I don’t know about your stock portfolio, but mine has been showing great results in 2013. I’m obviously not as good as my 2013 Best Dividend Stock Book as I don’t hold all of them, but I’m still pretty happy with my results so far. After the first quarter, it’s time to look at my positions and look forward to the future. You can check the details of my dividend portfolio here. Dividend yield are shown as at April 11^th.

5N Plus – TSE: VPN 0% Div

What a mess… this is my last and only non-dividend stock in my portfolio and I definitely regret holding it right now. I was making a healthy profit a few months after my purchase. I should have sold my position while the stock was riding the wave. Since then, they have completed a big acquisition in … Europe! The company is highly dependent on the cost of resources which continues to drop due to the economic slowdown. Lately, the stock took another hit because the company had to reduce their stock value and goodwill creating a $200M loss for the last quarter.

I am keeping the stock right now as I’ve lost too much to quit on it. The company is not that bad considering they are under serious pressure from the market. I will continue to be patient in this case since I don’t have much left to lose. This is a good example of a stock I should have sold!

Apple – NASDAQ: AAPL 2.45% Div

So far, I’m not happy nor feeling bad about my newest acquisition. When I bought Apple, it was for 3 reasons:

#1 It now pays a dividend

#2 It has plenty of cash in its bank account

#3 Its P/E ratio had fallen under 10

For these three reasons I’m confident the stock will bounce back. At least, I don’t see the value going down any further and the dividend will ultimately be increased. Apple is definitely a keeper!

ScotiaBank – TSE :BNS 4.15% Div

Canadian banks are currently facing their first sign of a headwind. I recently discussed how the Cyprus situation may affect banks in general. Nonetheless, I like BNS because it’s the most international bank in Canada and their financial statements are strong. They recently beat the analysts with their most recent results and they showed an increase in profits. I’m expecting BNS to increase its dividend every year from now on.

Chevron – NYSE :CVX 2.98% Div

Chevron has been on a roll since the beginning of the year showing a double digit investment return since then. As long as the FED is pumping money into the market, there is confidence the economy will continue to rise. When the economy goes up, the price of oil follows sooner or later. CVX is part of my core portfolio and will be there for a while.

Coca-Cola – NYSE :KO  2.72% Div

Another great acquisition, I’m under the impression that I will keep KO for the rest of my life! The dividend will continue to increase over time and is already paying over 3% on my cost of purchase. Since I’m already up by 20% in my portfolio, I will keep KO and ride the market with it.

Husky Energy – TSE :HSE 4.08% Div

This is among my most volatile stock I hold. I decided to buy HSE even with shakier financial statements compared to other picks. I believe in the sector in the first place and think Husky will continue to pay its high dividend yield. Recently, they have increased their financial performance and the stock is now up these days. I’m ready to pay the price of volatility as long as I don’t see the dividend coming under pressure.

Intel – NASDAQ :INTC 4.16% Div

Another volatile stock! Intel is constantly under the pressure of technological improvements. I guess this is a key point when you consider buying such a company. Being a leader in the industry is not enough to guarantee growth. After a strong performance in the months following my purchase, the stock started to go up and down based on mitigated results and rumors from everywhere.

Then again, the level of cash in their bank account coupled with a low payout ratio makes me keep this high paying dividend stock. I don’t believe we will stop using the PC tomorrow morning even if tablets and smartphones are very useful.

Johnson & Johnson – NYSE :JNJ 2.96% Div

I consider JNJ as one of the “bonds” in my holdings. A company that is so diversified in terms of products and geography definitely makes it a keeper. It seems that they have solved their quality control problems as no major recalls were made so far this year. I expect JNJ to hold on during an eventual market correction and continue to increase its dividend over time. I do not plan on selling this company in 2013.

Seagate Technology – NASDAQ :STX 4.17% Div

STX pick is made for those who love rollercoasters! Since I bought the stock when it was in the $20 range, I don’t really mind seeing the stock going up to $37 before dropping down to $32 a few months later.

