Earlier this year, largely for kicks, I wrote about 10 things I thought we would see in 2013. Now that 2013 is in our rear view mirror I thought I’d reflect on how clear my crystal ball was.
1.The S&P/TSX Composite Index will finish the year at 13,100.
Close but not quite. The index finished 2013 at 13,621.55.
2. The Dow Jones will finish the year at 13,900.
Not even close. The Dow had its biggest year in 18 years, closing 2013 at 16,576.66. For the year, the blue-chip stocks in this index were up almost 27%.
3. With renewed focus on Asia markets, RIM is the comeback business story of the year and makes the cover of Canadian Business Magazine at some point to prove it.
Unfortunately, it was far from a comeback year for this former tech giant. Research In Motion did not make the cover of CB Magazine as I predicted.
4. Crude Oil will finish the year at around $98 per barrel.
Oil finished the year close to what I predicted. Lucky guess.
5. The Canadian Dollar will finish the year at $0.97 against the U.S. Dollar.
Our dollar fell below parity with the U.S. dollar in 2013, finishing the year at $0.94 for about a 6% loss. I figured it would lose to par but not this much.
6. Speaking of dollars and cents, nobody misses the Canadian penny.
I still don’t.
7. Canadian REITs, measured by iShares XRE performance, will deliver 10%+ return.
Canadian Real Estate Investment Trusts (REITs) did not have a good year. The 2013 return for XRE based on net asset value was -6%. Maybe this year is the bounce-back year?
8. The following U.S. companies will announce dividend hikes this year: Coca-Cola, Johnson & Johnson, Procter & Gamble and Emerson Electric.
- On February 21, 2013, Coca-Cola announced a dividend hike of 10%.
- On April 25, 2013, Johnson & Johnson announced a dividend hike of over 8%.
- On April 15, 2013, Procter & Gamble announced a dividend hike of 7%.
- On November 5, 2013, Emerson Electric announced a dividend bump of 5%.
Correct on all accounts thanks very much.
9. The following Canadian companies will announce dividend hikes this year: TD Bank, Bank of Nova Scotia, Enbridge and Telus.
- On February 28, 2013, TD Bank announced a dividend hike of 5%.
- On March 5, 2013, Bank of Nova Scotia announced a dividend hike of 5% and increased it again this summer to the current $0.62/share.
- On December 4, Enbridge announced a dividend hike of almost 11%.
- On May 9, 2013, Telus announced a dividend hike of over 11%. On November 8, 2013, Telus announced third quarter revenue increased by almost 4% and promptly hiked their dividend, again, by almost 13%.
Correct on all accounts, even more than I bargained for.
10. Canadian bonds, measured by iShares XBB performance, will deliver 5%+ return.
XBB, a low-cost ETF that tracks the diverse DEX Universe Bond Index did not have a strong year. The 2013 return for XBB based on net asset value was -1.5%. With rates expected to go nowhere anytime soon it could be another subpar year for bonds.
Any lessons learned from this forecasting exercise?
I am no better at predications than anyone else, including financial experts who think they can predict the future. I am confident many blue-chip Canadian and U.S. companies that have increased their dividends over many decades, regardless of market conditions, will continue to do so. 2014 should be no exception.
What do you make of my financial predictions? Did you make any such predictions this year? How did you do?
#8 is my favorite! I’m sure you could do similar list for this year!
I just might. Thanks for the comment Kanwal.
Mark
Wow, awesome job on your predictions, especially with respect to dividend hikes. I don’t miss the penny at all – I hardly noticed it was gone.
You and me both with the penny. Hopefully the nickel is next. I would prefer everything rounded to the nearest $0.10.
I don’t just not miss the penny, I hope we get rid of all cash and cheques soon 🙂 Last year I was able to start doing a lot more online transfers and using touch sensors to pay with my credit card (some are slow, but the ones at Superstore usually approve it in a few seconds). Once both of those are integrated with smartphones we can spend a lot less time waiting to pay or get paid.
I like doing my banking online. I hate using cash. 🙂
I like using PayPass at the store. Tap and go. You’re right about the integration and it’s only going to improve with time.
Thanks for your comment Richard.
In the grand scheme of things, as the economy improves, occupancy for real estate property will go higher, and so will rents. Therefore, REITs should have a better year in 2014.
It was the shock of the interest rate increase when the Fed mentioned it would begin tapering last year that had such a negative impact on REITs. Now that people understand where interest rates are going, REITs won’t be affected as much by the process of tapering and so they shouldn’t have such a rocky ride this year.
I feel the same about REITs in 2014 Brian.
The good news was, at the time, the depressed prices made REITs a “buy” last year 🙂
Thanks for the comment.
I try not to make predictions about investments, but one prediction I think can be made is that good quality businesses will increase their value over a time period of 5-10 years. If they are paying dividends the pay out will also increase over the same time period.
Re-invest the dividends as well and the cash register really can start to ring.
I am trying to build a portfolio of good quality dividend paying shares, re-investing all the income up to when I can choose to work or not, and then use part of the dividend income to live off. If I re-invest the part that I don’t use for my income, I should still see a growth in value and dividends to beat inflation
Ah, predictions can be fun. It’s interesting to see how much you really don’t know.
I certainly agree with your point about quality companies. If they’ve been paying dividends consistently for 30, 40 or 50+ years, chances are good they will keep doing it.
Are you reinvesting all income or just some? Curious. Thanks for the comment.
Thanks for your reply, and I agree that predictions can be fun, as long as that is how you see them.
I re-invest all my income at present, I have two separate accounts, one produced over £4k in income last year, so I have the dividends as cash and re-invest approximately twice a year (not paying any money into this account). My other account produced £466 last year, and although I am paying into this account, I have the dividends re-invested automatically, and it is interesting how much the value of the dividends increases (I have posted an example using Glaxo and the annual increase has been approx. 10% even though actual dividend per share increase is only just over 4%.)
Best Wishes
Yeah, the predictions are just for kicks.
I reinvest most dividends at this time. I used to reinvest absolutely everything but now taking some of the cash and redeploying where I see fit. This ensures I don’t get overweight in any one company. That gain with Glaxo is good. I’d take 10% per year on everything every year 🙂