Now that we’ve passed the halfway point of 2023, let’s check in with my model dividend portfolio. First, I’ll recap the portfolio’s mandate and performance. Then, I’ll discuss how I’m reinvesting the cash that’s accumulated in recent months.
As you’ll see, my portfolio has developed something of a split personality lately, with dividends continuing to grow but share prices coming under pressure from the sharp rise in interest rates.
I launched my model Yield Hog Dividend Growth Portfolio on Oct. 1, 2017, with $100,000 of virtual cash. My goal was to identify companies with a strong track record of raising their dividends and a high probability of continuing to do so.
As a buy-and-hold investor, I vowed to do very little trading and to instead focus on reinvesting my dividends to maximize the benefits of compounding.
No strategy is perfect, and I’ve had to jettison a couple of companies that ran into trouble and reduced their dividends, disqualifying them from membership. But the vast majority of the original stocks are still in the portfolio and raising their dividends regularly. (View the complete portfolio online at tgam.ca/dividendportfolio.)
The combination of dividend growth and regular dividend reinvestment – which I do manually whenever a significant amount of cash builds up – has produced substantial growth in income for the portfolio, in line with its primary mission to generate increasing cash flow.
At inception, the portfolio was generating annualized income of $4,094, based on dividend rates at the time. Fast-forward nearly six years, and it’s now throwing off a projected $7,024 of cash annually – an increase of nearly 72 per cent.
Even in the face of inflation and surging interest rates, more than half of the companies in the portfolio have already raised their dividends this year – namely, Bank of Montreal BMO-T, BCE Inc. BCE-T, Brookfield Infrastructure Partners LP BIP-UN-T, Canadian Imperial Bank of Commerce CM-T, Canadian Utilities Ltd. CU-T, Choice Properties REIT CHP-UN-T, CT REIT CRT-UN-T, Manulife Financial Corp. MFC-T, Restaurant Brands International Inc. QSR-T, Royal Bank of Canada RY-T, TC Energy Corp. TRP-T and Telus Corp. T-T. And I expect most of the remaining stocks will deliver hikes in the second half of the year.
Now, I would be lying if I said everything is going peachy. Even as dividends are rising, shares prices of many dividend stocks have been struggling. That’s typically what happens, at least temporarily, when interest rates rise.
This is apparent in the portfolio’s performance. As of July 1, the portfolio was worth $149,565, representing a total return of about 49.6 per cent since inception. That trails the total return of about 53.7 per cent for the benchmark S&P/TSX Composite Index over the same period. Through the first six months of 2023, the portfolio’s total return of 3.8 per cent also lagged the index’s return of 5.7 per cent. (All return figures cited here include dividends.)
Am I upset? Not really. There have been times when my model portfolio has outperformed the index, and now we’re in a period when it’s underperforming. No big whoop. I prefer to look on the bright side, which is that I can now purchase some stocks at lower prices compared with a few months ago and generate more income for every dollar I invest.
With that in mind, let’s do some shopping.
Many real estate investment trusts are feeling the pinch from the steep increase in interest rates. In addition to increasing REITs’ borrowing costs, rising rates have caused their unit prices to fall, which has made their yields – which move in the opposite direction – more competitive with the higher returns now available from bonds and guaranteed investment certificates.
Two of the portfolio’s REITs – Choice Properties REIT and SmartCentres REIT SRU-UN-T – have been hit especially hard, dropping about 9 per cent and 8 per cent, respectively, year to date. Still, nothing has fundamentally changed in the long-term outlook for either REIT.
Both have solid tenants, with Choice’s portfolio anchored by grocery and drug stores in the Loblaw family and SmartCentres benefiting from its relationship with Walmart, which accounts for more than one-quarter of rental revenue. Occupancy levels also remain high, at more than 97 per cent for both REITs. What’s more, Choice and SmartCentres have deep development pipelines that include retail, residential and industrial properties.
