18 Monthly Paying Canadian Dividend Growers for 2020

What are your favorite monthly traditions? One of the best days of my month happens when I use the proceeds of loan repayments from my Kiva portfolio to put $25 toward funding another loan to an entrepreneur in need. Although it took me a little over a year to build toward this goal of funding a new loan through repayments each month, now the virtuous cycle keeps repeating with minimal effort on my part rather than the joy of selecting a worthy recipient.

Another of my favorite days of the month is the 15^th, when dividends from some of the companies below magically appear in my brokerage accounts.  When the 15th passed this month, it got me thinking that it was time to post the list of Canadian companies that pay growing monthly dividends for 2020. This has traditionally been one of my most read posts in 2019, 2018,  2017 and 2016. Using the Canadian Dividend All-Star list from December, 2019, I determined the monthly dividend growers for 2020.   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 20 companies before I removed Inter Pipeline that had not raised their dividend since November 2018.  I then removed Boyd Group Income Fund due to their unimpressive 0.27% dividend yield, even though the company has an excellent record of compounded growth. Lastly, I noticed the one year dividend growth for the A&W Revenue Royalties Income Fund was incorrect at 1.2%, so I fixed it to 11.2%. The remaining 18 monthly dividend growers were one more than the 17 in 2019 and 2018, down from 20 in 2017, but higher than only 12 in 2016.

The resulting 18 companies included nine 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:

- 20 of the 107 Canadian Dividend All-Stars at December 31 2019 pay dividends monthly.
- Although the average yield of all Canadian Dividend All-Stars of 3.37% is considerably less than the 18 monthly payers listed above (4.54%), the 1-year average dividend growth rate of 9.95% is significantly greater than that of the monthly payers (4.55%). 
- The average 3, 5, and 10-year dividend growth rates of the Canadian Dividend All-Stars of 10.74%, 10.37% and 10.36% are much greater than the comparable growth rates of the monthly payers 5.29%, 6.32%, and 5.99%. 

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 89.21%, although the trailing average P/E of 23.73X looks somewhat reasonable. As indicated on my Investment Holdings tab, I currently own four monthly paying Canadian Dividend All-Stars (A&W Revenue Royalties, Granite REIT, CT REIT and Canadian Apartment Properties). Of the remaining fifteen companies, Savaria is jumping off the page for me given their impressive dividend growth and reasonable 3.29% yield.  

If you're looking to create a virtuous cycle of re-investing monthly dividends, I think diversifying into some of the names above might be a good start. The psychological boost I get from holding a couple monthly dividend payers in my portfolio helps me on the 15th of each month to be a proud dividend growth investor!

Do you hold or are you interested in purchasing any of the 18 monthly payers?

Goals & Metrics for my Dividend Growth Portfolio

When I set my 2019 stretch goal to increase my forward dividend income by $3,300 while achieving a dollar-weighted average organic dividend growth rate of at least 5.5%, I half expected to fall short. Both aspects of the goal seemed aggressive and then I got off to a slow start to the year conducting only one transaction over the first three months of 2019. Although I can't identify a turning point, around May I decided to start deploying cash more regularly, which resulted in a personal high 24 transactions in 2019, including five sells. Three of the sells related to closing out positions that hadn't raised their dividends in years (H&R REIT, Keg Revenue Royalties and Life Storage Inc.). When the dust settled, I'm happy to report that my forward dividend income was up by $3,317 and my weighted average organic dividend growth rate was a strong 6.8%.

After thinking about it over the holidays, I chose to set an even more aggressive goal for 2020, aiming for an increase of $3,600 in my forward dividend income. Similarly ambitious, I'm targeting dollar-weighted average organic dividend growth of 6.0% in 2020. Although the dividend growth goal is less than I achieved in 2019, I think it's more of a long-term target given I don't expect to be sell any positions in 2020. Plus, I felt like I spent the last couple months of 2019 chasing dividend growth, which is something I prefer to avoid in 2020.

There are two other goals I want to work toward during 2020.
- At least one quality blog entry per month. My thoughts here are that if I keep renewing the domain name, I might as well use it regularly, rather than just as a transaction journal. For context, a quality entry would provide some benefit to readers, so this one wouldn't qualify.
- By this time next year, I want to produce an outline of how I'd fill a week without work. Not the dream week of sipping drinks on a tropical beach, but the outline of how I would spend my days when/if money weren't an issue.

Since I had some quiet time over the holidays, I calculated some portfolio metrics for 2019 that I thought would be fun to share.
- My internal rate of return on my portfolio in 2019 was 17.8%. This was lower than the benchmark return of 24.6% I get from calculating 67% of the Canadian dividend aristrocat ETF 'CDZ' and 33% of the US S&P dividend ETF SPY (the actual weights of Canadian and U.S. holdings in my portfolio). This result is consistent with my past experience that shows in years when the market is up, I tend to underperform, while I outperform in years when the market falls. I also realized my benchmark is not time-weighted with the inflows of my portfolio, which confounds the under/out performance.
- The value of my portfolio rose by 28.1% in 2019; much higher than anticipated. Canadian Apartment REIT and Microsoft were two of my best performers north and south of the border respectively.
- The dividend yield of my portfolio was 3.9% in 2019, lower than 4.2% in 2018 and 4.0% in 2017.
- Cash represented 1.6% of my portfolio at year end 2019, lower than the 2.7% at year end 2018.
- My holdings raised their dividends 47 times during 2019, with Realty Income doing so 5 times, and Kinder Morgan providing the largest percentage increase (25%).
- The only two companies in my portfolio that didn't raise their dividends in 2019 were Alaris Royalty and RioCan REIT (which I'll give away my last shares to charity in 2020).
- I ended the year with an all-time high 40 positions, up from 38 at the end of 2018. The plan is to slowly see this number decrease going forward.

Here's hoping all of you met your investment goals in 2019 and wishing you the best of luck in 2020!