5 stocks I bought in 2022
With the end of 2022 highlighting almost my 15-year tenure as a DIY investor, My Own Advisor no less (!), we inch closer to our semi-retirement dreams.
On that journey, earlier this year, I shared 5 stocks I want to buy more of in 2022.
All stocks were existing holdings at the time, and offered a blend of growth and income opportunities for my portfolio. This desire to hold both growth and income-oriented assets across our accounts remains part of what I’ve coined our hybrid approach to investing.
- Approach #1 – we own a number of Canadian dividend paying stocks for income and growth. We own nearly 30 different Canadian stocks within our non-registered account and across our Tax Free Savings Accounts (TFSAs). We own these stocks because we believe buying and holding our DIY bundle of Canadian dividend-paying stocks will, over time, provide some steady monthly income for future wants and needs in retirement.
- Approach #2 – we’re owning more units of low-cost Exchange Traded Funds (ETFs) inside our accounts over time. While dividend paying stocks are great, and while we still own a few U.S. stocks individually via ETFs we can largely set and forget part of our investment approach beyond Canada…
5 stocks I bought in 2022
With a bias to getting paid via dividends and being rewarded to be a long-term shareholder via capital gains, I selected a few stocks in particular to bolster my portfolio in 2022.
With my early 2022 shopping mandate in mind, here are the 5 stocks I bought more of since January 2022 along with a few other portfolio changes and additions!
1. Equitable Group (EQB)
Equitable Group (EQB) is a growing Canadian financial services business that operates through the company’s wholly owned subsidiary, Equitable Bank. Equitable Bank provides a range of personal and commercial banking accounts and services, including a range of smart banking solutions for Canadians: fast international money transfers, easy U.S. dollar accounts and more. It operates several business lines, including single-family lending services, commercial lending services, commercial mortgage, and deposit services.
Since January 2022, I have purchased a few more shares of EQB in my taxable account.
Some might argue the EQB dividend yield is a little bit low, but the sustainability of any dividend payment is important.
EQB has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. In fact, since November 2021, EQB has increased their *dividend 4 times. I read EQB earnings per share is likely to rise by some 40% over the next few years which makes the future bright for this dividend stock.
*Reference: https://eqbank.investorroom.com/dividends-2022
2. Waste Connections (WCN)
I love recession-proof companies like WCN.
Waste Connections provides non-hazardous waste collection, transfer, disposal, and recycling services in the U.S. and Canada. So, with its “moaty stock status” it would be very difficult for any company to match WCN scale in the coming years let alone decades to compete with them.
Like EQB, I like to own some lower-yielding, higher growth stocks in my portfolio.
Those are the “L” stocks in “TULF” stocks to consider owning:
- “T” for telecommunication companies (think Bell, Telus and Rogers).
- “U” for utilities (think Fortis, Emera, Capital Power, and others)
- “L” for low-yielding dividend growth stocks with growth potential (think Canadian National Railway, Waste Connections, Alimentation Couche-Tard, Brookfield Asset Management, and others), and last but not least everyone’s sector favourite in Canada for dividends,
- “F” for financials (you know the names; all six big-banks and more including life insurance companies).
Year to date, while our S&P TSX index is down a bunch WCN is up for the year, about 6% at the time of this post.
In terms of buying more WCN shares in 2022, I purchased more of what I could afford this spring around $160 per share as a growing defensive position.
WCN recently increased their dividend by almost 11% and I predict another dividend increase this time next year in the range of 5-10%.
3. Algonquin Power (AQN)
Yes, AQN but also, yikes….
No doubt some investors may not like AQN as much as I do – especially now.
Recently, the AQN share price plunged (about 20%) based on the news of a quarterly profit miss and lower overall forecast – analyst target prices are also much lower going forward for the coming year. Prices are likely to go lower near term too potentially under $10 per share.
The reason for the massive correction is AQN warned that it expects various current macro-economic challenges to persist into 2023, impacting its business. That bad news now public, AQN should recover, eventually, even if there is a dividend cut in 2023 – which might be a responsible decision for management to decide upon. I predict that dividend cut will happen in early 2023. The stock should bounce back accordingly.
I’ve owned AQN for well over a decade now. I started writing about it here.
Back in January 2022, with AQN amounting to around 1% of my overall portfolio value, I added some.
Looking back, the timing wasn’t great for my AQN buy but history is history and I can’t go back! Such is the challenge with individual stock selection.
Some readers have recently asked what will I do with my AQN shares? Buy more, hold or sell some?
For now: hold.
4. Alimentation Couche-Tard (ATD)
Couche-Tard is a multinational convenience store owner-operator with tens of thousands of stores across Canada, the U.S., Mexico, Ireland, Norway, Sweden and more international countries. I believe they will continue to grow this company more via acquisitions over time.
ATD was on my buy list for the better part of 2021 but I actually scooped up some shares when their price dipped in March 2022 – it just seemed to too cheap not to add more in my taxable account.
(I reminder I only contribute to our taxable accounts when TFSAs and RRSPs are full of contribution room.)
I’ve now owned Couche-Tard in my taxable account for many years now….
Like WCN, I like owning ATD for capital gains.
