I finally did it – I put the cash sitting in my RRSP & TFSA to work. I saw an opportunity to add to two positions I liked – and to initiate a new position in a company I have been eyeing for years. All in all, today I spent about $56,000 in the stock market – which was about $5500 fresh capital in my TFSA and mostly cash left over from previous sales in my RRSP. So…what did I buy today?
Stock Purchase # 1: XAW
I added to my (small) position in XAW. This is an ETF that holds over 8000+ stocks from all around the world (except Canada). I like this fund because it gives such great diversification, helps me diversify away from my home country bias, has a great track record, pays a semi annual distribution and has a very low MER 0.22%. I purchased 800 shares @ $34.00 in my RRSP. This purchase will add approximately $500-$600 to my annual dividend income (based on previous distribution amounts).
Stock Purchase # 2: GoEasy Financial
GoEasy is an alternative lender, which I have written about many times. It is also my all time best performing stock (up 155%). They have been an outstanding performer for years. Consistently growing revenues, earnings and their dividend. I already had a position of 276 shares- and decided I wanted to add based on the recent dip in stock price. They also recently released results which in my opinion looked great. A few highlights from the earnings release:
– Annual Dividend Increased to $3.64, up 38%
– Adjusted Annual Diluted Earnings per Share1 of $10.43, up 38%
– Adjusted Quarterly Diluted Earnings per Share1 of $2.76, up 23%
Once I saw the earnings report, I thought I may have missed my chance to get in on the dip, but to my (happy) surprise, the stock was actually DOWN. I scooped up an additional 150 shares @ $150 in my RRSP. This purchase adds an additional $546 to my annual dividend income, allows me to drip an additional share each quarter and gives plenty of room for future dividend increases and capital growth.
Stock Purchase # 3: Brookfield Asset Management
Finally initiated a NEW position! I’ve had Brookfield on my watchlist for quite some time- and finally had enough cash in my TFSA to make a respectable purchase, on a day when the price had dipped into my buy range. I picked up 78 shares @$70 each in my TFSA. Although this one won’t add a ton of dividend income as the current yield is under 1%, I am confident the dividend will continue to grow each year (as it has been)- and the stock price should continue to appreciate at a nice clip as well (the stock is up over 120% over the last 5 years). I plan to add more to this position in the future. This purchase adds an additional $52.00 to my annual dividend income.
These 3 purchases today add around $1200 to my annual dividend income, and bump my forward dividend income up to $14,360.00!
What do you think of these purchases? Do you own these stocks? Would you buy them? Let me know!
With the year coming to an end, I thought it would be a good time to look over my portfolio and share one or two thoughts on each stock I currently own. Just a little blurb about each, how it has performed for me, if I still like it, and if I’d consider buying more.
Going through the list, I noticed a few things:
Overall I am pretty happy with the mix of stocks and funds I own
There is still SOME value to be found out there
Over the last couple of months, I’ve received quite a few dividend increases. A few examples: Telus, Power Corp, Manulife, European Residential Reit & Diversified Royalty
As I get older, and my portfolio increases I am leaning more towards safe and simple. Whether that is broad market ETFS, or solid blue chip stocks – my desire to chase yield and hyper growth/speculative stocks is *almost* completley gone.
Let’s get down to business – in no particular order:
Algonquin Power: 1023 Shares.
Steady as she goes. There has been some dilution – but it’s been used to continue their growth strategy. The stock has moved sideways/down for the last year – but my average price is around $12.00 so I am still quite a bit up. I am happy holding and collecting the US dollar dividend while I wait for the additional revenue from the recent acquisitions and share price to increase. No plans to add any more (aside from DRIPPED shares – which is currently about 50/year). Barring any crazy changes to their business model the plan is to hold this for the foreseeable future.Currently up 43%
Alimentation Couche Tard: 603 Shares
This is one of the stocks I purchased after selling off a portion of my XAW holdings. I have long wanted to add to the company and was lucky to see it dip to $36.00. Another set it and forget it stock. The yield is low (but growing). This is one of those stocks I could see holding into retirement. Currently up 37%.
