Barchef Project: Toasted Old Fashioned Review

Barchef Review

Barchef Toasted Old Fashioned Review

It took me months, but I finally got around to opening this bottle. First a little background. This was actually a gift, sent to me by a reader of the site, who happened to know I loved cocktails & bourbon. This bottle is unavailable here where I live, so it was extra special. It just so happens, I later got to know him a bit better, and I am now a reader of his site, and was even a guest on his podcast….what a weird world. If you are interested, you can check out his site HERE

Barchef is one of the top cocktail bars in Toronto, and for this bottling they partnered with Still Waters Distillery who make Stalk & Barrel whisky. I haven’t been to Barchef Toronto yet, but next time I am there I will check it out for sure. I have heard nothing but great things.

First of all, the bottle itself, is really a thing of beauty. It’s just got a real nice, simple, clean look to it. It was also shipped with a small orange aromatic spray (to mimic the orange zest/twist) which smelled absolutely delightful. A friend of mine joked he wanted to take it and use it as a cologne. One of the real nice things about this bottle, is the simplicity. Just pour over ice, give it a spritz or citrus twist, and you have a gourmet cocktail in your glass within seconds.

For the unacquainted, and old fashioned is a very straight forward, spirit heavy cocktail. Typically the ingredients and measurements are as follows:

2 oz Bourbon
1 bar spoon simple syrup
3-4 Dashes of bitters

Classic Old Fashioned’s just happen to be one of my favourite cocktails due to their simplicity, and also the fun in finding the right balance of sweetness and sharpness. If you aren’t a whisk(e)y drinker, or into booze heavy cocktails, a classic old fashioned may not be for you.The good news is, the Barchef Toasted Old Fashioned could be the perfect gateway drink for those wanting to get a bit more into cocktails.

Classic Old Fashioned – This is Not

Barchef Review

The Barchef Toasted Old Fashioned is NOT your typical/classic Old Fashioned. In fact, after trying it, I was a bit surprised they marketed this as an old fashioned cocktail. First of all, it is very sweet, has a lot of added spices and flavours, and the bottle comes in at just 38.9% alcohol. According to the bottle, instead of simple syrup they use maple syrup (which is especially delicious), along with lots of other spices. As soon as you open the bottle, your nose will be hit with a heavy dose of anise/licorice. Unfortunately for me, much like Cilantro, this is one of the flavours I’ve never been able to get into.

The first sip is very sweet, and then you get hit with the spice. If I am being honest, the anise/licorice was too overpowering for me, and the drink was definitely too sweet for my liking. It almost tasted like a Jagermeister old fashioned with added sugar. I can definitely see the appeal of this drink for anyone who enjoys that Jager/Absinthe flavour, but I just couldn’t get into it as much as I tried. I offered some of the bottle to some friends who were visiting, and they were pretty split on it. Some enjoyed it, while some (like me) couldn’t get past the overpowered flavour and seemingly lack of bite that you’d expect from an “Old Fashioned”.

Final Thoughts: Toasted Old Fashioned

If there is one thing I’ve learned in my foray into cocktails over the last few years, it’s that everyone has different taste preferences. For example, I absolutely LOVE Campari, and Negoni’s but it is absolutely an acquired taste, typically you either love it or hate it – much like anise. So although I can’t say I’d pick up a bottle of this for myself if I saw it on the shelf, I would still recommend you give it a shot for yourself especially if you enjoy that jager, anise, licorice flavour profile. The simplicity and ease of making yourself a gourmet cocktail by just pouring it over ice, would make this a great drink for camping as well.

I’ve noticed recently there are a lot more options for pre made cocktails, but I’ve yet to find one I’ve really liked. If you have had this one, or some of the other pre made cocktails, let me know what you thought.

I’d like to once again thank Money Mechanic from FI GARAGE for sending this over, and just remind everyone, I will never say no to a bottle of whisky if you want to send me one…haha

Cheers

June Dividend Update: Summer Edition!

Dividend Income & Portfolio News

Personal Highlights – June 2020

  • June 19 was our 10 year wedding Anniversary.  Originally I had wanted to do a European trip to celebrate, however due to Covid, things were a lot more quiet and a lot less expensive. That said,  thanks to the grandparents offering to take the kids to the lake for a couple days, we were still able to  go out for dinner (first time in a restaurant in months), and have 2 nights alone with no kids.  It was nice, we went to a nice steakhouse, I opened up a fancy bottle of bourbon I’ve been saving for a special occasion(pictured below) and most importantly we got to sleep in!

