In September 2017, I received slightly over $100K as a result of the commuted value of my pension plan. I decided to invest 100% of this money into dividend growth stocks. Each month, I publish my results. I don’t do this to brag. I do this to show you it’s possible to build a portfolio during an all-time high market. The market will crash… eventually. In the meantime, I enjoy cashing some juicy and consistent dividends!

Vietnam Story – Stick to your plan

During my time in Vietnam, I discovered that travelling was very similar to an investing journey. While you have a plan about where you want to go, things get thrown in your way that create doubt about the best way to achieve your goals. You start to question whether you are heading in the right direction or if you are using the right means to get there.

After 4 days spent in a beautiful village up in the mountain (Ta Van near Sa Pa), we took a sleeper bus in the direction of Ninh Binh. Since I was travelling with my family, all our transportation arrangements (buses, trains, airplanes) were booked well in advance. My travel plan was clear, and I knew how to best get to each destination. I wanted to make sure this trip would be a series of great family moments. Everybody craves and deserves those amazing moments, right?

We got lost on the morning of our departure (I apparently have a big challenge following Google Maps correctly… or it just gets it wrong!), but we finally ended up at the bus station. We were there 45 minutes prior to the bus’s scheduled departure. I presented my booking confirmation and the circus began.

Sir, you have only 3 seats. You can’t enter the bus (approximative English has become part of the trip already).

But, I paid for 5 and my booking confirmation clearly states “5 passengers”. I even have my receipt showing how much I paid.

But sir, only 3 seats on tickets. Just wait.

While they make me wait, they want my children to stow their bags inside the bus (but they can’t enter).

Sir, please call your booking company. You need to pay for more tickets.

I paid for 5 and my booking confirmation clearly states “5 passengers”. I even have my receipt showing how much I paid.

This is the part where they offer me a “deal” to pay a few extra hundred thousand Dong to get my “missing tickets”. The bus was now leaving in 15 minutes, and my daughter started to get anxious and asked me what was happening. I then spoke with 3 different employees almost at the same time, and they then talked amongst themselves in Vietnamese. I had no clue what was going on, and I clearly saw the confusion getting created everywhere.

There was only one bus per day leaving. Mine was leaving in 10 minutes, and they would not let us get on the bus.

Sir, please go back to your seat and wait… You can pay for two more tickets.

5 minutes before the bus leaves…

I paid for 5, we are 5, we are getting on that bus.

The bus will leave, I don’t care, I’ll jump in front of it if I must.

Sir, it’s okay, you can get on the bus.

And we ended up having some of the best seats! When you think of the stock market, you may often have the feeling that it is filled with that bus company’s employees. You will get plenty of contradictive information that will plant the seeds of the doubt in your mind. The fear of missing your investment target and not having the happy retirement you deserve may flow from head to toe over your whole body.

But if you have a solid plan, why would you doubt? Be firm, be fearless, and follow your investment plan. You’ll get on that bus and you’ll arrive at your retirement destination as promised.

Do you have your plan in place and is it written down? If you don’t, you won’t know what to do when the market goes sideways… Or when one of your favorite companies doesn’t increase its dividend as expected.

This was the case for Disney (NYSE:DIS) last quarter. I decided to comment on this news – declared in December 2019 – more in details in this video:

Getting rid of the noise, adding to my positions

The last point I wanted to address before showing my numbers was the few transactions I made in January. First, I got rid of the dust in my portfolio. I happen to see that a lot when I review DSR PRO reports: many investors tend to keep bits and pieces of stocks that are completely irrelevant to their strategy.

They ended up having shares worth an insignificant amount because they received shares from a spin-off, or they just made an investment that turned sour. In 2018, Honeywell (NYSE:HON) spun-off Resideo Technologies (NYSE:REZI) and then Garrett Motion (NYSE:GTX). I received a few shares of each. Later down the road, I sold my shares of Honeywell to buy BlackRock (NYSE:BLK) that was trading under $400 during December of 2018.

For a full year, I had two more lines on my investment statement:

3 shares of Garret Motion

5 shares of Resideo Technologies

What should I do with that? The amount was so small that the transaction fee for selling them would eat a good part of it. On the other side, I had no intention of increasing my positions in those companies. Heck, I even sold my shares of HON!

What I want when I invest is clarity. I don’t want to wonder if I should do this or do that. Clearing up the noise helps me achieve clarity. For that reason, I sold my 8 shares and moved on. I’m sure that I will use that $75.58 in a more effective way later.

Combining those sales along with dividend payments that accumulated in my cash account, allowed me to increase my position in Sylogist (OTC:SYZLF). This company is #1 in our DSR Mike’s Buy List.

Who doesn’t like a company offering overall improvements in business processes, quality and systems control through their services? Sylogist shows a strong model of growth by acquisition and has no debt. It also offers surprisingly high yield for a small tech stock. Through their Enterprise Resource Planning (ERP) solutions, SYZ can help both the public and private sectors to manage intellectual property. Knowing how managing data has been crucial for businesses lately, SYZ is at the right place at the right time. We like their client diversification, reaching over 1,000 customers worldwide, including local and national government departments. One of the major downsides of a company like this is that small caps could be quite hectic on the market. For that reason, investors should proceed with caution (or buy it and forget about the transaction for a while).

Source: Ycharts

The stock keeps heading downward after another disappointing quarter. What is happening here is that investors are accustomed to (read expect) seeing Sylogist showing strong growth numbers and beating expectations. When numbers fall short (revenue decrease of -2%), the stock starts to lose “market’ sympathy”.

