eResearch│We have created a portfolio of high-payout equities that is focused primarily on attractive dividend yields but with some capital growth potential. Our performance since Inception on June 1, 20021 has been exceptional.
NOTE: The Dividend Yield Portfolio is designed with a longer-term perspective. As such, we update it every month-end, usually using the final Friday’s or the actual month-end’s closing prices. Essentially, it is a Buy-and-Hold portfolio, with minimal trading involved. The Portfolio is appropriately invested but, if circumstances warrant, there could be a sizable cash component. The Portfolio was initiated on June 1, 2021 with ten stocks. The initial investment, at inception, was $500,000. The maximum dollar amount invested in any one position is capped at $50,000. Net profit gains from the sale of stocks/ETFs can be used to invest in new, but not existing, equity positions, unless the invested amount is below the $50,000 threshold.
NOTE: We are now tracking the Dividend Yield Portfolio from two perspectives: (1) from June 1, 2021, when it was initiated; and (2) from January 1, 2022, to gain insight as to how the Portfolio is doing on a calendar year (2022) basis.
MARKET COMMENT
Although January and February were challenging months for the market, the major Market Indexes staged a strong recovery beginning about mid-March. We have been expecting a broad market pull-back for some time, but the recent heightened world tension associated with the Ukraine-Russia conflict has influenced short-term stock market performance, and this volatility is likely to continue. We think that if ever either a legitimate cease-fire occurs or a peace agreement is attained, then the market is likely to do well for the short term. At that point, but giving appropriate consideration to market influencers at the time, we think the market rise will stall and performance over the remainder of the year will be challenging. As such, we plan to trim some or all of our positions in certain stocks/ETFs on any pronounced market strength, and, to this end, we have identified target prices for selling purposes.
PERFORMANCE OF ERESEARCH DIVIDEND YIELD PORTFOLIO
The eResearch Dividend Yield Portfolio, despite being highly defensive, has performed very well, and we expect it to continue doing so even if the market stumbles.
In this report, we are showing our Portfolio’s performance (1) since June 1, 2021, and (2) from January 1, 2022. We will continue to monitor the Portfolio’s performance from these two dates.
The Portfolio’s performance for the two time periods is provided in the following tables.
Figure 1: Dividend Yield Portfolio – Performance Since June 1, 2021
COMMENT: Our income-oriented portfolio obviously emphasizes yield, as shown by the individual stock holdings. The Portfolio’s current yield is 7.1%. There is more information on dividends below.
COMMENT: Since Inception on June 1, 2021, or from the Purchase Date for stocks bought after the Inception Date, Enbridge (TSX: ENB) has been a continual star performer. It is up 25.4%. Diversified Royalty Corp. (TSX: DIV) is challenging, with a gain of 24.0%. And Alaris Equity Partners Income Trust (TSX: AD.UN) is not far behind with a gain of 22.1%. At the end of February, our Portfolio had no “losers” since June 1, 2021, or from the Purchase Date if it is different from June 1, 2021.
Figure 2: Dividend Yield Portfolio – Performance Since January 1, 2022
COMMENT: Since the beginning of 2022, Diversified Royalty Corp. takes the top spot with a gain of 17.4%. Enbridge comes next with a gain of 16.5%. There is only one stock that is below its start-of-year prices, and that is NorthWest HealthCare Properties REIT (TSX: NWH.UN)
DIVIDEND INCOME/YIELD
Below, we provide a table that indicates the annual dividend, the corresponding annual income and current equity yields, and the dividend pay-outs to date since inception.
The Portfolio is currently yielding 7.1%.
Figure 3: Dividend Yield Portfolio – Income/Yield and Dividend Information
TOTAL RETURNS
The next table shows each stock holding’s capital gain/(loss), its income generated, and the total return in dollar and percentage terms.
Figure 4: Dividend Yield Portfolio – Total Return
COMPARABLES
Since the Portfolio’s inception on June 1, 2021:
- the Portfolio is up 21.4%;
- the S&P/TSX Composite Index is ahead by 10.9%;
- the S&P/TSX Dividend Index is up 16.2% and the S&P/TSX High Dividend Index is ahead by 19.1%
- the ETFs range between 6.6% and 19.0%; and
- the Split Corps range between -2.9% and 14.8%.
The next table shows the performance of the Portfolio against these aforementioned benchmarks, namely (a) the S&P/TSX Composite Index, the S&P/TSX Composite Dividend Index, and the S&P/TSX Composite High Dividend Index, (b) four selected higher-yield ETFs, and (c) eight notable Split Corps.
Only the Horizons Active Canadian Dividend ETF, with a gain of 22.9%, has out-performed our Portfolio’s gain of 21.4% since last June.
Figure 5: Dividend Yield Portfolio – Comparatives
Figure 6: Dividend Yield Portfolio – Stocks Sold
COMMENT: No change from the last few monthly reports. To date, we have sold three stocks from the Portfolio. Collectively, they have provided a cumulative Capital Gain of $8,454.
Notes: All numbers in CAD unless otherwise stated. The author of this report, and employees, consultants, and family of eResearch may own stock positions in companies mentioned in this article and/or may have been paid by a company mentioned in the article or research report. eResearch offers no representations or warranties that any of the information contained in this article is accurate or complete. Articles on eresearch.com are provided for general informational purposes only and do not constitute financial, investment, tax, legal, or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this information should consult with a financial advisor. The article may contain “forward-looking statements” within the meaning of applicable securities legislation. Forward-looking statements are based on the opinions and assumptions of the Company’s management as of the date made. They are inherently susceptible to uncertainty and other factors that could cause actual events/results to differ materially from these forward-looking statements. Additional risks and uncertainties, including those that the Company does not know about now or that it currently deems immaterial, may also adversely affect the Company’s business or any investment therein. Any projections given are principally intended for use as objectives and are not intended, and should not be taken, as assurances that the projected results will be obtained by the Company. The assumptions used may not prove to be accurate and a potential decline in the Company’s financial condition or results of operations may negatively impact the value of its securities. Please read eResearch’s full disclaimer.