    Bourbon
  • We’ve been spending most weekends out at the lake, and it has been HOT.  This last weekend was 32-34 degrees and we went for a lot of swims.  The kids absolutely love going to the lake.  So far, not selling the cabin seems to have been the right move.  That said, next year I think I am definitely going to hire a company to come spray for mosquitoes and spiders…holy smokes they are bad this year.
  • I’ve definitely gained some weight since the Covid pandemic.  I had just gotten into a decent routine of running on the treadmill almost everyday, I was playing soccer again, and I had cut my beer intake down quite a bit.  Once Covid hit, and the kids were home all day, it changed everything, and made things a lot more difficult.  The good news is the kids are heading back to daycare tomorrow, so hopefully we can all get back into our routines right away.
  • Normally on Canada day there is a big parade out at the cabin, and a bunch of fireworks, celebrations, etc. This year there was nothing. That said, the kids still had a great time, and we did our best to represent some Red & White.
    Screen Shot 2020-07-05 at 4.46.21 PM
  • Financial Highlights for June:

  • Pre authorized bi-weekly contributions continued into both TFSA & Spousal RRSP.  I may have to look at reducing the amounts now that we will be paying for daycare again.
  • June was an expensive month.  Cabin taxes were due, had to fix my eavestroughs, spent a decent chunk on our anniversary dinner, and pre paid for next 2 weeks of daycare.  
  • On the plus side, June was also the month XAW paid one of its semi annual distributions.
  • I was paid dividends from 6 companies, and 2 funds this month.  I dripped a total of 80 new shares/units.

Passive Income Update For June 2020.

TFSA’S:

Diversified Royalty: $22.85(dripped 12 shares)

Canadian Western Bank: $0.29

Artis Reit: $28.35 (dripped 3 shares)

Interrent Reit: $4.29

Plaza Reit: $29.91 (dripped 8 shares)

Intertape Polymer: $55.12

TFSA’s Total: $140.81

RRSP:

Canadian Equity Income Distribution: $353.49(dripped 13.748 shares)

XAW Distribution: $1172.13 (dripped 44 shares)

Total Passive Income June 2020:  $1666.43

Portfolio Update:

My portfolio was up slightly to: $343,539.41  This represents a increase of 2.69% from last month. I expect continued volatility in the market (and my portfolio) for the foreseeable future.

My long term plan hasn’t changed. I haven’t sold a single stock, and I continue to look for good deals.  I’m sitting on a bit of cash, and I’ve updated my watchlist, which currently contains: Manulife, First National Bank, Alimentation Couche-Tard, Telus, Metro and Canadian Western Bank (among a few others).  I haven’t pulled the trigger on any of these yet, because I still think things are going to get worse before they get better.

Passive income in June was $1666.43 June was my second highest month in 2020. So far in the first six months of the year I’ve earned $6225.84 in passive income.  The second half of the year unfortunately shouldn’t be as strong, as there won’t be another big XAW distribution until January 2021.

Assuming no dividend cuts or increases, my current Forward 12 month dividend income is $11,405.96.

Stay safe!

Cheers.

 

Thomson Reuters: Stock Review

Dividends

Thomson Reuters: A Canadian Dividend Champion

*The following is a guest post by Dividend Power*

As a dividend growth investor, I love Dividend Champions. These are stocks that have paid a
growing dividend for 25-years or more. Thomson Reuters is a Dividend Champion. The stock is
also one of the Canadian Dividend Aristocrats. Thomson Reuters is a Canadian company that
trades on the Toronto Stock Exchange or ‘TSE’ and also trades on the New York Stock Exchange
or ‘NYSE’. At the right price, the stock is probably a good addition to many dividend growth
portfolios. The market downturn resulting from COVID-19 caused the stock price to drop, but it
has recovered somewhat since then. The current dividend yield is roughly 2.3%, which is higher
than the broader market average. Dividend growth investors may want to research this stock
further.


Overview of Thomson Reuters


Thomson Reuters is a media, content, and data company that traces its founding back to 1934 in
Canada and 1851 in London. The company in its current form is the result of a $17.6 billion
merger between Thomson of Canada and Reuters Group of the U.K. in 2008. More recently, in
2018, the company divested its Finance and Risk business forming Refinitv in exchange for $17
billion. Thomson owns a 45% stake of Refinitv and The Blackstone Group (BX) owns the other
55%. In 2019, Thomson Reuters agreed to exchange the 45% stake in Refinitiv that it owns for
a 15% stake in the London Stock Exchange Group subject to regulatory approvals.


Today, Thomson Reuters operates in five business segments: Corporates (22% of revenue),
Legal Professionals (41% of revenue), Tax & Accounting Professionals (14% of revenue), Reuters
News (11% of revenue), and Global Print (12% of revenue). The company will have about $5.9
billion in revenue in 2020 (before COVID-19 impacts). Thomson Reuters is the market leader in
the global legal market segment, and the market leader in corporate legal and tax solutions in
the U.S., and the tax market segment in the U.S.


Note that the company is controlled by the Thomson family of Canada through their investing
vehicle, Woodbridge Company Limited. They control approximately 65% of the company’s
common shares. The family holds the chairman position in Thomson Reuters.


