Stocks or ETFs for Cash?

 

With April 2023 coming to a close, I read a couple interesting posts about which is better when seeking dividend yield over the long run.

Before I get into that ... why bother with the accumulation of dividend cash? Investors use it to cover personal expenses, trips, tap into the cash when needed or buy more stock for dividend growth. 

Last week I read Globe and Mail's Rob Carrick's article about owning individual stocks over ETF's. 

Recently, Matt from Dividend Strategy weighed in on that debate which I'm sure is on a lot of DIY investor's minds, specially those just starting out.

BTSX vs Dividend ETFs

An individual's choice for sure. With a purchase into an ETF like Royal Bank's RCDC, your spread out into a number of top companies and banks by weight but ... your paying management fees and more than likely the monthly cash distributions will remain either steady or fluctuate like a lot of Blackrock's ETFs.

Some folks like the same steady cash distribution coming in so they know what they are getting without guess work or looking it up when distributions are declared.

When buying top companies and Banks individually and doing some research while keeping current on their sites and news, there's no management fees and dividends tend to grow each year or ... remain steady. 

There are commission free sites out there where buying stocks comes with no charge like TD's EasyTrade and Wealthsimple Trade (fractional stock 'buys' an option) in Canada.

I prefer dividend growth and the BTSX portfolio provides this with an average current yield of 5.75% over the 10 stocks. The only company I'm not into is AQN in the current BTSX portfolio. 

It's not 100% fool proof however and nothing in investing should be considered so. Every once in awhile, a company will stumble and make the decision to lower their dividends for the long or short term until their 'Books" stabilise and generate more cash flow in the future.

Like the football 2000 movie " The Replacements" starring Keanu Reeves and Gene Hackman there are plenty of replacements to choose from to make a winning combination and I own several like Sunlife Financial (SLF) and Telus (T) when it comes to accumulating dividend cash.

Mind Over Money

 

I've been reading the book, The Psychology of Money by Morgan Housel. 

Interesting stories about the pursuit of money and the way people think about it. What thoughts make billionaires broke and others maintain their savings, stocks, etc. with the patience to wait for growth/compounding to work along with examples of people who have experienced both

I have a plan going forward and I'm sure most do but I like this part ... You plan. God laughs.

Some plan and feel it is set in stone but I've been around long enough to know it has to be somewhat flexible because no one knows what's next to either disrupt your life or improve it and that goes for the stock world dealing with mindsets of fear and greed along with the luck and risk.

It's a great book and well worth reading about life, how the mind can manipulate the way you spend and save money ... learning from mistakes through the decades.

Ending April, I'll add to Emera (EMA) ... A Nova Scotia utility stock currently in the top twenty of the highest dividend yield of companies and banks in the TSX 60 list by dividend yield.

Another utility stock I'll add to in May is Fortis (FTS), based in St. John's, Newfoundland with interests in the US, Central America and the Caribbean.

With the Pipelines and going ex-dividend in mid-May and at the top of the list for dividend payers is currently Enbridge (ENB). 

These are all quarterly payers with the dividend that comes with earnings and dividend growth over the years.

Window Shopping for Dividends

 

I like the cool northerly winds after the Easter break here on the east coast of Canada. I prefer that to the heat and humidity of the summer months.

It's a mix of forecasts for the stocks looking ahead a few months. From a mild recession to shaping up to be a Bull run. The headlines change constantly where it's all guess work.

I stay informed but my main interest is the dividend yield on my stocks. Nice to see distribution increases when they are announced by companies and banks I own.

As I add to them with the majority being in the "TSX top 60" by dividend yield, slow or fast compounding kicks in. Depending on how much cash one adds and/or DRIPs, the results are rewarding over time but there is still the element of risk and being able to take the down market hits of 10% and lower while staying on course. Many an investor freaks out and sells at a loss during these crashes over the years.

Tom Connolly, with his Dividend Growth site: The Connolly Report since 1981 has a method of watching the stocks he tracks by charting dividend yield and price increases to show growth year by year over a ten year span. A decade snapshot of how a stock is doing. 

As a foundation ... there are 9 stocks out of 10 on Matt's Dividend Strategy site with the BTSX portfolio stocks I'm building on and own. AQN is the exception.

Like this young moose, why look further while doing some "window" shopping ... just what I'm looking for and it's free.

                                In this Thursday, April 6, 2023, image provided by Providence Alaska, a moose stands inside a Providence Alaska Health Park medical building in Anchorage, Alaska. The moose chomped on plants in the lobby until security was able to shoo it out, but not before people stopped by to take photos of the moose. Providence Alaska via the Associated Press

With the 24/7 Crypto market. Bitcoin and Ether have been having quite the ride lately but one has to keep in mind how volatile this market is. A few years back I got caught up in Trading as Bitcoin "laddered up" in price to new heights forgetting about a thing called ... overvalued. Down it came like a rock with a turn of events and so did my funds. 

Lesson learned and now I watch as it climbed over the $20 grand USD level and can cash out with a profit instead of being caught at BTC's peak followed by a downturn for a given cycle.

Banking on April, 2023

 

The end of March was "buy the dip" for yours truly with the Canadian Banks with all the selling fear spawned by a few US Banks having troubles plus Credit Suisse, now bought out. Currently, the Bank situation is getting somewhat back to normal. 

With some other positive factors, The Canadian TSX registered gains in the last week of March. Green ...  is good.

Banks here with their billions in profits and high yields are popular picks along with associated ETF's. 

The Feds with their latest budget last week are apparently going to take 1% of those Bank profits. CEO's probably yelling out ... foul play!

April is a quarterly ex-dividend month for many of these top Banks.

I would say the most volatile sector is the Tech industry (Nasdaq) and the reason it is so popular among investors who follow it. Down in the beginning of the year for many Tech stocks, recently zooming back up with an average of 15%. Timing that market is not a good idea but some are lucky and buy low.

For the quarter, the Nasdaq jumped 16.8% in its biggest quarterly percentage increase since the three months ended June 2020. 

Is the US legal eagle digging it's talons too deep into crypto exchanges south of the border? Is that the reason top Exchangers are crossing the border into Canada to expand? Not sure the reason but both Coinbase and Kraken have now filed paper work with the Canadian SEC departments to register for legal operation. 

There are strict rules up here now with more to come no doubt. A major one I like is that customer/member's deposited funds/coins are to be kept separate from the Exchanger's coffers or ... funds/wallets. The Bermuda based FTX comes to mind with billions routed elsewhere that went under and that will all come to light with a future court case involving the owner and his staff.