The name of the game is: Wait-and-Watch. The markets continue to
stay resilient and the major indexes have been flat for first
quarter 2014. Every little stumble is causing more sideline cash
pouring in to "buy the dip". I've decided to sit these small dips
out and concentrate on increasing my cash position. With the end of
quarter one, its earnings season again; and that means we can
expect some volatility over the month of April as the companies
release their results. A lot has been written about how the weather
has played havoc over the economy and it'll be interesting to see
if it really did make a difference in the earnings.
On the Fed front, the Fed has decided to cut the bond buying
program by another $10B and more importantly drop the Evans Rule -
where rising interest rates are tied to a pre-requirement of a 6.5%
threshold in unemployment - although the Fed has changed its tune a
bit after that comment a few days ago. The current consensus for
rate increase stands around early-to-mid 2015.
Provided the right conditions, I intend to add to my positions in
Chevron Corp (
), Johnson & Johnson (
), Medtronic (
), Qualcomm (
) and/or Rogers Communications Inc. (RCI.B.TO)
is the fourth largest oil and gas company in the world operating in
both Upstream and Downstream. CVX is a component of Dow Jones
Industrial Average and is a dividend champion raising its dividends
for 26 consecutive years. The five-year DGR is 9% and 10-year DGR
is 10.6%. The company is attractively valued at current levels and
the recent clearing of the Ecuador suit is some long-awaited good
news for the the company.
Johnson & Johnson (
is a behemoth in the healthcare and consumer goods sectors. The
double play on the two sectors makes this a great pick. JNJ is a
dividend champion that has been raising dividends consecutively for
51 years; has five-year DGR of 7.6% and a 10-year DGR of 10.8%.
April is also expected to bring a dividend increase announcement
Medtronic Inc (
manufactures and sells device-based medical therapies worldwide.
Medtronic is a dividend champion that has been raising dividends
for 36 years; has a 5-year DGR of 11.6% and 10-year DGR of 14.9%.
designs, develops, manufactures and markets digital communications
products and services based on CDMA, OFDMA and other technologies.
QCOM is the leader in ARM-based processors which are found in the
bulk of Windows, BlackBerry and Android devices. QCOM has been
raising dividends for 12 years and has a 5-year DGR of 16.95%.
Click here to read my full analysis of QCOM.
Rogers Communications Inc (
is the largest wireless service provider in Canada and is growing
its business segments in cable and media aggressively. Rogers has
been growing dividends for 10 years and has a 5-year DGR of 11.13%.
Click here to read about my analysis of the telecom providers in
Every month, I add to my positions in the following stock and
Claymore S&P US Dividend Growers ETF
is an ETF of 83 dividend growers and provides me with exposure to
excellent corporations across all sectors. The ETF has a 1.8%
yield and pays distributions monthly.
iShares Canadian Financial Monthly Income Fund
is an ETF of 24 Canadian financial equities. The fund yields 7%
and pays distributions monthly.
Scotia Canadian Balanced Fund (mutual fund)
is an index fund tracking the Canadian S&P/TSX Composite
Index and the DEX Universe Bond Index. The fund yields 0.52% and
pays distributions quarterly.
The Bank of Nova Scotia (BNS.TO)
is the third largest of the Canadian banks by deposits and market
cap. BNS is also the most international of the Canadian banks
with exposure in 55 countries outside Canada. BNS saw a pause in
its dividend growth during the financial crisis. However, BNS has
started raising dividends after the crisis with a 5-yr DGR of
5.03%. I have a DRIP plan in BNS and invest monthly to this
I am also considering various stocks that are not currently in my
portfolio. I have decided to clear out some old names from my older
watchlist and added a bunch of new ones as I need better
diversification. I am starting to look more closely at the
following sectors: Industrials and Services.
I have dropped Deere & Co (
) from my watchlist after the lack of dividend increase this year.
Instead, I have added conglomerates (GE and UTX) to my watchlist.