Thomson Reuters Dividend and Safety


Thomson Reuters is a Dividend Champion and a Canadian Dividend Aristocrat. The company
has paid a growing dividend for 27 consecutive years since 1993. The regular cash dividend has
increased from $0.08 per share in 1993 to $1.52 per share in 2020. This gives a current dividend
yield of approximately 2.3%, which is not bad compared to S&P 500s’ current average dividend
yield of about 2.0%.

Source: TRI Booklet Winter 2020


Thomson’s dividend safety metrics have historically been somewhat volatile due to special
items. They have also worsened recently due to the divestment and subsequent loss of revenue
and lower earnings, and COVID-19.


Looking forward, consensus 2020 earnings per share is $1.77. The forward dividend is $1.52 per
share. This gives a payout ratio of approximately 86%. This value is greater than my target value
of 65% or lower. However, revenue and earnings are likely to be depressed in 2020 due to
COVID-19. Further, Thomson Reuters is adding to revenue through bolt-on acquisitions. This
should improve the payout ratio with time as these acquisitions grow and add to the bottom-
line.


On a free cash flow basis, the dividend is also safe. The company is guiding for roughly $1 billion
in free cash flow. This is down from guidance of $1.2 billion in FCF earlier in the year due to
COVID-19. The dividend costs about $760 million annually ($1.52 x 500 million shares). This
gives a dividend-to-FCF ratio of about 76%. This is an OK value but higher than my target value
of 70%. The long-range target for Thomson Reuters is to pay 50% – 60% of free cash flow as
the dividend.


The dividend is also seemingly safe from the perspective of debt. At end of the most recent
quarter, Thomson Reuters had outstanding debt of $3.8 billion off set by cash on hand and
short-term investments of $1.35 billion. No debt is due until 2023 adding to the good picture from the
perspective of debt.


Overall, the combination of the divestiture, restructuring, and COVID-19 has likely made the
dividend safety metrics somewhat worse the desired. However, Thomson Reuters has
positioned itself in higher growth areas and is forecasting organic growth supplemented by M&A. With that said, I do not expect the dividend to grow at very fast rate over the next couple
of years as the global economy recovers from COVID-19.

Thomson Reuters Valuation


Is Thomson Reuters undervalued? The stock is currently trading at a forward earnings multiple
of about 38.5X. This is higher than the average of the S&P 500, which is trading at 21.9 as of this
writing. So, no Thomson Reuters is not undervalued at the moment. However, some of this
elevated valuation is due to lower consensus forward earnings per share due to COVID-19. The
high earnings multiple is also due to limited float that is also contributing to overvaluation.
Recall that the Thomson family controls about 65% of the common shares. So, there is limited
amount of stock that trades on a daily basis for a company of its size.


Final Thoughts on Thomson Reuters


Thomson Reuters’ stock price dropped to near $52 per share at the depths of the downturn
caused by COVID-19, which was probably a good entry point. The stock is arguably an under the
radar dividend growth stock. I expect that the dividend will continue to grow in the future but
at a slower rate. The company has seemingly prioritized share repurchases and M&A at the
moment. With that said, dividend growth investors may want to research this stock further
and keep an eye on it for a better entry point.


Biography: Dividend Power is self-taught dividend growth investor. He is the founder and
author of the Dividend Power investment blog. He writes about dividend growth stocks for the
long-term small investor seeking to invest in dividend stocks for income and growth. His focus is
on undervalued stocks with sustainable dividend growth and capital appreciation potential. His
work has appeared on Seeking Alpha, Sure Dividend, ValueWalk, The MoneyShow, and other
financial sites.

Updated Canadian Dividend Stock Watchlist

Dividend Stocks

Canadian Dividend Stocks To Buy In 2020

It’s been a while since I’ve updated my watchlist. I haven’t made a stock purchase in a few months. In fact my last stock purchase was back in early March, right when Covid 19 was just starting to really hit North America. If you recall, I had added to my positions in XAW, GoEasy Financial, Chorus Aviation (ouch), Diversified Royalty and finally initiated a new position in New Flyer. I am still happy holding all of these companies long term and the only one that has taken a huge hit was Chorus Aviation.

I’ve increase my bi weekly contributions into my TFSA and although I haven’t purchased anything yet, I’ve had my eye on a few different companies. First a bit of background, so you can better understand my reasons for choosing the stocks below…

1) My RRSP holds mostly just 2 funds. One is XAW(which is about 40% of my total portfolio) and takes care of my USA/Global diversification and the other is an RBC Canadian Equity Income fund(About 25% of my total portfolio).

2) I use my TFSA specifically to hold Canadian Dividend Paying Stocks, so this watchlist will only include Canadian Stocks that pay a dividend.

3) Since about 25% of my portfolio is the RBC Canadian Dividend fund, I TRY to avoid holding the same stocks in my TFSA/RRSP. There are some exceptions (Algonquin Power, New Flyer, etc).

