Dividend Growth Portfolio - Jan 2010

Last week on twitter I announced that I was going to post some information on my Canadian Dividend Growth Portfolio (DivG) for interested readers. I receive comments and requests from time to time to post specifics on my portfolio and since I bought back positions in Manulife Financial (MFC) and Husky Energy (HSE) on Friday after I sold them in December for tax-loss selling I thought that some disclosure on the portfolio would be beneficial to readers.

While I’m not going to give dollar figures ($) for the overall portfolio size or individual positions I have posted a PDF document on all positions held within the portfolio as of January 22nd, 2010. In the document I’ve included a breakdown of the closing prices as of January 22nd, the percentage of each stock within the portfolio, my adjusted cost base (ACB) on each position and some information on annual dividends and yields. I’ve also included the amount of leverage currently placed on the portfolio with an unsecured line of credit I started in late 2008 to take advantage of depressed market valuations.

There are some holdings that might appear to not fit based on the name of the portfolio, but I won’t hold not paying dividends against any company if I see value in the growth of a business or value in its valuation. Research in Motion (RIM) is one such company that I currently own that I purchased at a price for the medium to longer term that I felt was attractive based on its current business model and growth potential. DivG is a balance between dividends and growth with some companies paying out a relatively small yield (1-2%) with higher dividend growth (4-8%) with others paying out a relatively higher yield (3-5%) with lower dividend growth (2-4%)

Now I don’t aim or aspire to be the world’s best investor but what I do strive to be is a disciplined investor; one who has the drive and commitment to follow a strategy with as little emotion as possible. This was best illustrated by my activities during the credit crisis where I remained publicly and privately committed to my strategy by maintaining positions in beaten up stocks and adding aggressively to positions that were heavily undervalued.

A lot of readers and peers asked the obvious question at those times of, “How do you know you’re buying at the bottom?”

The objective for me, as a value investor, is not to preoccupy myself with picking a bottom or to time the market as best as I can. My objective is to buy when great companies are at good prices or buy a lot when great companies are at cheap prices. The simple logic behind my activities that seemed to be reckless buying was that I knew the companies I was buying because I had spent hours analyzing and researching them prior to the credit crisis. That didn’t give me a guarantee that I wouldn’t lose money, but it gave me the confidence in my plan, holdings and strategy to stay committed and invested. Essentially what I did was take a margin of safety in my DDCF calculation that assumed a 50% decrease in both earnings and dividends and then a five year P/E of 10 or less based on the current valuations I was seeing to justify when I bought additional shares. I continued buying throughout the crisis with saved money and my LOC as many as five times (in the case of MFC) or just once with my initial purchase of Canadian Tire (CTC.A). Taking out the contributed savings I committed to the portfolio the 2009 and including all re-invested dividends and purchases using leverage my return for DivG last year was 46.25%.

What I learnt from 2008-2009 was that discipline, in all facets of investing, rewards investors when you have clear objectives and capital available to take advantage of opportunities where fearful investors are searching actively for liquidity and not concerned about at what price they sell. The preferred shares I purchased in October and November of 2008 best represent this idea. Many investors, due to fear, were willing to sell preferreds at a 40% discount to retrieve their investment in the fear of losing all of it. Those preferreds (with a par value of $25 selling around $15) had a yield on cost of 7-9% in tax-advantaged income plus the potential for capital gains if held over the medium term. I made my investment back easily over a short period of time, but even if I held for a minimum of five years I had confidence I would make my money back with a decent return on investment for placing capital in the market where it was desperately needed.

Similar moves in my the equity and fixed income portions of my RSP helped to juice returns in 2009 by taking advantage of liquidity and available discounts to specific investments. My return for the US/International equity component of my RSP for 2009 was 32.27% (CDN$) and 37.27% (USD) with my currency hedge strategy helping to ease the effect of currency valuations in the portfolio. My investment in some fixed income alternatives provided a return of 72% (including interest and dividends) for 2009 from the CorTS’ I purchased and preferred shares in STD.PR.A and REP.PR.A.

Link to Dividend Growth (DivG) PDF




Disclosure: I currently own shares in all investments mentioned in this article and/or links




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Standard Auto Insurance

Disclosure: The below article is provided by TD Canada Trust. The information and content is the opinion of TD Canada Trust and not authored by the owner of this site.