With Choice and SmartCentres now yielding 5.6 per cent and 7.6 per cent, respectively, I’ve decided to purchase an additional 40 units of each REIT. In total, the model portfolio now holds 500 Choice units and 190 SmartCentres units. (Note: These purchases were completed at Thursday’s closing prices and consumed $1,513.60 of the portfolio’s “cash.”) The money in the model portfolio isn’t real, but I also own Choice and SmartCentres personally – along with all of the other stocks in the model portfolio – so I have skin in the game.
Nobody knows what will happen to REIT unit prices in the short run, but over the long run I expect that Choice and SmartCentres will both continue to expand their real estate portfolios and generate growing cash flow. In the meantime, I’m happy to sit back and collect my distributions while I wait for interest rates to crest and income stocks to start moving higher again.
Remember to do your own due diligence before investing in any security.
E-mail your questions tojheinzl@globeandmail.com. I’m not able to respond personally to e-mails but I choose certain questions to answer in my column.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
MONTREAL – The Quebec Professional Association of Real Estate Brokers says Montreal-area home sales rose 9.3 per cent in August compared with the same month last year, with levels slightly higher than the historical average for this time of year.
The association says home sales in the region totalled 2,991 for the month, up from 2,737 in August 2023.
The median price for all housing types was up year-over-year, led by a six per cent increase for the price of a plex at $763,000 last month.
The median price for a single-family home rose 5.2 per cent to $590,000 and the median price for a condominium rose 4.4 per cent to $407,100.
QPAREB market analysis director Charles Brant says the strength of the Montreal resale market contrasts with declines in many other Canadian cities struggling with higher levels of household debt, lower savings and diminishing purchasing power.
Active listings for August jumped 18 per cent compared with a year earlier to 17,200, while new listings rose 1.7 per cent to 4,840.
This report by The Canadian Press was first published Sept. 6, 2024.
In the quest to find cities where renters can enjoy the best of all worlds, a recent study analyzed 24 metrics across three key categories—Housing & Economy, Quality of Life, and Community. The study ranked the 100 largest cities in Canada to determine which ones offer the most to their renters.
Here are the top 10 cities that emerged as the best for renters in 2024:
St. John’s, NL
St. John’s, Newfoundland and Labrador, stand out as the top city for renters in Canada for 2024. Known for its vibrant cultural scene, stunning natural beauty, and welcoming community, St. John’s offers an exceptional quality of life. The city boasts affordable housing, a robust economy, and low unemployment rates, making it an attractive option for those seeking a balanced and enriching living experience. Its rich history, picturesque harbour, and dynamic arts scene further enhance its appeal, ensuring that renters can enjoy both comfort and excitement in this charming coastal city.
Sherbrooke, QC
Sherbrooke, Quebec, emerges as a leading city for renters in Canada for 2024, offering a blend of affordability and quality of life. Nestled in the heart of the Eastern Townships, Sherbrooke is known for its picturesque landscapes, vibrant cultural scene, and strong community spirit. The city provides affordable rental options, low living costs, and a thriving local economy, making it an ideal destination for those seeking both comfort and economic stability. With its rich history, numerous parks, and dynamic arts and education sectors, Sherbrooke presents an inviting environment for renters looking for a well-rounded lifestyle.
Québec City, QC
Québec City, the capital of Quebec, stands out as a premier destination for renters in Canada for 2024. Known for its rich history, stunning architecture, and vibrant cultural heritage, this city offers an exceptional quality of life. Renters benefit from affordable housing, excellent public services, and a robust economy. The city’s charming streets, historic sites, and diverse culinary scene provide a unique living experience. With top-notch education institutions, numerous parks, and a strong sense of community, Québec City is an ideal choice for those seeking a dynamic and fulfilling lifestyle.
Trois-Rivières, QC
Trois-Rivières, nestled between Montreal and Quebec City, emerges as a top choice for renters in Canada. This historic city, known for its picturesque riverside views and rich cultural scene, offers an appealing blend of affordability and quality of life. Renters in Trois-Rivières enjoy reasonable housing costs, a low unemployment rate, and a vibrant community atmosphere. The city’s well-preserved historic sites, bustling arts community, and excellent educational institutions make it an attractive destination for those seeking a balanced and enriching lifestyle.