The company continues to post solid sales and profits. It may disappoint analysts from time to time but the stock is still hovering under a 5 P/E ratio! How could this be possible? People simply have lost interest in this techno stock and believe Seagate can’t evolve from their “classic” hard drive mentality. I can’t wait to see their next earnings report at the end of April! In the meantime, their high dividend yield and my paper profit make me ride the stock. It doesn’t mean it doesn’t hurt when I see the stock at $32 when I could have sold it at $37 .

Telus – TSE :T 3.68% Div

Telus is probably one of the favorite pick in my portfolio. It is a strong and growing telecom in Canada. Surprisingly, in a “boring” market such as Canada, Telus finds the way for growth and this is why the stock keeps reaching new highs.

Telus is paying a dividend based on my cost of purchase over 4%. There is no way I’m letting this stock go.

National Bank – TSE :NA 4.43% Div

National Bank is facing the same problem as the other banks. Considering that it’s the smallest of the big 6, there is a possibility of seeing NA being hurt first. On the other hand, it is not really involved in the housing bubble in Toronto, Calgary or Vancouver. If there is a mortgage hit to be taken, TD will be the first to cry. I believe National Bank will continue to make money and pay a healthy dividend. After all, it was the first Canadian bank to raise its dividend since the 2008 crisis.

What Do You Think? Which Stock Would You Sell?

Tell me, if you were in my position, are there any stocks you would say goodbye?

After the best month of January on the stock market since 1997, all indexes continued to roll. February was a great month as well and March continued to push the stock market to higher levels.  But the market started to become a bit shakier in March and this continues in April. I didn’t look at the volatility index lately, but I feel that there are more emotions involved in trading lately.

Currently Sitting on the Sideline

At the beginning of the year, I listed 3 dividend investing goals:

#1 Adding a “stable” dividend growth stock (most likely from the consumer sector) I bought Apple

#2 Increase my existing positions through Dividend ReInvestment Plans (DRIP) Not done yet – procrastination at its best!

#3 Invest 10% of my portfolio in a US index ETF. Currently sitting on the sideline

I currently have $3,200 sitting in cash in my account plus another $700 invested in a US index mutual fund. This is my cash to buy my US index ETF. In theory, buying an ETF should take a big 2 minutes at most to register the trade and achieve a second goal for my year. However, for one of the first time in my trading history, I’m hesitating.

I’m currently accumulating dividends paid in cash in my account and waiting to see what is going to happen on the stock market. I’m weighing the pros and cons of hitting the market or not with my liquidity.

Pros

The stock market is at its highest level ever. This should be a bad sign that would lead me to wait until there is a 10-20% correction. However, stocks’ P/E ratios are currently undervalued compared to their previous high back in 2007. Interest rates are way lower which contributes to companies’ growth. Finally, the dividend yield is higher than 10 year treasury bills. These three factors have me holding onto my current position and push me towards investing more money in the stock market.

But it’s not all that easy; there are some severe cons…

Are We Heading Towards a Correction?

The first sign the market is “sick” is that Wall Street definitely counts on the FED to continue pumping cash into the machine. It’s like having a leaking engine and shoving more oil inside instead of solving the problem. Sooner or later, you will lack oil and the engine may break instead of slowing down.

Then, what happened in Cyprus made me realized that banks may fall under an all new set of rules if things go sour. We may not be the first to be affected but the movement will surely come back faster than a boomerang if bigger countries with difficulties (such as France!) look at other possibilities to pay off their debts.

The third factor is seasonal. It almost sounds like storytelling but spring is usually pretty slow for the stock market. In the past 3 years, we hit a correction during that period of the year. What’s the interest of buying an index when we are at the highest level and are on a verge of a 10% correction?

