Since beginning of 2017 we have deployed roughly $13,700 to purchase more dividend stocks. But we are far from being done for 2017.
The recent market volatility provided an opportunity to deploy some more cash. So we purchased the following stocks:
- 120 shares of Hydro One (H.TO)
- 10 shares of Canadian Tire (CTC.A)
Around $4,400 was deployed. That brought up the total cash deployed in 2017 to about $18,100.
Both of these purchases are new positions.
Reasons for Purchasing
Below are my reasons for purchasing these dividend paying stocks.
Hydro One (H.TO)
If you noticed, I have been adding more and more utility companies in our dividend portfolio. For the longest time, Fortis (FTS.TO) was the only utility stock that we own. Since then we have added Brookfield Renewable Energy (BEP.UN) and Emera (EMA.TO). Adding Hydro One is yet another step to diversify our geographical exposure within the utility sector.
Hydro One has a monopoly in electricity transmission and distribution in Ontario, the largest province in Canada. Being the monopoly in electricity transmission and distribution in Ontario makes Hydro One quite attractive. Ontario, after all, is the one Canadian province with the largest population. The 1.3 million Hydro One customers represents a stable source of strong and growing cash flow.
As a utility company, the growth is predictable. Hydro One can easily increase its revenue by increasing the electricity rate. Its board plans a 70-80% dividend payout ratio moving forward. Currently yielding around 3.6% and a payout ratio of 73%, so there are some rooms for future dividend growth.
Canadian Tire (CTC.A)
Canadian Tire has a very low dividend yield, so most dividend growth investors probably don’t pay too much attention to this stock. But when you look at its has excellent dividend growth history, it is pretty impressive. Canadian Tire has grown its dividend payout by 20.1% annualized over the last 5 years. At payout ratio of 28%, there are lots of room for further dividend growth. Therefore, Canadian Tire is one of those stocks I am betting on for long term dividend growth.
Canadian Tire no longer is a brand that sells automotive related items only. Rather, it has been providing customers with everything they need for life in Canada throughout different categories like sporting goods, apparels, and financial services. The company also operates under different names like Mark’s, Sport Check, and Atmosphere. All these brands are well received in Canada. Furthermore, the Canadian Tire family stores usually are located in key locations in major cities.
Just like any traditional brick-and-mortar retail stores, Canadian Tire faces challenges when it comes to online retails. The company has realized this challenge and has plans to shift a bigger portion of its business over to digital sales.
In the past 5 years, Canadian Tire has grown its earnings by 10.3% with a 12.85% return on equity. I believe Canadian Tire will continue to excel in the Canadian retail space and reward its investors through dividend payout increase and stock price appreciation moving forward.
These two purchases added $126 to our annual dividend income.
Dear readers, what do you think about our purchases?