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    Four years ago, I bought this blog. This was my first move towards dividend investing. I started investing back in 2003 but my first dividend stock was bought in 2010. Over the past four years, I’ve worked on building my own investing philosophy (you can read about it here). My investing model didn’t appear overnight and it was the result of a long process.

     

    What I really like about investing is that you are never done learning. There is always a new situation that will generate new results in your portfolio. After four years of dividend investing, here are the most important investment lessons I’ve learned:

     

    #1 I Love Receiving Money in my Account

    I guess the biggest difference between dividend investing and all other strategies is the fact that each month; my cash account grows bigger. Receiving dividend payouts each month is a great feeling. Since I don’t lose any time tracking my dividend dates, I sometimes open my brokerage account and find $20, $50 and up to $171 once! Since 2010, my dividend payouts have never stopped growing:

    dividend payout

    In 2014, I expect to receive almost $1,500 in dividends on a $50,000 portfolio. This equals a 3% yield. It is a modest amount so far, but it will greatly increase over the years to come. It took me two years to make the full transition from my previous positions to a 100% dividend portfolio this is why the yield is still relatively low.

    Besides the fact that it’s fun to receive money each month, I also appreciate this extra cash flow so I can buy more stocks. I usually build my dividend payouts up to $500 to buy an index fund and wait until I have about 10% of my portfolio available to buy another position. For example, I’m now waiting for my annual RRSP contribution of $5,000 in January to buy my next stock. I will definitely add all remaining cash in my account to this transaction.

     

    #2 It’s Easier to Follow Dividend Stocks

    I used to trade heavily on oil and other resources stocks. There is a lot of money to be made in these fields but it also requires several hours of work and daily check-ups. I still spend several hours before buying a dividend stock, but once it’s added to my portfolio, I don’t have to check my position every day… not even every week!

    When you buy a dividend stock, you usually buy a sound & healthy companies. Therefore, following quarterly results is usually more than enough to make sure one stock doesn’t slip through the cracks and start rotting.

     

    #3 Don’t Chase High Yield

    I recently wrote a case against high dividend yield but I must admit I learned my lesson the hard way. I bought a covered call ETF back in 2011 (ZWB). ZWB is a covered call ETF that follows the six Canadian banks. Over about a year, I lost almost 9% on that trade. Mind you, when I bought ZWB, the dividend yield was… roughly 10%.

    Today, the ETF is up 15% since its inception in 2011, while the worst bank during this period is CIBC (CM) at +23% and the best are TD (+54%) and NA (+50%). Plus, the ETF now pays *only* 4.61%.

    The lesson to learn from this is that high yield investments always carry limited growth potential and/or higher risk.There is a reason why you get a higher yield and it’s not because Santa Claus exists!

     

    #4 Dividend Growth is better than Trading Regularly

    One of the reasons why I switched to dividend investing was to reduce the time required to manage my portfolio without affecting its performance. It turned out that I’ve improved my performance and reduced the time spent managing my stocks.

    But I had to face my old demons; a part of me wanted to trade more and use capital gains to buy other companies. The best part about dividend investing is you don’t always need to sell your stocks to benefit from growth; the dividend payout increases too!

    When I bought Telus (TSE:T) back in 2011, the dividend paid was $0.26 per quarter per share. Now the current dividend is $0.38 per quarter per share. That’s a 46% increase over just 3 years! I could have sold the stock and cashed out a healthy profit, but the truth is that Telus pays a 5.6% dividend yield based on my cost of purchase. In a few years, I’ll be able to add a new position to my portfolio only by cumulating the dividend payouts. This means I won’t have to dip into my pocket to grow my portfolio!

     

    #5 Yield Doesn’t Matter if you Select the right pick

    At first, I used to select only companies paying over 3% in yield. It was my way of identifying “good dividend stocks” amongst other factors. I used to ignore lower yielding companies because they were simply not good enough for me.

    I quickly made my first exception and selected Coca-Cola (KO) at 2.75%. I knew KO’s dividend would reach over 3% in a heartbeat due to its dividend growth policy. It did and I was encouraged to dig further into similar yielding companies.

    The truth is that I found several gems among low dividend yield stocks. Among them, I bought Disney (DIS) with a 1% dividend yield now showing a +40.18% in my portfolio. I also bought Apple (AAPL ) with a 2.25% yield (back then) now showing + 39.96%. More recently, I bought Gluskin & Sheff (TSE:GS) at 2.50%. The stock is already +11% before dividend payments this year. The dividend yield is not the most important metric when you select a dividend stock. Instead, I look for companies with the ability to increase its payout consecutively for the next 10 years and beyond.