Trading Options

I can see two options to my situation right now:

#1 Investing my cash in a money market fund earning 1.25% and wait for the correction

#2 Invest right now and live with the consequences (good or bad)

The risk when you weight your option is that you have a 50% chance of making the wrong decision. Therefore, if I sit on the sideline and the market goes up by another 10% by the end of the year, I will still face the same debate (invest or wait for the correction that is even more eminent!) and will have left $400 on the table (10% of $4,000).

On the other hand, if I buy the index today and there is a market correction in the next 3 months, I will tell myself: “I knew it!” and will lose roughly $400. This is why I am hesitating so much…

What’s worse to you: leaving $400 on the table or losing $400 when taking a chance of making money?

1. Target Corporation (TGT) Dividend Stock Analysis @ DGS.

2. Does Fixed Income Allocation Make Sense for Dividend Investors Today? @ DGI.

3. More Thoughts On Google (GOOG) @ IS.

4. Barbarians at the Gate @ Barel Karsan.

5. Budget 2013 clamps down on Advantaged ETFs @ Canadian Capitalist.

6. Water Company Stocks: Enough Profits to Wet Your Whistle? @ The College Investor.

7. Will The Defensive Tech Stocks Keep Moving Higher @ Dividend Ladder.

8. Six Canadian Bank Stocks @ Dividend Engineering

9. Smith Manoeuvre – When Should You Consider It @ The Passive Income Earner.

10. Carnival of Personal Finance #405, sunny edition.

Warning: Bank Lovers Are Going To Be Heart Broken

If you have been hiding under a pile of rock for the past three weeks, you probably missed two things:

#1 There is a change of seasons happening as spring is finally coming

#2 The headwind that comes with season changes hits the markets with bad news

And banks will take the wind directly in their faces…

What Happened in Cyprus

You are probably well aware of what happened in Cyprus over the past month since it hit the first page of most financial newspapers. Long story short, Cyprus banks had serious problems mainly due to their positions in Greek debt. The country requested $10B in help to get out of this mess. After numerous “original” scenarios (such as taxing bank accounts!), the country finally decided to protect small savers and only take money from bank accounts showing a balance over $100,000 Euros.

The North American press lead by financial analysts’ comments was very fast to tell the world that the situation in Cyprus is isolated and would not be replicated here. This is a half-truth, half lie in my opinion.

What Cyprus Banks have in Common with our Banks???

he press were right, when they said this situation won’t happen to our Banks (American or Canadian). But they forgot a huge fact. There is a new trend building up in the economy. Governments have started to dictate what to do to banks and this will not stop.

The common point with banks across the world (including Cyprus’) is that governments and central banks have now become their boss. For too many years, they have closed their eyes and let the big guys of Wall Street run the show. In 2008, those same big guys looked like a bunch of kids who broke a window playing stickball. They came back crying they made a “boo-boo” and would never do it again… as long as daddy pays for the broken glass. You know the end of the story; daddy paid for the broken glass and even had to remortgage his house to foot the bill.

The story doesn’t end there as many people think. The banks thought they got out nicely once again and started to run the show again. But the Government has learned *part* of the lesson this time; it is adding a whole bunch of new rules to make sure banks don’t mess it up again. Since most governments are still paying for the casualties of 2008, they can’t afford another crash. By adding rules to prevent another crash, they might create a new one…

Governments Rules Will Push Banks to Mediocre Results in 2013-2014

In both the US and Canada, governments have changed mortgage rules. The Canadian government doesn’t know what more to do in order to slowdown the housing market and avoid a bubble. They have taken away the 40 years amortization, increased the minimum cash down to 5%, increased the rate used for mortgage pre-qualification and they even recently called banks to stop them from lowering their rates!

Banks saw these rules coming and are well aware that their profit goals won’t slow down the same way the housing market will. Their reflex was to enter a rate war. If Canadians don’t buy more houses, we will take our competitors’ share of the market!

