November 2015 Dividend Update

Below is an overview of our dividend stock portion of our wealth portfolio.  It has been a good month for dividends (i.e. another increase), but there are also some concerns with the portfolio regarding certain stocks (albeit not completely unexpected, it still is worrisome).

Below you can find a quick overview of this month’s total dividend payout:

20151201 Monthly Dividend

Here is an overview of our dividend stocks:

20151130 Dividend Overview

If you group the above dividend stocks by sector, the distribution of our portfolio is as follows (based on market value at close of markets on November 30, 2015):

20151130 Dividend Stock by Sector

As you can see in the dividend overview there are several stocks that have not done so well since purchase (understatement…). One is of them is NewAlta Corporation, an engineering and environmental firm working in the oil and gas industries, another example is Liquor Stores N.A. Ltd.

When we bought the shares, they were off their peaks by about 50-70%, so a few months back we thought that this was a good time to buy (and they seemed a nice addition to a balanced portfolio). Turns out we were too fast in purchasing these stocks at they have now plummeted even further, primarily as a result to the continuing drop in oil prices and negative sentiment in their main market area (read Canada’s oil province Alberta).

These stocks were fairly high dividend payers to begin with, but are now either reducing their dividend or considering it (still good yields though!). As oil prices are cyclical, and assuming the companies are strong enough to survive low oil prices for a while (both have been around for 20-25 years), the stock price and dividends should rebound in the future.

We try to keep a long term outlook here, selling now would just be a kneejerk reaction and would most likely do more harm than good. But as you can imagine, it does not feel good and scares the hell out of us.

Too bad this article came too late….. (still, we should have known better)

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10 comments

  1. Hi CF! We’ve been following your blog for a few weeks, and trying to start off following your steps 😀 can you explain to us newbies how you calculate the monthly dividend and dividend stocks? What do you advise us to start with, to invest the small amount of saved money that we have? Thanks for your help and best wishes for 2017!

    1. Best wished to you too and great that we were able to get you guys motivated!
      Before you start to invest, you should read, read some more and then some. Get to know the dividend aristicrats, kings, etc. Look for companies that you like or think have potential, or fit with your ethics. Next, scour other dividend blogs to see which stocks are on people’s hit list and why. Do some of your own research into those stocks, and decided what to buy and for which price. Put in some limit orders and wait 🙂

      Some resouces that we found useful to get started in selecting stocks are (with some you have to dig a bit to find stock analysis):
      http://www.dividendgrowthinvestor.com/ (he is very good)
      https://www.dividenddiplomats.com/ (American stock mostly)
      http://www.tawcan.com/ (Canadian and American stocks)
      http://www.investmenthunting.com/ (American)
      http://divhut.com/ (American)
      http://www.polliesdividend.com/ (American, Dutch)
      But there are many more very good blogs out there, this is just a very short selection!

      As for how much money you should invest? This is personal and depends on how much risk you are confortable with. If you have low expenses and a high income (and thus considerable cashflow at your disposal) you could consider keeping only 1-2 months in cash. But if you have large upcoming expenses on say your house, it’s better not to invest and keep the cash ready to deploy for you expenses. If you don’t have much to begin with, do start, but keep it small and look for a low cost brokerage (you don’t want the fees to significantly impact on your purchase).

      Hope this helps, and all the best!

  2. Love the month on month dividend increases!

    As someone new to the world of dividend investing, this post is definitely motivating as it shows your dividend income can start to rack up pretty quick over time.

    1. Hello MG,
      It certainly is motivating! But be a bit mindful when looking at our dividend growth, we are reinvesting a very large cash pile so the dividend growth is going to be rather large in the next year, after which it will level off as we can no longer capital to this retirement account.
      Thanks for dropping by and good luck yourself with dividend investing, it is very addictive.

  3. What a nice dividend growth that you have there.

    I understand your remark that dividend cuts are a possibility on these stocks. For my RDSA purchases, I entered when it was down about 2Opct of the top, And it seemed to stabilize… But with oil so low now, it went down another 30pct. Luckily I was able to average down 2 times already, the loss is now only 15 pct. But I am not worried, I expect the dividend to remain. Worst case, the dividend gets halfed and then they still yield 4,4pct. I do believe one day oil will recover, and so will RDSA.
    There is one stock I bought after they announced the dividend cut of 75pct and it now yields 3,3pct. It also looked stable, and went down about 10pct more.
    I look at these thing for the long long turn… I hope I can stay patient.

    1. Hello Amber Tree,
      The dividend growth is a bit distorted, as we are (re)investing a large cash pile in foreign retirement accounts. It should grow very rapidly over the next months and then slowly (“organically”) grow over time thereafter (as we can no longer contribute to these accounts).
      As for RDSA, they “promised” that they would maintain dividend until 2018, hopefully the oil price has stabilized by then and they can continue paying dividend (not so much worried about growth at this point considering the yield). We may buy some more shares if it drops further.
      We do share your view though, and try to focus on the long term.
      Thanks!

  4. I’m liking the upward trend in dividend income. Great progress from an income standpoint. I wouldn’t get too beat up over one or two stocks that are in a loss position, as long as you believe their dividend is safe and you aren’t staring a dividend cut in the face. Definitely keep an eye on them, but there will always be up and down periods for each stock. You have a diversified portfolio that will help you weather the short term fluctuations anyway.

    Keep up the great progress CF!

    Bert, One of the Dividend Diplomats

    1. Hello Bert,
      honoured with you visit. Well, that is part of the problem (dividend cuts or risk thereof), due to the ongoing drop in the price of oil (now below $35). We hoped that oil had stabilized at the time we bought a few months back, apparently it did not. So income is going to get hit even more, meaning reduced profits and risk of dividend cuts. In hint sight, these may not have been the wisest decisions. Let’s call it a learning curve!
      Thanks, Team CF

  5. Nice looking chart showing your dividend growth over time. I still like the large Canadian banks going into 2016. If prices remain low I think it’ll be some of my first buys in January, TD, BNS, RY. For now I’m focused on another beat up name ADM. Thanks for sharing.

    1. Hey DivHut, ADM looks like it is a good opportunity. It seems to be an an upward trend over the years (read in the last 30 or so) with lots of dividends being paid. We hope it works out well for you!

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