4) My updated watchlist will consist of Canadian Dividend paying stocks, and which meet my custom stock screening criteria. Some metrics I use in my custom stock screen are: Conservative Payout Ratio, Reasonable Price/Earnings, Earnings Growth & Expected Earnings Growth and Debt Levels.

Consumer Staples Stock(s):

Metro & Loblaw

Looking at these two stocks, I don’t believe you can go wrong with either. I would actually like to add them both, however right now I am leaning towards Metro. The only areas where Loblaw comes out on top is:
a) I am extremely familiar with it, I shop there multiple times a month.
b) Current dividend yield is slightly higher, slightly less volatility.

That said, the numbers speak for themselves, and I believe the first one I pick up will be Metro. See for yourself…

Metro looks like the clear winner here. They are trading at a better multiple, they have a much more conservative payout ratio (more room to grow the dividend), and the past 5 years show they are doing just that.


My target price for these stocks are:
Metro: $51.00
Loblaw:$61.00

Financial Stocks


The big banks are all well covered in my RBC Canadian Equity fund, so I will not talk about them here (although I will see, they pretty much all look like great pick ups right about now). I ALMOST grabbed some Bank of Nova Scotia last week when it was trading at 9x earnings. It is still trading under 10x earnings and yielding 6.13%!

I’ve been watching First National & Canadian Western Bank for years. In fact I owned CWB for a while, bought it at $19, sold it around $30. It is a stock that continually has good metrics, but also has crazy volatility usually tied to the Alberta market and oil prices. That said they have diversified away from being a “western” bank and continue to expand. If you don’t like volatility, it’s probably not for you, but it’s got a great history of increasing dividends, a low payout ratio and because of it’s volatility you can periodically scoop it up at a great price.

First National is actually the company I have my mortgage with, and they aren’t your typical financial institution. They work closely with mortgage brokers, and leverage technology better than most of the big banks. I’m a big fan of their online mortgage platform, however the current interest rates, coupled with the increasing amount of Canadian Household Debt may hurt them. First National pays a nice monthly dividend, and insiders own over 10%, which is usually a sign that management has confidence in the business.

Let’s see what the numbers say. I included Bank Of Nova Scotia here as well for reference:

As you can see, all 3 are trading at very reasonable levels, with the edge going to Canadian Western Bank. The dividend yields are all pretty strong as well. The conservative payout ratio as well as the 5 year dividend growth rate also put Canadian Western Bank on top.

Bank of Nova Scotia is the easy set it and forget it pick. It has solid, but not spectacular numbers all around, and you know it will keep doing its thing.

First National has a few risks attached with it, if interest rates stay this low, they will get hurt more than other big banks, and the payout ratio of 78.6% is way too high for my liking (especially in this sector). I own some reits with better payout ratios!

Canadian Western Bank looks like the winner for me here. That said, I still don’t like it enough at it’s current price to pull the trigger. I’ve seen it dip below $20 many times over the last few years, and I expect it (along with most other stocks) will see another huge drop as Covid continues to wreak havoc on us. I love the dividend growth history, low payout ratio and their commitment to diversifying outside of Alberta, and also more into wealth management.

Long term, I don’t think you can go wrong with any of these, and here are my target prices:

BNS: $60 or less. Honestly it’s a good price now. It could drop again, but if you are in it for the long haul, getting this for 9-10x Earnings is a go for me

CWB: $19.99 or lower. Although I would never recommend swing trading – if you had to choose a stock to do it – this may be the one. This one continually goes from $20-$35. I like it for its dividend growth and low payout ratio. I’d be comfortable buying and holding for 5-10 years if I can scoop some up at $20 or less.

First National: $22.50. If I am being honest it’s probably a good price at $25-27 as well, but due to some of the risk, I’d only grab this one if it really falls quite heavily again.

2 Other stocks I want, but am waiting for price to drop …Alimentation Couche Tard & DOLLARAMA
It’s getting late, so I won’t go into these ones too much right now (i’ll probably do a solo write up on each). I am currently waiting for these two to drop to initiate a position.

I actually owned ATD.B previously, but sold it a couple years back, and although I made a nice chunk on that trade, I wish I held on to it. Dollarama is one that I’ve never owned but have wanted to for a while. These two stocks have a lot of similar metrics, both have extremely low yields, but both are growing them at exponential rates. They both have super conservative payout ratios, and have both seen their earnings and profits rise at “growth stock rates” for the last few years. That said, Dollarama has seen a pretty big drop in the rate of it’s growth the last 2 years while ATD has continued to impress. These are another two great stocks for the long haul, which I hope to add both by the end of this year. My target prices are:

Dollarama: $38.00
ATD.B: $40.00

Do you own any of these stocks? Would you consider buying any? Let me know your thoughts.

Cheers.

