March & April 2025

It's been a long winter!

We were fortunate to escape most of the Ontario winter—and what a winter it was! While we soaked up the sun in southern Spain and Portugal, our kids sent us photos of the relentless snowfall back home. Every snowbird secretly loves hearing about the brutal weather they’ve avoided, and we were no exception.

Given everything that unfolded while we were away, it feels like we were gone for a year. Ontario’s Premier called an election, federal Liberal leadership hopefuls stepped into the race, Donald Trump played his usual tariff games, consumers staged product boycotts, a plane crash at Pearson miraculously spared every passenger, a Liberal leader was announced and more recently a Federal election was called.

Amid everything that is happening, one feeling stands out—uncertainty. While I’m relieved that the recent political turmoil has, in some ways, brought Canadians together, I cannot shake the concern for what’s ahead. As a parent, I worry about my kids and their future. They’re in the prime of their lives, yet they’re facing an economic battle that will have lasting consequences on both sides of the border.

The Markets: What’s Next?

With the on again off again tariffs, the markets have reacted as expected—volatility, uncertainty, and tough decisions for investors. In moments like this, many investors find themselves asking: What’s the right move? Should I sell, and if I do, what should I buy? Or is it better to sit in cash until the dust settles?

History has shown us that markets have weathered countless storms. While the road ahead is unclear, one strategy has stood the test of time: staying invested. Dollar-cost averaging continues to be a powerful tool for managing risk and lowering the cost basis, and for now, that’s our plan.

Since January, we’ve made some small adjustments to our portfolio, which I’ll outline below. But first, let’s talk about dividends.

February and March Dividend Income

In February, we received over $2,000 in dividend income—an 11% increase year over year.

In March, we received over $4,000 in dividend income, which is down about $300 from last year. A result of reducing some of our holdings in various companies. More on that later.

This means we’ve earned over $12,000 in dividends for Q1 of 2025.

Here’s a look at our income since 2020.

The graph illustrates how monthly dividend income can grow year over year while also fluctuating month to month, depending on the companies held in a portfolio. Each bar represents a year in chronological order, with the top green bar marking 2020 and the dark red bottom bar representing 2025.

Most of the companies we own follow a January, April, July, and October payout schedule. February is historically one of the lowest months for dividend income since fewer of our holdings pay out during this period.

For retirees relying solely on dividends, managing cash flow with this type of payout schedule can be challenging, requiring careful budgeting. Fortunately, we have other income sources, which allow us to reinvest our dividends, helping to further grow our future income.

To give you a clearer picture of what’s in our portfolio, here’s a list of the companies that paid us dividends in February:

• Bank of Montreal

• Diversified Royalty Group

• Emera

• Extendicare

• Freehold Royalties

• Peyto Exploration

• Power Corporation

• Royal Bank

• Slate Grocery REIT

• Whitecap Resources

And here are the companies that paid us in March:

• AltaGas

• Atco

• Canadian Utilities

• Cenovus

• Diversified Royalty Group

• Enbridge

• Extendicare

• Great West Life Co

• Freehold Royalties

• Fortis

• Manulife

• Pembina Pipeline

• Peyto Exploration

• Slate Grocery REIT

• Suncor

• Tourmaline

• Trican Well Services

• Whitecap Resources

You’ll notice some of our monthly payers when comparing both of these lists.

Our Top 10 Portfolio Holdings

For a clearer understanding of our core holdings, here’s our top 10 in alphabetical order.

1. Bank of Montreal

2. Bank of Nova Scotia

3. Canadian Natural Resources

4. Enbridge

5. Pembina Pipelines

6. Power Corp

7. Royal Bank

8. Suncor

9. TC Energy

10. TD Bank

As you can see, our portfolio is heavily weighted in the Canadian banks, the pipelines, and the oil and gas companies.

Transactions Since February 1st

At the start of February, we sold all our U.S. holdings, resulting in a slight year-over-year decline in our March dividend income. We stand firmly by our decision and will refrain from purchasing U.S. stocks or products until the threats to Canada’s sovereignty are resolved.

In February, we also reduced our position in Whitecap Resources and reallocated those funds into CNQ, while also increasing our CNQ holdings with new capital investments.

In March, we added to our positions in BMO and RY.

Dividend Stock Watchlist

Below is our personal watchlist of dividend stocks we've been tracking for some time. While we don’t own every company on this list, we hold the majority.