But the government didn’t stop there. Since banks are unlikely to follow the Government’s wishes (they also have to respond to shareholders’ appetites for profits!), the new federal budget is hunting down advantageous fiscal strategy. Everybody thought the government was after the rich and business owners. But there was also a third party targeted: banks! In fact, all Canadian banks have positions in the stock market that are too tax efficient for the Government. They are legal and follow all tax rules. But the Government thought it would be a good idea to take a few bucks from the Banks… bank accounts

So on one side, the Canadian government wants to slowdown the housing market and grab more money from bank’s trading abilities. So you can already tell that Canadian banks will see their revenues hit a plateau while they must have to pay more taxes than before. Doesn’t it sound like a great scenario to you?

If World Class Banks Are Getting Hit What Do You Think Will Happen To US Banks?

Since 2009, the world has now put Canadian banks at the top of the list for security and financial stability. Governments around the world are losing their breath on the weight of their debts while they see their banks holding all the cash they need to solve their problems… Do you really think it will continue this way?

After seeing the world market approving Cyprus’ deal to save the country, it truly seems to me that, in a last resort, Governments are ready to take on banks to pay for their own problems. The thing is that the money held in banks belong to people… you and me.

Seems like daddy is going to call back his son a few years later and ask him to repay for that broken window… with interest!

Any respectful investor will tell you that you need a solid investment process if you want to be successful in the stock market. I’m definitely part of this category. I strongly believe in fundamental analysis to find the best stocks for my portfolio. I’ve created my own dividend stock analysis template and follow my investing rules religiously. But there are far more than simply ratios and financial data required to analyze a stock. The numbers will tell you a story, but there is a lot more to discover when you read between the lines.

Know What You Invest In

This investing rule has been made famous by Warren Buffett. According to his investment method, you should never invest money in a business model you don’t understand. This is also probably why he keeps most of his investments in “simple companies”. I must admit that it’s pretty easy to understand companies like Coca-Cola (KO), CN (Canadian National – Trains) and Heinz (HZN)!

When you know what you invest in, it’s easier for you to figure out if the company can continue to make a profit over a long period of time. For example, I own shares of Telus, a telecom giant in Canada. The market is relatively closed to newcomers and there are a lot of possibilities. I’m not a techno crack, but I do understand that the population of Canada is not 100% converted to the Smartphone yet and margins on such products are pretty good (especially with the super expensive 3 year contracts we sign!). I also own a few consumer sector businesses in my portfolio as I don’t have to figure out if people will continue to buy soft drinks or not!

Surprisingly, there are a lot of things you can understand from your own perspective. When you mix what you learn from work and from your day-to-day life as a consumer, you have a lot of data to analyze. Most of it can be used to improve your knowledge of a few companies.

Plan Your Investment Return Based on Dividend Yield

Another thing I like about dividend investing is the fact that you can plan a part of your investment return ahead of time. If you treat your stock as bonds instead of equity, you will find retirement planning a lot easier. Let me explain my theory.

Within the next 12 months, 2 years, 5 years, it’s pretty hard to determine the future price of a stock. There is tons of news that can influence the price of your stock. However, there is not much that can influence the dividend payment.

Once you have selected a strong dividend payer (with a growing EPS and a low payout ratio), chances are that your dividend payment will only increase in the upcoming years. This part of the equation is fairly easy to plan for when you look at long time dividend payer.

In my portfolio, I can be assured that companies such as KO, JNJ, CVX, BNS, NA, INTC, T will continue to pay their dividends for a very long time. Their payout ratio is low and their dividend history is impeccable. Unless there is a huge catastrophe, I can plan on receiving my 3-4% dividend yield for several years. I don’t need to know the value of the stock per se; I only need to know how much I will receive in dividends. If the company continues to keep a good ratio, its valuation will come back to par (or even higher) over the long haul; exactly as bonds come back to their par value before maturity.

Then again, if you understand the business model you invest in, you won’t have to worry about the dividend payouts!

