Based on the recent readers’ survey, 53.8% of you enjoy reading the Random Thoughts posts and 43.8% of you enjoy reading them when they’re investing-related. Only 2.3% of you believe these posts are too random (thanks to everyone who filled out the survey, I really appreciate it!).
To be completely honest, I thought more readers would flat-out answer no, but it looks like readers enjoy the investment-related aspect of these Random Thoughts posts.
With that, I thought I’d write a post and share some random thoughts I had in the last few weeks.
Work Travel – Air Canada Flight Attendants Strike
In early July, I booked airfare for a 12-day work trip to Japan and Taiwan. Because Air Canada doesn’t operate out of Taiwan, the planning process was complicated. If I were to fly directly from Vancouver to Tokyo via Air Canada, then fly from Tokyo to Taipei with a Star Alliance airline, then fly directly from Taipei to Vancouver via EVA, the cost of the trip would be over $7,000 (for the long-haul flights in premium economy). Even though it’s work money, I was being fiscally conscious and knew I had to find a cheaper option.
The travel agent explained to me that the flight cost would dramatically decrease if the outbound and inbound flights were with the same airline. With that, I found the following flight combination just under $4,500.
Aug 18: Vancouver -> Tokyo Narita (Air Canada)
Aug 24: Tokyo Haneda -> Taipei Songshan (EVA Air)
Aug 29: Taipei Taoyuan -> Hong Kong (EVA Air) then Hong Kong -> Vancouver (Air Canada)
Since I have Air Canada status for 2025 (thanks to a lot of flying last year), I also put myself up for eUpgrade to business class.
Great right?
Until I heard about the potential Air Canada flight attendants’ strike on August 16.
Knowing Air Canada went through a similar experience with the pilots, I thought I was going to be fine and there would be a deal before the deadline.
Then, the union issued the 72-hour notice on August 13, and Air Canada began suspending and cancelling flights on August 14 and 15.
Contacting the travel agent, I was informed that I could rebook my August 18 flight to another day with Air Canada at no extra charge. I would only get a full refund from Air Canada if the first flight was cancelled. If I cancelled prior, I would only get an Air Canada credit, good for one year from the date of booking.
Since I booked everything through a travel agent and they have after-hours support, I decided to wait and out and see what would happen.
On Friday, August 15, no deal was reached and according to the Air Canada app, the scheduled incoming flights for Friday (Vancouver to Singapore) and Saturday (Singapore to Vancouver) were cancelled. The strike was going ahead as a result. The positive news was that the airplane was sitting in Vancouver airport, not somewhere else.
On Saturday, a few hours into the flight attendant strike, the Canadian government stepped in and sent Air Canada and the union to binding arbitration.
Phew, I thought I was good to go for my flight on Monday, August 18.
But on Sunday, August 17, the union decided to defy the back-to-work order and continue the strike. Air Canada was planning to resume operations later that afternoon, but abandoned the plan.
Meanwhile, my flight was still showing “On Time” even before I went to bed on Sunday.
I wasn’t able to check in at all, though.
When I woke up Monday morning on August 18, my flight was delayed from 12:55 PM to 1 PM. Not knowing if the flight was a go or not, I decided to cancel my Tokyo hotel to avoid any charges. In parallel, I started checking if there were options to depart on August 19 to go to Osaka (I had meetings in Osaka on the 21st). The most reasonable option (with an airfare increase of ~$750 to my original AC booking) was:
Aug 19: Vancouver -> Taipei Taoyuan then Taipei Taoyuan -> Osaka (~19-hour leg with EVA Air)
Aug 24: Tokyo Haneda -> Taipei Songshan (EVA Air)
Aug 29: Taipei Taoyuan -> Vancouver (EVA Air)
About 15 minutes later, I received a text and an email that my flight was delayed till 3:45 PM. Air Canada had already cancelled a number of domestic and US flights out of Vancouver. I had a suspicion that my flight would get cancelled too. Then, about 30 minutes later, at around 7:45 AM, Air Canada finally declared my flight was cancelled.
Since the travel agent’s office didn’t open until 8:30 AM and I didn’t know what the seat availability was for the Vancouver to Taipei flight on August 19, I decided to book everything myself rather than wait and go through the travel agent.
After booking the EVA Air flights, I called the travel agent to get my Air Canada booking formally cancelled in order to get a full refund on my credit card (I couldn’t do that on the Air Canada website at all. It tried to rebook me on a different flight a few days later).
Since I had a domestic flight on August 20 with Japan Airlines from Hanamaki to Osaka (I couldn’t make it and no longer needed it), I also asked the travel agent to cancel it for me. Fortunately, the travel agent informed me that I could get a full refund for this domestic flight.
