Featured Dividends – September 2019

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(This was originally published in the September 2019 version of the Dividend Growth Newsletter. It is available here.)

Our newest addition to our ongoing series Featured Dividends is Andrew Peller Ltd. (ADW.A – TSX)

Formerly known as Andrés Wines Ltd., the company produces and sells wine, spirits and wine related products. Started in 1961 out of Port Moody, BC, Andrew Peller is still run by the Peller family today with winery operations across Canada.

Andrew Peller Ltd. sells under a variety of well-known trademarks such as Peller Estates, Sandhill, Wayne Gretzky Estates, Tinhorn Creek, Panama Jack, Baby Duck and others through 670 authorized retailers and 101 wholly owned retail outlets.

CEO John Peller announced an increase in common share dividends by 4.8% in June, “a reflection of our confidence in the future and our commitment to enhancing shareholder value over the long term.”

Featured Dividends – June 2018

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A new series of posts starting on sethchang.ca will be a series called Featured Dividends!

Each post will highlight on one of the newest interesting additions to Seth Chang’s Dividend Aristocrat Portfolio.

(This was originally published in the May 2018 version of The Dividend Growth Newsletter. It is available here.)

Today’s newest contender in our series of Featured Dividends is the Canadian National Railway (TSX:CNR).

The Canadian National Railway Company (abbr. CNR but aka CN) is Canada’s largest railway and Canada’s only transcontinental railway company. CNR serves Canada and the midwestern and southern United States. CNR is classified as a Class I freight railway and is headquartered in Montreal, QC.

Many of us know CNR from the CN Tower in Toronto, which they built, and also which held the record for the world’s tallest free-standing structure for 32 years from 1975–2007.

In recent news, CNR is tackling its recent capacity challenges by focusing on expanding rail infrastructure in Manitoba, Saskatchewan, Alberta and British Columbia.

Fall is upon us

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(This was originally published in the September 2017 version of The Dividend Growth Newsletter. It is available here.)

It’s always an interesting exercise to see how human psychology can dominate the stock market. Fall is upon us, and believers of the “October Effect” must also sense that in the markets, too. The crashes of 1907, 1929 and 1987 all occurred during that wretched month, and last October the S&P 500 declined 1.94%.

To make things worse, Donald “Dotard” Trump and Kim “Rocket Man” Jong-un continue to have their war of words, with no resolution in sight. The hope is that both administrations will limit their aggression to playground insults and not launching nuclear warheads. The lack of a response by markets to this constant friction is both surprising, in the sense that markets can be sensitive to political developments, and also unsurprising, in the sense that markets are so quick to react and analyze situations that most don’t expect a nuclear war to occur. But, uncertainty continues to be an enemy of the markets, and constant vigilance required.

A new addition to the American Dividend Aristocrat Portfolio is Carnival Corp. (NYSE:CCL), which operates the Carnival Cruise, Holland America and Princess Cruise Lines. The stock currently has a dividend yield of 2.48% and prior to the string of hurricanes, posted a record profits in their most recent quarter.

NAFTA, SCHMAFTA

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(This was originally published in the August 2017 version of The Dividend Growth Newsletter. It is available here.)

NAFTA talks aren’t going anywhere. North Korea continues to be a thorn in everyone’s side. Hurricane Harvey is the worst natural disaster on American soil since Katrina. The Bank of Canada is seriously contemplating an interest rate hike. Stock market valuations remain high. Housing prices continue to climb. We’re nearly three-quarters through the year, but we’re still no closer to figuring out the head scratchers of 2017. The TSX is down more than 1 percent this past month, and the S&P 500 a little less than that.

It could be a lot worse… but that’s not the proper mindset for investing. Investors don’t want to just lose less money than the next guy, they want to see their portfolios grow. Losing money doesn’t feel good, even when you lose less than the market. And when the markets fall, selling positions to generate cash isn’t a sustainable strategy.

Investing isn’t always about total return. Achieving financial objectives can be planned using specific income goals, and that’s where dividend aristocrats come in with their fixed payments and attractive yields. The key is to hold steady through rough waters, and that’s what these portfolios are designed to do – no new portfolio positions have been initiated this past month.

A prudent investment

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(This was originally published in the July 2017 version of The Dividend Growth Newsletter. It is available here.)

When it comes to investing, the old adage is that past performance does not indicate future performance. While that is certainly true, past history isn’t completely worthless. Both the stock market and the events of world history move in cycles, so what happens in the past can happen again. Forward looking statements are educated guesses at best, but, as they say, hindsight is 20/20.

Consider this article by investor Nick McCullum, who showcases a chart (left) by Ned Davis Research that shows the historical return of dividend-growing stocks (9.6%) outpacing both non-dividend stocks (1.7%) and the S&P 500 (7.3%).

Dividend aristocrats also experienced lower volatility compared to the index, and because only established companies with enough cash flow can consistently pay (or raise) dividends, they’re also considered to be safer investments as well. Considering that stocks are at record highs, dividend stocks remain a prudent investment.

If only it were hockey

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(This was originally published in the June 2017 version of The Dividend Growth Newsletter. It is available here.)