Standard Auto Coverage

There are several types of auto coverage available to keep cars safe on the open road.

The coverage for direct compensation-property damage is available in Ontario and mandatory when driving a vehicle there. When a car accident occurs and the fault is placed on the other vehicle the car damage and personal belongings in your car are covered by this type of plan.

Accident benefits coverage is great to have if an injury or death occurs as part of a car accident. The coverage also provides lost income. Other benefits include payments for those not working who can not live a normal life, payment for home care expenses for a primary care giver who was injured and can not perform his/her duties and payments for medical, rehab or care giver expenses.

Other expenses may be covered in this type of coverage. In addition, those not killed in the car crash can be paid for funeral costs of those who died as a direct result of the accident. Accident coverage is not available in Quebec.

An optional form of auto coverage is called upset or collision coverage. This covers the damage that occurs in an auto accident. When an older car is insured, it may cost more than the car itself when collision coverage is added to the plan. A deductible is added to the plan and paid out by the coverage holder or towards the cost to repair a car. It can also be deducted from a settlement from a car insurance claim after a car wreck.

Comprehensive coverage is an added benefit to collision coverage. It is paid out the same way as that type of coverage. The purpose of comprehensive coverage is to protect a car from damage that is not included under a collision coverage plan. Examples would be flying objects or acts of vandalism.

When renting a car there is auto coverage available too. This is called damage to a non-owned automobile. It applies comprehensive and collision coverage to a rental car on a short-term basis. A rental car company can charge an arm and leg for this with daily rates that equal yearly premium costs. Coverage for this may be found elsewhere so check before you pay for it twice.

Stuck on the side of the road with a car that will not or cannot run can ruin a day. With emergency road service, coverage services can be paid that includes towing. Again, this type of coverage can be a part of other plans so check before you pay for it again.

Having car insurance coverage that includes the entire family is priceless. Family protection coverage means that all family members are covered in a car accident where the other driver is uninsured and at fault. Some provinces require the minimal coverage so this type of plan comes in handy when an accident occurs. You will be covered by the amount available on your coverage regardless of what the other driver has.

Loss of use coverage covers a driver who is involved in an accident where the car is damaged beyond driving capability. With this type of coverage, a rental car or payment for a taxi or train will be covered. You can still get around while the car is being repaired. The claim can include amounts of up to $750 or $50 daily.

Liability coverage is for you and it covers the injury or death of someone in a car accident. Their personal property is also covered by this plan. In Ontario, they have a “no fault” system when it comes to dealing with an auto accident. Both parties involved have to contact their own insurance companies when this occurs.

However, if the accident falls on you then you have to pay and if you are uninsured then you may be fined and be charged with driving without insurance. Payment has to be made to regain use of the license.

In Ontario and Alberta there is uninsured motorist coverage that protects you if an accident occurs with a driver that has no insurance. The Atlantic Provinces offer the same coverage, but with an added bonus. It is called uninsured automobile and unidentified driver if you are involved in a hit and run situation and the driver flees the scene.

Depreciation waiver coverage is an optional plan where you will receive the amount that the car was worth if you are ever in an accident. The full amount that you paid for the car will be paid. The insurance company may also pay for repairs if the car can be fixed properly.

Disclosure: The above article is provided by TD Canada Trust. The information and content is the opinion of TD Canada Trust and not authored by the owner of this site.

Dividends in the Rough

Picture courtesy of Edgar Maivel

The past 18 months have been very tough on dividend oriented investors with companies slashing their payouts in the face of a tough economic climate and a strong desire to conserve corporate cash.

While my Canadian dividend portfolio (DivG) experienced only a handful of cuts (Manulife, Husky Energy & Russel Metals) during this period of time there are dividend investors out there whose portfolios suffered significant losses in both income and capital.  Dividend cuts provide a solem reminder to investors of what can happen when a company's priorities change from shareholder value to corporate security.

I pride myself as a disciplined investor who utilizes a conservative approach to invest in my portfolios, but I will admit that there are times when a lack of dividend increases in my portfolios frustrates me and I consider if my approach is the best over the short-term.

The long-term answer often comes in the way of an eventual dividend increase that remind me of why I invest the way I do and how dividend increases today contribute to meaningful returns in my portfolios for the future.

