Agrium Inc. today announced a dividend increase of 122% bringing its semi-annual dividend to $0.50 from $0.225. The dividend will be paid on July 12th, 2012 to shareholders of record on July 1st, 2012. This marks only the second dividend increase for Agrium in the last 20 years.The press release can be found here
From the companies website:
Agrium Inc. is a major Retail supplier of agricultural products and services in North America, South America and Australia and a leading global Wholesale producer and marketer of all three major agricultural nutrients and the premier supplier of specialty fertilizers in North America through our Advanced Technologies business unit. Agrium’s strategy is to grow across the value chain through acquisition, incremental expansion of its existing operations and through the development, commercialization and marketing of new products and international opportunities.
Agrium is a member of the Basic Materials Sector in the Chemicals-Agriculture group.
Full Disclosure: None
For a full list of my dividend income holdings click here
Welcome to my May 2012 Investment income update. For anyone new to this site I generally try to post Investment Income Update close to the beginning of each month as an exercise in tracking my success at building a dividend growth portfolio. This year on of my goals is to grow my investment income by 20% using three basic pillars: dividend growth, strategic income reinvestment and finally by changing my asset mix. Assuming I can increase the amount of investment income generated faster than inflation and salary growth each year then I will be generating a larger and larger income stream over time. I like to think of this as my own personal pension plan. Without further ado here is this months investment income update.
May was a reasonable month for investment income growth through new purchases, however there was a large reduction in income from fixed income and dividend ETF’s (presumably as these funds rolled over their investments into lower yielding investments. This is a common problem with fixed income investments that is largely avoided when holding dividend growth stocks. Of course the possibility of a dividend cut is always available. With a little bit of luck and some research hopefully we can avoid that.
- Dividend Growth (-0.90%)First of all not unexpectedly there were no dividend increases in the month of May. None of the stocks I own raised there dividends last May either. The negative dividend growth shown here highlights 3 different issues:
- How I track my investment income.
- How products choose to distribute investment income.
- Risks inherent in certain income producing products.
I will quickly explain how each of these factors can lead to unpredictability in investment income.
First, Since my investment income tracking is actually a projection (projected investment income) of what dividend income I should receive in the next 12 months, there are imperfections in the calculation. projected investment income is calculated by multiplying currently announced dividend by number of dividend periods in the year for each investment that pays a dividend. This works great for investments that pay predictable dividends such as dividend growth stocks. But if the income payed in each dividend period is not uniform this will cause the projected dividend income to bounce up and down. Perhaps a better way to track the investment income of such vehicles would be to use the trailing twelve month dividend payout, I will consider this as a future modification.
Second certain products, ETF’s in particular may not pay the dividends evenly in each dividend payment period.
XDV.TO is a good example of this, it seems to pay the dividends that have come in in a particular month causing significant variations in its payout ratio from month to month. This value then gets multiplied by 12 for the number of dividend payments in the year and thus can fluctuate widely.
CDZ.TO does a better job of smoothing out the ups and downs, however do to portfolio re-weighting and other factors it also does not actually pay an ever increasing stream of income. However from year to year in a good dividend growth environment the trend should be to flat or rising dividends on a yearly basis.
Finally most of the fixed income funds will eventually need to cut their payouts if interest rates are perpetually declining as they will be rolling over into new bonds at lower interest rates. This provided extra reductions in my investment income. What follows is a list of the ETF’s that had reductions in investment income.
iShares Advantaged High Yield Bond ETF CHY.TO was down 8.3%, iShares Dow Jones Canada Select Dividend Index ETF
XDV.TO down 10.1%, iShares S&P TSX Canadian Dividend Aristocrats
CDZ.TO down 1.33%, iShares DEX Short Term Bond Index Fund
XSB.TO down 1.1%, iShares DEX Real Return Bond Index Fund
XRB.TO down 8.0%
- New Purchases (+1.28%) Dividends received from Northland Power
NPI-UN.TO also as there have been significant pullbacks in many stocks I am following. I added to my position of
TCL.A this was the major contributor to the new purchase income.
