2024-01-02 00:11:13 ET
Summary
- Dividend income increased ~12%.
- I doubled down on my investment in Brookfield Infrastructure Partners.
- I hit my annual target of $7,000 in passive income.
My Background
Each investor faces a different set of circumstances. Now 36, 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 30 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 for me both as a young investor and likewise carry me through the decades to come. 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
Living north of the border, my priority is on earning Canadian income. On that note, I earned cash flow from 25 sources in CAD, with the remaining 10 paying in USD.
Please note that all Canadian companies are owned in CAD on Canadian exchanges. KO and JNJ are owned in CAD within my portfolio, though they reside on the NYSE; their dividend payments are provided in CAD.
CAD Dividends
Company | CAD Payments ($) | Div Change (%) |
Toronto-Dominion Bank ( TD:CA ) | 192.00 | |
RioCan Real Estate Investment Trust ( REI.UN:CA ) | 70.47 | |
The Coca-Cola Company ( KO ) | 164.95 | |
Johnson & Johnson ( JNJ ) | 102.27 | |
BCE Inc. ( BCE:CA ) | 212.85 | |
Canadian Imperial Bank of Commerce ( CM:CA ) | 20.88 | |
Corby Spirit and Wine Ltd. ( CSW.B:CA ) | 10.50 | |
Bank of Nova Scotia ( BNS:CA ) | 106.00 | |
TELUS Corporation ( T:CA ) | 103.63 | |
Rogers Communications Inc. ( RCI.B:CA ) | 27.50 | |
Fortis Inc. ( FTS:CA ) | 115.05 | 4.42 |
Canadian Utilities Ltd. ( CU:CA ) | 105.42 | |
Canadian National Railway Company ( CNR:CA ) | 35.55 | |
Canadian Pacific Kansas City Limited ( CP:CA ) | 9.50 | |
Hydro One Ltd. ( H:CA ) | 77.06 | |
Chartwell Retirement Residences ( CSH.UN:CA ) | 15.30 | |
Metro Inc. ( MRU:CA ) | 6.05 | |
Brookfield Renewable Partners L.P. ( BEP.UN:CA ) | 130.64 | |
Brookfield Renewable Corporation ( BEPC:CA ) | 59.59 | |
Brookfield Asset Management ( BAM:CA ) | 2.14 | |
Brookfield Corporation ( BN ) | 2.06 | |
Brookfield Infrastructure Partners L.P. ( BIP.UN:CA ) | 75.33 | |
Brookfield Infrastructure Corporation ( BIPC:CA ) | 18.70 | |
A&W Revenue Royalties Income Fund ( AW.UN:CA ) | 33.60 | |
Enbridge Inc. ( ENB:CA ) | 22.19 | |
Saputo Inc. ( SAP:CA ) | 5.55 |
USD Dividends
Company | USD Payments ($) | Div Change (%) |
Waste Management, Inc. ( WM ) | 29.75 | |
McDonald's Corporation ( MCD ) | 29.81 | |
Yum! Brands ( YUM ) | 20.06 | |
Yum China ( YUMC ) | 4.31 | |
Visa Inc. ( V ) | 6.63 | 15.56 |
AbbVie Inc. ( ABBV ) | 66.60 | |
Microsoft Corporation ( MSFT ) | 8.29 | 10.29 |
Mastercard Incorporated ( MA ) | 3.40 | |
Apple Inc. ( AAPL ) | 3.60 | |
Abbott Laboratories ( ABT ) | 5.10 |
Dividend Totals
I posted a quarterly passive income record, coming in at C$1,724.78 and U$177.55, coming together for a currency neutral $1,902.33. In comparison with my Q4 2022 passive income total of $1,701.77, this represents an 11.79% growth rate.
I always consider growth rates above 10% to be the gold standard within a portfolio because they are both sustainable and allow for meaningful compounding over a lifetime.
With this being the final quarter of the year, I can also announce that I've slightly surpassed my annual goal of $7,000 in investment income:
Quarter | Passive Income ($) |
Q1 2023 | 1,838.98 |
Q2 2023 | 1,537.52 |
Q3 2023 | 1,772.66 |
Q4 2023 | 1,902.33 |
My final tally reached $7,051.49 and sets me up for a solid year ahead, as each dollar will continue to be reinvested.
Market Activity
One of my investment themes for 2023 has been to continue doubling down on investments I already own. As an individual investor, it can become unwieldy to manage a portfolio with too many stocks in it.
I hadn't set out back in 2009 to build a portfolio of ~50 stock positions, but such is the nature of a lifetime of accumulation. All the same, I kept to my principles this year and only added to one company in Q4.
Brookfield Infrastructure Partners L.P. ( BIP.UN:CA )
In two tranches, I added 65 shares to my position in BIP.UN:CA. The company is fully poised to take advantage of some of the biggest trends in the world of global infrastructure, including the movement and storage of energy, water, freight, and data.
This is one of my highest conviction investments at this time; I am particularly enthused by their data center platform, as this is exactly the sort of infrastructure which sets the stage for consequential use of artificial intelligence. Data is digital gold which can be mined for actionable insights and real world applications.
From their 2023 Investor Day Presentation , the company showed both the size and global scale of their data center operations:
2023 BIP Investor Day Presentation
Further, the company plans to continue doubling down on data center capacity:
2023 BIP Investor Day Presentation
When I close my eyes and project out by ten years, there are two very easy things to predict:
- The world is going to be more digitally connected.
- Data centralization and cloud computing are going to be increasingly vital.
On that note, businesses and consumers alike look to be working with top tier operators. Who wants to risk their data with unknown and potentially unscrupulous data warehousers?
The reality is that this field is going to be dominated by large players who have the capital and experience to last over the long term. BIP.UN:CA is just such a candidate to benefit from this trend.
On the investment side of the equation, what I love most is the company's commitment to shareholders. They've posted 14 years of distribution growth, and aim typically to boost it annually in the 5–9% range:
2023 BIP Investor Day Presentation
With the distribution yield hovering in the ~5% range, this packs a solid punch of providing a healthy current income while also offering growth to come.
I intend to make further purchases in the years to come, particularly on substantial pullbacks.
Featured on a Podcast
One of the highlights of the quarter was being featured on the Money Basics Podcast . I chatted with Jordan and Dan for over two hours covering a range of financial topics, including the following:
- Dividend growth investing
- Charlie Munger (may he rest in peace) and Warren Buffett
- Budgeting
- Cryptocurrency/blockchain
It's always a pleasure to meet up with like-minded individuals, and I recommend giving it a listen if these themes interest you.
Conclusion
Closing the year with +$1.9k in the final quarter gives me confidence in the health of my portfolio. With each passing month, it becomes easier to continue growing as my investment account fills itself at an increasingly rapid pace.
Looking to 2024 and what may impact markets ahead, I have been thinking most about the following topics:
- Global peace and stabilization. I am hopeful for 2024 to bring to rest some of the violent conflicts taking place.
- COVID tapering down. A few years ago, it was difficult to see out of the fog cast over the world, which resulted in lockdowns and global unrest. It's important not to lose sight or take for granted the freedoms we now have back. Spending time with family and friends is a gift we've all been given back.
- Inflation seems to be under control. It's not fully back to the 2% targets held by many Central Banks, but the trend is going in the right direction. I suspect 2024 may be the year we see some rate cuts, which should provide borrowers a bit of a reprieve.
As always, my recommendation is to remain optimistic. There are always things out there that can drag you down, but it's on all of us to look for ways to make the world a better place.
Thank you for reading.
For further details see:
Q4 2023 Dividend Report