Reviewing our 1H 2018 $50,000 Dividend Stock/ETF purchases

It’s July, that means the first half of 2018 is officially in the books. Since January 1, we have been busy adding dividend-paying stocks and index ETFs in our TFSAs, RRSPs, and taxable accounts. To be completely accountable, I have been highlighting these purchases in our monthly dividend income reports.

For those who just started following this blog and are not aware of how we started, Mrs. T and I have been working hard to grow our dividend portfolio since 2011. Our goal is to have our dividend income and other passive incomes to be greater than our annual expenses. When this happens, we can call ourselves financially independent.

After 6 months, we have had 5 record breaking months where we broke the all-time monthly dividend income amount. Just last month, we were just $9.18 shy of the $1,700 milestone. Although we received dividend income in USD currency every month, we didn’t convert the amount back to CAD. We treated USD and CAD with 1:1 exchange rate. We did this to avoid fluctuations in dividend income over time due to changes in the exchange rate. If we looked at our dividend income history, we have been receiving about 20% in USD and 80% in CAD.

Anyway, the record-setting trend so far this year was mostly contributed from adding fresh capital into our portfolio and purchasing more dividend-paying stocks.

I thought it would be interesting to review our purchases in the 1H of 2018.

 

1H 2018 Dividend-Paying Stock Purchases

Since the beginning of the year, we have made the following purchases. Some of the purchases were one-time purchases, some were spread across different months.

  • 44 shares of Bank of Nova Scotia (BNS.TO)
  • 36 shares of National Bank (NA.TO)
  • 378 shares of Enbridge (ENB.TO)
  • 20 shares of Starbucks (SBUX)
  • 79 shares of Laurentian Bank (LB.TO)
  • 100 shares of Canadian Utilities (CU.TO)
  • 122 shares of Smart Centre REIT (SRU.UN)
  • 150 shares of Emera (EMA.TO)
  • 50 shares of BCE (BCE.TO)
  • 100 shares of Magellan Aerospace Corp (MAL.TO)
  • 36 shares of TD (TD.TO)
  • 100 shares of Enbridge Income Fund (ENF.TO)
  • 62 shares of Vanguard Global Ex-Canada (VXC.TO)

In addition, whenever we had a few hundred dollars in our Questrade accounts, we would purchase ~10 shares of VCN and VXC to take advantage of Questrade’s commission-free ETF trading.

If we tally the total dollar amount of all the purchases, we have purchased over $50,000 worth of dividend-paying stocks and index ETFs in 1H of 2018. Or a total of 12 individual dividend-paying stocks and 2 index ETF’s. The purchases of the different individual dividend-paying stocks have increased our forward-looking annual dividend by $2,694.66. This amount is excluding distributions from VCN and VXC, since distributions from these funds vary every quarter.

To be honest, I was completely blown away when I tallied the total dollar amount of all the purchases from 1H 2018. I knew we have been busy buying stocks and index ETFs, but I had no idea the dollar amount was that high (I thought we were around $25-30k mark). At first, I thought there was something wrong with my math, so I had to triple check to ensure the over $50,000 amount was correct.

Phew, we must have been eating a lot of ramen noodles to save that much money…. NOT!

Folks, let’s not forget it’s all about finding the right personal balance between saving for the future and enjoying the present moment.

Due to privacy concerns, I am not going to disclose our cost basis per stock in this post. But from a high level, we can review our purchases and group them into 3 categories – winners, losers, and continue-to-monitor.

 

1H 2018 Winners

Out of the 12 individual dividend-paying stocks and 2 index ETF’s stocks that we purchased in 1H 2018, there are a number of clear winners.

Enbridge

We made 5 different purchases of Enbridge throughout 1H of 2018 when the price was around the 52-week low. Thanks to these purchases, Enbridge is one of the largest holdings in our dividend portfolio.

At the time of each purchase, it felt like it was a very risky move. But I was convinced the downward price trend was a temporary pain that Enbridge was going through. People would continue to use oil and natural gas and would need to rely on Enbridge’s pipelines to transport these valuable natural resources. I believed Enbridge would look at its large debt and try to reduce it by selling off some assets. This was exactly what the company has been doing over the last few months and the stock price has recovered since.

Enbridge Income Fund

Similar to Enbridge, we bought ENF around the 52-week low to take advantage of the low price. ENF had a very high dividend yield and I was convinced that ENF stock price would recover, for the same reasons as I had with ENB. Looked like my calculated gamble had paid off.

