May 30, 2023
Buy – Added to my position in Power Corporation of Canada (TSX: POW) in my unregistered account at $35.70
Reasons: Despite two months of adding more shares, Power Corporation remains one of the smaller positions in my unregistered account. After the company raised their payout by 6%, I decided to grow the position to the size of other financial institutions in my portfolio.
Risks: After working on the quality of my holdings in the first quarter of 2023, I might be trying to make up for lost yield and dividend growth with this purchase. I've indicated in the past that I'm not a fan of management team of Power Corp, and that holds true. Lastly, any buy I make in the last week of the month is likely rushed, and represents an effort to invest a certain amount each month.
May 23, 2023
Buy – Added to my position in Telus Corporation (TSX: T) in my unregistered account at $27.05
Reasons: Depending on the day, Telus is one of my largest position. The consistent revenue growth, free cash flow generation, and dividend increases, make this a relatively easy add.
Risks: Definitely overconfident about Telus. It's not cheap at ~25X earnings. The federal government seems to be set on fostering competition in the sector, but my take is that the government has not succeeded. Lastly, I should probably look beyond the big three telcos, and take a peak at Cogeco and Quebecor.
Reasons: After reading/listening/learning from Jim Chanos about why he was short DLR, and then watching DLR management choose not to raise their dividends after year-end and Q1 results were released, I decided to get out of DLR. In short, DLR seems to be consuming vs generating cash, as well as competing against some of their biggest clients (Facebook, Amazon, etc.).
April 25, 2023
Buy – Added to my position in Power Corporation of Canada (TSX: POW) in my unregistered account at $35.65
Reasons: Power Corporation is one of the smaller positions in my unregistered account, especially after giving some away to charity over the past two years. After the company announced good results in 2022, and raised their payout by 6%, it got me thinking that adding to a financial powerhouse trading at 12X trailing earnings wasn't a bad idea.
Risks: After working on the quality of my holdings in the first quarter of the year, I might be trying to make up for lost yield and dividend growth with this purchase. I've indicated in the past that I'm not a fan of management team of Power Corp, and that holds true. Lastly, there's some insurance, China, and high-fee financial advisor exposure via Power's holdings, none of which I'm crazy about.
April 19, 2023
Buy – Added to my small position in Constellation Software Inc (TSX: CSU) in my unregistered account at $2598.20
Reasons: After initiating this position about a year ago, seeing it go up over 20%, and the strong FY22 results, I thought it was time to add more. I continue to think that Mark Leonard is one of, if not the premier capital allocators among Canadian CEOs.
Risks: With Q123 results slated to be released next month, I think the company will have a hard time living up to strong year end results. Additionally, if any company in the TSX is subject to key man risk, it's CSU. Lastly, I admit that disclosure around CSU makes it hard to closely follow the thinking of the CEO.
Reasons: After waiting a bit more than a month, just to ensure the tax man had no reason to bug me, I sold an amount of A&W shares in my RRSP equal to the amount I added in my TFSA in January. As stated below, my goal is to convert the proceeds to US dollars, and increase the amount I have invested in the US stock market. I timed the sale before A&W releases their Q4 results in March, to avoid being very overweight at that time
Reasons: Having sold my position in Home Depot in 2012, and then watching it become one my biggest investment mistakes, the ~5% decline after giving soft 2023 guidance seemed like a good entry point to re-establish a position in the company. Also worth noting that it's rare to pick up such a high quality company for under 20X earnings, and the fact they announced a 10% dividend boost was gravy.
Reasons: In order to invest more of my RRSP in US stocks, I bought an amount of A&W.UN in my TFSA, that I'll hold for a month, before selling an offsetting amount in my RRSP. Wanting to invest more in US stocks is due to my perception that their economy is more robust and resilient than that of Canada.
Reasons: In order to avoid stressing myself toward month end, and given the market was trending down on rate hikes in both the US and Canada, I added to my Granite position. Paying about 17X FFO for Granite seems reasonable, in light of their impressive revenue and earnings growth. Lastly, this allows me to position size Granite similar to CRT REIT, which reflects my feelings about the potential for long-term success for each company .
Reasons: Let me set the scene, last day of the month, I'm busy working at the office, and realize I need to buy some stock today to keep my monthly buying streak alive. Both RY & NA reported solid results in the morning, boosting their dividends for the second time this year, and I notice both of their stocks are down a couple percent, so I make two quick buys over lunch.
Reasons: Adding to my position in the biggest bank in Canada, that's trading at around 11X trailing earnings, yielding north of 4%, and has grown their payout by more than any other Canadian bank this year, made this a pretty simple buy.
Reasons: It's rare for any stock I buy to go up, so when the shares of Home Depot gave me the chance to capture a year's worth of dividends in a couple days, and then some, I decided to sell.
Reasons: Having sold my position in Home Depot in 2012, and then watching it become one my biggest investment mistakes, the current valuation (P/E ~ 16X) combined with a fair amount of US dollars in RRSP made me want to re-establish a position. It is also worth mentioning that I'm pretty happy with the amount I have invested in my other ~12 U.S. holdings within my RRSP.
Reasons: With the market slumping, and oil prices down a bit, decided to add to this relatively small position in my portfolio that was down over 5% today on no company specific news. Fairly priced (~18X trailing earnings), yielding north of 5.5%, and with little chance of new pipelines getting approval in Canada in the short-term, I consider this a pretty safe investment.
Reasons: After adding to my bank positions the last couple months, given we're probably in a recession in Canada, I decided to up my stake in Fortis which should be able to survive any economic slowdown. Fortis to me is a very stable company, with good geographical diversification across North America. With a long record of annual dividend increases, and a starting 3.5% yield, now seemed to be a good time to buy.
Reasons: National Bank became a relatively small position for me as I was adding to my CIBC and Bank of Montreal holdings late in 2021, and earlier this year. Like many Canadian banks, it is priced very reasonably, has an enviable history of growing dividends, and has profited from the relatively hot housing market in Montreal.
Reasons: With many REIT shares looking cheap as interest rate hikes spooked in investors, I added some CRT that trades below 12X trailing FFO and increased their distribution in May by 3.4%. The fact my son is starting to play hockey this year, and we've bought most of his equipment at Canadian Tire and Sport Check, might also have influenced this purchase.
June 30, 2022
Buy – Added to my position in the Coca-Cola Company (NYSE: KO) in my RRSP at $62.38
Reasons: As this is one of my smallest U.S. positions, and given it has been a strong performer for me over the pandemic years, it seemed like an opportune time to add enough shares to generate sufficient income that would qualify as a "full position". The 5% dividend raise in February 2022 got me thinking about adding to this position for the first time since establishing it in February 2014.
Risks: Coca-Cola never gets cheap, and paying about 25% earnings for the shares is definitely not normal for me. Additionally, the longer the pandemic drags on, there's likely to be a negative impact on KO's short-term earnings. Lastly, I think there's reputational risk given KO recently partnered to sell pre-made Jack Daniels and Coke mixed in a can...that seems like a short-term management decision that could destroy some long-term value.
Reasons: As the market started to trend down, I decided to add to a relatively small position in BCE since it seemed like a pretty conservative buy. BCE has a history of increasing their payout by 5%, it was yielding about 5.5% at the time of this buy, and was priced reasonably at about 20X trailing earnings. In terms of a potential catalyst, as Canadians travel more internationally again, BCE should benefit from higher roaming fees.
May 31, 2022
Buy – Added to my position in National Storage Affiliates Trust (NYSE: NSA) in my RRSP at $52.57
Reasons: In addition to my reasons listed on May 2, 2022, another 10% dividend raise on May 26, 2022 lead me to increase the size of this position.
Risks: Again, echoing the risks from my May 2, 2022 purchases still remain valid. The additional dividend boost noted above also feeds into my overconfidence/blinders/just keep adding mental state.
May 18, 2022
Buy – Initiated a small position in Goeasy Ltd (TSX: GSY) in my unregistered account at $108.61
Reasons: As per my brief explanation when I initiated a position in Dye & Durham last month, I’m looking to test an idea of investing in companies that I think have the ability to grow profitably at an above-average rate over the coming years, that will hopefully cause their share prices to compound. Particular to this company is my belief that their business model is very scalable within Canada, and possibly internationally in the future.
Risks: The biggest risk I see in this test segment of my portfolio is to remove my focus from what has been a very successful process of investing in companies capable of dividend growth, to those less likely to provide relatively consistent results. Specific to this position is that it further feeds into my concentration to the financial sector in Canada, a definite issue for me given my holdings in the big five Canadian banks.
May 5, 2022
Buy – Initiated a small position in Constellation Software Inc (TSX: CSU) in my unregistered account at $1979.22
Reasons: As per my brief explanation when I initiated a position in Dye & Durham last month, I’m looking to test an idea of investing in companies that I think have the ability to grow profitably at an above-average rate over the coming years, that will hopefully cause their share prices to compound. Particular to this company is my strong belief that Mark Leonard is one of, if not the premier capital allocator among Canadian CEOs.
Risks: The biggest risk I see in this test segment of my portfolio is to remove my focus from what has been a very successful process of investing in companies capable of dividend growth, to those less likely to provide relatively consistent results.
May 2, 2022
Buy – Added to my position in National Storage Affiliates Trust (NYSE: NSA) in my RRSP at $53.48
Reasons: As this is one of my largest positions, I added to it since I’m comfortable with their business model, appreciate the 10% dividend raise in the first quarter, and think paying ~15X FFO is more than fair given the company grew by ~37% in 2021.
Risks: Overconfidence is likely fueled by this company’s strong performance over the last couple years. With many self-storage companies having invested to boost capacity during the pandemic, there’s likely a glut of space coming online that should negatively impact occupancy and pricing in coming years. Lastly, the large dividend raise in the first quarter likely put the blinders on me regarding some company and industry specific weaknesses that have not registered on my radar.
Reasons: In-line with my reasons for adding to this position last month, with the shares down a bit, and CIBC still being a small personal position, I added more to this relatively cheap Canadian bank.
Reasons: AbbVie reported strong Q4 results that showed good top and bottom line growth, so before they reported Q1 results on April 29th, I decided to buy more of this pretty reasonably priced company. Also worth noting that ABBV has seen some good short-term momentum up about about 35% since my last purchase in November 2021.
Reasons: There's likely an upcoming blog entry to further explain this position, but at a high level, I'm choosing to experiment in purchasing potential small-to-mid cap companies in my unregistered account that have the potential to compound over the next 5-10 years.
Reasons: Perhaps the biggest reason I added to this position is that CIBC was my smallest Canadian holding prior to the purchase. Given it is priced less expensively than its peers, at ~11X trailing earnings, and the fact that they've avoided material negative coverage over the past couple years (<- the reason it was my smallest Canadian holding), it made sense to add.
Reasons: With the second of three tranches of the proceeds of Coresite, I added to DLR, one of my flowers, that has dipped along with some of the technology darlings so far in 2022. I waited until the company boosted their payout by 5%, then added this company yielding 3.5%. With P/FFO estimated for 2022 of ~20X, DLR seemed like a fair buy in a frothy market.