In the end, it cost about $300 extra and I missed one day of meetings.
What a mess!! And not to mention a lot of nervous and uncertain moments.
I think I was fortunate to go through a travel agent on my original booking and found a reasonable alternate option. It would have been so much more nerve-racking if I had booked everything myself. The strike affected so many people and it’s really unfortunate that Air Canada wouldn’t give the flight attendants a fair deal and pay them for their ground time work.
Note: A tentative deal was reached on August 19. It was unfortunate that so many flights were cancelled before a deal was reached…
Japan & Taiwan
Both Japan and Taiwan were incredibly hot while I was there, with daily temperatures above 36 degrees C (a few days it reached 38 degrees C but felt like mid 40s due to humidity). It was good that I only brought short-sleeved collar shirts for my meetings. When I was walking around in Tokyo on the weekend, my t-shirt was completely soaked with sweat.
I am always amazed by the dedication of Japanese people. A couple of my Japanese co-workers live quite far from the office. One of them’s one-way commute time is 80 minutes; he said he gets on the train at 5:36 AM every weekday morning. The other coworker lived further away and commuted every day for 90 minutes one way.
Many of my Taiwan coworkers had to commute for quite a long time, too. A few I know had a daily one-way commute time of an hour!
I don’t know about you but if I had to commute for that long each day (over an hour each way), I would find a different job!
I’ll share more about my Japan and Taipei adventures in the August dividend income report.
Dividend Portfolio – reducing positions?
First of all, who knew the market would be on such a bull run? I certainly didn’t!
In the July dividend update, I reported that we closed out Target, Qualcomm, and Pepsi. We then reinvested the money elsewhere. With that, we hold 39 individual dividend stocks and two index ETFs at the time of writing.
I have mentioned many times that ideally, we would like to get down to either 30 or 35 stocks. With that in mind, I have been thinking about perhaps closing some of these positions.
- Hydro One (H.TO): We’ve done quite well with Hydro One over the years. This is the smallest position in our portfolio, so perhaps it makes sense to close it out and reinvest the money to say Canadian Natural Resources or Brookfield Corporation. I believe Canadian Natural Resources has had a tough year and the share price is undervalued. Therefore, it may make sense to add more CNQ shares (we’ve been doing that so far this year as you could see from our purchases). Brookfield Corporation is set to have a three-for-two stock split in early October. With solid assets and growing AUM, I would not be surprised if BN’s share price goes over $100 before the split and continues to climb post-split
- South Bow (SOBO.TO): We received some shares from the TC Energy split. Although South Bow has a very good yield (~7%), I am not 100% sure if there’s much share price growth in the future. Since South Bow is the second smallest position in our dividend portfolio, maybe it makes sense to close out South Bow and reinvest that money elsewhere. Due to the high yield, this would hurt our forward annual dividend income.
- VICI Properties (VICI): I keep hearing news that tourism in Las Vegas is down significantly. Since VICI operates many properties in Las Vegas, I’m wondering if this would impact its overall revenue. So far, I haven’t seen any impact yet and the share price has been going up steadily. Despite the share price growth, there’s probably a ceiling to this growth. Perhaps it makes sense to reinvest the money in either Alphabet or QQQM. Just like South Bow, closing out VICI would hurt our forward annual dividend income.
- Procter & Gamble (PG): Just like Hydro One, we have done quite well with Procter & Gamble over the years. However, PG has been underperforming this year due to slowing consumer demands and tariffs driving up costs, which are hurting PG on both fronts (i.e. lower revenues and higher costs). PG has been a very steady dividend grower but since we care about both dividend income and total return, perhaps it makes sense to close out PG and reinvest the money in QQQM.
- Walmart (WMT): Walmart has done fabulously well – a four-bagger stock for us. But it is a relatively small position for our portfolio. At less than 1% yield, perhaps are we better off reinvesting the money in either Alphabet or QQQM? My biggest concern is that if we shift money from VICI, PG, and WMT to say QQQM, we would be very tech-heavy in our portfolio, with around 10% of our portfolio heavily weighted to the top NASDAQ stocks like Nvidia, Microsoft, Apple, Broadcom, Amazon, Meta, and Alphabet. Is this such a good idea, especially when some people are wondering if we are going to see an AI crash, similar to the dot.com bubble we saw in the 2000s?
Dividend Portfolio – trimming some positions?
It’s a bit crazy that the market seem to be hitting an all-time high every other day and our portfolio value has been on an upward trajectory as a result.