- Investment Mix (+0.0%) Again nothing to add here, due to the current volatile environment in the markets the funds which I am intending to convert into income holdings are below the level that I had set as the desired amount. I am going to have to make a decision about whether moving them to the income portfolio can provide me better results than leaving them where they are. I am strongly leaning toward yes as the answer in that case I should just cut my losses and begin deploying them into income positions
Investment Income May’s Conclusion
May was a slow month for dividend increases and a lot of headwinds were provided by the reductions in dividends in my income and dividend ETF’s. I don’t expect that these will provide much further downside and more likely will actually move back up over the remainder of the year. (At least the dividend funds). Finally there are some more attractive valuations appearing lately within the dividend paying universe this is allowing me to selectively purchase stocks which are sporting higher yields and more potential for capital gains. I am not deluded into thinking that valuations in general are cheap however if you are wondering why look no farther than the following article in the Globe and MailYes Virginia, The S&P 500 is overvalued written by Norman Rothery. I am a fan of the Shiller P/E as a way of determining relative valuation and also like to use CAPE in my calculations of company valuations. Now it would be nice to have the Shiller P/E for the S&P TSX as well for comparisons sake…
Until my next investment income update hope you are progressing on your path to becoming DividendRich
Full Disclosure: Long all securities listed in this article
For a full list of my current dividend income holdings click here
If this article is enticing you to act please read my Disclaimer
Welcome to my April 2012 Investment income update. For anyone new to this site I generally try to post Investment Income Update close to the beginning of each month as an excercise in tracking my success at building a dividend growth portfolio. This year on of my goals is to grow my investment income by 20% using three basic pillars: dividend growth, strategic income reinvestment and finally by changing my asset mix. Assuming I can increase the amount of investment income generated faster than inflation and salary growth each year then I will be generating a larger and larger income stream over time. I like to think of this as my own personal pension plan. Without further ado here is this months investment income update.
April was a slow month with respect to income growth in my portfolio. I had no new purchases aside from a couple of dividend re-investments. There were a couple of dividend increases, unfortunately my holdings in the affected companies were small compared to my overall portfolio so it did not have a large affect on my overall income situation.
- Dividend Growth (+0.20%) Two companies which I hold announced dividend increases during the month of March. Both Both Johnson and Johnson(JNJ) and Procter and Gamble (PG) announced dividend increases on schedule with dividend increases of 7.0% and 7.1% respectively. This made 50 consecutive years of dividend increases for JNJ so it has now entered the elite list of U.S Dividend Champions. Proctor and Gamble as raise dividends each year for 56 years. Between the two companies this increased my annualized dividend growth by approximately one fifth of one percent, not much but with dividend growth every little bit helps. To put this in perspective if every month had a similar level of dividend growth the total compounded growth in income would be about 2.4% or about the rate of inflation. I have some much larger holdings which should allow dividend growth to do even better than that in the coming months.
- New Purchases (+0.05%) Dividends received from Northland Power
NPI-UN.TO and Algonquin Power Utilities
AQN.TO were again reinvested in additional shares of these companies. This process is almost irrelevant in the total income portfolio and I have a mind to stop the DRIPS on them as I would prefer to accumulate case more quickly so that when the opportunity presents itself I would have more money to use for new purchases. I will give this some thought this month as we are going through at least a period of market consolidation. I would like to be able to take advantage of any opportunities that arise.
- Investment Mix (+0.0%) Still nothing on this front. In fact I have seemingly regressed as my goal of reaching a certain Market value and then liquidating the entire portfolio was not met and now with the market pullback ongoing that goal appears to be moving away. This is one of the problems with targeting absolute values for decisions to buy and sell however I think I am going to stick the course and see how it plays out. I have been within 1-2% of my target a few times now only to have a serious setback that leaves me feeling like I should have already made the move.
- Currency variations (-0.15%) What goes up must come down. US dollar weakness, or Canadian dollar strength in March knocked about 0.15% off the annualized estimate of my income. At this moment I will take a moment to explain how I calculate this value. I use a spreadsheet to track my investment income projections and update the values of any changes in dividends, share purchases and so on. I compare the Current months projected annual investment income to the previous months annualized investment income to come up with the numbers in the sections above. Once the first three categories are complete then I move on to the Currency variations calculations. Here for ease of computation I simply put the previous months US to Canadian dollar exchange rate into this months chart, this gives me a dollar value for the effect the current exchange rate would have on my annual investment income were it to remain constant until the end of the year. Finally I calculate the percent that represents of the current months income.
In conclusion April was a bit of a disappointment from an Investment income growth standpoint. Dividend increases came generally as expected with PG and JNJ but with little new purchases and none of the asset mix conversions that I plan to do them month was very close to flat, if I am to hit my goal of 20% investment income growth in 2012 it will require more than just partial dividend reinvestment and dividend growth. To compound issues my projections do not predict any dividend increase for the Month of May. The silver lining here is that so far in May with world stock markets generally on a downward trend it seems likely that good dividend paying stocks are becoming more attractive by the day. Now if I can just ensure that I have some extra cash to allow me to take advantage of this then all will be well.
