Friday, January 15, 2021

11 Monthly Paying Canadian Dividend Growers for 2021

"Do you know the only thing that gives me pleasure? It's to see my dividends coming in."
- John D. Rockefeller

If like Mr. Rockefeller, you get pleasure from seeing your dividends coming in each month, and you'd like to see them grow over time, the below table might interest you. Using the Canadian Dividend All-Star list from December 31, 2020, I determined the monthly dividend growers for 2021.   To be included, companies had to pay a monthly dividend, increase their distribution at least once in the last 12 months, and have a minimum 5-year history of annually increasing their payouts. Much like in similar posts in 202020192018,  2017 and 2016, there was some additional filtering to come up with the below table. From the 100 companies appearing on the initial Canadian Dividend All-Star list, there were only 18 who paid dividends monthly. Sadly, I had to remove seven companies (ticker symbols: EIF, KEY, CAR.UN, PPL, SGR.UN, SRU.UN, MRG.UN) who had not raised their distributions in the past twelve months. The negative impacts of the covid-19 pandemic can be seen since the remaining 11 companies were much less than the 18 monthly dividend growers in 2020, and the 17 in 2019 and 2018, down from 20 in 2017, but only slightly lower than the 12 in 2016. The resulting 11 companies included six real estate investment trusts (REITs). As the payout ratios and valuations of REITs are usually calculated based on funds from operations (FFO) or adjusted funds from operations (AFFO), I decided to separate the resulting list in two so as not to confuse any casual readers. For your browsing pleasure, the resulting 11 monthly dividend payers are.

StreakCADDiv.Dividend Growth RatesEPS PayoutP/E
CompanyYearsYieldCurr.1-yr3-yr5-yr10-yrRatio %TTM
First National Financial Corp95.06CAD7.
Parkland Fuel Corporation83.01CAD1.71.72.4-0.493.831.2
Savaria Corporation83.32CAD4.417.822.418.786.725.97
Global Water Resources Inc.72.01USD1.01.83.1N/A599.02311.73
Badger Daylighting Ltd.51.58CAD5.31210.63.553.3333.57
Granite Real Estate Investment Trust103.85CAD3.33.74.818.959.6112.17
Allied Properties Real Estate Investment Trust94.36CAD3.
Firm Capital Property Trust98.04CAD1.94.44.4N/A68.098.38
InterRent Real Estate Investment Trust92.38CAD5.08.17.11012.735.32
CT Real Estate Investment Trust85.13CAD2.04.23.6N/A230.5744.61
Chartwell Retirement Residences65.47CAD2.

As with any other screen, the above list is simply a starting point for further research.  Clearly, a deeper dive is required based on the average EPS payout ratio of 130.86% and the pricey trailing average P/E of 49.44X. As indicated on my Investment Holdings tab, I currently own twor monthly paying Canadian Dividend All-Stars (Granite REIT and CT REIT). Of the remaining nine companies, First National and Allied Properties both look interesting to me based on the metrics above. The psychological boost I get from holding a couple monthly dividend payers in my portfolio helps me relate to the pleasure Mr. Rockefeller felt about receiving regular dividend payments.

Do you hold or are you interested in purchasing any of the 11 monthly payers?

Sunday, January 10, 2021

Portfolio Results for 2020 & Goals for 2021

 "Whenever we are surprised by something, even if we admit that we made a mistake, we say, 'Oh I'll never make that mistake again.' But, in fact, what you should learn when you make a mistake because you did not anticipate something is that the world is difficult to anticipate. That's the correct lesson to learn from surprises: that the world is surprising."
- Daniel Kahneman

Heading into 2020, I was on a high after achieving my 2019 goal of increasing my forward dividend by $3,300 while obtaining a dollar-weighted average organic dividend growth rate of 6.8%. Therefore, I set a stretch goal of adding an additional $3,600 to my forward dividend income in 2020, while targeting a dollar-weighted average organic dividend growth of 6.0%. My results from 2020 were surprising: my forward dividend income went up by $1,675 and my dollar-weighted average organic dividend growth was a mere 0.85%. 

Although I managed to sell early enough to avoid dividend cuts from Alaris Royalty and Tanger Factory Outlet Centers, the distribution cuts from Laurentian Bank and A&W Revenue Royalties Income Fund severely impacted my dollar-weighted average organic dividend growth rate, especially given A&W is one of my larger positions. Similarly, the Office of the Superintendent of Financial Institutions' ("OSFI") March 2020 decision to halt dividend increases for the Canadian banks that it regulates also negatively impacted the organic dividend growth of my portfolio given I hold seven Canadian banks, and only three (CIBC, Royal Bank & TD Bank) increased their payouts before OSFI's march decision. 

Falling almost $2,000 short of my forward dividend income goal isn't quite as surprising if you followed my transaction journal during the last couple months of 2020 and noticed I traded into and out of Brookfield Renewable Partners units twice in three months. Although holding onto my position in Brookfield Renewable Partners at year end wouldn't have allowed me to meet my goal, the deficit wouldn't have been at large. That said, the two trades I completed allowed me to book a profit in excess of the $2,000 shortfall. Other big contributors to the forward dividend income shortfall include selling Alaris Royalty and Tanger Factory Outlets in advance of their announcements to cut their dividends, the lower organic dividend growth noted in the above paragraph, and the fact I continue to count any US dollar dividend income on a 1:1 exchange rates with Canadian dollars (impacts 15 of my 37 holdings). 

After taking a couple weeks to digest my shortcomings in 2020, I decided to shoot for a more realistic forward dividend income increase of $3,000 in 2021, while targeting a dollar-weighted average organic dividend growth rate of 5%. Although I personally feel like the coronavirus will continue to impair regular economic activity in North America well into the summer, I'm optimistic that immunization shots will be effective and will become more plentiful in the second half of the year. Other lesser goals for 2021 include:
- At least one quality blog entry per month.
- At least one purchase of stock per month.

Since I had some down time over the holidays, I calculated some portfolio metrics for 2020 that I thought would be fun to share.

- My internal rate of return on my portfolio in 2020 was 1.0%. Although this sounds sadly low, it compares well to -3.9% benchmark return, I get from calculating 67% of the Canadian dividend aristrocat ETF 'CDZ' and 33% of the US S&P dividend ETF SPY (the actual weights of Canadian and U.S. holdings in my portfolio). 
- The value of my portfolio rose by 6.7% in 2020; much better than I expected after experiencing some large declines in March. Algonquin Power & Utilities and Microsoft were two of my best performers north and south of the border respectively.
- The dividend yield of my portfolio was 3.9% in 2020, in-line with the 3.9% achieved in 2019, lower than 4.2% in 2018 and 4.0% in 2017.
- Cash represented 4.2% of my portfolio at year end 2020, much higher than the 1.6% at year end 2019, and 2.7% at year end 2018. A big contributor was having traded out of Brookfield Renewable Partners at year end. 
- My holdings raised their dividends 35 times during 2020, with Realty Income doing so 5 times, and Power Corporation providing the largest percentage increase (10.5%).
- I conducted 32 trades in 2020, including six sales. Although this is high compared to the 24 conducted in 2019, it still only represents a couple basis points in terms of cost. 
- I ended the year with 37 positions, down from an all-time high of 40 positions at year end 2019. The plan is to slowly decrease this number again this year. 

Having made it through the very surprising 2020, I wish all of you the best of luck in 2021 and hope the surprises we experience collectively are less negative this year.