When I look at some of the stock share prices and their valuation, it’s hard to figure out what’s driving the price increase. For example, Enbridge reached over $66, TD reached over $100, Fortis reached over $70, and Royal Bank reached over $200.
It’s great that many of the Canadian stocks are doing extremely well this year. On the other hand, it means some of these stocks are making a much bigger percentage of our dividend portfolio. Take Enbridge and TD. They each are above 5% of our portfolio; in fact, they are each north of 7%. Don’t get me wrong, I think Enbridge and TD are both solid companies and will continue to pay and raise dividends for many years to come. But I have been asking myself the following question a lot lately:
Does it make sense to trim some positions like Enbridge and TD and use the money to buy other price depressed stocks like Canadian Natural Resources, Canadian National Railway, and Alimentation Couche-Tard?
We have been rebalancing our portfolio by adding new cash and buying underweight stocks. We typically don’t trim the winners and use that money to invest in underperforming stocks. Since we are now in saving mode for next year’s TFSA and RRSP contribution rooms, we don’t anticipate injecting new cash in the second half of this year (if we do, it would be a small amount of money here and there).
While rebalancing by trimming the overweight stocks makes sense logically, I am struggling quite a bit with this concept – why sell your winners to use the money for underperformers? Sure, the idea is that the winners may pull back and the underperformers may start outperforming in the future, but that’s a lot of if’s. What if the winners keep going higher and the underperformers continue the subpar returns? Then we’d be doing much worse.
Speaking of Enbridge, Reader B has been replying to comments that readers left on the $360k dividend per year interview post. I’m super thankful for him for keeping replying to comments. Maybe I’ll need to convince him to do an updated interview or Q&A. Reader B had this thought on selling Enbridge (in replying to a comment about Enbridge hitting $65, which it did back in 2015 as well):
True, in the past 10 years there have been no share splits and overall the price has not changed much from the 2015 level ($65 range). So I agree there has not been any degree of capital gain in the past 10 years.
But one could have a very nice capital gain if ENB was bought at any of the “price dip points” in the past 10 years – and our short-term ENB holdings above show that we bought shares at the $48.80 price point. So, if you only want to look at exactly the past 10 year period and compare price points, then, yes, ENB has been primarily an income stock. Most of the growth in our older long-term holdings came during the 10 year period from 2005 to 2015 – a nice run-up. But in the past 10 years, you have to buy the price dips to get a capital gain – and the 14 Week Relative Price Strength (RSI) Indicator does a great job of identifying those price dip buy points. I use the 14 Week RSI all the time. The other factor overlooked is that ENB is a solid long-term dividend aristocrat, averaging a 9% compound annual dividend growth rate for the past 30 years.
This has led to a substantial growth in dividend income which in future will eventually drive the share price of ENB upwards, even if it hasn’t done so significantly for the past 10 years. It has to or else the yield would rise to irresistible levels. I believe that other factors have also contributed to keeping the ENB share price depressed over the past 10 years – and that includes both public/political negative sentiment and opposition towards oil and gas as well as the inexcusable failure of our Federal Government to approve the pipeline system expansion project.
Reader B goes on stating:
- Hold your stocks “forever” (literally till death do us part), watch the growing dividends roll in and your income rise. Remember, that by selecting stocks with growing dividends not only does your income keep pace (and more) with inflation, but rising dividends also translate into rising share prices i.e. long-term capital gains.
- Do not sell anything before you have to, are forced to or the company situation deteriorates. Every time you sell, you’ll have to pay capital gains tax and then you have fewer $$$ to re-invest. Resist the temptation to subscribe to the sell half to recoup your original investment approach … let your stocks “run”. Do not sell to rebalance portfolio percentages – again let your stocks grow – most times you’ll end up selling way too early anyway and regretting it later as your stock price continues to soar. You will end up leaving sizable future gains on the table. For example, I’ve held BN in my portfolio since 1985 (one of the first stocks I bought) and it now comprises some 20% + of my portfolio …. people say that’s too much weight – they tell me to rebalance – but I’m not selling … and I see no reason to. BN is my home run stock … like people who bought Apple, Microsoft, Shopify or NVidia and held on – they didn’t make $$$ by selling early.
- Hint: Buy any or all of the Brookfield family of companies – they are all dividend aristocrats, solid and know how to make shrewd deals that generate $$$.
- By following the above strategies, I believe you will be able to achieve a well-balanced mix of both increasing safe dividend income and long-term capital gains.
Very wise words from someone who’s way ahead on the FIRE journey than us.
Maybe we need to be comfortable with some stocks like Enbridge and TD being more than 5% of our portfolio each and rebalance by purchasing more of other stocks? After all, it’s extremely unlikely that Enbridge and TD would go bankrupt all of a sudden.