This past week three Canadian corporations I hold shares of within my DivG portfolio raised their dividends decisively; Fortis (FTS), Atco (ACO.X) and Shaw Communications (SJR.B).  Fortis raised their dividend for the 37th consequetive year with this year's increase at a surprising 7.7%.  Atco raised their dividend by 6% and Shaw Communications raised by 5%.

These increases don't come close to replacing the income I lost from the 50% cuts in the payouts of MFC, RUS and HSE, but they do remind me of why I diversify my investments and that other components of my portfolio can provide meaningful value in both increasing income and risk reduction.  The fact that FTS, ACO.X and SJR.B raised their payouts above the annual rate of inflation helps meet my long-term goal of growing my annual dividends from this portfolio at a rate faster than the annual pace of inflation.

Often when a dividend investor starts out with this long-term strategy a lack of dividend increases can both frustrate and demoralize you as you implement this strategy.  Patience isn't easy, but taking the time to develop it will go a long way to showing you how a dividend in the rough can turn into a diamond over the long-term.


Disclosure: I hold shares in Fortis (FTS), Shaw (SJR.B), Atco (ACO.X) & Russel Metals (RUS)



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Top Posts of 2009

Each year since I started this blog I take the time to look back on the content posted on Triaging My Way To Financial Success and reflect on some of the main developments in my life, portfolios and the market.

2009 was definitely an interesting year for investors and myself with uncertainty as the key driver for investment activity and behaviour throughout the year.  While I kept to my investing thesis with a disciplined approach within my portfolios that didn’t mean that on more than one occasion I questioned the strength of the market’s rally or the health of the companies that shot forward with such impressive returns.  While the portfolios of some investors have recovered to their highs of 2007 many remain frustrated and asking questions on how their portfolios have lagged in the face of such a strong equity market rally.

With investors looking forward into 2010 here are some of the top posts recognized by popular readership, high traffic and comments.

First I had the priveledge to be mentioned in a few articles this year in both The Globe and Mail and CanadianBusinessOnline courtesy of financial columnist Larry MacDonald.  In May I was involved in a weekly column in The Globe and Mail titled “Me and My Money” discussing some of the financial moves I made in early 2009 and outlining my specific investing style and discipline.  In December Larry quoted both myself and The Dividend Guy in a post examining the Dividend 15 Split Corp

In January I incorporated my private consulting business with the creation of Triage Capital Management Incorporated, changed over the ownership of TMWTFS and Dividends Anonymous to the corporation and launched my corporate website.

I had the intentions of posting a number of Stock Analysis Mailing List (SAML) articles but because of time was limited to posting only two: Taking Stock in Coca-Cola (KO) and Taking Stock in Pfizer (PFE).

I took time to outline an investing strategy that I use to effectively leverage dividends in a portfolio with a focus on a conservative approach.

I shared an alternate fixed income strategy that I use in my RSP with a post on Fixed Income Alternatives.

The Importance of Business Fundamentals was a follow up post to Getting Intimate with Stocks where I shared an important quote: “Without strong qualitative performance no company can enjoy sustainable quantitative success.”

One of the most popular posts of the entire year was The Bond Guide; an investment guide to corporate bonds that addressed a lot of issues many retail investors have with understanding corporate bonds and their risks.

The Competitive Analysis was a follow up post on a four part series I published in the past on my stock analysis techniques that identified how an investor can analyze the competitors of a company they’re researching.

I published my perception of why Shoppers Drug Mart (SC) has not raised their dividend in quite some time.

I also had the pleasure of reaching some important milestones in my life during 2009.  My major investment milestone was one that dealt with dividends in my Canadian non-registered dividend portfolio (DivG).  I got engaged to the love of my life in April with a wedding date in Fall of 2010 and together we bought our first home in a neighbourhood where I grew up.  The mortgage was organized by a good friend of mine at TD Canada Trust with very attractive terms.  The five-year fixed rate mortgage was for 3.64% which to my knowledge was the lowest five-year fixed rate mortgage available in Canada during 2009.  I bought the home privately with 20% down and hope to own 50% of the home (based on a conservative market value) when the mortgage is up for re-financing in 2014.

I encourage readers to submit their favourite(s) posts from 2009 if I missed highlighting any of importance and I’ll take some time to reflect on the performance of my portfolios, with specifics, very soon.

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