Chasing returns and getting the drop back

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    Hello everybody

    I hope you are all well.

    Life is good apart from this Sh! T show that’s Ontario, but hey that’s another post. The market is finally showing some red, but to be honest, I don’t really see a lot of offers out there. (Well, maybe tobacco supplies when you’re done with that)

    I’ve actually been thinking about just starting out building a cash position and not using the money to work like Ontario is doing and seeing this market. But the reality is that other provinces and countries around the world are opening up.

    Some of my wealthy clients that I speak to about money believe we are going to see a massive boom. That’s a great sign. People clearly want to go on vacation, go on trips, shop, eat, etc., etc., but the government won’t let us. As soon as things open up, it’s booming!

    Inflation, too, will most likely be much greater than governments keep telling us. Look at your groceries, lumber, house prices, corn futures, metal, etc., etc.

    I actually worked for a client who has a steel making business. He told me he offered jobs in March and now, in April, the price of the steel he uses has almost doubled, so he has to repeat those offers. That’s crazy! (It really reminds me of the story of someone spinning money on a bike, going into a store to buy something, only to get outside and find all of their money on the floor and find their wheelbarrow stolen becomes.)

    Obviously, cash is losing its purchasing power. I want to keep using this money.

    I’ve been thinking about Telus or Algonquin currents, but utilities are one of our highest sectors and Telus is back up a bit. Because share prices have risen so sharply lately, I’ve also lost the dividend reinvestment program on some of our holdings.

    Put simply, the stock price is higher than the dividend we receive from this company. I’m a big fan of drops and their compounding effect. When I see that they are no longer dripping, this position is worth expanding.

    I also stated earlier in the year that I wanted to get more lower yield / higher dividend growth companies and mix them with higher yielding companies. Since I bought a little more Couche-Tard last month, it didn’t do much to add to our dividend income in the short term. Why not get some return?

    Smart centers

    Chasing returns – buying a new one

    So this month I decided to improve the position of our smart center. Why not have 2 birds stoned at the same time? Get that drop back and add a nice chunk of forward income too.

    Now I’ve hit the retail environment during this “pandemic,” but smart is very diverse and I’m a huge fan of the Walmart anchor. Shops want to be in these squares because there is traffic. I really don’t see Walmart going anywhere and instead of investing in it, I’m going to invest in smart indirectly.

    Is Smart Center a Buy Now? I wouldn’t say it’s a bargain. In fact, it is ahead of what analysts think Yahoo Finance is. But they didn’t cut their dividend last year like so many other companies, and their presentation in the fourth quarter looked good. In December, their rental collection was 93.4%. Much better than most months last year, but unfortunately also almost 2% less than in October. (Presumably this is to be expected as the lockdowns started again in Toronto in November.)

    Smart Centers was a position we started last March and added 3 tranches when the market fell. One at $ 27.97, the next at $ 21.21, and finally the largest tranche at $ 15.17. It’s pretty safe to say this was a great investment, so I don’t mind increasing the price on average to get that monthly drop back!

    So we bought another 40 shares of children’s smart centers, or $ 27.80, which is $ 74.01 a year. Since we now own 209 stocks, that will bring in $ 32.22 per month and activate that drop again … Woot! Woot!

    Conclusion

    Well this is our final purchase. Nothing big, not a bargain, but what’s on the market these days? I just need to keep improving our positions and increasing forward income.

    Curious what did you buy? or have you started building your own money pile?

    Cheers everyone!

    Long – sru.un’s dividend portfolio has been updated.

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