Reasons: After going almost a year without buying any Canadian bank shares, even after adding some Bank of Montreal shares late last year, I still find myself relatively underweighted on Canadian banks. With the month coming to an end, and me looking to keep my monthly stock buying streak alive, adding shares to the largest bank in Canada, that also gives me access to the Northeastern U.S., seemed like a good choice. Paying a little over 12X earnings and thinking that a rising rate environment would ultimately benefit RBC's margins helped convince me that adding to this flower made sense.
Buy - Added to my position in A&W Revenue Royalties Income Fund (TSX:AW.UN) in my TFSA at $38.05
Reasons: After making my yearly contribution to my TFSA, I decided to allocate it to additional shares in A&W revenue royalties, with an eye to selling an equal amount of shares in my RRSP (after at least a month - can't upset Canada Revenue Agency), in order to use the proceeds to buy shares in U.S. companies. This should help allow me to maintain a two-thirds/one-third distribution between Canadian / U.S. companies.
Risks: Rushing to use my 2022 TFSA contribution in January, to buy shares in a company that I already have a large position in, and risking being overweight for at least a month, doesn't seem like a reasonable course of action. Of course, a couple days after buying the shares, the price is now materially lower. Lastly, it's worth noting that I might still be in love with A&W for raising their distribution by 50% last year, then paying a special distribution in December.
Reasons: With the first of three tranches of the proceeds of Coresite, I decided to add to Realty Income, one of my flowers, that dipped today on a broader market sell-off. Although by no means a fast growing company, I'm optimistic to see how VEREIT impacts their Q4 results and how quickly they are able to integrate the company into their operations in 2022. Adding a high quality company with a 4.3% yield in an environment where many companies look pricey, seemed like a relatively easy decision for me.
Reasons: I forgot about the Microsoft purchase below, and wanted to keep my streak of buying shares each month alive. Since I hadn't bought any bank shares this year, after their recently boosting their dividend by over 25%, and announcing the acquisition of BNP Paribas' branches in the U.S., I decided to add to this position, one of my biggest gainers in my Canadian holdings.
Reasons: Adding to Microsoft continues my current theme of "watering my flowers". In this case, it's been over eight years since I initiated what has become my biggest gainer of all my holdings. Instead of trying to justify this purchase from a quantitative perspective (dividend growth of 10.7% isn't too shabby), I'll simply say that I continue to believe in the company's ability to navigate change, and find opportunities to profit from gaining users globally of their products and services.
Reasons: Adding to BIP.UN goes along with my current philosophy of "watering my flowers". I continue to think BIP is a great way to get global diversification, along with sector diversification (utilities, midstream, data and transport). Although the shares are a bit pricey, I decided to add when the secondary issue was announced. I'm comfortable with sitting back and collecting the near 4% yield which is guided to grow at 5% - 9% per year.
Reasons: AbbVie reported strong Q3 results that showed good top and bottom line growth, and then boosted their dividend by 8.5%. The stock is priced very reasonably at less than 10X forecasted 2021 diluted EPS. Lastly, this buy allows me to water a flower in my RRSP and turn it into a bigger position.
Reasons: CAR.UN was one of my biggest two gaining Canadian equities, but represented the smallest holding in my TFSA. Given their ~5% distribution hike earlier this year, I thought I'd add to them in order to let the power of compound growth work its magic with this position. This trend of "watering my flowers" is something I plan on doing more of over the coming months.
Reasons: Much like the preferred units I sold last month, these shares were part of the distribution I received when Brookfield Property Partners went private. The main reason I sold was the total worth of the shares were immaterial to my portfolio, so selling an investing in one of my ~38 holdings seemed to make more sense to me.
Reasons: With some extra capital to deploy in my unregistered account, and the Canadian banks still not having receiving approval to increase their dividends, I decided to add some shares of Fortis, one of my highest conviction holdings. With a 3.9% dividend yield, after the recent 5.9% raise, and the stock down a bit after hitting a 52-week high, I was comfortable adding to my position.
Reasons: With Evergrande pulling down the markets, I decided to add more to my position given CT REIT remains priced moderately (about 15X trailing P to FFO), yielding around 4.8%, and has a history of regularly increasing their distribution supported by underlying revenue and FFO growth. Although it`s likely not relevant, I also enjoy their Canadian Tire and Sports Check stores.
Reasons: For context, these preferred units were part of what I received when Brookfield Property Partners REIT got taken private. Given the units were valued at an immaterial amount, and had a 6.25% payout, I didn't feel comfortable keeping them in my portfolio.
Risks: Although the yield was attractive, and there might be demand for preferred shares in a decent company, I don't think it was worth looking into the features of these units given a lack of fit with my dividend/distribution growth oriented portfolio.
Reasons: Since the Canadian banks have yet to get authorization to increase their dividends, and with most other companies in my unregistered account that have increased their payouts in the past year already accounting for large enough portions of that account, Fortis seemed like the best possibility to add to in late August. With a 3.5% dividend yield, and the company slated to raise their payout in December in-line with their plan to increase dividends by ~5% yearly through 2025, I was comfortable adding a bit to my position.
Reasons: As month end approached, I added to my position given the same reasons I wrote about in the last two months (see June 28th entry for detailed reasons). I'll add that this purchase brings my position in EMA in-line with the size of my other main utility holdings (Fortis, Brookfield Renewable, etc.).
Reasons: For context, I had quite a bit of cash in my TFSA account after Brookfield Property Partners got taken private. Instead of adding a new position, I added to CT REIT, that recently reported strong Q2 results, and was yielding about 5% after raising their distribution earlier this year by 4.5%. Relative to other holdings in my TFSA, CT REIT was smaller in value.
Risks: Instead of going hunting for the best value, I took the relative easy decision of adding to a holding I was already comfortable with at what I thought to be a fair price. Although it was a smaller holding within my TFSA, CT REIT is one of my larger holdings in the context of my whole portfolio. A strong fourth/subsequent waves in Canada might prove negatively impactful to this purchase.
Reasons: When shares dropped after going ex-dividend, I added to my position given the same reasons I wrote about last month (June 28th) still apply.
Risks: Emera is always pricey, there won't be explosive growth, and in order to keep adding to my portfolio each month, I bought on the last trading day in July.
Buy - Added to my position in A&W Revenue Royalties Income Fund (TSX:AW.UN) in my TFSA at $38.61
Reasons: After the fund announced ridiculously strong Q2 results, increased their payout again (50% up since the start of the year), and seems to be clicking on all cylinders, I decided to up my position in A&W making it one of my top holdings.
Risks: Rushing to make an investment before the end of July (gotta keep that monthly streak alive), and knowing I enjoy this company far too much than is warranted for my limited knowledge, this large position could end up being a mistake.
Reasons: Since I last added to this position in May 2017, management of Emera has kept boosting their dividend by 4-5%, the stock price has kept looking a bit expensive (P/E of 20X), and the value of my shares have kept trending upward. Although Emera will never be the most exciting company to own, I remain a fan of the utility, and expect it to continue to generate solid cash flows and reinvest smartly.
Risks: As usual, after I made my purchase, Emera's share price has dropped to a level I would have preferred. As noted above, Emera always tends to be priced a tad richly, so I likely overpaid for the company's modest growth prospects. Lastly, I wonder if I'm too much of a fan of companies that provide dividend growth guidance, like Emera.
Buy - Added to my position in A&W Revenue Royalties Income Fund (TSX:AW.UN) in my TFSA at $36.72
Reasons: Having sat on a growing pile of cash inside my TFSA since January, the time seemed overdue to deploy it into more A&W Income Fund. Having survived the worst of the pandemic, partially restored their distribution that was cut last year, I think the fund is well positioned to benefit as eating out becomes possible again across Canada. I've mentioned before my fondness of the fund's management team, and the quality of food in the restaurants. Lastly, I've been thinking about consolidating my A&W position in my TFSA, which would allow me to buy US stocks in my RRSP. This purchase provides some future optionality in that regards.
Risks: Rushing to make an investment since my cash balance in my TFSA is a tad too high is not a good reason to part with my money. Although I`m optimistic the worst of the pandemic is behind us in Canada, that`s clearly something that`s outside of my ability to predict. Lastly, A&W is one of my largest holdings, which demonstrates my overconfidence; troubling considering many of the restaurants recently added to the royalty pool that make up this fund are in urban centers, which might suffer if office workers continue to work from home.
Buy - Added to my position in Capital Power (TSX:CPX) in my unregistered account at $38.15
Reasons: With management announcing a secondary issue at $38.45, I took advantage of the dip in price to add to a growing position. Although not cheap at 22X trailing P/E, Capital Power has almost doubled since their covid-low of $20.23, offers a generous dividend yield north of 5%, and management guides toward about 5% dividend growth this year. Better yet, the company supports the dividend growth plans by rising revenue, EBITDA and free cash flow.
Risks: Rushing to make an investment before month end was a factor, looking for a company to buy where there was a dip (most of my holdings are riding hot right now), and the jury is still out on if buying secondary issues is a good long-term strategy.
Buy - Added to my position in Algonquin Power & Utilities (TSX:AQN) in my unregistered account at $19.98
Reasons: Algonquin boasts of 5-year total return of 141% on their investor relations site, which reflects the company's ability to grow their earnings and dividend through smart capital investments in clean power generating assets. Given the adverse impact of the Texas ice storm on the company's assets, shares are trading at a very reasonable 12X trailing earnings, and close to a 4% yield.
Risks: In a February 2021 news release, the company assesses the negative impact of the early year storms as between $45M - $55M on their adjusted EBITDA (about 5-6%). Until the company releases the exact impact of the storms on their earnings in the Q121 news release (scheduled for May 6th), the stock has been treading water around the $20 mark. There's a chance the negative impact is greater than forecasted, which would drive down the company's share price. There's also a chance that the company might need to re-direct some of their CAPEX money to weather-proof some of their assets, which would not yield as rich of a near-term return on investments. Lastly, there's a chance that the eye-popping returns that Algonquin and other green energy utilities have generated in recent years will limit their future returns as competitors enter this profitability sector.
Buy - Added to my position in Telus Corp. (TSX:T) in my Unregistered account at $25.20
Reasons: When Telus announced their plan to raise $1.3B via a secondary issue priced at $25.35, I thought it would be a good moment to add to one of my larger positions. At the risk of sounding like a broken record, Telus is the most shareholder-friendly Canadian telecom and they have the best customer satisfaction of the big three telecom companies. Lastly, with Telus still owning the majority of shares in Telus International (whose IPO in February raised $8.5B), the parent will benefit from the continued expansion of the subsidiary.
Risks: While I don’t love when my investment holding companies announce secondary equity issues, with the plan to use the proceeds for the next round of wireless frequency auctions in Canada and to build out their 5G network, I can learn to live with it. As usual, I did not buy at the lowest point in the trading day (below $25), and there are likely lower days ahead before the secondary issue closes. Lastly, this buy puts me right at the limit of my comfort zone when it comes to the percentage one investment accoutns for within my portfolio.
