infusion, as all gains stem from retained and/or reinvested dividends – a testament to the organically cultivated success of his strategy.
A Harvest Reaped: Final Reflections
The resurgence of 2023 served as a powerful testament to the resilience of Mike’s investment principles. As he strides into 2024, he stands assured of navigating any market vagaries with unwavering confidence in his expertly curated portfolio.
Amidst these financial milestones, Mike, in his characteristic buoyant tone, declares, “As you read this update, I’m probably relishing a sumptuous steak accompanied by a fine Malbec or Cabernet in the picturesque vistas of Argentina. Here’s to another triumphant year for all dividend growth investors!”
Warm regards,
Mike.
Original Post
Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.
Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
