Back to School with the Markets in September 2024

 

In the US, Mr. Powell, head of the Federal Reserve is making his first cutting of interest rates which could happen in September as Canada heads into their 3rd lowering of interest rates from a high of 5% coming into 2024.

That puts more of a positive investor sentiment towards the markets depending on sectors. Utilities and pipelines for example will like the lowering of interest payments on their debts. 

I'm a monthly "dollar cost averaging" buyer so I'll probably be paying more for my stock buys for now but there's always a lot of factors moving prices daily ... up and down and my buys "average" out through the months and years ahead while the compounding factor kicks in.

It's back to school and studies here in September. It seems with the stock market, I'm always in school, learning and working the plan. Not always easy to do as a portfolio and dividend growth accumulates. The mind wants to see it grow faster like an addiction but just chasing mid to high yield with no research is not the answer. That's when a break from the markets is needed to sort of reboot.

With 20 individual stocks, I have a Watchlist of some decent stocks. One I'll add for certain in September is Capital Power Corporation (CPX) I've been keeping tabs on for awhile, which operates in Central & Western Canada and in the US.

The utility has a dividend increase of 6% added with a current yield of 5.52% with an ex-dividend date falling on the 27th of September, 2024. CPX has a 5 year dividend growth of 6.57%. What I like to see but as always, past performance doesn't mean it will repeat or even grow that dividend rate.

Why add more stocks? Various company board decisions about dividends with plans for more capital going towards expansion for a set term can sometimes affect dividend growth such as Emera (EMA) for example, with their expansion plans in the US lowering dividend growth to 1 to 2% going forward for awhile. 

So, it's about keeping an average dividend rate and growth over the portfolio going forward with me and won't alter my future plan to add more money to Emera with their current yield of 5.70%. 

Meanwhile, September is about more pipeline and energy stocks in my next post that rank up there in the highest yielding stocks in the TSX with "risk" data updated regularly by the Globe and Mail.

Model Portfolios

 

Model Portfolios ... there are a lot of them with different approaches to the stock market. Stock growth with valuation. price growth with dividends and dividend in focus portfolios are some examples.

I'm dividend focused but also like to see a stock increase in price over time. That usually happens when a company pays dividends but not always of course. Think AQN, Algonquin Power, I didn't invest in AQN although it's included in the Beat the TSX, BTSX portfolio. Algonquin cut it's dividend for the 2nd time and by 40% recently to get debt under control. I own the rest of the stocks in that current portfolio.

As a Globe and Mail subscriber, I get to share 3 articles monthly. G&M's John Heinzl I follow and look forward to his articles and also his Model Dividend Growth Portfolio, which he updates monthly with the latest update being July 31st. I'm unsure how many times the above link will open for viewing. He also does a weekly look at a "Stars and Dogs" approach to stocks with comical write-ups at times.

I own most of his stocks shown and prior to last week's (August 5th - 9th, 2024) craziness/panic in the Market with the big sell off followed by recovery, all but QSR-T, Restaurant Brands International Inc. and BMO-T, Bank of Montreal increased in price compared to April 30, 2024's update. What I like to see as an investor while collecting dividends. 

I look at these portfolios when researching stocks and for reference/comparison only instead of copying them exactly into my portfolio. Some stocks I prefer and others I won't buy where they don't fit into what I'm looking for with regards to dividend growth over 1, 3 and 5 years. 

On my radar to further buy in the last half of August are in the insurance/financial sector with MFC, Manulife Financial (in John Heinzl's portfolio), GWO, Great-West Life and SLF, Sunlife ... all with ex-dividend dates approaching. 

TD Bank in Canada introduced fractional or partial stock/ETF buying in "real time" as an option last week. Good for buying more or less than full shares with a set cash limit or an expensive stock while any dividends being paid will be proportional to the partial amount owned with a stock or ETF.

Wealthsimple, owned by Power Corporation of Canada (POW) , which also owns GWO. has had the partial share buy or sell option for awhile with the automatic repurchase (enable or disable on site at anytime) of partial and full share buys from dividends paid. That old saying about looking after pennies will become dollars. 

The difference between TD and Wealthsimple is that partial share buying with Wealthsimple are delayed instead of "real time" with TD. Buying a partial share with Wealthsimple close to Market closure for the day or week, may not be executed for that day with the option to cancel.

The Cost of Staying Cool in August, 2024

 

It's August, 2024 and the month is starting out with high humidity levels and heat warnings where I live. I'm definitely not a "fan" of heat and the AC is cranked more than usual these days. A higher power bill to come as the local power utility rakes in more money from me.

Enbridge (ENB.TO), known for being a major pipeline in Canada and the US released it's 2nd quarter report plus updated about it's finalising buying more utilities in the US in several States with that side of their company growing.

All looks positive to me and ENB has an ex-dividend date for August 15th with a 7% yield. I'll add more although the lower Graham Number indicates overvalued and at a year high so far. I prefer buying a stock that is undervalued with room to move up in price but building dividend income is on my agenda 

Continuing with the "Utility Sector" theme, Fortis (FTS.TO) out of St. John's, Newfoundland is spread out through North America and beyond. With an ex-dividend date of August 20th, it's 2nd quarter report was also upbeat as I expected and I will continue to buy that stock with a 4% yield, also near it's yearly high.

I assume the Bank of Canada lowering interest rates and decent half year reports from companies like Enbridge and Fortis are what interested investors like to see and driving the stock prices up for now. Emphasis on "for now" where the Market is always churning with what's going from day to day but to stay on track with a plan, I ignore the short term daily moves.

Later in August, there are ex-dividend dates for insurance companies or the Lifeco sector I'm fond of such as Manulife Financial and Great-West Life with yields in the 4 to 5% range plus more companies to add to like Algoma Central (ALC.TO), the Great Lakes shipping company I currently hold. More on that in my next article.