Hope you enjoyed these Random Thoughts.
In a dividend based portfolio, why would you “trim” to maintain balance vice just reinvesting the dividend payouts to maintain your portfolio balance? At least during the accumulation phase of your portfolio. A material change in the company like BCE recently, or during retirement a single company becomes a risk to your income should they fail it does make sense then to trim/divest/balance. But beyond that, wouldn’t it be better to hold?
That’s one way to do it, reinvesting the dividend payouts to maintain the portfolio balance. The thing is, we DRIP with both TD and Enbridge so in some way by dripping these positions, they are getting bigger and bigger.
I did not consider that, then it could make sense. I guess my approach would be different if my other dividend payouts can out balance the DRIP then.
I’m a small fry that measures my dividend income in $cents$ vs $dollars$. I’m also not doing any of the stuff research says is mathematically optimal. I started earlier this year with a goal $10/mo income, which I hit if you count over the year average but I’m aiming per month. I end up buying stocks a bit more based on ex-div dates. Then I’ll move on to trying to build enough dividend to replace one monthly bill, and so on. I do have a decent DBPP so this is more for fun.
Although my portfolio and dividend income is much smaller than Reader B’s I certainly agree with his approach. I confess I have done some modest rebalancing over the last 6 years, but I had some capital losses I could use to avoid capital gains. My main trades were selling MFC (50% of position) and POW (20% of position). Those sales enabled me to open positions in TRP and EMA. No regrets there at all.
We currently have 21 positions and 11 of them are over a 5% weighting, with POW at the top of the list with a 7.2% weighting. But POW has consistently delivered great dividends and annual increases. I’m definitely not selling that one again. We have several positions that I prefer to keep below 4% so having several over 5% is a natural result.
We also have SOBO. We didn’t get enough shares in our TFSA holdings to DRIP (we don’t have partial DRIP on our platform), so I recently sold those shares > $39 and used the funds to shore up other positions. I kept the SOBO shares in my RSP as there’s enough there for a modest DRIP.
It’s been a while since we’ve been able to invest new money as I am currently “between contracts”. If and when the opportunity arises TD, PPL, and CNQ are at the top of my list for new purchases as they are all currently below a 4% weighting.
I think rebalancing slightly to avoid capital gains (i.e. tax loss harvesting) makes sense. We did exactly that with BCE last year.
Interesting to know that you have 11 out of 21 over 5% weighting. POW is pretty solid so I wouldn’t have any concern with over 5%. This is the exactly thinking we have with Enbridge and TD.
Makes a lot of sense on SOBO in terms of dripping and not dripping. We may do something similar too or just exit that position completely as we have a few too many holdings in our portfolio.
Stressful as usual on AC. My least favourite airline. Pure complacency on AC’s part as they are a monopoly and they know it. We always travel economy out of YVR and AC never satisfies with their multiple add on fees and charges just to get our family sitting with each other. Luckily YVR has a lot of international airlines to choose from. I’d rather not get AC points but give my money to another airline.
Also nobody forces cabin crew to accept the industry standard work rules. If they don’t like it they should get another career. I don’t get paid either prior or after on site work hours
It was really stressful for sure, fortunately I was able to find an alternate route to go to Japan.
My husband was also headed to Japan but not until this week. His dad passed away …my husband is Japanese…what a stressful time not knowing if AC would be on strike. The family was planning a memorial or Buddhist monk ceremony etc and were holding off until hubby got there. Luckily all is ok now. We are in Halifax so AC is the best way for us to get to Japan…
I’m very sorry to hear about your loss. That must be so stressful having to deal with the planned memorial/ceremony and having to postpone it due to AC strike.
Not sure why you are looking for options re the AC strike when you have a Travel Agent. They are supposed to offer you the options as they should be able to get through to AC faster than an individual traveller.
Check out Maritime Travel, 100% canadian owned with almost 100 branches across Canada and provide 24/7 live support.
Hi Ian,
The travel agent emergency line was swamped over the weekend and when I was dealing with the cancellation on the Monday, the office wasn’t open until 8:30 AM, so I just decided to book myself.
“I don’t know about you but if I had to commute for that long each day (over an hour each way), I would find a different job!”
Sadly the reality for most of the GTA. An hour is pretty standard, especially on public transit.
All of those close outs sound like a good idea. Would love an updated interview with Reader B
Ah, I didn’t realize commute time is that long for most of the GTA. I suppose it can be quite long for Metro Vancouver too. Just that most of my co-workers in Asia leave super early from home and get home super late. It’s unfortunate commute time is that long nowadays.