May 2020 Update: Dividends, Renovations & Bourbon

Dividend Income & Portfolio News

Personal Highlights – May 2020

  • 2 Years ago we thought we were going to sell the cabin because it was hard to enjoy with a 1 and 3 year old… but as the kids got older, we’ve really started enjoying it again.  We decided if we are going to keep it – we should finally make a few much needed changes.  We bought new beds, a new BBQ, brought a few new chairs out, and spent 2 full days ripping up the old carpet/flooring and putting new floors in.  It looks and feels like a whole new cabin.  Pic below:
    Cabin Floor Renovations
  • On the Covid front – our province is on “Phase 2” of reopening.  Most things are open now, although strict guidelines are still in place.  I haven’t yet gone to any restaurants or malls or anything.  Although I have made a couple trips to the hardware store.  We’ve been really lucky so far in Manitoba *knock on wood* with under 300 confirmed cases since the pandemic started.
  • The liquor mart got their yearly supply of my favourite bourbon that they carry so I stocked up.  It only comes in once or twice a year, and always sells out, so I need to make sure I stock up when it is available:)
    Liquor Mart
  • If I am being completely honest, between Covid, and the protests happening down south, I have lost quite a bit of interest in stocks, sports, etc.  I find myself refreshing twitter, reading articles, and going down the rabbit hole reading comments or arguing with people.  On the one hand I feel like I need to take a break from it for my own mental health, but on the other hand this is too important to just ignore/take a break.
  • I’m going to keep this short this month. Truth be told, I feel kind of like a Jackass even writing a dividend report/blog update with everything going on in the world right now, but it keeps my mind busy.  I hate that we even have to say #blacklivesmatter.  How fucked up is that? Seriously – think about that for a second. How did we let it get to this?  Silence and status quo I think is the biggest factor.  If you see or hear something racist, sexist, homophobic – please do your part and call that shit out.  It won’t be easy, it will be uncomfortable, but it needs to be done.
  • Financial Highlights for May:

  • Continued bi weekly contributions into TFSA, Wife’s TFSA & Spousal RRSP
  • May is usually a slow month, not many dividends paid.  The good news is there were no cuts/suspensions this month.
  • I was paid dividends from 5 companies, and 1 funds this month.  I dripped a total of 43 new shares/units.
  • Even though I had to take a temporary pay cut, my spending has been way down, which has more than made up for the temporary cut.  I guess it is easy to increase your savings rate when you can’t go out anywhere…haha
  • Next month XAW pays its semi annual dividend.  This should give my income a nice boost. They haven’t announced their distribution yet, and I assume it will be lower than last year due to Covid, but it should still hopefully work out to over $1000.

Passive Income Update For May 2020.

TFSA’S:

Diversified Royalty: $22.62(dripped 13 shares)

Artis Reit: $28.22 (dripped 3 shares)

Power Corp: $98.90 (dripped 4 shares)

Interrent Reit: $4.29

Plaza Reit: $29.68 (dripped 10 shares)

TFSA’s Total: $183.73

RRSP:

Canadian Equity Income Distribution: $352(dripped 13.845 shares)

Total Passive Income May 2020:  $535.73

Portfolio Update:

My portfolio was up slightly to: $334,531.46  This represents a increase of 1.62% from last month. I expect continued volatility in the market (and my portfolio) for the foreseeable future.

My long term plan hasn’t changed. I haven’t sold a single stock, and I continue to look for good deals.  I’ve updated my watchlist, I am currently keeping an eye on: Manulife, First National Bank, Alimentation Couche Tard, Metro and Canadian Western Bank (among a few others).

Passive income in May was $535.73 This is one of my slowest months, but luckily it should be followed by one of my largest.  Next month XAW pays one of it’s semi annual distributions.  With everything that has gone on in the market, I am not too sure how much to expect from XAW but it should be a much needed boost.

Assuming no dividend cuts or increases, my current Forward 12 month dividend income is $11,340.46.

Stay safe!

Cheers.

 

Stock Review: Canadian Natural Resources

Canadian Natural Stock Review

Canadian Natural Resources: A Blue-Chip Canadian Dividend Stock

*** The following is a guest post (Our first official guest post to be exact) from our good friends at Sure Dividend ***

At Sure Dividend, we don’t use the term blue-chip loosely. While the term blue-chip gets thrown around a lot in the financial media, we have a specific definition of what constitutes a blue-chip stock. Blue-chips, in our view, are stocks that have at least 10+ consecutive years of annual dividend increases. There are three specific groups of stocks that fall into the category of blue-chip stocks: the Dividend Achievers (10+ consecutive years); the Dividend Aristocrats (25+ consecutive years); and the Dividend Kings (50+ consecutive years).

We believe blue-chip stocks are those that have maintained long histories of raising their dividends each year. A long track record of consistent annual dividend growth indicates a company with strong brands, durable competitive advantages, and a proven history of generating growth over the long run.