Follow the Buzz? Only if You Get it

I’m not too keen on following the market flavor of the month. For all kinds of reasons, good or bad, many investors start to invest in similar stocks in the same sector. We saw it earlier this year with the food industry. I personally picked the techno sector over the past two years with investments in Telus, Intel, Seagate Technology and Apple. I like the buzz around techno stocks because most companies have so much cash in their accounts, they don’t have any other choice but to pay bigger and bigger dividends! I’m expecting Apple to turn into another Microsoft. The growth won’t be astronomical anymore, but the dividend will increase on a steady basis.

Riding a wave while it goes up is always fun. But there is a big risk the wave crashes while you are still on top of it. This is why it’s important to understand why there is a buzz around a sector and if it’s worth it to invest or not. I’ve riden the buzz around oil income trusts in Canada back in the early 2000s. I made a lot of money and, fortunately, I cashed out my investment to buy a house in 2007, right before the crash. There was a huge negative buzz around banks in 2008-2009. Those who analyzed the situation right saw that Canadian banks should not be penalized by that buzz. They made a lot of money!

The reason why I bought Apple this year is also because there is a negative buzz around the company. I believe that with their resources and cash, they will bounce back. I don’t expect the stock to go as high as $800. But I expect it to increase its dividend on a yearly basis!

Finally, Know Why You Are Investing

I think that knowing why you are investing is very important. Some do it for fun because they like the feeling of trading. Others do it because “it is the thing to do when you have money”, they should consult a professional to make sure they are doing the right thing! There is also a big difference if you invest to generate a source of income than if you are in your 30s and trying to build a big nest egg. Beyond the numbers, the reason why you invest in the first place will dictate how you will manage your portfolio and if you will make money or not!

Disclaimer: I own shares of KO, JNJ, CVX, BNS, NA, INTC, T, STX.

Let’s jump right into the links today!

1. High Dividend Growth REITs: Digital Realty Trust (DLR)  @ DGI.

2. 6 Stocks Building Wealth Through Higher Dividends @ DGS.

3. Canadian Imperial Bank of Commerce – Dividend Fact Sheet @ Dividend Engineering.

4. Karsan Value Funds: 2013 Q1 Results @ Barel Karsan.

5. Asset Allocation – Young Adults Part II @ The Passive Income Earner.

6. Thinking About Getting Into Apple (AAPL)? I’d Get In Now @ IS.

7. How Budget 2013 will affect your pocketbook @ Canadian Capitalist.

8. Home Depot: Real Estate Exposure at a Fair Price @ The College Investor.

9. 5 Reasons Why Bitcoins are the Dumbest Investment Ever @ Darwin’s Money.

10. Shotgun Stock Analysis Pt 2 @ TCDB.

There is something very powerful about the stock market.

Something no human being can really explain or can truly understand.

No matter how low the stock market goes, it always bounces back!

It Was The End of The World… 5 Years Ago!

Do you remember your summer of 2008? I certainly do! It was part of my first “real life” experience when the market suffered from a correction. The word “correction” is pretty small in this case. I could have used the word “disaster” instead. Some of the World’s biggest banks collapsed, Lehman Brothers even went bankrupt and suddenly, GM was synonymous with General Maelstrom.

I remember the craziness, the panic and all the assumptions:

Capitalism is dead.

Banks are going to close.

This is even worse than you think it is (how could it be? It’s the end of the world???)

The Black Swan Rhetoricians were brought in mass onto Oprah’s TV show to explain how this was inevitable. Investors lost faith in the market and traded their shares for bonds by billions. The world had changed and it will never be the same…for at least 18 months, right?

5 Years Later, We are More Capitalist Than Ever

I’m sure you have read the headlines over the last month: The Dow Jones at a new peak, the S&P 500 breaking a new record. We are now aiming for new highs in the market a scant five years after the worst stock market crash in history. I can say that my first two kids have survived the end of capitalism…

Five years later, I’m asking what has truly changed? Nothing. There are absolutely no differences between the world before 2008 and the world after 2013. Only 5 years of investing turmoil and we are back to square one. The big guys on Wall Street are still overpaid; companies’ problems have been shifted to the Government who now holds the debt – only true survivor of 2008.