Reasons: Buying a company in the health care sector, with a forward P/E of less than 10X, given the 5% dividend yield, some above-inflation forecasted dividend growth over the next couple years, on a day when the stock was down ~6%, seemed like a best case scenario for me. Selling IRM/buying ABBV was a trade I had been thinking of making for months, and the stars seemed to align on March 17h.
Reasons: After holding Iron Mountain for almost five years, it was time to part ways with the company when management decided to grow into the data center sector (where I already own Digital Realty and Coresite) and freeze their (albeit high) dividend. I county myself incredibly lucky that IRM became a meme-stock this year, given the short-interest in their shares became a rallying point, somewhat along the lines of GameStop.
Reasons: After Laurentian Bank cut their dividend last year, I held off selling right away, as I thought the market over-reacted a bit. After Laurentian released good results today, and their stock was up over 10%, I took the opportunity to capture a small taxable loss, decrease my portfolio weighting to the financial sector in Canada, and to get rid of a bank that doesn't add anything of interest to me in my portfolio.
Reasons: After the company released their year end results on February 4th, I took a couple weeks to digest them, before completing my position. Despite the pandemic, BEP grew their FFO by 6%, deployed over $2B net into new projects, then rewarded unit holders with a 5% distribution increase. The company has many signs of being a long-term capital compounder.
Reasons: Having traded into and out of this company twice late last year, I decided that I would re-enter with a half position with a plan to hold this for the long-term. When I think about the big winners in my portfolio (i.e. Microsoft), they usually don't meet all my desirable qualities, but the investment pays off over time when given time to compound. Brookfield Renewable Partners is expensive, their yield is relatively paltry, and organic growth remains a question mark...yet I continue to think this is a fine company to hold for the long-term.
Sale - Sold my position in Brookfield Renewable Partners L.P. (TSX: BEP.UN) in my TFSA at $53.30
Reasons: Yup, I did it again. As the price creeped up around 27X trailing FFO, I felt there are better options out there from a risk-return perspective. Don't get me wrong, I'll likely buy again if I can get it closer to 25X trailing FFO, but I'm wary of over paying for this admittedly a great company.
Buy - Added to my position in Capital Power (TSX:CPX) in my unregistered account at $34.85
Reasons: Capital Power checks almost all of my criteria of a good investment: reasonable price (~14X trailing P/E), good momentum since March covid-low (up from a low of $20.23), generous dividend yield (~6%), good recent dividend growth (6.7% this year), management guiding toward about 5% dividend growth next year, and all of that supported by rising revenue, EBITDA and free cash flow.
Risks: A lot of the usual suspects regarding buying prior to a dividend of record date (December 30th), buying on a day when the stock is only down moderately (about 1%), trying to pandemic proof my portfolio, and rushing to invest before year end.
Buy - Added to my position in Algonquin Power & Utilities (TSX:AQN) in my unregistered account at $20.24
Reasons: Algonquin continues to check many of my boxes as a company to invest in: a (high-end of) reasonable 25X trailing P/E, ~4% yield, a 10% dividend hike in the past year, and growing revenue, earnings and CAPEX to back the first three ratios up. As an added bonus, it's been on a tear in 2020, so momentum is strong despite some big secondary stock issuances.
Risks: As noted above, Algonquin is never particularly cheap, especially given the 20% (including dividends) return over the past year. That said, I think this is a case of paying up for a quality company with a history of delivering on their growth aspirations. The two other big risks common to my investments lately, trying to "pandemic proof" my portfolio and feeling the need to put cash to work near year end are also present here. Lastly, with an ex-dividend date of December 30th, I liked the idea of getting in before the ex-dividend date, which I know shouldn't matter in terms of investment logic.
Buy - Bought a full position in Brookfield Renewable Partners L.P. (TSX: BEP.UN) in my TFSA at $74.99
Reasons: I'm going skip the reasons I listed in my October 21st entry a couple lines down. Instead, I'll admit to enjoying the fact I had sufficient funds in my TFSA after my November 25th sale of my half position, to buy a full position this time around. Plus, I was able to purchase at ~25X FFO, which is my cut-off for a high-quality company such as BEP.UN.
Buy - Added to my position in Realty Income (NYSE: O) in my RRSP at $60.30
Reasons: Realty Income gives me many reasons to be comfortable adding to my position: paying 18X trailing FFO for arguably the strongest triple-net REIT in the US seems like a bargain. Initial yield of 4.6%, between 2-3% distribution growth per year, and a management team that's collection ~93% of rent during the pandemic.
Sale - Sold my position in Brookfield Renewable Partners L.P. (TSX: BEP.UN) in my TFSA at $81.25
Reasons: I wrestled with this decision for weeks, but the reason I decided to sell my position in Brookfield Renewable Partners came down to value. Paying 27X trailing FFO for admittedly a great company, good management, just seemed too steep. Having only bought a half position (at around 23X FFO), my intention was to buy the other half before year end, but the price of the assets just got too steep for me. That said, the other reason for selling was that thought that if the price dipped down to $75 in the coming weeks (aka 25X FFO), I could buy a whole position in BEP, and my mind would be at ease.
Buy - Added to my position in Granite REIT (TSX:GRT.UN) in my TFSA at $74.99
Reasons: Although the P/FFO of ~20X is a tad high, given Granite has had no trouble collecting rent from their tenants during covid-19 (99.9% of rents collected in October), I see the purchase as paying a premium for quality. With a secondary issue priced at $75 to fund some acquisitions, I took the opportunity to buy more of this 4% yielder that recently increased their distribution by 3.4%.
Risks: Although I usually shy away from participating in secondary issues, management at Granite delivered very strong Q3 results, so I'm likely overconfident on this company. The fact they collected 100% of rents in Q2 & Q3 is also giving me a false sense of security that I can make my portfolio pandemic proof. Lastly, I usually like to buy on days when the market is down, and today it's just treading water.
Donated - In-line with my five-year plan, I donated the last of my Riocan REIT shares to Oxfam Canada. By donating the shares, I support a worthy charity while avoiding a capital gain on some shares that I would rather not hold for the long-term given management's inconsistent strategy and capital allocation. This is the fifth year I've given away RioCan shares to a registered charity and it's win/win.
Sell/Buy - Sold shares of Brookfield Infrastructure Corporation (TSX: BIPC) at $72.63 and used proceeds to buy shares of Brookfield Infrastructure L.P. (BIP.UN) at $57.28 in my TFSA
Reasons: After the spin-off earlier this year, I was surprised to see the pricing gap between these shares grow to over $15. Given my shares are in my TFSA, I decided to take advantage of the pricing gap to buy the same percentage ownership in the same underlying assets at a considerable discount.
Risks: Selling too soon, not letting winners ride, and not appreciating all the reasons for this pricing gap are the top three risks that come to mind.
Buy - Added to my position in Fortis Inc. (TSX:FTS) in my unregistered account at $52.48
Reasons: My reasons from October 19th are still valid. I will correct that Fortis extended the dividend growth target of 6% through 2025 (vs 2023 below). The Q3 results were in-line with last year's results, so the stock remains valued ~20X trailing earnings.
Risks: Maybe what I thought was FTS getting pulled down by a broader market sell-off was in part due to their Q3 results, which I saw as pretty solid. Also the risk that I'm too comfortable with my Fortis holding and not looking at the company critically enough. Lastly, with quite a bit of cash sitting in all my accounts, I might be rushing to invest before year-end.
Buy - Initiated a half position in Brookfield Renewable Partners L.P. (TSX: BEP.UN) in my TFSA at $69.67
Reasons: Instead of focusing on quantitative metrics, most of the reasons why I initiated this position are more qualitative in nature. From the importance of renewable sources of energy, to a solid management team, to great recent momentum, I have been envious of other people holding this company for years. Dipping my toes in with a half position was a relatively easy call for me after selling my Algonquin shares in my TFSA earlier this month. Lastly, I find the divergence between shares of BEP.UN and BEPC (about $15 at the time I'm writing this) remarkable. If I can buy future income at a cheaper rate than someone buying the BEPC shares, I'm in!
Buy - Added to my position in Fortis Inc. (TSX:FTS) in my unregistered account at $53.88
Sell - Sold my position in Algonquin Power & Utilities (TSX:AQN) in my TFSA at $20.37
Reasons: My initial justification got deleted, but to summarize, after holding the equivalent of a double position in Algonquin for over a month, I got uncomfortable and wanted to decrease the size. It's nothing against this great company, I simply wanted to reduce exposure given it was over my preferred size of 5% of total portfolio value.
Buy - Added to my position in TC Energy Corp (TSX:TRP) in my unregistered account at $59.73
Reasons: After establishing my position in TC in 2011, completing it in 2015, I took a closer look at the company when I noticed their shares were down about 5% last week on lower oil prices and as part of the broader market sell-off. The shares were trading at about 13X trailing earnings, the dividend yield was about 5.5%, and TC's planned projects for the next couple years should support 5-7% dividend growth guidance management has provided.
Risks: Since I usually try to buy on dips, there's always a chance that the dip will continue, and I'll end up overpaying. If the price of oil stays low (below $40 today), TC's profits will decline and projects will be cut. Biden, if he wins the US election, has indicated he will nix TC's Keystone pipeline, which would jeopardize the company's continued dividend growth. Additionally, there's always regulatory risks when so many of TC's projects require government approvals.
Buy - Added to my position in Algonquin Power & Utilities (TSX:AQN) in my unregistered account at $18.16
Reasons: As stated below, my plan is to replicate my position in Alqonquin in my unregistered account, and then sell the position in my TFSA at least one month later. Despite the secondary issue last month, and underwhelming Q2 results, the company's shares continued to trend above $18 recently, so I added today before month end. With an ex-dividend date near the end of September, I thought buying now would protect my downside somewhat for the next month while I'll have a larger position in AQN than I would like to hold.
Risks: First obvious risk is buying at month end just to continue my habit of buying shares of some company each month. Secondly, as indicated above, my position in Algonquin right now is a bit too large for my comfort level, but I'll sell sometime after the next 30 days so as to avoid any nasty tax surprises from the Canada Revenue Agency. Lastly, I find AQN a bit pricey here given the recent $900B secondary issue at $17.10 and moderate Q2 results that didn't meet expectations.
July 8, 2020
Buy - Started my position in Algonquin Power & Utilities (TSX:AQN) in my unregistered account at $17.51
Reasons: I felt like the TSX has been mostly flat for the last while, so I decided to initiate a position in Algonquin Power in my unregistered account, with the aim of selling my position in the same company in my TFSA. There's an upcoming special situation I'd like to take advantage of involving Brookfield Renewables, and creating some liquidity with which to do it in my TFSA is the most tax-efficient.