Full Disclosure: Long NPI-UN.TO AQN.TO JNJ and PG
For a full list of my dividend income holdings click here
Welcome to my March 2012 Investment income update. For anyone new to this site I generally try to post Investment Income Update close to the beginning of each month as an excercise in tracking my success at building a dividend growth portfolio. This year on of my goals is to grow my investment income by 20% using three basic pillars: dividend growth, strategic income reinvestment and finally by changing my asset mix. Assuming I can increase the amount of investment income generated faster than inflation and salary growth each year then I will be generating a larger and larger income stream over time. I like to think of this as my own personal pension plan. Without further ado here is this months Investment Income Update.
March was a decent month for dividend increases with three companies doing their magic. I also added to my holdings in 2 dividend ETF’s this month because I was over allocated to cash in one of my accounts.
- Dividend Growth (+0.20%) Three companies which I hold announced dividend increases during the month of March. Both Royal Bank (RY) and Transcontinental (TCL.A) each announced a dividend increase sooner than I was expecting. The dividend increases were 5.5% and 7.4% respectively. SNC-Lavalin which has been plagued by various high profile scandals as of late delayed it’s reporting by about a month but did in the end announce it’s dividend increase that clocked in a +4.8%. which was lacking by historical trends for |SNC of about 20% per year. There is some speculation that SNC might follow up with a second increase this year if it clears up it’s legal troubles. Obviously nothing would please me more as SNC was bought as one of my low yield high growth dividend stocks and 5% a year does not adequately fit the bill.
- New Purchases (+2.64%) Dividends received from Northland Power
NPI-UN.TO were again reinvested in additional shares of the company. Claymore S&P Canadian Dividend Aristocrat’s ETF (CDZ) and Ishares Dow Jones Canadian Dividend ETF are two holdings that I have used to flesh out more than one portfolio with investment income. CDZ in particular follows my philosophy of focusing on dividend growth. During March it became time to re-balance a portfolio that had grown very cash rich. As a result Significant amounts of these stocks we purchased and this drove a one percent increase in my investment income for the month. The biggest problem with these ETF’s in my opinion is that they (especially XDV) pay out an uneven dividend throughout the year. This means that even without
- Investment Mix (+0.0%)March found me still waiting to convert a group of mutual funds from one account into cash so that I can then reinvest in income producing assets. To add some structure to this process I have set a target valuation at which I will sell this group of holdings after which I will transfer the assets to a brokerage account where I will slowly redeploy them into my income portfolio. This group of stocks represents over 10% of my holdings and at least 20% of my current dividend and income holdings so I will take some months to redeploy the funds.
- Currency variations+0.04%) This month fluctuations in currency gave a little bit of a boost to my portfolio.
In conclusion March generally showed decent dividend growth that exceeded my expectations with the notable exception that SNC-Lavalin generated disappointing growth. I am willing to let this pass for the time being on the hopes that a second increase will come or next year the rate of increases will return to trend. The largest contributor to increased income was an overdue re-balancing in one of my accounts which does not hold individual stocks currently but instead is made of low cost mutual funds and ETFs. At the risk of sounding like a broken record my plans to change my Investment mix toward more income generation is still on hold. I have specific criteria that I am trying to meet (which are outside the scope of this investment income update) before I can begin deploying the funds appropriately.
For a full list of my dividend income holdings click here
Here is a list of interesting links I ran into over the last week dealing with topics that are likely to be of interest to anyone who follows this site. Hope you find them educational and useful.
Canadian Couch Potato wrote about When Buy What You Know Makes Sense. Which is a bit of a rebuttal and a different perspective on an article that was written by another blogger My Own Advisor over here.
Clark over at Million Dollar Journey wrote about A Primer on BRIC which discusses what BRIC and emerging markets are as well as how and why to invest in them.
The Passive Income Earner did a preliminary dividend stock analysis on Apple after its recent announcement that it would issue a dividend.
On a similar vein The Dividend Ninja wrote an article about how many funds stuffed Apple in whether it fit their mandate or not over here in Dividend Fund Managers Are Buying Apple.
The Dividend Guy unveiled his proprietary Dividend Growth Ranking system over here along with how a number of dividend stocks scored.
The Div Guy discusses how people are (possibly erroneously) replacing Inflation Protected Treasuries(TIPS) with dividend paying stocks in Why dividend stocks top TIPS for income investing
Dividends4Life over at Dividend Growth Stocks wrote about 7 Dividend Stocks Sporting A Five-Star Rating
Dividend Growth Investor wrote 17 Cheap Dividend Aristocrats on Sale
Finally Dividend Monk wrote two dividend analysis pieces on Technology giants Microsoft and Intel. Microsoft stock still a reasonable value and Intel Analysis: Where are their Growth Opportunities?
There is lots of great reading here, I hope that you get a chance to read a few of these articles.