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August 21, 2017

How to Build Your Dividend Income Portfolio (Part 2)

In my last post I had introduced the 3 objectives I look for in a potential dividend stock.  In this article, I will talk about my Dividend (Income) portfolio and give a brief background in why I purchased some of dividend stocks.
This company was formerly called Edgefront REIT.  I had liked the prior company because it buys properties from owners and leases it back to them.  It was a good business strategy because it gave owners (Edgefront purchased from) a huge chunk of change and it gave Edgefront a steady income of rents.  Since then, Edgefront REIT went on to acquire Noble REIT, based out of Eastern Canada with holdings in office and a few retail.  The REIT renamed itself and has become more than just a regional player.  It moved away from its sale-lease back strategy and is in acquisition mode to buy properties across Canada.

I decided to invest more into this company because of its dividend yield and because it was one of the few REITs listed on the TSX that was still growing.  Click here for my analysis of the company.
Pizza Pizza is one of those companies that are as steady as it comes.  The business has a big presence in Ontario and Alberta.  It seems content at its current location size and it only grows by a few stores per quarter.  This pizza chain has actually shown innovation in the past: it has revamped its menu and it was the first to create an online website that allows people to order pizza through their mobile cell phones.  
This is actually not my go to restaurant when I need my pizza fix.  But being one of the largest pizza chains in Canada tells me they know how to run its business and its dividend yields have been consistent as well.  Click here for my analysis of the company (the article is a bit old though, it was written in 2015).
Transalta is an electrical power company with locations in Canada, US, and Australia.  It took a stock price beating in recent years (a forced revamp of its strategy) but the company had dropped enough that it was time to make a play on it.  One thing I like about the company was its longevity, it was founded in 1911. 
The company has been cutting its dividends for the last little while, and I believe the dividend cutting is now over.  This company has a bit more risk to it but because it is an energy stock, it gives me the diversification I need. Also, this company has been around long enough that I know this is just a low point in the company’s history.  Eventually it will be in growth mode again once its investment into renewable energy materializes.  
Richard’s is a company a lot of people have probably never heard of. It specializes in manufacturing plastic and glass containers in North America so you may have seen its products around.  Its recent financial performance shows that this company is a money making machine.  

Similar to Transalta, what attracted me to this company is its long operating history.  It was started in 1912. and so far has been paying out a consistent monthly dividend. Its dividend payout ratio is currently about 57% which gives the company a huge financial flexibility.  Click here for my analysis of the company.    
Bell is a communications company.  Besides 2012, the company has been steadily growing its dividends.  Currently it trades with an average dividend yield of 4.88%.  Since 2009, the company’s stock price been on an upward trend and I don’t foresee this reversing itself anytime soon.  Its late 2008 value drop had to do with a failed bid by a Canadian pension plan to take it private.  I like BCE’s business so far.  Recently, it overtook Rogers as the number one phone carrier in terms of sales and new customer sign ups.  
BCE has good dividends and shows that it can grow it in the near future.  Also, I consider BCE cell phone business to be an economic moat:  Several years ago, a number of new cell phone carriers came in to compete with BCE, Telus, and Rogers only to be acquired a few years later.  
Riocan is an Canadian urban retail play for me.  It is one of the largest retail landlords in Canada.  What makes them significant is that it has a presence in almost all of the largest Canadian cities.  Its tenant roster consist of high end retailers such as Loblaws, Canadian Tire, Hudson’s Bay, etc.  It is currently redeveloping a few urban malls that should add more value and rents to its business in the future.  
The downside is it hasn’t grown its dividends in a while .  The past year has shown Riocan’s stock price to be trading flat but the financials show this company is making money, and management knows how to run the business well.  Click here for my analysis of the company.

Feel free to add these companies to your own investment portfolio.  

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