Risks: Seeing Algonquin selling for $17.50 at 3:58 on Wednesday, I quickly logged in and bought since this was a price I was targeting. Literally the next morning I was scrolling my Twitter investment feed and saw AQN was doing a massive $900B secondary issue at $17.10. Proving once and for all my timing is horrible! Additionally, worried that in the period when I'll be effectively double-positioned, something will happen and the company's value will be permanently impaired.
June 24, 2020
Buy - Added to my position in National Storage Affiliates Trust (NYSE: NSA) in my RRSP at $26.85
Reasons: When I last bought NSA in January, I paid 34.43 and thought I was getting the fastest growing self-storage REIT at a reasonable valuation of ~15X FFO. Due to a second-wave corona-virus fueled sell-off (???), I was able to add to my position at around ~11X FFO. While other REITs are floundering, NSA is making strategic acquisitions (early June), collecting 98% of their April rent, and reporting top-line and bottom-line growth in their Q1 results.
Risks: I still worry about NSA's relatively small size (market capitalization is ~$2B) and their ability to continue to generate sufficient growth to cover ~10% distribution hikes in the future. Also, I felt compelled to buy yesterday as my RRSP cash has climbed to the highest its been in years, and due to a wide market sell-off that I felt should yield some bargains. Lastly, I continue to worry that I’m too impressed by NSA’s 5-year stock price climb that looks smooth and almost exponential.
June 11, 2020
Buy - Added to my position in Granite REIT (TSX:GRT.UN) in my TFSA at $64.60
Reasons: After spending time recently looking at industrial REITs trading on the US-exchanges, I decided to invest in Granite as I think it's a high quality industrial REIT with global exposure. Although the P/FFO of ~18X is a tad high, given Granite has had no trouble collecting rent from their tenants during covid-19, I see the purchase as paying a premium for quality. With Granite's history of dividend growth, and an attractive initial yield of ~4.5%, I took advantage of a slumping market to add to my position.
Risks: Using the last of my TFSA cash for 2020 to add to Granite on a day when the REIT was down 3%, but the broader market was down around 5%, might not be the best risk-return trade-off. The fact Granite recently issued more stock at $67 (ultimately used for a serious of US-property acquisitions) also left a bad taste in my mouth as a unit holder. Lastly, I think I might be blinded by the high rent collection numbers and the idea of making my portfolio pandemic-proof.
May 13, 2020
Buy - Added to my position in CT REIT. (TSX:CRT.UN) in my TFSA at $12.06
Reasons: CT collected 96.5% of May 1st rent (it helps when your largest tenant, Canadian Tire, is deemed an essential service across most of Canada), the yield is about 6.5%, and they are trading at a P/FFO of just over 10X. Another reason I decided to add to this company is that REITs in general are very beat-down right now due to rent collection concerns, so I wanted to make add to a REITs while I still have cash left in my TFSA to invest.
Risks: Yet another instance of had I waited a day, I could have bought for about 5% less. The risk of focusing more on coronavirus-resistant companies, as opposed to seeking a slightly higher risk, higher return opportunity, played itself out here as well. There are some Canadian REITs that are trading at a much bigger discount to their NAV than CT.
May 13, 2020
Buy - Added to my position in BCE Inc. (TSX:BCE) in my unregistered account at $54.65
Reasons: Since I added to the position about two weeks prior, the yield has eclipsed 6%, their results were in-line with expectations, and apparently the company is making some progress in customer service which should result in lower churn if they can keep that up.
Risks: If you ever want to buy into a company that I add to, a great bet is to wait for the day after I make a purchase, and then save about 2%. Market timing is clearly not my strength. Another risk worth identifying is that I feel I'm looking for bullet-proof, coronavirus-resistant companies, as opposed to seeking a slightly higher risk, higher return opportunity. This might become a theme, to the detriment of my long-term returns.
April 30, 2020
Buy - Added to my position in Capital Power (TSX:CPX) in my unregistered account at $26.92
Reasons: I felt pretty comfortable adding more to this power producer whose EBITDA comes from 78% regulated activities. They are diversifying outside of Alberta, rated BBB-, and look to grow their dividend by 5-7%.
Risks: After buying on Thursday, mainly to continue my streak of purchases each month, CPX was down about 2% on Friday. I might be chasing yield growth right now as well with so many companies pause their payouts. Additionally, CPX is very exposed to Alberta which is experiencing tough time with the oil price route.
April 30, 2020
Buy - Added to my position in BCE Inc. (TSX:BCE) in my unregistered account at $56.50
Reasons: Yielding close to 5.9%, having just raised their dividend by 5%, and priced at about 16X P/E, I thought it was time to add to my BCE position in the first time in over 10 years (February 2010 was my last purchase). It's probably worth noting that during that 10-year period, BCE has delivered pretty consistent results despite the federal government and regulator finding ways to challenge them.
Risks: After buying on Thursday, mainly to continue my streak of purchases each month, the market was down about 2% on Friday. Market timing is clearly not my thing. I also wonder if the federal government and industry regulator will succeed in finding a way to have BCE lower their prices and/or improve customer choice.
April 29, 2020
Sale - Sold my position in Alaris Royalty (TSX: AD) in my Unregistered Account at $10.50
Reasons: With the yield around 16%, management announcing a change from a monthly to a quarterly dividend, and some large partners of Alaris unable to make royalty payments due to business closures related to coronavirus, I think a dividend cut in June is imminent. I've also grown a bit frustrated with Alaris's management selling some of their interests in some of their better performing partners over the past couple years.
Risks: Although I assume a dividend cut is imminent, I don't dislike Alaris's business model, and respect the fact management has allocated capital pretty well in a very challenging environment for private equity over the past couple years. There's some of Alaris's partners who I'd really like to invest in for the long-term (i.e. Planet Fitness & Body Contours), but I also see those as the most likely to be sold by the company. It's totally possible Alaris uses some corporate liquidity to keep the dividend constant and the market rewards them for that, I just don't think it's likely.
April 27, 2020
Sale - Sold my position in Tanger Factory Outlet Centers (NYSE: SKT) in my RRSP at $6.61
Reasons: With the yield hovering close to 25%, most of their centers closed by local government orders, and plans to "evaluate the payment and rate of any subsequent dividends" after paying out their dividend on May 15th, I took advantage of a 15% up-day on the stock as investors chased the dividend (holder of record date is April 29th) to exit my position.
Risks: I assume that Tanger will cut their dividend when their Board of Directors meets next. If they cut it to a reasonable level, and the market starts to appreciate the factory outlet center business model again, there's a chance I could have sold too early. At the start of 2020, I was hoping that Tanger might be a take-over candidate given their ridiculous price to FFO ratio of ~3X currently, but they are so small of a company that they wouldn't move the mark for most acquirers. I feel like I fell in love with Tanger after visiting some of their locations years ago, and hung on way too long.
March 18, 2020
Buy - Added to my position in Realty Income Corp. (NYSE:O) in my RRSP at $41.65
Reasons: Is Realty Income, who just announced their second dividend increase of the quarter, worth 24% less than it was yesterday? My answer was 'no', and given the P/FFO of about 13X on what I consider to be the best quality REIT in the US, I felt adding to my position was a sound move.
Risks: Realty Income will likely trade lower in the coming days. There might be even bigger bargins out there on which I could have used some of my accumulated U.S. cash in my RRSP. Lastly, Realty Income has only been able to grow their distribution by about 3% in recent years, materially slower than other REITs in my portfolio.
March 11, 2020
Buy - Added to my position in Aecon Group (TSX:ARE) in my unregistered account at $15.98
Reasons: The market was down ~5% on Wednesday when I added to my position in Aecon, and I was able to buy at a P/E of about 15%, a 4% yield, on a company that just raised their dividend by 10%. Even though I think we're headed for a recession in Canada based on the plunge in oil prices and coronavirus impacts, my bet is one of the ways the federal government will try to re-start the economy is by boosting infrastructure spending...something that should benefit Aecon.
Risks: After buying on Wednesday, the market plunged on Thursday and I could have picked up the shares even cheaper. That said, I'll never buy at a market bottom, I'm not that lucky. My theory of construction spending might also take years to play out, if it plays out at all, and investing in a construction company might prove to be a bad idea. Lastly, I feel that I might be chasing dividend growth a bit with this purchase, as I don't expect many other of my holdings to be boosting payouts by 10% or more.
March 6, 2020
Buy - Added to my position in CT REIT (TSX:CRT.UN) in my TFSA at $15.78
Reasons: This is my first purchase since the Coronavirus sell-off that's been leading to some big swings in the market the last few weeks. In CRT, I'm buying the REIT on which most Canadian Tire, Sports Experts, SporkCheck, Mark's Work Wearhouse, Atmosphere, etc. stores sit, that yields close to 5%, and raised their distribution last August by about 4% (lower than they could have given AFFO growth of almost 6% in FY19). The fact the REIT was down about 5% yesterday, for no specific reason, helped convince me to deploy some of cash I still had in my TFSA. Now if only these reduced valuations could continue.
Risks: If the sell-off continues, CRT will likely go even lower. I'm also thinking that some of Canadian Tire's suppliers in China will be impacted by the Coronavirus, which could cause CT's and this REIT's prices to fall. Lastly, concentration risk is a factor for CT REIT given there's only minor tenants (i.e. banks) outside of Canadian Tire in the REIT's portfolio.
February 21, 2020
Buy - Added to my position in Brookfield Infrastructure Partners (TSX:BIP.UN) in my TFSA at $73.24
Reasons: BIP grew their FFO by 11% in 2019, and then boosted their distribution by 7% earlier this month. I continue to have a lot of confidence in Bruce Flatt and Brookfield’s management team to grow this global infrastructure powerhouse. If management’s plan to convert this partnership into a corporate structure goes ahead, this could serve as a further catalyst as it will allow a wider variety of investors to hold shares.
Risks: Adding to one of my larger position, while the stock is trading near it’s 52-week high, is not my usual recipe to investing. That said, I have grown more comfortable in “averaging up” over the past year. With 20/20 hindsight, I can also confirm I bought too soon as BIP was down about 2% on the next trading day due to the larger coronavirus market sell-off.
February 21, 2020
Buy - Added to my position in Telus Corp. (TSX:T) in my Unregistered account at $51.96
Reasons: Unlike Rogers and to a lesser degree Bell, Telus has a focus on dividend growth, and their business results back-up their 5-8% annual dividend increases. When management announced plans to issue $1.3B of equity last week, at $52/share, when the stock was trading at a 52-week high, I took the opportunity to add to my holding at a slightly lower price than bankers had paid to underwrite the issue.
Risks: While I don’t love when my investment holding companies announce secondary equity issues, if they use the proceeds to de-leverage their balance sheet and ready themselves for the next round of wireless frequency auctions in Canada, I can learn to live with it. Of course the next trading day after I bought, Telus was down 1% due to the larger coronavirus market sell-off.
January 31, 2020
Buy - Added to my position in National Storage Affiliates Trust (NYSE: NSA) in my RRSP at $34.43
Reasons: I like NSA due to their history of FFO growth that supports their near 4% dividend yield and ~10% dividend growth in 2019. With some built-up cash in my RRSP, I thought adding to my position in this self-storage REIT trading at ~15X FFO was a good investment given the lofty valuations of most of my other US-holdings.
