Friday, January 30, 2015

Two More Dividend Raises and Short-term Trade

     Two more of my holdings increased dividends this week, with Rogers Communications and Kinder Morgan raising their payouts. I also closed out a short-term trade that I initiated in December, selling the last of my shares in Suncor Energy for a nice profit.
     Rogers has been a long-time holding of mine, and regularly increases their dividend in the first quarter of the year. After announcing year-end results that were in-line with their guidance (slightly higher revenue, but lower net profits than last year), they raised their quarterly dividend by 4.9%. The stock currently yields about 4.3%.  Being the market leader in wireless, Rogers stands to benefit from increased data usage. 
     Last summer, after Richard Kinder announced he was simplifying his company's structure by bringing multiple related companies under the same corporate parent (Kinder Morgan Inc), and planned to increase Kinder's dividend about 10% per year between 2015 and 2020, I bought shares in this US pipeline. Last week, I wasn't surprised when Kinder Morgan announced they were raising their dividend by a penny per share, the fifth consecutive quarter they increased the dividend by a penny. Over the last year, Kinder has increased the dividend by 9.8%, in-line with their forward guidance.
     Today, after relaxing on the beach in Fort Lauderdale, I came back to my hotel room and discovered I'd sold my shares in Suncor Energy. I had a limit price sell order in (as I have for the past couple weeks), and with the price of oil spiking today, I sold my position in Suncor for a nice gain. This was a short-term trade I initiated in early December. I managed to pick up a dividend in December, and after deducting transaction costs, ended up making 1.6% in less than two months. 
     With five dividend increases, and two profitable short-term trades completed, January has been a great month in my portfolio. Hopefully the strong start is a sign of things to come in 2015. 

Wednesday, January 21, 2015

Two More Dividend Raises!

     With US earnings season in full swing, two more companies in my portfolio announced dividend increases in the last week.
     Omega Healthcare Investors, Inc. ("OHI") increased their quarterly dividend by a penny a share to $0.53; their tenth consecutive quarter with a dividend increase! Omega provides financing to the long-term care industry. In October 2014, Omega merged with Aviv Healthcare Properties, creating a $10B pure-play skilled nursing facility REIT. I was lucky enough to buy shares in Omega at $37 last fall, and have watched with mixed feelings (should have bought more!!!) as they've since climbed to over $44. I'm looking forward to seeing the quarterly figures as a merged entity in early February.
     Realty Income ("O"), which bills itself as "The Monthly Dividend Company" is clearly my kind of investment. Since being listed on the NYSE in 1994, the company has paid 535 consecutive monthly dividends, and increased the dividend 79 times. After only raising their dividend by about 1% in 2014, Realty Income got the year off to a strong start by boosting its monthly payout by 3%. The dividend is supported by the cash flow from the strong portfolio of over 4,200 properties in the US under long-term lease agreements. Their portfolio of properties has lead to higher rents, which translates into higher cash flows for the company, and higher distributions for shareholders. Although I think the company is a little pricey right now at over $52, I'd look to add to my position on dips in the future.
     The first three dividend increases of 2015 in my portfolio have added almost $50 of additional yearly projected income for me. Here's hoping this impressive trend continues.

Wednesday, January 14, 2015

2015 Financial Goals

As great as 2014 was for me personally, professionally, and financially, I'm happy to turn the calendar to 2015. After tracking six financial goals in 2014, I'm going to simplify in 2015 by only tracking four goals. 

Increase Expected Forward Dividend Income by $1,800/yr 
This is definitely a stretch goal, but one I think is possible with some discipline. My plan is to invest a certain amount per month, and make one special contribution based on my work bonus. Additionally, the dividend growth I have from my current portfolio will help in achieving this important, but realistic objective. Lastly, I'm hoping the Canadian market continues in a bearish mode as there are some nice opportunities developing in the energy and banking sectors. I look forward to adding to my positions in solid companies that reward their shareholders with regular dividend increases...hopefully at lower prices than in 2014.

Complete the Transformation of my RRSP by Year End
Mid last year, I decided to use my RRSP to increase my holdings of US and foreign companies in order to benefit from favorable tax treatment of international dividends and to increase my portfolio diversification. The plan is also to hold Canadian REITs in my RRSP, as their distributions are taxed at a higher rate than dividends in my taxable account. I started a very long process of cleaning up my various holdings, knowing it would take me at least a year, possibly 18 months in order to get my portfolio in tax efficient, well diversified shape. I made a lot of progress in the transformation in the second half of 2014, but there's still much ground to cover in 2015. The rise of the US dollar against the Canadian dollar is making this objective even more challenging as I look to buy attractive US stocks where a 25% exchange premium won't completely negate my returns if the Canadian dollar appreciates again (which I do feel it will in the long-term). My current estimate is that the transformation in my RRSP will be complete around September 2015.