Canadian Natural Resources (CNQ) qualifies as a blue-chip dividend stock for Sure Dividend, as the company has now increased its dividend for 20 consecutive years. We also consider the stock to be undervalued, given the recent and significant decline in the share price. With a high current yield above 8%, Canadian Natural Resources is a blue-chip dividend stock.

Business Overview & Recent Events

Canadian Natural Resources is an energy company that operates in the acquisition, exploration, development, production, marketing, and sale of crude oil, natural gas liquids (NGLs), and natural gas. Geographic areas of production focus include Western Canada, the North Sea, and offshore Africa. The company is headquartered in Calgary, Alberta, and the common stock is cross listed on the Toronto Stock Exchange and the New York Stock Exchange, where it trades with a market capitalization of approximately US$17 billion.
The company has high-quality assets that will fuel its growth for many years. It has a massive asset base of long-life, low-decline assets which hold 27.8 years of proved reserves, and 36.0 years of reserve life based on proved-plus-probable reserves. Canadian Natural’s Oil Sands Mining and Upgrading assets have a reserve life of more than 43 years.
As a large exploration and production company, Canadian Natural Resources’ revenue and cash flow are dependent in part on the underlying commodity price. Reduced prices of oil and gas due to the negative demand shock posed by the coronavirus has put a dent in the oil and gas majors. Fortunately, Canadian Natural Resources has continued to perform well in recent periods.

In early March, Canadian Natural Resources reported financial results for the fourth quarter of fiscal 2019. In the year, average production grew 2%. In addition, the company reduced its operating costs by -10%, to $11.50 per barrel, and thus grew its adjusted earnings-per-share by 17%, from $2.06 to $2.40. Moreover, the company grew its adjusted funds flow by 13%, to an all-time high of $10.3 billion, and delivered record free cash flows of $4.6 billion.

Such a strong level of free cash flow permitted the company to return lots of cash to shareholders last year. Shareholder returns totaled $2.7 billion for 2019, including a 12% increase in the company’s quarterly dividend and over $940 million in share repurchases.

Canadian Natural Resources grew its reserves by 11% in 2019, to 10.99 billion barrels, and thus enhanced its reserve life index to 27.8 years. As this figure is more than twice as much as the average life of reserves of its peers (~11 years), it is impressive and certainly bodes well for the future growth prospects of the company.

Dividend Analysis

In early 2020, Canadian Natural Resources declared a new quarterly dividend at a rate of $0.425 per share, for an annualized rate of $1.70 per share (US$1.21). This represented a 13% raise from the previous quarterly payout, meaning 2020 is the 20th consecutive year of a dividend increase for Canadian Natural Resources. This is an impressive history of increasing dividends, as it includes the global financial crisis and recession of 2008-2009, as well as the coronavirus pandemic.

Canadian Natural Resources is a high dividend stock, and is an attractive stock for income investors. Based on its recent share price, the stock has a high dividend yield of 8.6%. Compare this with the S&P 500 Index, which has an average dividend yield just above 2% right now. The combination of rising stock markets over much of the past decade, as well as falling interest rates, means it is more difficult to find suitable levels of investment income considering the lack of available alternatives.

The company has decent balance sheet strength as well, with an investment-grade credit rating of BBB from Standard & Poor’s. Canadian Natural Resources recently notified investors of recent developments surrounding the coronavirus crisis, and measures taken to protect the company’s financial position in an effort to secure the dividend. In 2019, Canadian Natural retired approximately $2.35 billion of bonds and term facilities, proving to be a wise decision as the global economy faces a potential recession in 2020.

Canadian Natural Resources has taken a number of steps to shore up its finances more recently, including suspending buybacks and cutting operating costs. Management is also confident regarding the liquidity position of the company. Current liquidity is approximately $5 billion consisting of cash, including approximately $1 billion in estimated cash reserves as at March 31st . Lastly, it is lowering its 2020 capital expenditure budget from $4.05 billion to $2.96 billion, a 27% reduction. In the company’s
view, its financial resources are more than sufficient to retire any current debt obligations when due.

Final Thoughts

The coronavirus crisis has weighed on the stock market over the past several weeks, particularly in the hardest-hit sectors such as energy. But this could simply be a good buying opportunity for long-term investors. There are many high-quality stocks that have seen their dividend yields rise dramatically as a result of their plunging share prices. And, valuations appear compressed across the energy sector.

Still, investors need to choose stocks selectively, to focus on high-quality businesses with sustainable dividends. Canadian Natural Resources has a strong business model and a long history of increasing its dividend each year. With a high dividend yield above 8%, Canadian Natural Resources is a blue-chip dividend stock.

 

** Just a reminder, this was a guest post from our friends at Sure Dividend. **

Always do your own stock research.

Cheers!