Risks: NSA is a relatively small self-storage REIT (market capitalization is ~$2B) with facilities in only 35 states. I question the company’s ability to cover ~10% distribution hikes in the future if it can’t continue to grow their top line at a similar rate given saturation in the self-storage space. Also, I felt compelled to buy on January 31st as my plan was to invest each month in 2020. Lastly, I worry that I’m too impressed by NSA’s 5-year stock price climb that looks smooth and almost exponential.
January 31, 2020
Buy - Added to my position in Power Inc. (TSX:POW) in my Unregistered account at $33.18
Reasons: The stream-lined structure (incorporating Power Financial), the proposed 10% dividend hike in 2020, and the very reasonable ~13X P/E all helped justify my additional investment in Power.
Risks: Adding on the last day of the month, to ensure I made investments each month in 2020, will likely be a mistake in retrospect. Taking a wait-and-see approach to Power’s integration of Power Financial also would have been a more conservative approach. Lastly, I’m likely over-weighting this year’s proposed 10% dividend hike into my buying decision.
Buy - Added to my position in Granite REIT (TSX:GRT.UN) in my TFSA at $66.74
Reasons: Further to the AQN purchase outlined below, this purchase also helped me meet my forward dividend income and organic dividend growth goals. Unlike Algonquin, I've owned Granite for over 3 years, and love what the new management team is doing: moving away from a concentration of a single renter in Magna (now accounting for less than 50% of their rental income), seeking opportunities to purchase industrial properties in the US, and adding a bit of leverage to their balance sheet.
Risks: Buying close to year end with an eye on meeting my dividend income and growth goals isn't a quality reasons to act. As to be expected, after I bought the shares, the stock price trended slightly downward. Lastly, I am starting to wonder if the income Granite generates south of the border will ultimately result in higher withholding taxes when Granite makes their distributions.
December 23, 2019
Buy - Added to my position in Algonquin Power & Utilities (TSX:AQN) in my TFSA at $18.50
Reasons: In order to avoid ending the year with a bunch of cash in my TFSA, I made this purchase that helped me meet my forward dividend income and organic dividend growth goals. To re-state my main reasons for having confidence in this company: management has shown an ability to grow both organically and through acquisition, and this growth supports the current yield and dividend growth.
Risks: Buying near the end of the year, with the expressed reasoning for meeting goals and investing some excess cash in my TFSA aren't quality reasons to act. Of course since I made this purchase, the shares of trended downward. Lastly, I continue to feel that I might be chasing dividend growth in AQN, without giving enough consideration to looking forward to future growth.
December 11, 2019
Buy- Purchased a full position in National Storage Affiliates (NYSE:NSA) in my RRSP at $33.50
Reasons: This was one of three contenders I identified to replace my Life Storage Inc. holding when I sold it. I like NSA for it's initial yield of ~4%, 10% dividend growth over the past year, and reasonable P/FFO. Lastly, as this is a relatively modestly size company (market capitalization of about $2B), it's possible a bigger player could look to buy them given NSA's history of good organic growth.
Risks: Bought the day before the ex-dividend date, a mistake I've made many times before. The stock has been trading lower ever since I bought it (very common when I purchase a stock). Lastly, I could have simply added to a current position, instead of buying a new one that requires additional monitoring.
December 11, 2019
Sell - Sold my position in Pfizer Inc. (NYSE:PFE) in my RRSP at $38.33
Reasons: Three reasons I sold out of this position. First, there's an upcoming spin-off of Mylan's and Upjohn's growth assets into a new entity Viatris, which would mean another company for me to monitor. Blending into the second reason, reading Pfizer's management talking about "keeping investors whole" when this happens, and then warning of slowing dividend growth after the spin-off, degrades my already low opinion of Pfizer's management. The already low opinion is based on what I feel is a preference for financial engineering aimed at making results look better as opposed to actually growing the company responsibly, and ethically (my last reason).
Risks: The spin-off could work, both new companies could post fantastic results, and the share prices could climb much higher than the original entity. I also feel bad judging a company's ethics, given I'm far from perfect myself. Lastly, I feel this might be a case of me being more interested in dividend growth, than total return, which would be an error on my part.
December 2, 2019
Buy - Completed my position in Fortis Inc. (TSX:FTS) in my unregistered account at $51.80
Reasons: After my previous purchase of Fortis on November 5th, the company announced a secondary issue priced at $52.15 to fund their capital program with proceeds set to total $1.1B. I can't blame the company for accessing cheap (less than 4%) equity funding, even if it drives the P/E from 15X to 20X. That said, on Monday, I was able to buy shares at a slight discount to the issue price, before the issue closed and the price bounced on Tuesday.
Risks: As stated above, I'm not a fan of a huge stock issue that dilutes my ownership. There's also the fact that with one month left in the year, I still have to make a couple buys in order to meet my forward dividend income goal. Having made three quick purchases of Fortis, I also wonder if I'm overlooking red flags in order to buy a name that has been on my watch list for years.
November 22, 2019
Donated - In-line with my five-year plan, I made a donation of Riocan REIT shares to Oxfam. By donating the shares, I support a worthy charity while avoiding a capital gain on some shares that I would rather not hold for the long-term given management's inconsistent strategy and capital allocation. This is the fourth year I've given away RioCan shares to a registered charity and it's win/win.
November 5, 2019
Buy - Added to my position in Fortis Inc. (TSX:FTS) in my unregistered account at $53.03
Reasons: After initiating the position a couple weeks ago, watching the stock dip for no apparent reason, I decided to take the 2% discount and double my position. Many of the same reasons listed last month remain: reasonable valuation, decent initial yield, long history of dividend growth, a 6% targeted growth rate through 2024...what's not to like?
Risks: It's very normal for a stock to fall after I buy it, and Fortis is no exception. Instead of simply thinking I'm buying more shares at a cheaper valuation, I have to learn to think more critically and ask myself why I was content to buy it at a higher price the first time. Was I in a rush? Did the length of time I've been watching this company, waiting for a better entry valuation, cause me to strike to fast? Was I simply feeling greedy on the day in question? All possible answers, and there are probably more I'm overlooking.
November 5, 2019
Buy - Completed my position in CoreSite Realty (NYSE: COR) in my RRSP at $115.40
Reasons: After initiating my position in July, I've been saving up my cash in my RRSP, waiting for a dip in order to complete my position in this data center REIT. With the stock trading down a couple percent, this seemed like a good time to add to this REIT with a 4%+ initial yield, ~10% distribution growth of the past year, trading at a reasonable valuation.
Risks: Something I know about myself: once I initiate a position, I look to complete it in a pretty quick period of time. This leads me to fixate on a stock, wait for a dip, then close out the position. The big risk here is that my timing is too early and I overpay. As it relates to CoreSite, I'm quite over-weight data center REITs now, especially given Iron Mountain spent most of their Q3 earnings call talking about how they are moving more toward that sector. Lastly, I feel like most of the second half of 2019 has consisted of me chasing dividend growth in order to meet my 5.5% average organic dividend growth rate target; the CoreSite purchase along with the Fortis purchase helped push me to above my target (sitting at ~5.75% currently).
October 23, 2019
Buy - Started a position in Fortis Inc. (TSX:FTS) in my unregistered account at $54.11
Reasons: Fortis has been on my watch list for years, so when I found myself struggling to figure out what position to add to in my unregistered account, I took a closer look at it and saw the trailing P/E of 15X, a 3.5% yield, and their recent 6% dividend hike. The company also recently extended their 6% dividend growth rate target through 2024. Management's 46 year record of increasing its payout is backed by rising revenue, income and free cash flow. I'd be remiss not to mention the company's regulated US assets were a big selling point for me in establishing this position.
Risks: Adding my 40th company to my portfolio means more monitoring, but I feel like the benefits far exceed this particular cost. Buying in on a day when the shares were only trading down a 1% likely means I bought too soon as well (my personal specialty). Given how long this company has been on my watch list, and the build-up of cash in my unregistered account, it's very possible that I let greed to finally own this company over-ride rationality that would have normally caused me to wait until the price fell even more to make this an even more attractive investment.
October 16, 2019
Buy - Completed my position in Algonquin Power & Utilities (TSX:AQN) in my TFSA at $17.81
Reasons: After the company announced it was issuing new shares at USD 13.50 via a syndicate, I decided now would be a good time to complete my position at a slight discount to my September purchase. To re-state my main reasons for this position: management has shown an ability to grow both organically and through acquisition, and this growth supports the current yield and dividend growth.
Risks: Buying after a company announces a 4% share issue that dilutes my position isn't a logical purchase. Especially given the elevated valuation after the share price has run up materially over the past year. There's also something to be said about my perceived need to "complete" this position. Additionally, I continue to feel that I might be chasing dividend growth in AQN.
October 8, 2019
Buy - Topped up my position in Kinder Morgan, Inc. (NYSE:KMI) in my RRSP at $20.03
Reasons: Since my last purchase of KMI in November 2015, the company cut their dividend and grew it again at a rapid pace. They were able to grow their payout by 25% in the past year despite funding projects internally and decreasing debt (selling some assets helped). Yesterday, the company traded at a reasonable 20X P/E and had a 5% dividend yield. Although I don't expect rapid dividend growth going forward, I think 5% is a reasonable rate over the next 5-years given the high quality of assets that KMI owns.
Risks: As the end of the year approaches, I feel a bit rushed to allocate some cash to stocks. This will likely lead me to buying stocks too soon, without any downtick/discounts. For KMI, I think there's an endowment effect in that I own these shares, and didn't look at any other US pipelines for purchase. Lastly, I continue to think that I'm chasing dividend growth in order to achieve my 5.5% organic dividend growth rate goal.
September 27, 2019
Buy - Added to my position in Algonquin Power & Utilities (TSX:AQN) in my TFSA at $18.05
Reasons: With an elevated amount of cash in my TFSA, I bit the bullet an added to this position before the end of September. I continue to like this company, their great assets, growth-oriented management, and near flawless execution of their inorganic growth plan Although I continue to think the valuation is expensive, the plan is to slowly add to this position and test if they are worth the premium valuation (given my results in 4-months of ownership, I'm tempted to say 'yes').
Risks: Although I bought AQN on a bit of a dip (down over 1% that day), I definitely bought too early as it traded below $18 with the subsequent impeachment route. Additionally, I continue to feel that I might be chasing dividend growth in AQN. That said, I think there's something to be said for owning quality companies, with a history of good results.
September 11, 2019
Buy - Topped up my position in A&W Revenue Royalties Income Fund (TSX:AW.UN) in my TFSA at $38.63
Reasons: The proceeds of my KEG disposition were reinvested into this REIT that has managed to increase their same-store-sales by double digits over the last year, add tens of new restaurants to their royalty pool, and organically grow their revenues by price increases. Bought in at a 4.9% yield and the company has increased their distribution by 11% in 2019 alone.