Artis Reit: 847 Shares
The Sandpiper turnaround story continues to be a success. The dividend has been increased(there is also talk of a special dividend). The Net Asset Value (NAV) has continued to climb and the company has continued to buy back shares. This is still trading at a pretty big discount to NAV. After a few years of mediocre results -it’s nice to continually see good things come from the new Artis team. I expect this will continue to trade well below it’s NAV – but the gap seems to be closing. Currently up 8% and dripping about 35 new shares a year. I’ll continue to follow the transformation plan and then decide if I will hold this one long term. Currently happy to hold.
CAE: 245 Shares
Had a rough quarter – but this is another stock I was able to snag post covid when it originally tanked so I am still up about 9.5%. Expect some volatility over the next year or two – but long term still like it a lot. Expect this to pop in a post covid world (whenever that is). I expect the dividend to continue to be on hold until covid is well behind us. Happy to hold/would buy on dips.
Chorus Aviation: 931 shares
What can I say about this one. When I bought it – I thought Covid would be short lived and thought I got it at a steal. This is one of the few positions I am currently sitting on a loss with I am down about 35%– and they’ve cut their dividend. It is not a huge position – and long term I am sure it will recover – but I expect this to be dead money for a while (similar upward trajectory to CAE when it should rebound) – but this one fell a lot harder/faster. No plans to add to it. Position is small enough that I’ll wait out the pain a bit longer.
Diversified Royalty: 1548 Shares
Slowly recovering – an unexpected – but pleasant surprise when they raised the dividend last quarter. Although they did cut the dividend a bit when the pandemic hit – they’ve slowly started increasing it back to pre covid levels. Like a few others on the list – this should only go up once the economy is back in full swing (Mr Mikes, Mr Lube, etc). Don’t expect huge capital appreciation – but it’s a nice monthly paying income stock. Currently up about 3% on this one and dripping 9 new shares a month. Happy to hold in my TFSA.
European Residential Reit: 587 Shares
Recent third quarter results were very strong. Big increases in FFO/AFFO, occupancy remains strong, reasonable payout ratio for a REIT and a 4.8% dividend increase. What is not to like. They also extended their agreement with CAPREIT for another 2 years which adds more stability. Currently up 10%, dripping a new share each month and very happy to hold. If there are any major dips – I’d consider adding to this one.
GoEasy Financial: 276 Shares
Although the slightly missed some analyst expectations and pulled back slightly – I’d consider it a blip and expect this to continue to outperform. It’s been a complete rockstar for quite some time. Although the stock price is almost $200 – it is still relatively cheap (12 X earnings) and it pays a small – but growing very quickly dividend. There is a lot of volatility in this one – it moves quite a bit on a daily basis…if I was a trader I might jump in and out of it – but I am 100% happy holding this for long term. One of the top stocks you can own in Canada – the only real threat is any new regulations from the government. I am currently up +198% (not a typo) and that is after it pulled back quite a bit. I am expecting some more aggressive buybacks/dividend increases and another stellar q4/year end report.
Intertape Polymer: 776 Shares
What an odd series of events. They posted strong earnings (beat estimates) & actually increased their future revenue estimates – but the stock took a HUGE fall due to some short term lower margins due to higher prices. So while this may struggle in the short term – it’s still a great profitable, growing company. I took the opportunity to add 500 more shares and may add some more if it stays down. Revenue actually increased 23%, but net earnings decreased 5%. Long term this one will be fine and I am fine holding and collecting a nice juicy dividend (which is also paid in USD)! Hold/Buy
If you want a super stable, very cheap (under 8x earnings) blue chip company with growing dividends and some room for capital appreciation look no further. They just announced a nice 18% dividend increase. Will continue to add on dips. This one one kind of reminds of of Power Corp from a few years ago- the market didn’t like it, but fundamentals and value were strong. Eventually it will get some love and until then enjoy the dividends. Currently up about 15% on this one.