April: Saying Goodbye, Dividends, Birthdays & A Podcast

Dividend Income & Portfolio News

Personal Highlights – April 2020

  • Let’s get the bad news out of the way first.  We had to say goodbye to our sweet dog Penny this month.  She was a beautiful girl, with a gentle soul.  She lived a long, happy life and graced us with so many memories.  I even proposed to my wife with the dog (as a surprise) almost 12 years ago.  Here are a few of my favourite pics of Penny:
  • Losing a pet is never easy – it’s even worse when you are in the middle of a global pandemic with two toddlers at home.  The kids have handled it pretty well so far.  Every now and then they(we) have a cry and remember the good times with Penny.
  • Onto some less depressing news.  The weather has finally started warming up, so we have been able to get out into the back yard and stretch our legs a bit more.  Isaac just had his 3rd birthday, and got a lot of outdoor/yard toys.  I expect the next few days will be spent almost entirely in the backyard playing with new toys, kicking a ball around and of course drinking some cold beers.
  • I was a guest on a podcast for the first time ever. I had a great time, and although it’s clear it was my first time..i’d definitely do it again. It was the FI_Garage podcast.  The guys sit around, drink beer and talk about investing.  What’s not to love.  You can check it out HERE
  • I started re-watching Parks & Recreation with the wife since she has never seen it. If you haven’t ever seen it – do yourself a favour and check it out. It streams on Amazon prime.
  • I posted some hopefully possible positives that could come from the Covid 19 pandemic.  You can read that post HERE
  • My little man turned 3 on April 28.  Although we couldn’t get the family and friends together for a big party, we had some people drop by with presents, and still spoiled him with pizza and ice cream cake.  Here’s a few of our favourite photos of our little baby boy…I cannot believe he is 3 already!Isaac J Maas
  • Financial Highlights for April:

  • Continued bi weekly contributions into TFSA, Wife’s TFSA & Spousal RRSP
  • Took a temporary pay cut at work due to Covid.  It’s hard to complain when so many people have lost their jobs. We are lucky in the sense we can both work from home, and are at least saving some costs on daycare for the time being.  That said, we miss our daycare family so much and cannot wait until the kids can go back.
  • Our variable mortgage rate dropped, which ends up saving us about $200 per month.
  • Since the Covid pandemic, I have received dividend suspensions from CAE and Chorus Aviation. I ‘ve also received  dividend cuts from: Diversified Royalty & New Flyer Group.  I expect my distributions from XAW & RBC Canadian Equity Income fund to be lower than expected as well.
  • I was paid dividends from 9 companies, and 1 funds this month.  I dripped a total of 86 new shares/units.  These reduced prices have caused a huge spike in dripped shares per month. SIX double digit drips this month!
  • Portfolio increased over $42,000 month over month, and is now back to the same level it was at in August. I don’t understand this market. I feel like we are in for another big drop…but I also thought it would have happened already, so who knows.

Passive Income Update For April 2020.

TFSA’S:

Diversified Royalty: $26.00(dripped 18 shares)

Artis Reit: $28.08 (dripped 3 shares)

Algonquin Power: $185.31 (dripped 10 shares)

Interrent Reit: $4.29

Plaza Reit: $29.44 (dripped 10 shares)

Chorus Aviation: $36.76(dripped 12 shares)

TFSA’s Total: $309.88

RRSP:

Canadian Equity Income Distribution: $351(dripped 13 shares)

Transcontinental: $192.83 (dripped 16 shares)

New Flyer: $57.16(dripped 4 shares)

Go Easy: $123.75

Total Passive Income April 2020:  $1034.62

Portfolio Update:

My portfolio jumped back up to: $329,207.77.  This represents a increase of 14.78% from last month. This market is crazy.  Over the last 3 months, my portfolio has gone:
– 5.41%, -19.73%, +14.78%

My long term plan hasn’t changed. I haven’t sold a single stock, and I continue to look for good deals.  I’ve updated my watchlist, I am currently keeping an eye on: Manulife, First National Bank, Alimentation Couche Tard, Metro and Canadian Western Bank (among a few others).

Passive income in April was $1034.62.  This was the second time in the first 4 months of 2020 my income was over a thousand!  I only achieved $1000+ twice in all of 2019!

Stay safe!

Cheers.

 

Black Manhattan: A Twist On a Classic

Cocktail

Classic Cocktail Twist: Manhattan

The Black Manhattan is one of my new favourite drinks.  If you are a cocktail person, you are most likely familiar with a classic Manhattan.  If you are not a cocktail person a classic Manhattan is Rye, Sweet Vermouth & Bitters.  It’s a very boozy drink, but absolutely delicious.  I love a classic Manhattan, but I have to say, lately I’ve definitely been preferring a Black Manhattan.

Black Manhattan Vs Classic Manhattan

So what’s the difference between a regular classic Manhattan & the Black Manhattan?

