July 2020 Dividend Report & Pizza

Pineapple Feta Pizza

Dividend Income & Portfolio News

Personal Highlights – July 2020

  • July started off pretty good.  The kids are back at daycare, most weekends at the cabin, nice weather..and then everyone got sick.  I forgot how quickly germs spread at daycare. It took a whopping 8 days before both kids got a cold, and in turn got both my wife and I sick.  That said, the kids are super excited to be back and seeing their friends, and since we are both working from home now – we are probably even more excited 🙂
  • Although we’ve been spending most weekends out at the lake, whenever we stay in the city instead we’ve been trying to do something new or different.  So in July, a few things we did as a family; we had a picnic and ice cream at Assiniboine park, spent a day at the zoo and made home made pizza (pictured below is the kids creation)
    Home made pizzaPineapple Pizza
  • I put up a basketball net in my driveway and have been getting out once or twice a day for a few minutes to get some fresh air and shoot some hoops.  I forgot how much fun basketball is, and it’s nice to get away from the laptop for awhile every now and then.
  • Thanks to my father in law, I got a bicycle in the city now!  Although I don’t plan on becoming a major cyclist, I am looking forward to some nice leisurely rides through the neighbourhood, and over to some friends houses for some backyard bourbon and beers without having to worry about driving home after.

    Financial Highlights for July 2020:

  • I’ve continued with my bi-weekly contributions into my TFSA, spousal RRSP & wifes TFSA.  I noticed I had started to build up a decent amount of cash, and had started looking for a new stock or two to buy.  In June I updated my watchlist. You can see that HERE
  • I made my first two stock purchases since the covid pandemic started.  I picked up 180 shares of Telus and 146 shares of Manulife.  These two purchases will add an additional $374.12 in yearly tax free dividend income!
  • July was my second consecutive month of over $1000 in passive income.
  • I was paid dividends from 9 companies, and 1 funds this month.  I dripped a total of 68 new shares/units.

Passive Income Update For July 2020.

TFSA’S:

Power Corp of Canada: $100.69 (dripped 4 shares)

Artis Reit: $28.49 (dripped 3 shares)

Diversified Royalty: $23.05 (dripped 12 new shares)

Interrent Reit: $4.29

Plaza Reit: $30.10 (dripped 8 shares)

Algonquin Power: $201.83 (dripped 12 shares)

TFSA’s Total: $388.45

RRSP:

Canadian Equity Income Distribution: $354.91(dripped 13 shares)

GoEasy Financial: $123.75

New Flyer Group: $58.01 (dripped 3 shares)

Transcontinental: $196.43 (dripped 13 shares)

Total Passive Income July 2020:  $1121.55

Portfolio Update:

My portfolio jumped a bit in July to: $354,977.52  This represents a increase of 3.33% from last month. I expect continued volatility in the market (and my portfolio) for the foreseeable future due to covid and the upcoming US presidential election.

My long term plan hasn’t changed. I haven’t sold a single stock, and I continue to look for good deals.  I pulled the trigger on two stocks on my watchlist this month (Telus & Manulife).  My plan is now to wait until the US election is over to make any other moves in the market.  That said, I will continue to keep my eyes open for any stocks that meet my screening criteria and fall to an attractive price.

Passive income in July was $1121.55 This was only the second time in my investing history, that I’ve ever had back to back months over $1000 in dividend income.  It was my fourth month in 2020 with over $1000!  To put that in perspective, in all of 2019 I only cracked one thousand once!

Since January 1st, I’ve earned $7347.39 in passive income.  The second half of the year unfortunately won’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 $11,763.01.

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.