Risks: How long can A&W continue to grow same-store-sales by double digits and add new restaurants to their royalty pool? I don't know. The fact this is now the largest or second largest holding in my portfolio show my overconfidence and recency biases in spades. Lastly, the fact I tend to enjoy A&W restaurants and eat there a couple times a month also adds bias to my feelings toward this investment.
September 11, 2019
Buy - Initiated a full position in CT REIT (TSX:CRT.UN) in my TFSA at $14.06
Reasons: The proceeds of my H&R disposition were reinvested into this REIT that owns Canadian Tire/Marks/Sports Check properties all over Canada. This REIT has grown their distribution each of their five years in existence (by about 4% last November), has a well covered 5.5% yield based on my purchase price, and had fallen about 5% yesterday based on the news that Canadian Tire would be selling a portion of their position for $14.25. Given the dominance that Canadian Tire and their associated brands have in the sports retailing world in Canada, I'm much more confident investing in this REIT than H&R.
Risks: Canadian Tire has been slowly divesting their position in this REIT ever since it came into existence. There will likely be other steep declines in the price of their REIT when these announcements come in the future. Also, if Amazon ever focused on sports retailing in Canada, it could cause severe problems for Canadian Tire to expand their footprint and this REIT to continue to increase distributions going forward.
Reasons: It's been three years since H&R raised its monthly distribution. Their revenue and FFO have shrunk in that time as management has sold off assets (some great, irreplaceable, one of a kind buildings) as it has focused on decreasing leverage and exposure to the US/malls/Alberta. My hot take on H&R's management is that they lack any kind of focus, and seem to change their strategy on whims (i.e. developing an apartment complex in Long Island as rental REITs became hot). I got tired of holding an albeit cheap, but poorly managed REIT.
Risks: There's two possible catalysts that I could see benefiting H&R in the short-term. An activist investor could shake things up demanding management changes and a firm strategic direction (similar to what happened with Granite REIT). The other possibility is that their first residential complex in Long Island becomes a huge success, and the REIT refocuses on developing apartment complexes, which could push up the valuation considerably. In the former case, I might be interested in re-entering this position, in the latter, I wouldn't as I'm happy with my position in Canadian Apartment REIT.
Reasons: For restaurant revenue royalty vehicles, the ability to increase distributions to unit holders are based on same-store-sales growth, the growth in the number of stores in the pool, and increases in top-line sales (think raising prices). The Keg has anemic same-store-sales growth, has kept the number of restaurants steady (~100) and hasn't had much success in raising sales. The distribution has now been kept steady for 20 months, and I didn't expect it to go up anytime soon.
Risks: One possibility that might happen with the Keg fund is that it is acquired by Recipe Unlimited (formerly Cara) buys it like it did the Keg operating company back in 2018. If this happens, I might have sold these shares too soon.
Reasons: Most of the reasons why I sold are covered in this post. I'd add that after reaching 40 positions, I felt it was time to start trimming a few investments that hadn't lived up to the expectations when I initiated the position (namely, long-term dividend growth supported by revenue/earnings/FFO growth).
Risks: LSI could easily announce a dividend increase this month or indicate they were a target for an acquisition; I wouldn't be surprised at all if I sold too early. That said, after three years of holding the company, I felt I had waited for such announcements a couple years too long.
August 26, 2019
Buy - Completed my position in Aecon Group (TSX:ARE) in my unregistered account at $18.21
Reasons: After waiting since April for Aecon to dip again so I could complete my position, I pulled the trigger when the stock was down 2% in a broader sell-off. Aecon should benefit as SNC faces regulatory headwinds in Canada and exits fixed price contracts. I think the company is reasonably valued at ~15X trailing earnings, has an attractive 3.2% dividend yield, and grew their dividend by 16% earlier this year. Lastly, this is one of the few positions that I wanted to complete in 2019, and feel good having bought enough shares to consider it closed.
Risks: Aecon is not a consistent dividend grower, having taken 2018 off after their acquisition by the Chinese construction company fell through. Although the company has been able to grow revenue and EPS over the long-term, construction is a more fickle industry than most of the ones I invest in. Lastly, of course I bought in too early (the company has traded lower in the the two days since my purchase).
August 14, 2019
Buy - Added to my position in Toronto-Dominion Bank (TSX:TD) in my unregistered account at $73.28
Reasons: On a day when US-traded stocks were down 3%+ on trade war fears, I felt totally comfortable adding to my TD position given the trailing P/E of ~12X, 4.1% dividend yield, 10% dividend growth in the last year, and the bank's growing market position in the US.
Risks: Knowing I'm already very overweight in Canadian banks, adding more TD didn't diversify my portfolio any. If Trump's trade war with China continues to negatively impact the US economy and drive down interest rates, TD will suffer more than other Canadian banks. Lastly, by adding more to TD and making it my largest Canadian bank holding, my overconfidence in it is likely causing a blind spot to some of the risks it faces. Oh, and of course I bought too early as it continued to drop in recent days.
July 26, 2019
Buy - Added to my position in Canadian Utilities (TSX:CU) in my unregistered account at $35.30
Reasons: Very comfortable adding to my CU position given the trailing P/E of ~10X, 4.7% dividend yield, 7.5% dividend growth in the last year, and the fact the company is the longest-running Canadian company with a history of annual dividend increases.
Risks: I thought about starting a new position in Fortis instead of adding to CU in order to diversify a bit by company. CU has a lot of exposure to the Alberta economy, which is facing some headwinds at this moment. Lastly, I might be overconfident in CU given their great history of dividend growth.
July 19, 2019
Buy - Started a new position in CoreSite Realty Corp. (NYSE:COR) in my RRSP at $114.30
Reasons: COR has been on my watch list for the last couple years as an alternative to Digital Realty, which I feel I overweighted. Data Center REITs provide the nice REIT characteristics I look for (4%+ starting yield, ~10% distribution growth, 5+ years of growing revenue/FFO), with the kicker of being in an industry that companies are very willing to invest in. I bought this half-position before the Q2 earnings were released, when COR was priced ~16.5X FFO.
Risks: A new position means more monitoring work for me, and given COR is now about $10/ share lower, after they revised their FY19 guidance downward by a few pennies, I definitely bought too soon. Another key risk, as semi-indicated above, is that I might be too positive on data center REITs that have shown a good growth history.
June 28, 2019
Buy - Started a new position in Algonquin Power & Utilities (TSX:AQN) in my TFSA at $15.90
Reasons: AQN has been on my watch list for the past 4-5 years: I like the company, they have great assets, decent management, and have executed their inorganic growth plan very well. They were always a bit expensive for me, and now is now different with the stock up 20% YTD. That said, I established a small position, bit the bullet, and plan to add to it over time.
Risks: A new position means more monitoring work for me, I definitely didn't buy AQN on a dip, buying on the last day of the month means I bought too early, and I feel that I might be chasing dividend growth in AQN. That said, I'm starting to lean more toward quality companies, than cheap companies...here's hoping AQN is the former, since it has never been the latter.
June 28, 2019
Buy - Added to my position in Brookfield Property Partners (TSX:BPY.UN) in my TFSA at $24.80
Reasons: Given a glut of cash, my plan is to deploy it in near-equal installments the rest of the year, starting with this buy and Algonquin. In terms of companies that I own in my TFSA, that I feel completely comfortable adding to, BPY and BIP are top of the list. I chose BPY due to the near 7% yield, 5% dividend growth rate (in-line with management guidance), exceptional management, and the attractive valuation of less than 10X P/FFO.
Risks: I'm overconfident in Brookfield's management, the company has a complex organization structure, this particular REIT has above-average exposure to shopping malls, and the fact I bought on the last day of the month in order to start executing an new plan, means I likely bought too early (as always).
May 6, 2019
Buy - Added a new position in Capital Power (TSX:CPX) in my unregistered account at $30.00
Reasons: This power generation company provides me with my first exposure to some clean sources of energy generation, it's reasonably priced (~12X trailing earnings), management has been able to grow net income over the past five years while investing in growth projects, dividend yield is generous at 6%, and there's target dividend annual growth of 7% until 2021. Lastly, I got a 1% discount to the price underwriters were using for the secondary offering that is being used to pay for a small acquisition.
Risks: Adding an additional company to my portfolio entails additional monitoring work for me. Looking at CPX's revenue over the past five years, its been stable, but hasn't grown at the 7% rate that would be required to fund its dividend growth ambitions. Lastly, while I'm trying to find good opportunities to deploy capital, I might be looking too hard as opposed to sitting back and waiting.
April 17, 2019
Buy - Added to my position in Aecon Group (TSX:ARE) in my unregistered account at $16.99
Reasons: After the Canadian government invoked national security reasons to kill the acquisition of Aecon by a state-owned Chinese construction last summer, I was quite happy. Avoiding capital gains taxes and getting the chance to grow my position in this construction company that will continue to benefit as SNC faces regulatory headwinds in Canada are two of the qualitative reasons I added to this position. I think the company is fairly valued at ~18X trailing earnings, supports an attractive 3.4% dividend yield, and grew their dividend by 16% earlier this year. Lastly, I think the cash in my various investment accounts has grown to the point where I feel obligated to at least deploy some of it before I hit a mental block and am unable to pull the trigger on any buys.
Risks: Aecon is not a consistent dividend grower, having taken last year off after their acquisition by the Chinese company fell through. Although the company has been able to grow revenue and EPS over the long-term, construction is a more fickle industry than most of the ones I invest in. It is also worth noting that as stated above, after more than four months of inactivity, I felt obligated to buy something (never the best reason to make an investment).
Reasons: After logging onto my account and noticing my largest position was National Bank of Canada, I remembered that I could sell the shares I held in my TFSA as it had been more than a month. Don't get me wrong, I like National Bank, but having a bank operating mainly in my home province as a largest position made little common sense as a life hedge.
Risks: Since I'm writing this three weeks after selling, I can confirm that I sold too early and a missing out on a fairly nice gain by not holding it longer. That said, as soon as I realized it had been over a month, I felt compelled to get rid of my shares in my TFSA, so no regrets on this sale.
December 24, 2018
Buy - Added to my position in Johnson & Johnson (NYSE: JNJ) in my RRSP account at $123.50
Reasons: In the midst of an asbestos scandal (which seems pretty immaterial to me) and a US market plunge into bear territory, I decided to add a couple shares of JNJ at about 16X current year earnings. I like the company's focus on health care, relatively low dividend payout ratio less than 50%, global diversification, and competent management team.
Risks: Maybe there's some legs behind the asbestos claims and shares will plunge further. Or perhaps the US market will go into a free-fall and I would have been able to pick up the shares even cheaper. That said, I felt very comfortable adding to this relatively old position (established in 2010).
