Chasing Yield And Getting That Drip Back


hey everyone

Hope you are all doing well.

Life is good other than this Sh!t show that is Ontario, but hey that’s another post.. The market is finally starting to show some red, but honestly I don’t really see much deals out there. (Well maybe tobacco stocks if your down with that)

I have actually been contemplating just starting to grow a cash position and not putting the money to work, the way Ontario is going and seeing this market. But the reality is other provinces and Country’s around the world are opening up.

A couple of my wealthy clients who I talk money with think we will see a massive boom. That’s a great sign. People clearly want to go out on vacations, excursions, shopping, restaurants etc etc but the govt isn’t letting us. Once things open up, boom here we go!

Also inflation will most likely be a lot bigger than what governments keep telling us it will be. Look at your groceries, lumber, house prices, corn futures, metal etc etc. They are spiking.

I was actually working for a client who has a steel fabrication business, he told me he was quoting jobs in March and now in April the price of the steel he uses has almost doubled, so he has to redo those quotes. That’s crazy! (It really reminds me of that story of someone wheel barrowing money around, going into a store to buy something. Only to come outside and find all his cash on the ground and notice his wheelbarrow being stolen.)

Clearly cash is losing its buying power.. I want to continue to putting that cash to work..

I was contemplating either Telus or Algonquin power, but utility’s are one of our highest sectors and Telus popped back up a bit.. With stock prices going up so much lately I have also lost out on the dividend reinvestment program with some of our holdings.

Simply put the stock price has went higher than the dividend we receive from that company.. I’m a huge fan of drip’s and their compounding effect, so when I see them no longer dripping it’s worth looking into growing that position..

I have also stated at the start of the year I want to get more lower yielding/ higher dividend growth companies and mix them with higher yielding companies. Since I bought some more couche-tard last month it really didn’t do much to increase our forward dividend income in the short term, why not get some yield?

smartcentres

Chasing Yield – New Buy

So this month I decided to pump up our smart centre‘s position. Why not get 2 birds stoned at once right? Get that drip back and also add a nice chunk of forward income.

Now I have bashed the retail environment during this “pandemic” but smart is very diversified and I’m a massive fan of the Walmart anchor.  These plazas are where stores want to be because the traffic is there. I really don’t see Walmart going anywhere and instead of investing in them I’ll invest indirectly with smart..

Now is smart centres a buy at the moment? I wouldn’t say its a steal.. Actually its ahead of what analysts think it should be on yahoo finance. But they didn’t cut their dividend last year like so many other reits and their q4 presentation looked good. In December their rent collection was 93.4%. Way better than most months last year but also unfortunately almost a 2% drop from October. (Guess that’s to be expected as lock downs started again in Toronto in November)

Smart Centres was a position we started last March and added 3 tranches as the market fell. One @ $27.97, next @ $21.21 and finally the largest tranche at $15.17. It’s pretty safe to say this was a great investment, so I don’t mind averaging up in price to get that monthly drip back!

So we bought another 40 shares of smart centres in the kids resp @ $27.80 adds which adds $74.01 a year. Since we now own 209 shares this will bring in $32.22 a month and active that drip again… Woot! Woot!

Conclusion

Well that’s our most recent purchase. Nothing huge, not a steal but what in the market is these days? Just got to continue beefing up our positions and growing that forward income.

Curious what have you been buying? or have you started to build up your own cash pile?

Cheers everyone!

Long – sru.un Dividend Portfolio has been updated.



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