The capitalism movement is now stronger than ever, we don’t even hear about “Occupy Wall Street”. Money is coming back into equities and investors now realize that it’s not a few bozos who will put the system at risk.

Did You Learn Something from 2008?

If Governments didn’t learn much, I think I’ve done my homework and have some notes to share:

#1 When people panic, they are probably wrong.

#2 Diversify your investments – even something as strong as a bank can collapse.

#3 Never invest in something you don’t understand (commercial paper anyone?)

#4 Invest for specific reasons, do not speculate.

What about you, have you learned anything from 2008?

At the beginning of each month, I produce a recap of the dividend yield and ex dividend date for the TSX 60. In addition to this recap, I’ve decided to briefly cover the result of my Best 2013 Dividend Stock Book. This book includes 30 stock analyses (20 US and 10 CDN) for only $2.99. So far, my results are:

20 US Dividend Stocks: +16.79% (Can you do better?)

10 CDN Dividend Stocks: + 4.51%

If you want to read more, just continue look at the TSX 60 Dividend Yield & Ex-Dividend Date chart…

TSX 60 Dividend Yield & Ex-Dividend Dates

Best 2013 Dividend Stock Results

At the beginning of the year, I made a list of Best dividend stocks for 2013 (click on the link to get my metrics and see the list). Out of this exhaustive list, I pulled out 30 stocks to be my “favorite” picks from these lists. These are not stock recommendations and I strongly suggest that you do your own analysis and read financial statements. This book is simply a compilation of my own stock analyses for 30 stocks either being held in my portfolio or being on my watch list.

I’ve broken down the results per market:

Best 2013 US Dividend Stocks Results

The average portfolio is showing an amazing return of 16.79% that is 6.49% over my benchmark (VIG with 10.28%). Oh! Did I mention that my portfolio also produces 0.90% more in dividend yield than VIG? . I also compared the results to the S&P500 that has a YTD of 10.03%. So I’m not only beating a dividend ETF, I’m also beating the whole US market by more than 6% in return without counting my 3.07% current dividend yield.

The food market continues to boom with several high return stocks (read about the best performing food stocks here). I’m definitely proud that none of my stocks show negative results so far. I think this is the key to my portfolio success so far. Only 6 stocks out of 20 don’t beat my benchmark. Finally, I hit 4 homeruns (stocks over 25%) so far:

Safeway +45.65% (current dividend yield at 2.66%)

Campbell Soup +30.01% (current dividend yield at 2.56%)

Walgreen +28.82% (current dividend yield at 2.31%)

Heinz +25.28% (current dividend yield at 2.85%)

Best 2013 Canadian Dividend Stocks Results

My results are not as impressive on the Canadian market. Some of my stocks are still lagging (National Bank, Calian Technologies, Evertz Technologies). These are the same stocks that were behind the index in February.

A month ago, I was beating the index by only 0.08%. Depending on the day you look at the portfolio, I could even fall behind. I’ve done a little bit better in March and I’m now showing +0.46%. I also reduced the difference in dividend yield. My portfolio now generates only 0.12% less than XDV. Overall, I’m still ahead.

My call on financials (RBC, NA and POW) has not created as much enthusiasm as I thought it would. Fortunately, my call on telecoms (Telus and Rogers) is much better!

When I created my first Best 2012 Dividend Stock book, I thought I was just lucky to beat the market. Then, my stock selection for 2013 is on a roll to beat the market again. How was I able to generate such high return so far this year? I didn’t do anything special… but to follow specific investing guidelines listed in my book: Dividend Growth.

You can buy it on Amazon and understand how I found these stocks before you did

Disclaimer: I own shares of NA, T, CVX, INTC, JNJ, STX