Give Twice as Much to Worthy Causes as in 2014
Last year, I tied the amount I gave to charity to half of my short-term trading gains. Although last year's plan provided me with motivation to complete profitable short-term trades, I realized that my contributions to charities shouldn't be tied to the luck I have with my investments and the direction of the market. If I have a rough year on the market, I should still give money to worthy causes that are important to me. I'm very lucky in life that I have an incredible wife, amazing son, loving family, fantastic friends, a fulfilling job, and so many other blessings. After reading Tony Robbins' "Money: Master the Game", I decided to double the amount I gave last year. The plan is to give a certain amount per month in order to ensure that I don't lose sight of the importance of giving to the less fortunate.

There are a couple non-financial goals I'll be working toward in 2015 (keeping my weight under 165 lbs at the end of each month and averaging a blog post each week) that I'll report on here as well. This is gearing up to be a great year, and here's wishing everyone the best of luck with accomplishing everything they set out to do in 2015!

First Dividend Raise of 2015 - Corus Entertainment

     January isn't even half over and I already received my first dividend raise of the year! On Tuesday, Corus Entertainment ("CJR") announced they were raising the annual dividend on their 'B' shares by 4.6% to $1.09 annually. Management commented that "This 4.6% dividend increase reflects our confidence in the continued development of our business and is supported by our strong free cash flow". Management seems to understand that as their business grows and free cash flows increase, shareholders should be rewarded for staying faithful to what has been a pretty volatile stock over the past year (52-wk-low of $20.08 and 52-wk-hi of $26.05).  I'm a long-term investor in Corus and think their specialty channels, radio stations, and other investments make it a long-term hold given the near 5% dividend rate and history of growing the payout each year.

     I'm anticipating the following companies in my portfolio to increase their dividends this quarter: Rogers Communications, TD Bank, Bell Canada, TransCanada Pipelines, Bank of Nova Scotia, Cisco Systems, and Royal Bank of Canada.

Wednesday, January 7, 2015

Update on Investment Goals at December 31, 2014 (YE14)

My investment portfolio had a strong finish to 2014, bolstered by the weakening Canadian dollar and Enbridge's announcement to make themselves more dividend-friendly. I accomplished many of my goals in 2014, and feel great heading into 2015.

Increase my portfolio value by 17% :
My portfolio increased in value by about 38% compared to its value at the start of 2013.  As indicated above, the depreciation of the CAD relative to the USD over the course of 2014 helped grow my portfolio given US stocks now account for about 30% of my portfolio holdings. The spike in both Enbridge and Enbridge Income Fund Holdings' shares after their Q4 announcement to re-structure the company in a more dividend-friendly matter benefited my portfolio value as well. Another primary contributor to the increase in value was a series of short-term trades I made in 2014 that added about 1.5% of return to my portfolio value. 

Despite accomplishing this goal, I still long for an extended bear market that would allow me to buy more quality dividend paying stocks at lower prices.

Total Dividends Received Up 25% (Revised from 18% at June 30th):
My forward dividends were up 32% in 2014, a truly remarkable figure which I doubt I'll ever accomplish again.  During Q414, a number of my holdings in my portfolio announced dividend increases, including Inter Pipeline Limited, National Bank, Bank of Montreal, Enbridge, Enbridge Income Fund, Laurentian Bank, Telus, Kinder Morgan, Pfizer, and Realty Income. 

Maintain US Holdings at About 30%:
My US holdings accounted for exactly 29.99% at YE14!  As the CAD continues to depreciate against the US dollar, and with plans to continue to shift my RRSP holdings to US and international stocks, this number should climb slowly over time.  That said, I must admit that with the CAD at a year-low against the USD (about 85 cents today), I'm finding it harder to force myself to buy US stocks and pay the 20% premium my brokerage thinks is fair. However, my rising stream of USD dividends helps to remind me to follow through with my plan. 

Doubling Down on Comfortable Holdings:
I made decent progress on this throughout 2014, but couldn't find attractive entry points to increase my positions of Coca-Cola, Microsoft, or Realty Income. It's definitely a goal I keep in the back and look for opportunities when stocks I hold decrease in price. 

Get rid of all companies who haven’t raised their dividend in the past 18 months:
Only two companies in my portfolio didn't raise their dividend/distributions in 2014 (H&R REIT and Riocan REIT). I simply cannot sell Riocan due to tax implications, but I'm still considering selling H&R REIT since they no longer seem committed to increasing distributions, despite strong business results and growth in AFFO. 

Figure out what to do with cash in excess of $500 (especially in TFSA and RRSP):
Given the current cash-producing nature of my portfolio, I've decided against pursuing this goal. I tend to invest when I have above $1000 in cash in any of my accounts. I figure transaction costs of less then 1% are fair. Plus, I like having some cash in my accounts just in case interesting opportunities arise.

My portfolio continues to perform well-above my expectations. Although the value of my holdings is down slightly during the first week of 2015, I remain comfortable with all my holdings. Hopefully your investments had a strong showing in 2014, and will continue to increase in value this year!