New Flyer Industries: 686 Shares
What can I say? Head office is in my hometown, I believe in the Green/Electric future and even though there are (quite a few) short term challenges -I still like it. After announcing a new bought deal to help shore put he balance sheet the stock tumbled again – so I took the opportunity to add an additional 400 shares. I am expecting a rough 12 months or more – but long term when it rises (and I am confident it will) I think it will shoot up very quickly. I may add a bit more if it falls below 20.00. Happy to hold/collect dividend. Currently DOWN 15%
Nexus Reit: 281 Shares
They continue to make acquisitions by issuing more shares. They had a similar strategy when they ran EdgeFront Reit (which I used to hold). Although the payout ratio is high (most REIT’s are) they continue to increase their funds from operations and occupancy remains high. Has done really well over the last year. I wouldn’t expect s much capital appreciation going forward- but it is a nice income stock with room for modest growth. Would consider buying more on Dips.Currently up 17%
RBC Canadian Equity Income Fund: 3600 Shares
Most people will tell you to stay away from mutual funds and stick to low cost ETFS – and while that is generally great advice, every now and then you may find a fund that is worth paying a fee for. In my case, I’ve owned this fund since I was about 20 years old. It is consistently one of the(if not THE) top performers in its class (Canadian Equity). I own the series “D” of this fund, which means Its via my direct invest account and I pay a lower fee – albeit still higher than an ETF. This fund holds 95 different Canadian dividend paying stocks. The top holdings holdings include great names such as: RBC, BAM, TD, Enbridge, Sunlife, BMO, etc. Since inception this fund has returned 11% per year, and pays a nice monthly dividend. I’ve owned this fund for a long time, and with compounding it is now paying me almost $400 per month (which I use to DRIP about 10 new shares each month). I am up over 30% on this one, and it is a key staple in my dividend portfolio. It provides growth, income and probably most importantly diversity.
Power Corp: 242 Shares
Just about as safe and reliable as a stock you can get in Canada. Over the last year or two it has finally started to get some more attention (the stake in Wealthsimple has definitely helped). Still trading at a steep discount to NAV, still buying back shares and raising their dividend now that they are allowed to again- all sounds good to me! I am up about 40% on this one. Happy to hold – but if it dips back into the mid 30’s I would be happy to add to this one. Long term hold.
Telus: 190 Shares
While I am probably not AS high on Telus as a lot of the people I follow- I still think it’s a great stock/long term hold. They recently increased the dividend as well. It pays a juicy dividend which is nice. The stock isn’t “cheap” trading at 30x earnings, but it’s not outrageously overpriced either. I am currently up 25% on Telus. I’d be okay adding on dips, and am comfortable holding this one long term. HOLD
Transcontinental: 934 Shares
I bought TCL as a value play a couple of years ago(around $14-$15/share). I am still up 21% from where I bought, but the stock has come creeping down into value territory again. I am happy to hold and drip new shares right now – but if I didn’t already have a large position I’d consider adding near these prices. TCL is trading around 11 X earnings and pays almost a 5% dividend. They’ve done a decent job transitioning from printing to packaging and the balance sheet looks better than it did a few years ago. Resin prices have hurt this short term, but longer term outlook still looks okay. Happy to hold/drip new shares each quarter.
Greenlane Renewables: 23,719 shares
This company has nothing but tailwinds behind it. The green space is only going to keep on growing. They are finally profitable, they have zero debt and they continue to add new contracts. It’s only a matter of time for this one to really start picking up. This stock is also a traders dream – it moves a lot and often. It has dropped a lot in price lately and if I didn’t already have over 20,000 shares I’d consider adding more. This is a long term hold, so don’t worry about the day to day fluctuations.
Western Forest: 2081 shares
This stock just has the worst luck….anytime there is good news it is directly followed by bad news. Climate catastrophes, union strikes, Pandemic and now potential concerns around the BC government’s plan around the review of its old growth forest management. If you take all those things away- the stock has actually been fundamentally pretty good- but it just can’t seem to catch a break. When you add the additional uncertainty of the price of lumber it adds to the drama. Fundamentally I still think the company looks good – and has done a decent job – they even reinstated a dividend. It trades very cheap and they have a history of buying back shares when the price falls. If you can stomach all the drama – it may be a stock for you. Personally I am okay holding it, and dripping new shares for now – but if (when) it gets back into the 2.50 range I may look at selling and move into something a little more risk free.