December 12, 2018
Buy - Initiated a position in Alaris Royalty Corporation (TSX: AD) in my unregistered account at $18.01
Reasons: After waiting a bit more than a month to lock in my capital loss, I re-initiated a smaller position in Alaris Royalty. Reasons I like the company are management's commitment to dividend growth, the 9% yield, very reasonable P/E of 12X based on trailing earnings, and exposure to businesses I would never be able to access as a retail investor without Alaris.
Risks: Although dividend coverage is tight (90% payout), management still had confidence to boost the payout for the first time in several years in November when they signed a new partner. The bigger risk is that I like Alaris the company too much and made today's purchase with an eye on meeting my forward dividend income goal for 2018.
December 11, 2018
Donated - In-line with my five-year plan, I made a donation of Riocan REIT shares to Oxfam. By donating the shares, I support a worthy charity while avoiding a capital gain on some shares that I would rather not hold in the long-term given management's constant shifting priorities. This is the third year I've given away RioCan shares to a registered charity and it's win/win.
Reasons: Bought a day before earnings release, with the ultimate goal of moving my TFSA position into my unregistered account. The 4.1% dividend yield at time of purchase, 8.3% dividend growth in FY18, and P/E around 10X continue to make this an attractive bank to own.
Risks: Buying companies before an earnings release (and anticipated dividend raise) is always a bet on what earnings might be. As the year draws to a close, and I continue to have plenty of cash in my unregistered account, without many good ideas, I am feeling compelled to put some cash to work instead of waiting for a recession/correction/dip. Buying NA with a plan of holding my TFSA position long enough to collect the dividend, and keep the tax authorities happy, seems like a low-risk plan for me, but lots can happen in a month.
November 30, 2018
Buy - Initiated a position in Power Corporation of Canada (TSX: POW) in my unregistered account at $26.42
Reasons: The combination of a nice yield ~5.7%, dividend growth over the past year of 6.5% , a cheap P/E under 10X, trading right near a 52-week low, and the rising rate environment that should benefit Power's insurance holdings (Great West Life). From a qualitative standpoint, increasing exposure to insurance, China and Wealthsimple (robo-advisor) was attractive, as was the 'A/Stable' credit rating.
Risks: Buying companies as their stock prices bounce around 52-week lows isn't a quick recipe for success, but I thought it was warranted in this case. I'm also not crazy about adding another new holding to my portfolio. Another knock on Power is that the Desmarais family, who controls/manages the company, don't always act in other shareholders' best interest.
Buy - Initiated a position in Brookfield Property Partners (TSX: BPY.UN) in my TFSA at $24.17
Reasons: I like the Brookfield management team, the 6.5% yield, ~7% distribution growth earlier this year, the guidance of 5-8% distribution growth going forward, the cheap price of ~ 13X trailing FFO, and the global & property type diversification
Risks: Every Brookfield company has a complex organizational structure and aggressive accounting practices. Traders might be punishing Brookfield Property these days for their recent acquisition of GGP Inc. (mall operator). As the year is drawing to a close, and I'm sitting on a bunch of cash, I feel I might be deploying it too quickly, which is another key risk.
November 5, 2018
Sold - I sold my entire position Alaris Royalty (TSX: AD) for $19.48
Reasons: Primarily, this sale creates enough of a tax loss for me to offset the gain from the Enercare sale in mid-October. Beyond the tax implications, Alaris has had a tough couple years with their investments going sour and redemptions from important partners. I think they're back on track now, but I'm not sure I'll be buying back my position after a month.
Risks: I sold the afternoon before Alaris released their Q3 results, which I thought were actually decent, but the stock went down ~7% the next day. Reading their earnings call transcript, I think they might announce another investment before year end, and possibly even raise their dividend for the first time in years. If they don't make that kind of announcement, I know I'll be overthinking if I want to buy back shares in the company after December 5th.
October 26, 2018
Buy - Added to my position in Brookfield Infrastructure Partners (TSX: BIP.UN) in my TFSA at $48.90
Reasons: After selling my Enercare position earlier this month before it got converted into units of BIP, I decided to increase my position in this company since I think it will benefit from that acquisition. As the market has punished interest rate sensitive stocks, it seemed like a good time to add more of this 5% yielding, globally diversified, infrastructure company.
Risks: As previously mentioned, every Brookfield company has a complex organizational structure and aggressive accounting practices. This is now one of my larger positions in my portfolio, so that increases my risk of loss as well.
October 18, 2018
Sold - I sold my TFSA holding of Rogers Communications (TSX: RCI.B) for $67.30
Reasons: This was the second half of the August 31st transaction that was meant to transfer this holding from my TFSA to my taxable account. The main reason I chose to sell it on the 18th was that Q3 earnings were being released the morning of the 19th, and I didn't want to gamble on a favorable report.
Risks: Although I could have sold for slightly higher than $67.30 later in the afternoon on the 18th or even on the 19th, I'm happy to take some cash off the table as it relates to Rogers. During the earnings call this morning, Rogers' CEO again indicated that he was waiting for the right time in order to recommence dividend growth. Since I find myself at odds with many of the decisions that Rogers' management makes, I want to limit my position in this company.
Sold - I sold my entire position in Enercare Inc. (TSX: ECI) for $28.99
Reasons: One of my harder investing decisions of the year came down to realizing a capital gain on Enercare after its purchase by Brookfield Infrastructure Partners or letting my shares convert to units in Brookfield which are heavily taxed in my unregistered account. I decided on the former, and plan to sell some of my Alaris position in the coming weeks to offset the capital gain on Enercare.
Risks: Having to sell some Alaris, realize a capital loss, and then possibly buy it back later, introduces complexity into an already hectic period of the year. Long-term, I think I made the right decision in order to minimize taxes, but there will be some short-term pain in terms of executing the offsetting Alaris trade(s?) by year end.
October 11, 2018
Buy - Added to my position in Bank of Nova Scotia (TSX: BNS) in my taxable account at $72.58
Reasons: With my monthly contribution to my taxable account, I decided to take advantage of the ~5% sell-off in BNS this week to add to my position. I like the 4.5% dividend yield, the 7%+ dividend growth this year well supported by growing earnings, and the reasonable valuation at ~10.5X P/E.
Risks: My stock portfolio is definitely concentrated in Canadian banks, and this buy doesn't help. As always, I bought too soon as the stock is off another 1% this morning. Lastly, Canadian banks, even ones with a large international presence like BNS, are heavily exposed to domestic real estate prices via mortgage lending. I think certain real estate markets in Canada (i.e. Toronto, Vancouver, Montreal) are approaching bubble territory.
September 26, 2018
Buy - Completed my position in Digital Realty Trust (NYSE: DLR) inside my RRSP at $112.50
Reasons: With the cash accumulating from dividends in my RRSP, the proceeds of the sale of my Keg units (below), and because my brokerage decided to enable splitting RRSPs into USD and CAD, I decided to complete my position in this US data center REIT. The reasonable valuation P/FFO below 20x, dividend yield of about 3.5%, this year's distribution growth of 8.6%, BBB issuer rating, and recent dip helped motivate my purchase.
Risks: Definitely bought too side as DLR is now trading below $110. Also feel I jumped the gun in order to immediately replace one holding with another. This is a mental issue I have to monitor and work on in the future. That said, I'm in DLR for the long-term and have a lot of confidence in management.
September 26, 2018
Sold - I sold my RRSP holding of Keg Royalties Income Fund (TSX: KEG.UN) at $17.65
Reasons: This was the second half of June 6th transaction that was meant to transfer this holding to my TFSA in order to create room for more US-traded dividend payers in my RRSP. I dragged my feet selling the Keg units since I didn't know what I'd use the funds for until Digital Realty started to look very attractive (see above entry).
Risks: I have this mental flaw where even if I'm doing transactions for tax reasons, I like to break even. I held onto my units in the Keg for much longer than expected and made sure to break even (actually up a bit after accounting for distributions). I recognize this is a problem for me, and is something I'll continue to work on.
August 31, 2018
Buy - Replicated my TFSA holding of Rogers Communications (TSX: RCI.B) in my taxable account at $67.70
Reasons: Since Rogers is my lowest yielding Canadian holding (dividend yield ~2.9%), from a taxation perspective, it made sense to hold this in my taxable account. Even though they haven't raised their dividend in past couple years, Rogers has deleveraged their balance sheet materially, and I continue to like the company as a play on cellular usage in Canada.
Risks: It took me quite a while to build up my cash position in my taxable account so that I could afford to make this purchase, and I was likely a litter trigger happy when I realized had enough cash to buy. Like Brookfield below, this was another situation while waiting until the stock went ex-dividend might have saved some money. Lastly, I don't love the fact that the Rogers kids have so much influence over the strategy of the company, but think they brought in a great CEO in Joe Natale.
August 29, 2018
Buy - Added to my position in Brookfield Infrastructure Partners (TSX: BIP.UN) in my TFSA at $52.50
Reasons: Before it went ex-dividend tomorrow, I decided to use the leftover cash in my TFSA to get me a little closer to a full position in BIP. I like their recent A&T call center and proposed Enercare transaction, the ~4.5% yield, and 8% dividend raise earlier this year.
Risks: I try not to make it a habit to buy something right before it goes ex-dividend, since the price of the company should go down by the amount paid (in theory) after the dividend is paid. Also, the company has a complex organizational structure and their accounting practices are aggressive.
June 28, 2018
Buy - Replicated my RRSP holding of A&W Revenue Royalties Income Fund (TSX: AW.UN) in my TFSA at $32.17
Reasons: Replicating my RRSP position in A&W inside my TFSA will ultimately allow me to only hold US dividend paying stocks in my RRSP. I continue to be a fan of A&W's food, think the 5% yield is reasonable, and expect 2-5% growth going forward.
Risks: Since I've been looking to add these shares to my TFSA since mid-May, and given I had a higher cash position in my portfolio than I'm comfortable with, I likely bought too soon. Additionally, much like my KEG.UN purchase below, I wonder if sticking to my plan vs trying to find the best value company was the right course of action.
June 6, 2018
Buy - Replicated my RRSP holding of Keg Royalties Income Fund (TSX: KEG.UN) in my TFSA at $17.87
Reasons: Over the past few years, I've been trying to focus my RRSP holdings to US dividend payers. My ultimate plan is to switch from my current brokerage to another that allows has a US dollar RRSP. The Keg units are the second last Canadian traded company in my RRSP that will still be tax advantaged in my TFSA. Although a slow grower, the units current yield a little over 6%, sell for around 15X historical earnings, and I think the restaurants will benefit from Cara's management that is focused on keeping costs low.
Risks: Distribution growth was only 3% last year (not including the special distribution in December) and the total number of restaurants is not expanding as quickly as A&W (which will likely be my next TFSA buy). I also wonder if sticking to a plan years in the making is the right course of action in the current market environment, as opposed to trying to buy the most attractively valued companies in my TFSA.
May 18, 2018
Sold - I sold my TFSA holding of TD Bank (TSX: TD) at $75.62
Reasons: As explained below, I wanted to move my holding of TD Bank from my TFSA into my unregistered account as it's a bank I'd like to add to from time-to-time, it's low yielding relative to my other investments making it tax efficient to hold in my unregistered portfolio, and to create some liquidity in my TFSA. After waiting more than a month (to avoid tax penalties), I sold today at a small gain ahead of the earnings release next week.