I monitor several key metrics, including the 10-year dividend growth rate, price trends, and the 10-year yield on cost compared to the current yield on cost. My “Graham Number” calculation incorporates the past three years of earnings per share, whereas most conventional methods rely on just one year.

The Graham Number estimates a company's intrinsic value, what the business is truly worth on a per-share basis, based on fundamental factors like profitability, growth potential, and cash flow generation.

It's important to distinguish intrinsic value from fair market value. Fair market value reflects what investors are currently willing to pay, while intrinsic value is an estimate of the company's true worth.

Feel free to explore the watchlist, which highlights the companies we follow. While we strive for accuracy, the spreadsheet may contain calculation errors and is not a buy or sell recommendation. It is provided for informational and entertainment purposes only. Always conduct your own research before making any financial decisions.

The current price reflects the market close as of March 28.

There’s more green this month—driven by volatility and the market’s reaction to the unfolding economic conflict.

Here are my thoughts as I analyze this chart:

• The longer you invest, the more your income grows. The 10-year Yield on Cost (YoC) shows how your yield (return on initial investment) would have increased if you had purchased the stock at its 2015 price and held it until today.

• When you compare the 10-year YoC with the current yield, you'll see that only two companies on the list - BCE and LB - currently offer higher yields. However, this is due to the price drop both companies have experienced, not necessarily growth in the underlying business.

• Now, take a look at National Bank (NA.TO) for a completely different story. Investors in National Bank have seen strong returns over the past decade, not just in dividends but in stock price appreciation as well.

• When we consider the Graham Number, the PEGY and CAPE… Atco, BMO, NA, POW and SU stand out. Power has been a top pick for many analysts on BNN as of late. It is a great company, but, personally, not something I would buy at the current price. If there is a larger pullback, it might become more compelling to me.

Wealthsimple

I personally use Wealthsimple for the We Invest Challenge account, which I started in October 2020. Updates for this account are shared on Instagram, and it was created to inspire others to start investing.

Wealthsimple is a great platform for beginners, offering commission-free trading on Canadian equities. This allows you to reinvest dividends immediately, helping you grow your account faster.

If you're considering opening a Wealthsimple investment account, you can use my one-time referral link. Fund your account within 30 days and receive $25 toward your first trade. Conditions apply, and the offer may change at any time, so be sure to review the details.

Reading and Listening Material

• Amber Kanwar’s podcast In The Money features a great episode with Rebecca Telscher from New Haven Investments that's worth a listen. Titled Profit From These 7 Recession-Proof Stocks, the episode explores Rebecca’s insights on dividend-paying companies, including Telus, BCE, Algonquin, Nutrien, Gibson Energy, and Manulife. She also shares her top stock picks at the end, definitely an episode to check out!

• Ross Healy appeared on BNN’s Market Call at the beginning of March. This episode is now a month old, but I always value his analysis. You can watch the episode here: BNN MarketCall

• Henry Mah’s post Who Cares “If you are just starting on your investment journey, and especially if you are considering Income Growth investing, it might be difficult to justify it to others. Imagine if you only invested a few dollars, say $35.00. Not too impressive, and certainly nothing to brag about. Still, even with just investing $35.00, you should expect to earn an income”

  This is the approach I took with the We Invest Challenge account. When I opened it in October 2020, I started with a lump sum deposit of $1,000. The following October, I shifted to contributing $100 per month, or $25 per week. While this may not be feasible for everyone, any amount, especially in a commission-free trading account, can help you start your investing journey.

  Today, my We Invest Challenge account generates $600 in annual dividend income and has grown to over $10,000. It’s a testament to what can be achieved with consistent investing—just $100 per month can go a long way.

• From Tom Connolly’s blog “Our increasing income comes from our companies directly, not the market. After 25 years, yields have grown to: Metro 29.2%, CNR 29.6%, GWO 16.3%. Investment value, as you can see with these examples, relies on the future return of cash. That’s why we purchase our companies. We are investing.”

  He goes on to talk about Berkshire’s gain over the years, and that Warren Buffett is currently sitting on a lot of cash. “Armour your self with a margin of safety: cash. Cash is the default position. CASH: Berkshire had $334 billion, 27% of assets, in cash as of end of December 2024. To me this is a warning: turmoil. But we don’t want to sell our great high YoC companies: we’ll hold those through the coming excitement for their growing income/yields; but we want to be careful if buying when the market is this high.”

  Wise advice, as always, from Tom Connolly.