Conclusion:
Overall, I am fairly happy with my portfolio. The only stocks “underperforming” are really due to the pandemic or other forces outside the companies control. Dividends continue to roll in (and increase), and although most of my holdings are at or near all time highs – there is still some value to be found (Intertape Polymer, Transcontinental & Manulife come to mind). The only two companies I’d consider possibly selling are Chorus Aviation & Western Forest. If I am being honest, I originally bought Chorus aviation in my “chasing yield” days. I still think it will recover eventually – but the money could definitely have been put to better use.
My top performing stocks are *shocker* also the ones I am the happiest holding long term. This includes names like: Power Corp, Algonquin Power, Manulife & GoEasy. I am also very happy holding my *gasp* Mutual Fund with an MER over 1.00 which has performed very well for me. I also own RBNK – which I didn’t include in this list – but it’s done really well for me. It’s an ETF that holds the big Canadian banks and pays a monthly dividend. The plan is to hold that one forever.
Lastly. my watchlist continues to get updated, and currently sitting near the top are: – Visa – Brookfield Asset Management – Equitable Group
I’ve also updated my portfolio page, which you can view HERE
Just a VERY quick update. For the sake of transparency – I always like to try and post when I buy or sell a stock. Today I closed a position in one of the stocks I’ve held for quite some time. I sold all my shares of Plaza Reit. This was actually one of the first stocks I ever owned, and although I ended up making a profit on these shares, and the monthly dividend was nice to see hitting the account each month – truth be told the annual returns have been sub par. I’ve been wanting to add some Canadian Banks to my portfolio and was torn between which one to add, so I ended up using the proceeds and buying 363 shares of RBNK. This is an ETF that has just 6 holdings (All 6 of the big Canadian banks). The best part is, it pays a monthly dividend, and I’ll have enough to drip 1 additional share each month!
I still like Plaza Reit, and may consider adding it again on dips. I could definitely see myself moving back into Plaza in retirement as well when monthly cashflow will be more important – but for now, I am much more comfortable holding the big Canadian Banks, and I believe they will outperform Plaza (by quite a bit) over the next 10 years.
Stocks on my current watchlist are:
Equitable Group (do not own)
Metro (do not own)
Manulife (recently added to my position)
GoEasy (currently own)
CCL (do not own)
CP Rail (do not own)
Empire (do not own)
With the recent purchase of Manulife and now RBNK, the TFSA’s are pretty empty as far as cash reserves go – so I’ll be slowly adding cash until I am ready to make another purchase (thinking EQB will be next).
In the RRSP, I am still sitting on quite a bit of cash, and will be looking for some US companies to nibble on. Ideally I’d like to see a dip and either up my position in XAW, or start positions in: Visa, Disney, Microsoft.
Once or twice a year I like to update my watchlist for stocks to keep an eye on in the coming months. My favorite way of doing this is by running a custom stock screener, using multiple metrics to slowly narrow the list down. Since there are so many stocks to go through – I like to start by first narrowing it down to some quality names, who have a history of paying dividends , and luckily there is a great tool for this- The Canadian Dividend All Star List. This list is updated each month and is a great starting point for anyone looking for quality dividend stocks in Canada.
This list includes just about every metric you can think of. Personally I use about 25-30 different metrics when I run my custom screen, and for each I consider a value that meets my risk profile and investment goal. I then highlight any stocks in green that meet/exceed this target and any in red which do not. For a very basic example, let’s say the metric I am evaluating is payout ratio. In this example, let’s assume I think a payout ratio of 40% or less is great, and anything over 70% concerns me. In this scenario I would highlight all stocks with a payout ratio under 40% in green(and score them +1), and all stocks over 70% in red(score of -1). Anything in between would be left as is(no score). If you want, you can also assign different weights to different metrics. For example, perhaps “value” is most important to you – so you may weight P/E higher than dividend growth rate. I do this for each metric, and when I am done I tally up the scores. What I like about this method is that although it’s not really scientific in it’s approach, it allows each individual investor choose stocks that fit THEIR own personal comfort level. I would also like to note that I use this ONLY as a starting point. Once I end up with my top scoring stocks – I never dive right in and purchase them. This is just a starting point. Once I’ve narrowed it down to my top 10, I then go to the company website to learn more about the company, read the investor presentations, financial statements and analyst comments to dig in further.
