Hello folks, and welcome to the annual review of the dividend growth companies from my watchlist! I have been busy with other projects, which is why I haven’t posted updates on when I add positions to my portfolio, but the method hasn’t changed. I continue to use the methods documented in previous posts to determine valuation and I continue to add the quality companies on my watchlist when valuation re-appears.
You will notice that many of the companies that I decided to no longer partner with continue to have good fundamentals. The reasoning was about concentrating the portfolio on companies that have better predictable earnings / cash flow history and growth, since I have been investing in other assets when it comes to volatility and added risks.
For this year, on the Canadian portfolio, I decided to sell 4 companies (besides MIC.TO, which was acquired by Brookfields and had the common shares delisted as it issued Sagen’s preferred shares). On the US portfolio, I decided to sell 1 company. No companies were added for this year.
Sold: Airboss of America Corp (BOS.TO).
I am reducing my risks in equities to be exposed in other assets, so I will lock my profits here and deploy funds on other companies. Nothing wrong with BOS, earnings are estimated to drop a bit in the next short term, after the massive growth they had recently. Earnings are too cyclical given their sector exposure, so dividend growth is not always consistent. I will deploy funds to other companies that are better predictable to continue growing dividends.
Sold: CAE Inc (CAE.TO)
They suspended dividends when the pandemic started and they have been overvalued according to the metrics that they typically trade on. I will also lock my profits here and deploy funds on other companies. I am confident that CAE will recover and eventually reinstate dividends, but I would rather have my funds deployed with other companies. As the years go by, dividend investing becomes more about reliability of growth of the income, so I will trim companies that haven’t been able to endure that consistency in difficult times.
Sold: Shaw Communications Inc (SJR.B)
They haven’t growing dividends for a while, so I rather lock profits here and deploy funds on other companies. Earnings are estimated to be flat, which increases my perception that dividends won’t be raised anytime soon. Their cash flow is more than enough to cover dividends, so my take is simply to focus on companies with dividend growth or companies with a higher growth potential based on earnings and cash flow growth estimates.
Sold: Andrew Peller Ltd (ADW.A)
Andrew Peller is a small cap company, so it’s difficult to get consistent data for historical earnings, cash flow and accurate estimates. I will be deploying funds to larger companies since I have other mechanisms to invest and trade on small cap sectors, through my trading models.
Sold: Walt Disney Co (DIS)
The pandemic affected the reliability of DIS to continue producing dividends, so I will be locking profits here and deploying funds to other companies with a better consistency of paying and growing income in difficult times.
The proceeds will be allocated to companies that I consider fairly valued right now, and estimated to grow. Below are a few examples of some companies on my watchlist meeting this criteria, in which I will add exposure:
The Bank of Nova Scotia (BNS.TO):
Cogeco Communications Inc (CCA.TO):
Canadian Tire Corporation (CTC.A):
Dollarama Inc (DOL.TO):
Exchange Income Corporation (EIF.TO):
Empire Co (EMP.A):
IA Financial Corp (IAG.TO):
Open Text Corp (OTEX.TO):
Stella-Jones Inc (SJ.TO):
On the US side, there are some options as well:
Amerisourcebergen Corp (ABC):
Aflac Inc (AFL):
Ameriprise Financial (AMP):
Cardinal Health (CAH):
Comcast Corp (CMCSA):
Fedex Corp (FDX):
3M Co (MMM):
Altria Group Inc (MO):
Northrop Grumman Corp (NOC):
Qualcomm Inc (QCOM):
Stanley Black & Decker Inc (SWK):
AT&T Inc (T):
T Rowe Price Group (TROW):
Verizon Communications Inc (VZ):
Walgreeens Boots Alliance Inc (WBA):
Lots of options to invest right now, since we can always find fairly valued companies in any market. Eventually, the portfolio performance will be a function of how these businesses perform. Stay consistent on the methods you employ to partner with these business or move on, always looking on the business behind the stock.
Please let me know if you have any questions or comments!