Risks: If they report good earnings next week, like most other transactions, this could prove to be too early. That said, TD Bank was my largest holding for the past ~2 months, and I didn't feel super comfortable keeping it any longer.
December 21, 2017
Buy - Initiated a small position in Digital Realty Trust (NYSE: DLR) inside my RRSP at $109.60
Reasons: With the cash accumulating from dividends in my RRSP, I decided to add this US data center REIT. Although I was reluctant to start a new position, the reasonable valuation P/FFO below 20x, starting yield of about 3.4%, last year distribution growth of almost 6%, BBB issuer rating, and impressive list of clients drew me to this new REIT sector for my portfolio.
Risks: Definitely not as cheap of valuation or as high of initial yield as I hope for in REITs, but relatively fair for this Sub-sector. I also felt compelled to make a US purchase in my RRSP given I paid $30 this quarter for a fair exchange rate. Likely bought too soon as this purchase also meant accomplishing my incremental forward income goal for 2017 ahead of year end.
November 15, 2017
Buy - Completed my position in Canadian Utilities (TSE: CU) at $37.92
Reasons: Instead of initiating a new position in Cineplex or Power Fnancial, I decided to complete my position in Canadian Utilities, a utility company with the longest streak of consecutive dividend increases in Canada. Given the elevated level of the overall market, I was drawn to the simplicity of this utility company that is priced fairly (P/E ~ 18.5X) provides a nice initial yield (3.8%), and will likely grow their dividend again in January as it has for 45 consecutive years.
Risks: Beyond sensitivity to interest rate increases, an elevated amount of debt, and likely slower dividend growth going forward (I don't think the company can maintain their recent 10% annual DGR), I have the feeling that I made an investment due to excess cash, instead of waiting for a better moment to buy. Furthermore, this particular buy puts me in a better position to meet my forward dividend income and average dividend growth rate goals by year end. In summary, I don't know this was the best possible buy if I wanted to maximize the total long-term return of my portfolio.
October 27, 2017
Buy - Completed my position in Tanger Factory Outlet Centers (NYSE: SKT) at $23.00
Reasons: JC Penney cut their outlook for 2017 and I was able to purchase shares in Tanger at a ~5% discount to yesterday's price (which was a good deal at about P/FFO of 10X) in order to complete my position. Dual kickers: JC Penney isn't even a tenant of Tanger and by buying today, I will benefit from owning before the shares trade ex-dividend on Monday.
Risks: My bet is that Tanger will continue to trend downward in the short-term, and I'll likely miss out on buying at the bottom. That said, I can't time the market, and I view Tanger as a long-term holding. The way mall stocks are trading lately, the death of bricks-and-mortar retail seems to be imminent, even though online retail only accounts for about 10% of total US retail sales.
September 15, 2017
Buy - Initiated a new almost full position in Canadian Utilities (TSE: CU) at $37.95
Reasons: With the longest streak of consecutive dividend increases by any Canadian company, CU has always been on my watchlist. I've owned it twice before, but bought it this time in my unregistered account knowing I barely ever sell anything that will trigger tax consequences. Dividend streak aside, with a P/E under 18X, yielding 3.8%, and with nice exposure to the US market, this will likely be staying in my portfolio for the long-term.
Risks: Utility stocks tend to be very sensitive to interest rates given the elevated amount of debt most of them have outstanding; CU is no different. There's also the potential that if dividend growth slows (it's been 10% the last couple of years), investors might abandon ship driving the share price lower. Lastly, although I waited for a dip in the share price, I think I once again bought too early as the share price did proceed a bit lower after I purchased. Oh well, market timing is clearly not my strength.
September 5, 2017
Buy - Initiated a new full position in Canadian Imperial Bank of Commerce (TSE: CM) at $103.90
Reasons: Given my fondness of Canadian banks, I decided to add the only one I didn't already own given its currently the cheapest (P/E < 10X), had good dividend growth (~7% over the past 12 months), a generous initial yield of 5%, and I like their recent US acquisition to give them some international wealth management exposure. To be frank, another reason was after taking a couple months off, I had quite a bit of cash in my unregistered account and felt I should put some of it to use.
Risks: Over-concentrated in the Canadian banking sector, yet, so are the Canadian indices that passive investors favor. CIBC does tend to be headline prone, in a bad way. They also may have overpaid for their recent US acquisition. I also wonder if I felt the need to put my cash to work might have forced me to buy too soon?
June 21, 2017
Buy - Added to half position of Tanger Factory Outlet Centers (NYSE: SKT) at $24.98
Reasons: With the valuation sitting around P/FFO of 10X, I think this discount mall REIT is one the biggest bargains I see in the US markets. The 5.5% yield, proven management team, and history of distribution growth throughout different points in the economic cycle all led me to add to this position.
Risks: Even though Tanger was down 3% when I bought for no reason, I do think it will go lower with any bad news/results in coming months. Chose to add now given my plans to discontinue paying the $30/quarter to my discount broker to give me a better CAD/USD exchange rate. Lastly, although I think the "death of the mall" rhetoric is overdone, I don't expect strong growth out of Tanger in 2017 given secular headwinds.
May 26, 2017
Buy - Initiated half position in Aecon Group, Inc (TSE: ARE) at $15.10
Reasons: Exposure to the construction sector in Canada (new for me), solid history of dividend growth (8.7% in 2017), decent current yield of 3.3%, and tax efficient to hold in unregistered account (lower yield than my portfolio average).
Risks: Doesn't have a full economic cycle of dividend growth, P/E of 20X is slightly high vs historic average, and I have been making a lot of purchases lately so this might not be my best idea.
May 24, 2017
Buy - Bought a small number of shares in Bank of Montreal (TSE: BMO) at $92.40
Reasons: Was down 2.5% due to earnings disappointment, part of my 2017 plan of adding to positions in which I am comfortable, fair P/E valuation of ~12X, and a decent current yield of 3.8%.
Risks: Fell further in subsequent days (struck too soon), seems to be the only Canadian bank to report weaker results in the US, and I'm already overweight in the Canadian financial sector.
May 18, 2017
Buy - Initiated a half position in Brookfield Infrastructure Partners (TSE: BIP.UN) at $53.01 in my TFSA
Reasons: Exposure to infrastructure assets located worldwide (new for me), love the management team and their focus on dividend growth (10.6% in 2017), and a good use of remaining 2017 TFSA contribution due to the unfavorable taxation of their distribution if held in an unregistered account.
Risks: Paid about 19X the FFO/Share (slightly high), considering selling it after price appreciated and was in for dividend holder of record date, thinking it would be smarter to hold in my RRSP with other companies who pay US distributions (in preparation for potential move to a brokerage with USD RRSP).
May 18, 2017
Buy - Bought a small number of shares of Cisco Systems, Inc. (NYSE: CSCO) at $31.18 in my RRSP
Reasons: Stock was down 6% after providing disappointment guidance for next quarter, part of my plan to add to positions in which I am comfortable, good dividend yield (3.7%) and growth (11.5% in 2017), pretty fair P/E valuation of ~16X vs broader US market P/E of ~27X.
Risks: Having a difficult time growing top line as they move from a hardware to services business, three recent acquisitions in May that result in integration risk, and buying at a time when the CAD/USD exchange rate was ~$1.36.
May 17, 2017
Buy - Bought enough shares of Emera Inc. (TSE: EMA) at $46.60 to close my position
Reasons: P/E Valuation of ~16.5X was fair, in before the next dividend holder of record date, closing a position, and management's guidance of dividend growth of 8-10% over the next couple years.
Risks: Bumpy earnings, continued use of bond and secondary share offerrngs to fund their aggressive CAPEX plans, can never trust management guidance, and my need to complete/close positions had a roll in pushing me to make the purchase (i.e. there might be better utilities out there than EMA).
May 9, 2017
Buy - Bought a small number of shares of Bank of Nova Scotia (TSE: BNS) at $76.03
Reasons: Part of plan to add to positions in which I am comfortable, fair P/E valuation around 13X, good dividend yield (4%), and getting in before dividend holder of record date.
Risks: Latin American exposure, already overweight on Canadian financial sector, bought too early (has been down further since purchase).
April 28, 2017
Buy - Bought a small number of shares of Toronto-Dominion Bank (TSE: TD) at $64.25 in my TFSA
Reasons: Part of plan to add to positions in which I am comfortable, the best dividend growth among Canadian banks in my portfolio (9% in 2017), fair P/E valuation of ~13X.
Risks: Dependence on the US for earnings growth, already overweight on Canadian financial sector, bought too early (has been down further since purchase).
April 26, 2017
Sale - Sold my half position in Corus Entertainment (TSE: CJR.B) at $13.08 in order to create a tax loss
Reasons: Creating a tax loss to carry forward in my unregistered account since I had a minimal tax loss to use in 2017, stalled dividend growth, constantly disappointing quarterly results, the Shaw family dictate actions in their best interests vs. those of minority shareholders.
Risks: Selling the highest yielding security in my investment holdings, prompting a decision of whether or not to buy the shares back after a month plus a day, and selling too soon (share price has rallied since I sold my shares).
Interesting post man. Great companies there. I will also do an update on my latest buys in my next dividend post. I also bought some BNS. As well as some REI.UN, CUF.UN and ENB. Thanks for posting.ReplyDelete
Merci Monsieur. Great minds think alike on BNS ;-) ENB has been pretty tempting to me as well. Enjoyed your post about the companies you added last month.Delete
I recently heard of SKT as well so your post about Tanger caught my eye. My husband recently bought some more CU. I have FTS myself and added to that.ReplyDelete
Seems like we have quite a bit of overlap in our portfolios. I think FTS will be on my watch list for Q1 2018. I like the consistency and predictability of their business.Delete
CU has been good to me. Its parent company, Atco, has a lower yield but increases its dividends faster. (And it's more diviersified.) Both good companies...ReplyDelete
Nice move. Im curious with your bip in a tfsa. Is there no withholding tax on it? Seem to find mixes reviews online but my brookfield renewable has been tax free in the tfsa.ReplyDelete
Yes, there’s no withholding tax on BIP in my TFSA. I try to structure my investments to be as tax efficient as possible. Sadly, I don’t always succeed (I.e. paying withholding tax on Granite due to their US income included in their distribution).Delete
I bought GGP for the merger arbitrage and then kept the BPY shares when the deal closed. I have since added to my position. I personally believe that BPY bought GGP at a very good price and the death of class A properties is overrated. They will have to spend significant money to repurpose some of the properties but if you are prepared to hold for 10 years, I think you can do quite well.ReplyDelete
Although I'm not as familiar with the GGP property portfolio as you are, I agree that there will likely continue to be demand for class A properties. Brookfield has the management team in place to repurpose and resell properties, and the track record of doing it well. I'm fine with being patient and letting the magic of compounding happen.Delete