Blind Stock Screen
As regular readers may know, I am a pretty big fan of whisky (specifically bourbon), and sometimes I like to do blind taste tests. I prefer to do tastings blind, because I want to know which bourbons truly provide the best value, and I want to ensure I am not tricking myself into thinking I like it because it’s expensive, or because a bunch of people say how great it is. When I am looking for value in stocks, I take the same approach. Here is a pic from the last blind tasting we did (back when we could still see people in person):
MMMM BOURBON
Prior to starting the screen I always HIDE the company name & stock symbol. I do this because I don’t want any bias to come into play, and honestly, I like being surprised at the end to see if certain companies I assume fit my investing profile actually do or not. In the past, some of my top performing stocks have come from this method, including: Goeasy, Manulife & Transcontinental.
Stock Screener Metrics Used
I would again like to reiterate that each investor will probably have different metrics they use, since a lot of us have different goals. Personally, I consider myself a value investor who is interested in long term dividend paying stocks who pay a growing dividend. Here are just a few of the metrics I used in my stock screener (in no particular order) :
Dividend Growth Rate (I use the 1,5 & 10 year growth rates)
Dividend Growth Streak (# of years)
Payout ratio (Trailing 12 month & Estimated next 12 month)
Trailing 12 month Earnings Per Share & Estimated EPS
Payout Ratio
Price/Earning Ratio
Earnings Per Share Growth (1 year, 3 year, 5 year & 10 year)
Sales Per Share Growth
Difference between analyst price target & current share price (I don’t put too much stock into this one)
Canadian Dividend All Stars To Watch
So which companies scored best on my most recent screen? There are a few names I was not surprised to see, a few that I was surprised to see, and if I am being completely honest, a couple of names I had never even heard of. By doing this blind screen it can:
Introduce you to new potentially great stocks (to do further research on)
Confirm that some preconceived notions you had about some stocks are correct (or incorrect)
Takes any sort of bias/group think out of your decision making.
Top 10 Canadian Dividend Stocks
Here are the 10 stocks that ranked highest in my blind screen.
Equitable Group Inc (nearly a perfect score)
Enghouse Systems Ltd
Goeasy Ltd
PFB Corp
Empire Company
iA Financial Corporation
CCL Industries
Canadian Tire Corp Ltd
Intact Financial
Canadian Pacific Railway
The top 10 includes a few companies I either already own, or have been looking to purchase(Equitable Group, Go Easy, Empire, CCL, etc), as well as one company I had never heard of (PFB Corp). $EQB scored the highest of all stocks by quite a bit, though I believe almost every company on this list would be a great long term hold. I’ve now officially added PFB to my watchlist and plan to dig a little deeper into it.
I would also like to include a couple that fell just outside the top 10 that I will also be adding to my watchlist. They are:
Hardwoods Distribution Inc
Alimentation Couche Tard
Dollarama Inc
Brookfield Asset Management
Manulife
TD Bank
Having recently purchased Couche Tard I am happy to see it ranked highly in my screen. I’d also like to point out that although I don’t know much about Hardwoods Distribution Inc, every single time I have run a screen in the last couple of years it has shown up. I am not sure why I haven’t bought it yet (I wish I did, as it has gone up about 90% since my last screen).
I’m glad I’ve been able to add a bunch of names to my watchlist, now I just need this damn market to cool down so I can dive in and make some purchases! If you have any questions or metrics that you use when evaluating stocks, please let me know in the comments or reach out on twitter!
Moneymaaster 