TD

We purchased TD early in the year and the stock price has risen nicely since. I really like TD’s business, it provides financial services that everyone needs and uses, and the business is quite geographically diversified. In addition, TD seems to be making more and more money each quarter. What’s not like here? Depending on our sector allocation, we may purchase more TD shares later this year.

 

VXC and VCN

Both of these index ETFs are doing well so far in 2018. As mentioned, we have been purchasing both VXC and VCN every other month whenever we have a few hundred dollars in our Questrade accounts. This dollar cost average strategy has paid off so far. We plan to continue with this strategy and build up our VXC and VCN holdings for diversification purposes.

 

1H 2018 Losers

It pains me to say that we purchased a couple of losers. But that’s the risk and reality you face when purchasing individual stocks – you lose some, you win some. However, we are not selling any of these stocks, so it’s just purely paper loss. We can continue to hold these stocks, collect dividends, and wait for the stock price to recover (that’s the beauty of dividend stock, you can wait and collect dividends, as long as dividends don’t get cut or suspended). We can also purchase more shares to reduce our basis. And when the stock price recovers, a loser can suddenly become a winner. (Just look at what happened to Enbridge!)

Canadian Utilities

The Canadian utility sectors have underperformed so far in 2018. Canadian utility stocks like Fortis, Emera, and Canadian Utilities all have seen better days. At this time we are down about 9% with our CU holding. Since we have no intention of selling, this is purely paper loss. We plan to collect dividends and potentially add more CU shares in the future.

Magellan Aerospace Corp

MAL’s stock price has been on a downward trajectory since our purchase earlier this year. We are down by around 20% at the current stock price. MAL’s recent quarterly report showed that both of its revenue and net income were decreasing on a year on year basis. This appears to be caused by the company not getting new contracts. However, MAL has hinted that new contracts are coming as American and Canadian military plan to purchase more fighter planes. The MAL holding is a relatively small portion of our dividend portfolio, so I am not too worried that we are down by 20%. Given that MAL is financially robust with lots of cash on hand, the dividend payments should be healthy in the short-term. We may add a few hundred shares in the near future to average down our cost.

 

Dividend Stocks to continue-to-monitor

Stocks not mentioned in the winners and losers section are in either up or down a little bit or relatively flat in terms of stock price. Given we are holding dividend-paying stocks and index ETFs for the long term, we plan to continue to hold them and collect dividends. Who knows, maybe we will even buy more shares.

 

Final Thoughts

This is the first time that I have written a review of our dividend-paying stock and index ETF purchases. I believe this has been a worthwhile exercise to see which stocks/ETFs are performing and which ones are not performing/ The ones that are not performing well, we need to analyze whether this is a short-term pain, or if the fundamentals have changed. Has our original investment thesis changed since the purchase?

By doing a quick review, we can determine whether we should continue holding these stocks/ETFs and potentially add more shares, or if we should sell, take the loss, and move on. This is exactly what we did with Corus Entertainment earlier this year. We closed out the position at a loss. If we didn’t close out the position, we would have taken on another 50% hit on the stock price.

This review has been interesting as I had no idea we have purchased over $50,000 worth of dividend paying stocks and index ETFs since the beginning of the year. Crazy!

While we are on auto-pilot for most of our stock holdings, it makes sense to review regularly to trim positions. This is something we need to continue to do moving forward.

Dear readers, how have your 2018 purchases performed so far?

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16 Comments

  • Reply
    Financial Shaper
    July 22, 2018 at 9:58 am

    Wow! What an amazing amount you put to work and congrats on a very nice list of businesses sending you dividends. I particularily like Starbucks.
    My wife and I have been pretty busy as well making our stock portfolio as well. We almost invested the amount of usd 40‘000, acquiring stocks of PepsiCo, British soft dring companies Britvic and Nichols, British American Tobacco and Imperial Brands, UBS, British insurer Legal & General and AVIVA and Reckit Benkiser. The invested amount to some extent surpassed our savings, we decided to reduce our cash pile (initially we had planned to buy a house but decided against for various reasons). Our portfolio now now has has a market value of more than usd 200’‘000 and quite comfortably produces usd 7‘000 (after taxes etc.) in 2018 and hopefully with some nice organic dividend growth ahead. We won‘t put such sums to work each semester (we wouldn’t be able to) but we saw several good opportunities and so far we feel comfortable with each purchase made so far.
    Keep it up and all the best!

    • Reply
      Tawcan
      July 23, 2018 at 10:49 am

      It’s too bad that the CAD to USD exchange rate is so poor, or we would be buying more US-listed stocks. We’ve been buying US-listed stocks with the dividends received in USD, so it can take a few months before we have over $1,000 to use.