Here’s a fun stat: The S&P TSX had the fourth-worst performance in the first half of 2017, returning just 0.69% (see left), finishing only ahead of Israel, China, and Russia. South Korea leads the pack with an 18.03% return, and only two countries (the U.S. and Spain) outside of the Middle East and Asia finished returned more than 10%. According to BNN, Canada ranked 91st among the 103 indices that are tracked, thanks to huge declines in the energy sector with low oil prices.

That hasn’t stopped prognosticators from predicting a huge rebound in the second half, citing more appetizing equity valuations. A rising loonie will help certain sectors, including grocery chains (such as Metro, Inc., which is featured in the Canadian Dividend Aristocrat Portfolio), and a Reuters poll showed that many believe the TSX will reach new highs by mid-2018… but we all know how wrong polls can be.

In times of poor overall returns and further geopolitical risk with North Korea’s constant missile experiments, dividends are once again attractive investments for their steady dividends and high yields.

A quiet summer…?

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(This was originally published in the May 2017 version of The Dividend Growth Newsletter. It is available here.)

Despite reports earlier in the year that Canada’s economic growth would outpace the U.S., the TSX has returned just 0.41% year-to-date. After an outstanding year in 2016, Canadian markets have remained relatively stagnant while the U.S. markets have rocketed; Donald Trump’s first 100 days in office had the fifth-highest percentage gain in the S&P 500 in history. Stats Canada says the country’s real GDP growth was 3.7% in Q1, but the Canadian dollar could go even lower with lower oil prices, Stats Canada’s numbers are often subject to revision and not always reliable, and the federal government has yet to inject the economy with any infrastructure spending.

The rest of the summer is expected to be quiet at best. At worst, there are many signals pointing towards a correction or a market downturn. Reports on overvalued stocks, low bond yields and an imminent bursting of the Canadian housing bubble have been ubiquitous, and the global political climate remains sensitive. Whether or not those calls come to fruition this year remains to be seen, but Canadians were sitting on big cash piles in 2016, which indicates investors have been cautious for quite some time.

The flip side, however, is that staying invested tends to pay off in the long run. Stocks in the Dividend Aristocrat portfolios are meant to be held long-term, even through market downturns. To better adapt to a constantly changing environment, 10 new names have been added to the three model portfolios, which are outlined in the newsletter.

Investing, caution

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(This was originally published in the April 2017 version of The Dividend Growth Newsletter. It is available here.)

Despite a record-breaking 24 executive orders – the most since World War II – in Donald Trump’s first 100 days in office, it seems very little has changed. Twitter continues to showcase the best and worst of Trump, the U.S. is still very much part of NAFTA, tax reform has yet to come, and a single brick has to be laid for the wall. Interest rates remain low, the housing crisis in Vancouver and Toronto have hit a fever pitch, and the Canadian dollar continues to be weak along with weak oil prices.

Combined with the French presidential election, which has eerily mirrored the most recent U.S. election so far with a right-wing populist going up against a center-left opponent who’s leading the polls, and North Korea, where Kim Jong-un’s fascination with flexing his military muscle can no longer be considered as just a sideshow, it’s understandable why some investors remain cautious, especially with a stock market that continues to try and push to new highs.

However, earnings for 1Q 2017 have looked mostly positive so far, and that may be the single biggest driving factor of the rise in the Dow and S&P 500. Dividend aristocrats such as Metro and McDonald’s have all reported impressive earnings, and continue to provide value through capital gains and consistently growing dividends. They have proven to provide downside protection relative to other equities, which makes them ideal in uncertain times.

Tiresome Trump

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(This was originally published in the March 2017 version of The Dividend Growth Newsletter. It is available here.)

Donald Trump has been called many things since assuming office. Most are critical of his methods and choices, and his waning popularity is a symptom of that. But here’s another word: tiresome.

Trump has been in office less than four months, and yet Barack Obama’s presidency feels like it’s in the distant past. The 24/7 news cycle is ruthless; Trump is polarizing, if anything, and no other president has ever felt so pervasive. I mean, has the failure of any TV show ever been singularly attributed to the President of the United States?

Trump’s lack of political experience is hampering his ability to deliver on his promises, especially when it comes to big tax cuts. The S&P 500 jumped eight points the day Trump was sworn in, and over the next two months climbed to almost 2,400 points, an all-time high. The Dow saw a similar spike, reaching an all-time high in early March. Optimism has waned, however, and over the past month, both indices have pulled back, declining roughly 1 per cent and 1.5 per cent, respectively. The status quo has changed from a corporate-friendly administration to one that may be impeached.

In this type of environment, stable dividend stocks seem all the more logical and worthwhile. Stock prices can be difficult to stomach, but these are companies that have weathered all kinds of presidents, and continue to deliver predictable dividend increases and yields.

The Commodities Price Driven Dividend Growth Portfolio

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(This was originally published in the February 2017 version of The Aristocratic Dividend Growth Newsletter. It is available here.)

Brand new in this month’s newsletter is the introduction of the Commodities Price Driven Dividend Growth Portfolio, which includes 10 companies located in Canada and the U.S. that are deemed to be of good quality, such as:

     

*Please note that investment in this portfolio is limited to only a portion of a client’s overall portfolio.