Fall is upon us

(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

(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.