     

    #6 Patience is the Most Important Investor’s Asset

    During these four years, I’ve bought several stocks that didn’t go into the green right away. In fact, both Chevron (CVX) and Johnson & Johnson (JNJ) stagnated a while before I realized any profits. I bought JNJ when there were quality control issues causing important expenses. Let’s just say there wasn’t any hype around the company at that time.

     

    But since then, JNJ has soared boosted by great results in 2013 and 2014. Sometimes you get lucky and your stock keeps going up the minute you buy it. But most of the time, the result of your trade is not instantaneous. On the other hand, patient investors will receive their rewards sooner or later.

     

    I’m excited to finish 2014 with my current portfolio as things are going very well for me right now. I also know that will learn a lot more in the upcoming years as it will be interesting to see how my portfolio will react to a bear market although I don’t think we will see it any time soon.  I’m not stupid either; there’s always a drop in the market after such a boom.

     

    Tell me, what have you learned from dividend investing in the current bullish market?

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    At the beginning of the year, I selected HP to be one of my best 2014 dividend stocks. Not long afterwards, I added HP to my portfolio. The company shows great metrics and meets all my minimum requirements in terms of revenue, EPS and dividend growth over the past 3 and 5 years.

     

    This year’s quarterly results continue to show strong growth and the future of the company looks bright. While the past two quarters were slightly under analysts’ expectations, Q2 was a record period for the company.

     

    However, the stock is on a major downtrend for the past two months. It seems HP isn’t in investors good grace anymore but I can’t really see why.

     

    hp

     

     

    So here’s my question; why do you think HP is down lately? Is it a great buying opportunity or am I missing something?

     

    I’m looking forward to reading your answers!

     

     

    disclaimer: I hold HP in my portfolio and it is also part of some of our DividendStocksRock portfolios

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  • Before we go with the TSX60 Ex Dividend Date; I wanted to tell you that I was interviewed by Mint! you can read the article here.

     

    I started this “tradition” on my blog in 2012. The goal is to pick 20 US and 10 CDN dividend stocks that I think will outperform their peers. This is the reason why I use VIG and XDV as my benchmarks. I keep track of my results for accountability purposes as I find that too many analysts and blogs just drop the ball on their picks when they are not that great. By posting monthly results, I have no other choice but to face my performance and explain it. You can look at my previous picks and returns:

     

    Best Dividend Stock Picks 2012 (-1.47% vs VIG (US dividend ETF), + 8.32% vs XDV (CDN dividend ETF)

    Best Dividend Stock Picks 2013 (+11.07% vs VIG, + 0.77% vs XDV)

    My 2014 Best Dividend Stock Pick is for sale on Amazon.

     

    Top US Dividend Picks 4.46% (vs VIG at 3.93%)

    The recent financial results hurt the US market in July & August and my portfolio was no exception. While I’m still beating my benchmark by 0.53% and its dividend yield by 1.12%, it’s not much compared to the S&P 500 with a ytd return of 8.08%. This is why you have to pick dividend investing for the long run and not for the short term.

    Poor results from Aflac (AFL), McDonald’s (MCD), Exxon Mobil (XOM) and Mattel (MAT) pushed these stocks lower. I can understand the impatience aimed at MCD as it has struggled to post growth for about two years now.  Exxon Mobil ran into expenses and Mattel seems to have lost its touch for great toys. Aflac is still struggling with a strong US dollar as most of their business is coming from Japan.

    On the other hand, PepsiCo (PEP), Lockheed Martin (LMT) and Apple (AAPL) are driving my portfolio higher with better than expected earnings. Of these three companies, I own positions in two personally (LMT and AAPL), you can tell I’m smiling right now. Apple is probably is a good buy right now since it has dropped by over 3% last week due to all those celebs pics stolen from iCloud. Between you and me, do you think your Google Drive is safer than your iCloud?

    Best 2014 US dividend stocks

    Top Canadian Dividend Stocks + 5.28% (vs XDV at 8.88%)

    Right now, I’m seriously lagging behind my benchmark and the reason why is obvious; I hold too many losers in my portfolio. Black Diamond (BDI) which was one of my top performers recently dropped 13.24% in July. Results were only going to be live on August 12th after the market, why has the stock plummeted in July? Call it bipolarity! This should make a good entry point for this company now paying a 3.25% dividend yield (monthly!). The stock didn’t move much after record second quarter and a dividend increase. The P/E ratio is now back to a more “normal” situation under 24. This is definitely a good buy occasion.

    Telecoms were hit by the obvious; the Gov’t doesn’t want them to play alone in the mobile industry. This is why Telus (T) dropped by almost 2% in July and Rogers (RCI.B) kept dragging by another 3%.

    Finally, Lassonde (LAS.A) took BDI’s place in the big portfolio winners with the recent purchase of the American Apple & Eve. The stock surged by 24% in July, helping my stocks to be close to the benchmark. A 2% difference with ten stocks can easily be caught back up with a good third quarter.

