Q2 2024 Dividend Report

anyaberkut My Background Each investor faces a different set of circumstances. Now 37, I have been investing since I was 22 years old. My first investment in individual stocks was made in the heart of the financial crisis back in May 2009. I purchased 40 shares (80, split-adjusted) of Toronto-Dominion Bank (TD:CA). However, for years before making that purchase, I had been researching the best methods available for both wealth creation and preservation. I don’t believe in taking unnecessary risks and feel the whims of the stock market are too fickle as far as capital gains are concerned to base my aspirations of financial freedom on. Dividend growth investing stands out as it is far more predictable that a healthy company might increase its dividend by 6% than to make any sort of prediction about stock price volatility in the near term. On this basis and from my initial foray into the markets with TD, I’ve built a portfolio of over 40 cash flowing equities. My goal is ultimately to have a stock market portfolio which provides enough income to cover all of my expenses. While some feel that it only requires ten companies to achieve ultimate diversification, I believe there is room for a healthy level of redundancy to avoid the hiccups involved with company-specific performance. Regardless, I endeavor to always own the best of breed companies in their respective industries. I can live with slower growth if it means greater security for my invested dollars. This is a strategy I have researched over time and came to trust because it can work both for young investors and for those much further along on their financial journeys. While it may not turn heads at a dinner party, it has proven its value over the past few hundred years and remains as relevant as ever today in our digital age. Having noted the above, it is truly a great time to be a dividend growth investor. The companies I own are committed to rewarding shareholders and I love nothing more than to reinvest back into them to further increase the compounding power in my portfolio Dividend Summary I received cash flow from 41 companies, with 26 paying in Canadian dollars, with the remainder in USD. Please note that all Canadian companies are owned in CAD on Canadian exchanges. JNJ is owned in CAD within my portfolio, though it resides on the NYSE; its dividend payments are provided in CAD. CAD Dividends Company CAD Payments ($) Div Change (%) Toronto-Dominion Bank (TD:CA) 204.00 RioCan Real Estate Investment Trust (REI.UN:CA) 72.42 The Coca-Cola Company (KO) 87.32 5.43 Johnson & Johnson (JNJ) 107.32 4.20 BCE Inc. (BCE:CA) 219.45 3.10 Canadian Imperial Bank of Commerce (CM:CA) 21.60 Corby Spirit and Wine Ltd. (CSW.B:CA) 10.50 Bank of Nova Scotia (BNS:CA) 106.00 TELUS Corporation (T:CA) 107.19 Rogers Communications Inc. (RCI.B:CA) 27.50 Fortis Inc. (FTS:CA) 115.05 Canadian Utilities Ltd. (CU:CA) 106.48 Canadian National Railway Company (CNR:CA) 38.03 Canadian Pacific Kansas City Limited (CP:CA) 9.50 Hydro One Ltd. (H:CA) 81.69 6.01 Chartwell Retirement Residences (CSH.UN:CA) 15.30 Metro Inc. (MRU:CA) 6.70 Brookfield Renewable Partners L.P. (BEP.UN:CA) 137.97 Brookfield Renewable Corporation (BEPC:CA) 62.93 Brookfield Asset Management (BAM:CA) 2.61 Brookfield Corporation (BN) 2.42 Brookfield Infrastructure Partners L.P. (BIP.UN:CA) 80.09 Brookfield Infrastructure Corporation (BIPC:CA) 19.88 A&W Revenue Royalties Income Fund (AW.UN:CA) 57.60 Enbridge Inc. (ENB:CA) 22.88 Saputo Inc. (SAP:CA) 5.55 Click to enlarge USD Dividends Company USD Payments ($) Div Change (%) Kenvue Inc. (KVUE) 10.00 Waste Management, Inc. (WM) 31.88 McDonald’s Corporation (MCD) 29.81 Yum! Brands (YUM) 22.22 Yum China (YUMC) 5.31 PepsiCo, Inc. (PEP) 22.28 7.11 Walmart Inc. (WMT) 15.88 9.21 Visa Inc. (V) 6.63 AbbVie Inc. (ABBV) 69.75 Microsoft Corporation (MSFT) 8.29 Mastercard Incorporated (MA) 3.93 Apple Inc. (AAPL) 3.75 4.17 Abbott Laboratories (ABT) 5.50 Meta Platforms (META) 1.70 Alphabet (GOOGL) 3.40 Click to enlarge Dividend Totals I earned C$1,727.98 and U$240.33, combining for a currency-neutral sum of $1,968.31. As a Canadian investor who lives near the US border, I enjoy this split of income. While all dividends currently get reinvested, in the future I will use the US income for times when I head south. Overall, dividend growth in this quarter was healthy. Particularly given the fact that inflation has begun to