I thought I’d give you an update with our most recent purchase. This market is definitely getting harder and harder to find a deal, but lately certain groups of stocks have come under slight pressure and have fallen in price.
The Canadian telecommunications companies, for example, have dived a little on the Rogers – Shaw Takeover News. I really don’t think this deal will come off as it creates less competition in Canada again. That is usually a political sticking point as we pay for some of the highest cellular plans in the world and I don’t see why they would allow things to roll back to the big 3. In both cases, both bce and telus fell on the news for some reason. (It really doesn’t make sense as less competition would be good for them)
Utilities have fallen due to rising interest rate news. As you probably know, I am a huge renewable energy fan and at this point I was really discussing improving our Algonquin position. Utilities are a large part of our portfolio, however, and I always like to focus on lower sectors / holdings when I can. Perhaps we will make another purchase before the end of the month and add to it. In this rapidly changing landscape, one thing is for sure the need and also the demand for more renewable energies.
Another goal of mine for 2021 is to add more low income, high dividend growth positions. While growing your starting income is great, the dividend cuts are higher with the higher returns, and dividend growth is sometimes not the best. Look at both 3M and Canadian utilities this year with increases of 1% or less.
It’s like me in a pink thong. You can see I’ve tried and will probably put a smile on your face, but it’s not something to get upset about.
Companies like CNR, Microsoft and Couche-Tard are now increasing their dividends significantly. The capital gain is nice too! In the long run, these will most likely outperform higher yielding stocks in terms of return on costs. I plan to fill this type of position from time to time as we continue to grow the portfolio throughout the year.
In mid-January we started a job in Couche-tard (ATD.B) according to the carre-fore news. Couche-tard hit the news and basically it was free money for anyone who bought at the time. We are already 11% up on these stocks, but I think the stock still has room to grow / rebound from here.
We hold this position with our children or on their account and their account has had 400 dividends and the government game in idle since January. There is no way I want to see 400 idle, not working for us. We added another $ 1000 to the account and ended up buying 33 more shares of Couche-tard. This adds a whopping $ 11.55 to futures earnings.
Like I said, lower yield but massive dividend growth. Couche-Tard has had an 11-year dividend growth streak and a payout ratio of just 11.11%. In November, they increased their dividend 25% and posted a solid 10-year dividend growth rate of 27.3%. 5 years is 21.7%. You have to love to see such growth and such a low payout ratio.
I’m not going to get into Couche-tard too much as I was just talking about it 2 months ago. They are a solid company with tons of cash, great management and very shareholder friendly.
Obviously the elephant in the room is their gas station. How will they adapt with the switch to electric cars? They have already started installing charging stations in their locations and I think it will be another 10 years before gas is available.
Well there it is. Short and simple. Doubled our holdings in one of our smallest positions in our portfolio. Increased our defensive sector allocation adding $ 11.55 to that income.
It’s easy to get distracted in this market. You see stocks like wild stocks rising again and it is tempting to jump there, but we have a plan and we must stick to it. Buy great dividend growth stocks and keep growing that cash flow. Slowly but surely.
Have you bought anything these days? If so, what did you buy?
Hey, I’m Rob, the creator of Passive Canadian Income.
In 2011, my wife and I had nearly $ 60,000 in debt and $ 7,000 in negative net worth. We paid for it all through hard work and financial education. Now we are focusing on increasing our passive income streams to make the money work for us. Follow the journey by clicking the social media links below or signing up to be notified of new posts in the sidebar.