    The other problem I see with my benchmark is that 54% of their holdings are in Bank. Since they did well so far and I hold only 20% among my 10 picks, it is very hard to compete this year. Still, I hold too many losers and this is the main reason I’m lagging behind…

     best canadian dividend stocks 2014

    S&P TSX 60 DIVIDEND YIELD AND EX DIVIDEND DATE

    Ticker
    Name
    Price
    Dividend Yield
    Payout Ratio
    Ex-Dvd
    PWTPenn West Petroleum Ltd8.36.75N/A9/24/2014
    CPGCrescent Point Energy Corp44.556.2746.549/26/2014
    COSCanadian Oil Sands Ltd22.86.1481.2911/21/2014
    TATransAlta Corp12.375.82N/A11/28/2014
    BCEBCE Inc49.195.0291.5209/11/2014
    ERFEnerplus Corp23.914.52452.0309/03/2014
    RCI/BRogers Communications Inc44.374.1253.6909/10/2014
    SJR/BShaw Communications Inc27.583.9961.5809/11/2014
    POTPotash Corp of Saskatchewan Inc38.23.964.4210/14/2014
    ARXARC Resources Ltd30.733.9155.389/26/2014
    CMCanadian Imperial Bank of Commerce/Canada104.773.8244.499/25/2014
    TTELUS Corp39.923.8167.2609/08/2014
    FTSFortis Inc/Canada33.583.8178.3810/22/2014
    RYRoyal Bank of Canada81.143.745.210/23/2014
    BMOBank of Montreal84.623.6946.8610/30/2014
    TCK/BTeck Resources Ltd24.463.6853.912/10/2014
    HSEHusky Energy Inc32.833.6664.9611/25/2014
    NANational Bank of Canada52.533.6638.369/23/2014
    BNSBank of Nova Scotia/The72.273.6546.0610/03/2014
    POWPower Corp of Canada323.6354.6309/05/2014
    SLFSun Life Financial Inc40.893.5250.8611/24/2014
    TRIThomson Reuters Corp41.443.49848.0311/21/2014
    PPLPembina Pipeline Corp51.463.38147.359/24/2014
    TDToronto-Dominion Bank/The57.33.2846.7210/01/2014
    TRPTransCanada Corp59.143.2575.999/26/2014
    AGUAgrium Inc103.123.1734.019/26/2014
    CVECenovus Energy Inc34.083.12110.5709/11/2014
    MFCManulife Financial Corp22.172.831.9611/14/2014
    BBD/BBombardier Inc3.652.7432.5209/10/2014
    TLMTalisman Energy Inc10.862.71N/A09/11/2014
    SUSuncor Energy Inc43.672.5628.0211/27/2014
    ENBEnbridge Inc54.952.55236.1511/12/2014
    GGoldcorp Inc29.242.25N/A9/16/2014
    CNQCanadian Natural Resources Ltd46.171.9527.5809/10/2014
    WNGeorge Weston Ltd86.471.9436.2509/11/2014
    CCOCameco Corp21.031.949.669/26/2014
    YRIYamana Gold Inc91.82N/A9/26/2014
    LLoblaw Cos Ltd54.51.841.9409/11/2014
    CTC/ACanadian Tire Corp Ltd112.741.7721.3810/29/2014
    SNCSNC-Lavalin Group Inc55.891.72389.7811/14/2014
    MRUMetro Inc70.671.712.9410/29/2014
    SAPSaputo Inc65.521.5932.8912/04/2014
    THITim Hortons Inc89.221.4336.811/28/2014
    MGMagna International Inc123.361.3418.1911/26/2014
    BAM/ABrookfield Asset Management Inc52.251.3318.4111/26/2014
    CNRCanadian National Railway Co79.11.2627.7209/05/2014
    ECAEncana Corp24.751.23209.3209/11/2014
    ABXBarrick Gold Corp19.521.12N/A11/26/2014
    SLWSilver Wheaton Corp26.650.9942.6111/19/2014
    IMOImperial Oil Ltd56.780.9214.6711/26/2014
    AEMAgnico Eagle Mines Ltd40.30.86N/A11/28/2014
    GILGildan Activewear Inc61.70.7713.6612/09/2014
    CPCanadian Pacific Railway Ltd222.880.6328.119/24/2014
    FMFirst Quantum Minerals Ltd24.040.4221.134/15/2015
    ELDEldorado Gold Corp8.630.23N/A02/04/2015
    VRXValeant Pharmaceuticals International Inc131.200N/A
    KKinross Gold Corp4.22009/17/2014
    BBBlackBerry Ltd11.4200N/A
    CCTCatamaran Corp51.8700N/A
    GIB/ACGI Group Inc39.2200N/A
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