  • Reply
    Randy D
    July 22, 2018 at 10:31 am

    Hi Bob,
    Thanks for posting this! Very informative and like minded thinking for me…
    So far in 2018 I have purchased 3000 shares of FSZ, 1000 shares of CU, ENB, PLC, PWF 500 shares of SLF and finally 250 shares of NFI, PBH. FYI did you know that ENB will be taking over ENF soon and all ENF shares will become ENB shares? I have been slowly liquidating positons that were not DG or cut their dividend (cjr.b) , and while the above are not all will be long term hold positions, most are within +- 10% of my purchase price. Most of my dividend stocks have been hit with the rising interest rate issue, but quite a few have raised their dividends already this year so I will hold those and monitor the rest. In addition to this site and a couple others, I also follow 5iresearch.ca, Dividendgrowth.ca, and I download the all star list each month from dividendgrowthinvestingandretirement.com for most of my stock research starting points.

    • Reply
      Tawcan
      July 23, 2018 at 10:50 am

      Hi Randy D,

      Sounds like you’ve been busy buying shares too! Wow 1000 shares of CU, ENB, PLC, PWF? That’s a lot of money working hard for you, amazing stuff. Yup I know that ENF will soon convert to ENB shares so currently considering whether we should liquidate ENF before the conversion or just wait.

  • Reply
    DivvyDad
    July 22, 2018 at 11:14 am

    Great job putting so much new capital to work for your future, and adding that nice big number to your forward dividend income! The best part is that it sounds like you have been able to do that while still enjoying the balance and quality of life that you desire. Very impressive!

    The first half of the year has been exciting for me, as I have just started a DGI focused portfolio in May. My goal for the remainder of the year is to add approximately $2,000 in new capital on a monthly basis. I’ll have to do a similar review at the end of the year to look back at the progress that I’ve made. Thanks for sharing your review, as it shows that even when you have stocks that decline in price, they can still warrant a hold as long as the dividend remains constant and there haven’t been any major changes in the business that raise red flags.

    Look forward to seeing what you guys accomplish in the 2nd half of the year!

    • Reply
      Tawcan
      July 23, 2018 at 10:51 am

      I was very surprised that the total amount is over $50k. Like I said, I was expecting a lower number. But that’s a good thing I suppose.

      $2,000 in new capital everything would be pretty impressive. Any new capital is good capital IMO!

  • Reply
    Passivecanadianincome
    July 22, 2018 at 6:11 pm

    wow nice Bob! 50k in half a year is huge, congrats!

    look like some really nice buys, alot of the banks.
    Enbridge is my largest holding as well.

    keep it up
    cheers

    • Reply
      Tawcan
      July 23, 2018 at 10:52 am

      Not sure if we’ll have as big investment the 2H of 2018 though. We usually move a big chunk of money into our TFSAs and RRSPs at beginning of the year. Now we’re kinda in the “savings” mode for next year. 🙂

  • Reply
    Mr. Tako
    July 23, 2018 at 12:49 am

    Nice review Bob! I wouldn’t sweat the losers too much over just one year. The stock market moves in ‘fits and starts’ and movement is almost random in the short term. Do a review after three years and if they’re still ‘losers’ then it’s probably time to trim those holdings.

    • Reply
      Tawcan
      July 23, 2018 at 10:53 am

      Exactly, that’s why I’m not too worried at all. You’re right, maybe a review after 3 or 4 years and trim off the losers if they haven’t recovered in that time. 🙂

  • Reply
    Buy, Hold Long
    July 23, 2018 at 5:13 am

    You clearly put in a lot of work into both this blog and your investments. Keep up the fantastic work. I love following. Cheers

    • Reply
      Tawcan
      July 23, 2018 at 10:53 am

      Thank you for your kind words Buy, Hold Long.

  • Reply
    Caroline
    July 23, 2018 at 8:36 am

    Nice job!
    Were you planning to save $30K and ended up saving $50K? That is a lot of savings over 6 months!

    • Reply
      Tawcan
      July 23, 2018 at 10:54 am

      I was just tallying what we have transferred to the different accounts and I must have missed some transfers. That’s why I thought we would be around $30k but turned out to be over $50k. Not a bad problem to have.

  • Reply
    scott
    July 26, 2018 at 6:33 pm

    when buying stocks how do you decide whether to put it in TFSA or your TFSA/RRSP? i have lots of room in my TFSA? what would you suggest?

    thanks Scott

    • Reply
      Tawcan
      July 27, 2018 at 1:40 am

      We always maximize TFSA first. We only buy Canadian dividend stocks in TFSA. For RRSP, we buy some US dividend stocks since the 15% withholding tax is exempted for RRSP.

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