Saguenay, QC
Saguenay, located in the stunning Saguenay–Lac-Saint-Jean region of Quebec, is a prime destination for renters seeking affordable living amidst breathtaking natural beauty. Known for its picturesque fjords and vibrant cultural scene, Saguenay offers residents a high quality of life with lower housing costs compared to major urban centers. The city boasts a strong sense of community, excellent recreational opportunities, and a growing economy. For those looking to combine affordability with a rich cultural and natural environment, Saguenay stands out as an ideal choice.
Granby, QC
Granby, nestled in the heart of Quebec’s Eastern Townships, offers renters a delightful blend of small-town charm and ample opportunities. Known for its beautiful parks, vibrant cultural scene, and family-friendly environment, Granby provides an exceptional quality of life. The city’s affordable housing market and strong sense of community make it an attractive option for those seeking a peaceful yet dynamic place to live. With its renowned zoo, bustling downtown, and numerous outdoor activities, Granby is a hidden gem that caters to a diverse range of lifestyles.
Fredericton, NB
Fredericton, the capital city of New Brunswick, offers renters a harmonious blend of historical charm and modern amenities. Known for its vibrant arts scene, beautiful riverfront, and welcoming community, Fredericton provides an excellent quality of life. The city boasts affordable housing options, scenic parks, and a strong educational presence with institutions like the University of New Brunswick. Its rich cultural heritage, coupled with a thriving local economy, makes Fredericton an attractive destination for those seeking a balanced and fulfilling lifestyle.
Saint John, NB
Saint John, New Brunswick’s largest city, is a coastal gem known for its stunning waterfront and rich heritage. Nestled on the Bay of Fundy, it offers renters an affordable cost of living with a unique blend of historic architecture and modern conveniences. The city’s vibrant uptown area is bustling with shops, restaurants, and cultural attractions, while its scenic parks and outdoor spaces provide ample opportunities for recreation. Saint John’s strong sense of community and economic growth make it an inviting place for those looking to enjoy both urban and natural beauty.
Saint-Hyacinthe, QC
Saint-Hyacinthe, located in the Montérégie region of Quebec, is a vibrant city known for its strong agricultural roots and innovative spirit. Often referred to as the “Agricultural Technopolis,” it is home to numerous research centers and educational institutions. Renters in Saint-Hyacinthe benefit from a high quality of life with access to excellent local amenities, including parks, cultural events, and a thriving local food scene. The city’s affordable housing and close-knit community atmosphere make it an attractive option for those seeking a balanced and enriching lifestyle.
Lévis, QC
Lévis, located on the southern shore of the St. Lawrence River across from Quebec City, offers a unique blend of historical charm and modern conveniences. Known for its picturesque views and well-preserved heritage sites, Lévis is a city where history meets contemporary living. Residents enjoy a high quality of life with excellent public services, green spaces, and cultural activities. The city’s affordable housing options and strong sense of community make it a desirable place for renters looking for both tranquility and easy access to urban amenities.
This category looked at factors such as average rent, housing costs, rental availability, and unemployment rates. Québec stood out with 10 cities ranking at the top, demonstrating strong economic stability and affordable housing options, which are critical for renters looking for cost-effective living conditions.
Québec again led the pack in this category, with five cities in the top 10. Ontario followed closely with three cities. British Columbia excelled in walkability, with four cities achieving the highest walk scores, while Caledon topped the list for its extensive green spaces. These factors contribute significantly to the overall quality of life, making these cities attractive for renters.
Victoria, BC, emerged as the leader in this category due to its rich array of restaurants, museums, and educational institutions, offering a vibrant community life. St. John’s, NL, and Vancouver, BC, also ranked highly. Québec City, QC, and Lévis, QC, scored the highest in life satisfaction, reflecting a strong sense of community and well-being. Additionally, Saskatoon, SK, and Oshawa, ON, were noted for having residents with lower stress levels.
For a comprehensive view of the rankings and detailed interactive visuals, you can visit the full study by Point2Homes.
While no city can provide a perfect living experience for every renter, the cities highlighted in this study come remarkably close by excelling in key areas such as housing affordability, quality of life, and community engagement. These findings offer valuable insights for renters seeking the best places to live in Canada in 2024.
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