Last Sunday for lunch, we did something very Quebecois, feasting on a deliciously sweet meal, taking a horse drawn sleigh ride, and finishing of with maple taffy on the snow at a sugar shack. Even though it was a tad expensive at about $25 per adult, I definitely got my money's worth in bacon and maple syrup (which is a great sugar substitute in coffee). While my father-in-law was making small talk with a former student of his who works as a waitress, I overheard her explaining that March is a critical month for maple syrup producers in Quebec. With the maple sap running when the temperature climbs above freezing and this coinciding with the only four weeks most shacks are open for meals all year, it's make or break for producers. How stressful it must be to have so much of your financial well being dependent on weather during one single month that has notoriously unpredictable weather.
The visit to the "cabane à sucre" got me thinking that it was time to post the list of Canadian companies that pay growing monthly dividends for 2019. This has traditionally been one of my most read posts in 2018, 2017 and 2016. Using the Canadian Dividend All-Star list from February, 2019, I determined the monthly dividend growers for 2019. To be included, companies had to pay a monthly dividend, increase their distribution at least once in the last 12 months, and have a minimum 5-year history of annually increasing their payouts. The initial screen this year yielded 23 companies before I removed five organizations that had not raised their payout in the last 12-months. I then removed Boyd Group Income Fund due to their unimpressive 0.4% dividend yield. The 17 monthly dividend growers for 2019 were consistent with the number in 2018, down from 20 in 2017, but higher than only 12 in 2016.
The resulting 17 companies included eight real estate investment trusts (REITs). As the payout ratios and valuations of REITs are usually calculated based on funds from operations (FFO) or adjusted funds from operations (AFFO), I decided to separate the resulting list in two so as not to confuse any casual readers. For your browsing pleasure, the resulting monthly dividend payers are included below.
Here are some quick comparisons between the monthly dividend payers and the complete list of Canadian Dividend All-Stars:
- 23 of the 104 Canadian Dividend All-Stars at February 28, 2019 pay dividends monthly.
- Although the average yield of all Canadian Dividend All-Stars of 3.71% is considerably less than the seventeen monthly payers listed above (5.14%), the 1-year average dividend growth rate of 9.13% is significantly greater than that of the monthly payers (5.77%).
- The average 3, 5, and 10-year dividend growth rates of the Canadian Dividend All-Stars of 9.62%, 11.95% and 8.74% are much greater than the comparable growth rates of the monthly payers 6.23%, 9.04%, and 5.27%.
As with any other screen, the above list is simply a starting point for further research. Clearly, a deeper dive is required given the average EPS payout ratio of 77.26%, although the trailing average P/E of 15.5X looks downright reasonable. As indicated on my Investment Holdings tab, I currently own two monthly paying Canadian Dividend All-Stars (Granite REIT and Canadian Apartment Properties). Of the remaining fifteen companies, Savaria is jumping off the page for me to conduct further research, and I'd also consider a deeper dive into Global Water Resources based on their industry and the fact they pay their dividend in US dollars.
If your retirement savings happen to be as concentrated or weather dependent as owning a sugar shack in Quebec, I think you could do worse than diversifying into some of the names above to smooth out your cashflows to have funds trickling in each month. The psychological boost I get from holding a couple monthly dividend payers in my portfolio helps me on the 15th and last day of each month to be a proud dividend growth investor!
Do you hold or are you interested in purchasing any of the 17 monthly payers?
Sunday, March 24, 2019
Friday, March 15, 2019
The Calm Investor?
Instead of opening up cans of worms regarding market timing or anchoring on past prices, I thought I’d write about my pre-occupation of late: calmness. It seems like rather I’m reading about meditating, listening to a podcast about how to be a better parent, or learning some kernels of wisdom from Howard Marks about business cycles, the importance of remaining calm and avoiding unwarranted action keeps re-appearing.
There are a lot of conflicting pieces of advice about investing, but one of the few universal truths seems to be that the ability to control your emotions, keep fear and greed in check, and respond to opportunities in a calm and rational manner is a winning formula. Trying to develop a sense of calm, being perfectly happy to do nothing, not yearn for more (action, stocks in my portfolio, possessions, etc.) has been, and will continue to be, a huge struggle for me. For example, here’s one of the needy, anxious, greedy thought patterns that plays in my head: If you added a few more higher growth/lower yielding stocks to your portfolio at more frequent intervals, you’d have more to blog about, you’d achieve a higher dividend growth percentage, you’d add more income, you could follow more exciting holdings, you’d be a more interesting person, etc., etc., etc.. Crazy? Yes. Destructive? Definitely! Yet, it’s a story that plays far more than I wish it would.
I failed at developing a mediation habit last fall. Focusing on my breath, for a mere five minutes at a time, without my thoughts wondering in a hundred different directions, was too much of a mental challenge for me. Forcing my mind to be calm, instead of letting it run wild, proved nearly impossible. On the bright side, I did find that focusing on my breath was helpful in getting to sleep at night. That was a nice silver lining.
With my son and daughter approaching five and two respectively, calm is not a word I’d use to describe my home. Some nights, both kids run laps around the kitchen/dining room/living room screaming, laughing and crying. After she wakes up, my daughter finds it hard to keep calm in bed at 5:30am in the morning for less than minute before starting to cry. Then she likes to play with mom and dad in our bed as we’re floating in and out of consciousness. My moments of calm around the house tend to come when both kids are in bed, my wife’s out somewhere, and I find myself with an hour or two to spend as I will. Instead of enjoying the solitude and embracing the calm, I tend to read, watch a show or contemplate a work problem. Although I think I’m decent at remaining calm when the kids are riled up, I need to improve my ability to be comfortable doing nothing on my own.
I’m not sure if I’ve become calmer as an investor, or that I’ve deprioritized it as an activity. I still think about possible transactions, spend time researching companies, read some filings to monitor my holdings. It’s the pulling the trigger to buy shares with a feeling of conviction that I have lost. I’ll likely not achieve my portfolio goals of adding forward dividend income this year. It’s part of where I perceive the market to be (frothy, eighth inning, few obvious opportunities), it’s a bit because of some of my holdings provided pathetic dividend increases (i.e. Coca-Cola, Tanger, etc.), and it’s also due to a calmer attitude. Ultimately, I’m happy at my job, fulfilled with my family, so meeting a stretch forward income goal doesn’t seem to matter much anymore.
Two and a half months into 2019, this entry sums up my attitude and progress pretty well. I feel like an odd combination of the turtle and the hare in the famous fable, had the turtle pulled off to the side of the road and took a nap in the middle of a race against the hare. I’ll enjoy my slumber, let the hare sprint ahead, appreciate the calm, and we’ll see how long it lasts.
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