Keep in mind that SYZ generated $3.2M in cash from operating activities (up 6.7%) while paying $2.4M in dividends last quarter. Not bad for a company that has no debt. The CEO mentioned that “Sylogist reduced its employee base by 20%, while generating the same level of business activity with greater capacity available to assimilate future acquisitions and while simultaneously improving operating margins.”

Management clearly is focused on acquisitions at this time and we should see more growth coming down the road. I like when a company has no debt, keeps increasing its dividend and improves its margins. That’s enough to keep me patiently waiting. I even personally added shares to my portfolio.

Now, let’s look at my current holdings. Numbers are as at February 6th, 2020 (before the bell):

Canadian portfolio (CAD)

Company Name

Ticker

Market Value

Alimentation Couche-Tard

OTCPK:ANCUF OTCPK:ANCTF

$7,700.44

Andrew Peller

OTC:ADWPF

$4,614.80

National Bank

OTCPK:NTIOF

$5,860.00

Royal Bank

RY

$6,417.00

CAE

CAE

$8,046.00

Enbridge

ENB

$8,948.38

Fortis

FTS

$5,653.89

Intertape Polymer

OTCPK:ITPOF

$4,992.00

Lassonde Industries

OTC:LSDAF

$2,943.99

Magna International

MGA

$4,879.00

Sylogist

SYZLF

$3,948.99

Cash

$31.59

Total

$64,036.08

My account shows a variation of +$3,153.67 (+5.18%) since the last income report.

Please note that my Canadian account didn’t really jump by 5% in January. In fact, I’ve transferred about $840 from my US account to my Canadian one. The $840 was the result of dividend payment accumulation. At some point, you must do something constructive with your dividends. You can either add new positions or increase the positions you already hold.

I currently have 22 different holdings in my portfolios (CDN and US stocks). I did not want to increase the number of companies I must follow quarterly. At the same time, I had a very small position in Sylogist (about 2K). This was the perfect opportunity to increase SYZ to over 2% of my total portfolio. I like it when each of my positions has a real impact on the portfolio. In an ideal world, they would all show an initial 4-5% weighting against the total portfolio value.

You can read about how I managed my portfolio as a Canadian (e.g. mixing both CDN and US investments): Investing the Canadian Way – Tricks I use to Boost My Returns. I discuss my sector allocations, how I manage currency fluctuations and my favorite sectors.

Numbers are as at February 6th, 2020 (before the bell):

US portfolio (USD)

Company Name

Ticker

Market Value

Apple

AAPL

$9,964.95

BlackRock

BLK

$7,608.72

Disney

DIS

$6,361.65

Gentex

GNTX

$7,127.55

Hasbro

HAS

$4,833.22

Lazard

LAZ

$4,464.54

Microsoft

MSFT

$10,794.00

Starbucks

SBUX

$7,442.60

Texas Instruments

TXN

$6,622.00

United Parcel Services

UPS

$3,923.48

Visa

V

$10,140.50

Cash

$0.74

Total

$79,283.95

The US total value account shows a variation of $1,875.97 (+2.4%) since the last income report.

While everybody was screaming the coronavirus would kill the economy and become the reason of the next stock market crash a few weeks ago, I see my portfolio in better shape today than it was on December 31st. I’m not a doctor or an epidemic specialist, and I don’t know if this virus, the trade war, or the Brexit aftermath will push the economy over the cliff. All I know is that most of my companies will continue to increase their dividends in the meantime.

That is part of my investing plan and that is what I’ll follow.

Dividend income: 110.87 CAD (+3.7%)

For the year 2020, I’m adding a new color to my graph. This means I’m adding a new year to my portfolio. January isn’t a great month in term of dividend payments. At least, it’s slightly higher than last year and the year before!

Here is the dividend growth detailed. The growth is compared to January 2019 (not necessarily a recent dividend increase):

  • Andrew Peller +4.9%
  • Disney: +0%
  • Gentex: +4.6%
  • Currency impact of +2.07%

Canadian Holdings payouts: 22.33 CAD

U.S. Holding payouts: $66.63 USD

  • Disney: $39.60
  • Gentex: $27.03

Total payouts: 110.87 CAD

*I used a USD/CAD conversion rate of 1.3288

Since I started this portfolio in September 2017, I have received a total of 7,100.19 CAD in dividends. Keep in mind that this is a “pure dividend growth portfolio” as no capital can be added into this account. Therefore, all dividend growth is coming from stocks and not from additional capital.

Final thoughts

I’m glad I finally came around to getting rid of GTX and REZI and deployed all the cash sitting in the account. It wasn’t much ($2K), but it feels better to see 100% of my money working for me while I sleep.

Some investors like to keep 10-25% in cash just in case the market crashes and there is a buying opportunity. When I look at my portfolio in 10, 20 or 30 years, I’ll tell myself that 2020 was an amazing year to invest and I will be thankful that I was fully invested during this period.

Did you know that between 1977 and 1990 Fidelity’s Magellan fund (managed by the famous investor Peter Lynch) generated an average annual return of 29%? Fidelity did a case study on this fund as it became their largest investment product due to its incredible returns. Did you know what they found? The average investor in this fund lost money. Investors kept trying to time the market and ended up panicking in most cases.

By staying fully invested all the time, you don’t have to figure out when is the right time to invest or to get out. Most importantly, you will not lose money you shouldn’t.

What about you? Are you planning any trades for February?

Original Post

Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.

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2020-02-18