General Electric Company (GE)
is a conglomerate operating in eight segments - Power &
Water, Oil & Gas, Energy Management, Aviation, Healthcare,
Transportation, Home & Business Solutions, and GE Capital. GE
cut its dividends during the financial crisis and now has a track
record of raising dividends for 4 years in a row at an annualized
rate of 16%.
United Technologies Corp (UTX)
is a conglomerate operating in six segments - Otis, UTC fire
& security, Pratt & Whitney, Hamilton Sundstrand and
Sikorsky. UTX has been raising dividends for 20 years with 5-yr
and 10-yr DGRs of 10.3% and 14.5% respectively.
Illinois Tool Works (ITW)
is a manufacturer of diversified range of industrial products and
equipment with operations in 58 countries. The company operates
in seven segments: transportation, power systems &
electronics, industrial packaging, food equipment, construction
products, polymers & fluids and all other. ITW is a dividend
champion who has been raising dividends for 39 years. ITW has a
5-yr DGR of 9.9% and a 10-yr DGR of 12.6%.
Parker-Hannifin Corp (PH)
is a full-line diversified manufacturer of motion and control
technologies and systems, including fluid power systems,
electromechanical controls and related components. The company's
motion and control technologies and systems are used in the
products of its three business segments: industrial, aerospace,
and climate & industrial controls. PH is a dividend champion
who has been raising dividends for 57 years. PH has a 5-yr DGR of
16.2% and 10-yr DGR of 12.9%.
Canadian National Railway (CNR.TO)
engages in transportation of goods including petroleum and
chemicals, grain and fertilizers, coal, metals and minerals,
forest products, intermodal, and automotive products. The company
operates 20,100 route miles of track that spans Canada adn
mid-America connecting the three coasts of Atlantic, Pacific and
Gulf of Mexico. CNR is a dividend contender that has been raising
its dividends for 17 consecutive years and has a 5-yr DGR of
13.9% and a 10-yr DGR of 17.4%.
Norfolk Southern (NSC)
engages in rail transportation of raw materials, intermediate and
finished goods operating approximately 20,000 router miles across
the southern and eastern US. NSC and other railroads stand to
benefit from the oil boom in continental US, and before permanent
pipelines are put in place, railroads are the only option
available to transport the huge supplies. NSC is a dividend
contender raising its dividends for 12 consecutive years and has
a 5-yr DGR of 10.8% and 10-yr DGR of 21.1%.
Aqua America (WTR)
is a water utility company based in Pennsylvania but also
provides services in seven other states. WTR is a dividend
contender having raised dividends for 22 years consecutively. WTR
has a 5-yr DGR of 7.4% and 10-yr DGR of 7.9%. Water utilities are
a great fit as an essential resource and the company provides
very agreeable dividend growth for the sector.
Procter & Gamble (PG)
Unilever plc (UL)
are giants in the consumer packaged goods field. PG has five
segments - beauty, grooming, healthcare, fabric care and home
care. UL has four segments - personal care, foods, refreshment
and home care. PG has been raising dividends for 57 years; has a
5-yr DGR of 10.2% and a 10-yr DGR of 10.8%. UL has been raising
dividends for 25 years; has a 5-yr 7.07%.
Index Funds - China ETF, Emerging Markets -
I am also considering adding a new index fund to my portfolio to
track the Chinese market/economy. Everyone is dumping the
emerging market equities these days, and I am looking for the
right time to jump in. Read about my comparison of available
China ETFs here. I am also considering using an emerging market
ETF instead of China-specific ETF and need to weigh out the
Global High Yield
- In a global economy, it would be naive to ignore international
equities as an investment target, esp when a plethora of foreign
companies pay a attractive dividends. I am considering adding
international equities exposure via ETFs which yield
approximately 6.5%. Click here for my list and analysis.
What are your thoughts on the stocks mentioned here? Do you own
them or are they on your watchlist?
Disclosure: My full list of holdings are available here.
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