Manhattan Cocktail Black Manhattan Cocktail

As you can see, the only difference is swapping the vermouth for Averna.  As far as ingredients go, these drinks are VERY similar.  That said, don’t let it fool you, the flavour profile is completely different.  Aside from the dark complexion, the Averna gives the drink a more herbal/medicinal feel – but in a good way.  I like to make mine with a hint of sweetness ( I add a spoonful of Maraschino syrup).

Ingredients:

2 oz Rye Whiskey (You can substitute with Bourbon but traditionally a Rye).

1 oz Averna Amaro

2-3 Dashes Angostura Bitters

1 barspoon Luxardo Cherry Maraschino Syrup

*Garnish with 3 Luxardo Cherries.

 

Directions: 

Add all ingredients into a mixing glass with ice.  Stir for 20 seconds.  Strain into coupe glass.  Garnish with 3 cherries.  Enjoy.

This drink will go down fast and smooth.  Don’t let that fool you. It is a boozy one.  Take your time, enjoy it.  That said, if it goes down too fast – no worries, make yourself another one…after all it’s only a few ingredients!

 

Cheers!

3 Penny Stocks guaranteed to double in 2020!

Penny Stocks

3 Penny Stocks Set To Double In 2020

Okay, seriously. If you ACTUALLY clicked this headline – this is for you.

Stop chasing penny stocks.

Stop chasing unsustainable high yields. 

If you think you will find your next great stock on a blog, facebook group, reddit thread or from a friends “hot tip” – you probably shouldn’t be buying individual stocks.  I cannot count the number of people I’ve had message me over the last couple of weeks asking about penny stocks, oil stocks, etc.  People who have never invested a penny in their lifetime, messaging me telling me they are going to easily double their money in the next few months….

Are there some penny stocks that will double this year? Of course.  Do I (or anybody else) know which ones?  Of course not. If we did, we’d be billionaires.  The amount of people searching for “good penny stocks” or “best monthly paying stocks” or “dividend stocks yielding over 10%” is astounding…and it’s dangerous.

We’ve all been there, starting out trying to figure out what stocks to buy, how to make a quick buck.  Almost every experienced investor will tell you they got got burned early on, either chasing yield, listening to a hot tip or speculating/gambling.

High Dividend Yield Stocks

Almost everyone agrees getting a dividend payment from their stock is great.  It feels good, you can reinvest that money or use the cash – so why wouldn’t you want to find stocks that pay out the biggest dividends?  The answer is simple:

Sustainability & Future Dividend Growth

Owning shares in a company that pay a dividend feels great. You know what feels even better though?  Having confidence that the dividend will not only be around for years to come, but that it will continue to increase.  What good is a 10% dividend yield if it gets cut next month – or if the stock price declines 15%?

Here are some metrics that can help give you confidence in the sustainability of a dividend:

Payout Ratio & Earnings Per Share

Payout Ratio: This one is pretty straightforward.  What percent of earnings is the company paying out to its shareholders as dividends.  For an extremely simplistic example, assume company ABC makes $100 this year, and pays an annual dividend of $50.  The company would have a payout ratio of 50%. Look for companies that have a conservative payout ratio.  Payout ratios will vary between industries, but typically you want to find a company that is paying out less than 40-50% of annual earnings.  The big exception here would be REITS – but that is a discussion for another day.

Earnings History & Projections

Another important metric to focus on is earnings per share.  Are earnings increasing?  A super conservative payout ratio is great, but if earnings are falling each year, that payout ratio, by default will start to increase.  If a company is not able to increase its earnings, eventually the dividend is going to get cut.  Look for companies that have a history of growing their earnings per share, in good times and bad.

Strong Balance Sheet

Always look at the financial statements for a company before pressing the “buy” button.  A lot of metrics could look great, but if a company is over leveraged, it means they could be at risk in the future.  Always ensure a company has no problem meeting its debt obligations.  If they can’t this means they may need to raise equity (issue more shares/dilute your stake in the company), cut back on costs (cut dividends), or worst case face a possible bankruptcy.

Dividend Growth History

Lastly, look for companies that have a history of increasing their dividend each year.  This typically shows they have confidence in the business, and they like to reward shareholders.  It is important to do your own research, and just because a company has increased their dividend for 10+ years in a row, doesn’t mean it can’t or won’t get cut in the future.  That said, if a company has strong and growing earnings, increasing revenue, a strong balance sheet and a history of paying a growing dividend, you are probably on the right track.

Finally, since you may have been lured here with the click baity headline, and the hopes of finding 3 great stocks to buy, out of pure guilt I will post 3 Canadian stocks below I believe meet the following criteria:

  • Conservative Payout Ratio
  • Increasing Earnings
  • Strong Balance Sheet
  • Dividend Growth History

3 Canadian stocks to consider:

  1. Alimentation Couche Tard
  2. Metro Inc
  3. CN Rail

 

As always, do your own due diligence.  Happy Hunting.
Cheers.