recede, these boosts will go even further in terms of future purchasing power. On the balance of things, I like to see dividend growth for most companies coming in at least for 5% annually. The only exception would be with high yielders like REI-UN:CA, where I enjoy the elevated cash flow and simply reinvest it into other companies. Taking the Good with the Bad On a positive note, I enjoyed receiving my first dividend payment from GOOGL. This is a company I hadn’t really expected to be receiving cash flow from for quite a few years. While it is indeed a mature tech company, there are no shortage of areas requiring huge sums of investment capital, with AI and cloud expansion being among the highest. On the downside, BNS:CA failed to raise its dividend as expected in this quarter. On the company’s Q2 2024 Earnings Call, CFO Raj Viswanathan stated the following: …[T]here is no dividend increase this quarter. It’s part of what we’re thinking is, we do want to grow dividends in line with our earnings growth, which we know is going to happen in 2025, rate situation and other stuff to contribute it. So we decided that it’s better to take a pause at this time and we should start commencing our dividend increases in 2025, in line with what we do every year in the second quarter. While the tone of the earnings call was upbeat, with leadership indicating it was a solid quarter, the lack of a dividend boost—even a token raise—is certainly a red flag. At this point, I will continue to hold BNS given its high yield which I consider to be relatively secure, but I have lost confidence and have no intention to increase my position. Q2 Market Activity I went to the market twice in the quarter, picking up additional shares of T:CA and AW.UN:CA. My total cash outlay was C$2,590.40. Taken together, I am expecting the two purchases to bring in C$43.46 quarterly or C$173.84 annually on a forward-looking basis. My purchase of AW.UN:CA was fortuitously also ahead of their announcement with Q2 results that they would be part of a strategic combination with A&W Food Services, leading to a new publicly traded company. This caused the shares to pop from ~$28.50 to ~$35 on the news: Data by YCharts It was a nice surprise to get a double-digit percentage gain so quickly on my purchase from April. I am currently leaning toward holding shares of the new company to be formed. The A&W restaurant brand has been well-managed over the years, and anecdotally, I find the restaurants themselves to have a high throughput of customers in clean, reliable establishments. Q3 Investing Considerations The biggest investment theme I am currently following is with relation to artificial intelligence (AI). It has been the largest game changer in the business world over the past two years, and the runway remains incredibly long. The way I see it, there are basically two ways to play this: Invest in companies developing large language models (e.g., MSFT, GOOGL). Invest in companies providing the foundation for AI (e.g., energy companies, chipmakers). While I am currently satisfied with my position in the AI-developing companies themselves, my intention is to continue doubling down on the energy providers. These companies tend to come with healthy dividend yields and I believe they will continue riding the secular growth trend of higher global energy needs for decades to come. In a best-of-both-worlds scenario, MSFT and BEPC announced a collaboration where BEPC will deliver over 10.5 gigawatts of new renewable energy capacity. This five-year agreement will help MSFT trend toward its green-targets (i.e., zero carbon footprint), while further establishing BEPC as a go-to source for other large tech players. I love owning both companies and expect more of this type of deal in the future. Conclusion I enjoyed both healthy current income and solid dividend growth from my portfolio in Q2. My quarterly totals are now consistently knocking on the $2,000 barrier, which I suspect I should cross in Q4 for a single quarter. The reliability of the dividend growth investing strategy gives me confidence that no matter the economic climate, I will always have plenty of capital to continue reinvesting. My future investment plans continue to consist of investing further in companies I already own, while preparing my portfolio for a tech-and-energy-heavy future. Thank you for reading.

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