Year to date, Couche-Tard is up about 20% at the time of this post.
5. Manulife Financial (MFC)
Manulife is a multi-billion dollar, leading financial services group that provides financial advice, insurance, as well as wealth and asset management solutions for individuals, groups and businesses.
I’ve owned MFC for well over a decade now and will continue to do so – even though the capital gains have been non-existent which is not great of course. MFC is very bond-like for income, not growth and for that reason it only makes up <0.50% of my total portfolio value while it does provide a few hundred dollars in dividends per year.
After our TFSAs were maxed out with mostly XAW, we did add some MFC to my account around $22 in hopes the price would climb (finally?) in 2022. Year to date, MFC is down about 6% at the time of this post.
5 stocks updates and other changes!
Quite the year – and it ain’t over yet!
Stocks can go up and down and/or stay flat – this investing year is another lesson of that to all…
You might recall from my initial 2022 purchase list, I also included TD Bank and Summit REIT on my potential buy list beyond EQB, WCN and AQN.
Well, some updates!
TD Bank (TD)
TD is one of our biggest banks and one of the best Canadian brands around. As interest rates rose in 2022, I figured our banks might benefit. I only had so much money to go around in 2022, so I decided to buy more EQB vs. TD but I still purchased a small amount of TD stock for my wife’s taxable account.
Give or take, TD makes up about about 3-4% of my entire portfolio value over the last 15 years. I reinvest many TD shares every quarter.
Summit REIT (SMU.UN)
While many REITs are usually in a portfolio for distributions and yield, I have a slightly different bias in my asset accumulation years: I don’t shy away from growth potential.
Again, you’ve read this above with EQB, WCN and ATD as examples in our portfolio from my taxable account.
I started to own Summit a few years ago.
Upon further reflection, I have enough Canadian stocks and REITs.
I sold my small position in Summit this spring and bought more CAR.UN (Canadian Apartment Properties REIT) this year with CAR.UN tanking in price. Without any Summit now, CAR.UN is down heavily in 2022: down about 25% year to date at the time of post which is actually very good for my dividend reinvestment plan whereby I buy more shares of CAR.UN commission-free every month.
As such, I believe CAR.UN will thrive over time otherwise I wouldn’t have made this decision. Over the last few decades, Canadian Apartment Properties REIT has grown from owning interests in 2,900 residential suites to interests in over 67,000 suites, townhomes and land leased community sites with a total asset value exceeding $17 billion. They expanded into key growth markets across Canada, as well as internationally.
CAR.UN stock now makes up >1% of my overall portfolio.
5 stocks I bought in 2022 summary
Even beyond this year, there are other stocks on my watchlist and some changes to note in my portfolio to share:
BlackRock (BLK)
BlackRock remains a U.S. financial behemoth, and a big reason why we continue to own it. I will continue to own and watch BLK for more chances to buy more shares over time. BLK stock makes up about 2%-3% of my overall portfolio value depending on the share price of the day.
Canadian Natural Resources (CNQ) and Whitecap Resources (WCP)
With rising oil prices threatening to become a crisis earlier this year, I believed it was time to buy more oil and gas stocks – and did. While I’ve owned some CNQ for many years (along with Suncor (SU)) as oil and gas proxies in my portfolio, I added more CNQ in June 2022 and added more Whitecap (WCP) too.
Beyond CNQ, WCP I continue to invest in energy pipelines like Enbridge (ENB) and TC Energy (TRP) for additional energy exposure.
Energy stocks fluctuate between 10-15% of our overall portfolio value.
On my Dividends page, I highlight some other stocks I own. I’ve held many of these companies for over 10 years.
Finally, generally speaking, I try and keep any individual stock to <5% of overall portfolio value. I call that my “5% investing rule”. That said, I’m more than fine if just a few stocks exceed that value (say 6% or even 7%) from time-to-time since I tend to let winners run… I would be concerned if a few stocks dominated my portfolio over 10% though. You can more personal investing rules and FAQs on this page here.
As I buy more individual stocks in my portfolio over time, I intend to offset any individual stock risks by owning low-cost diversified ETFs such as XAW in our TFSAs.
In the coming weeks, I won’t be buying much, if anything.
January 2023 TFSA contribution room opens up soon – we need to continue saving for that room for investing and those timelines are coming up fast. I will let you know what I decide to purchase beyond any XAW for my/our TFSAs in the coming weeks and months. 🙂
Thanks for your readership and keep your comments and emails coming my way.
Mark
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Mark
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H8i Mark: I have been watching AQN intently lately. Another one for the TFSA that I have been watching is AP. UN. People are down on them because they are mainly in office properties but that is changing. Take Shopify for example. My niece’s fiancee or partner runs teams for Shopify and during the pandemic Tobi thought that everyone would now work from home, so they hired thousands of employees’, but as the pandemic was coming to an end more people wanted to work from the office and more companies were asking employees to return to the office, so it was a bet that went wrong and so Tobi had to lay off thousands of people. AP has more than just office buildings. Did you ever wonder when you phone someone no matter what system you are on the call goes through automatically. Part of this is because of two buildings in downtown Toronto owned by AP and leased to the communication companies. These buildings have their windows covered and have security cameras all around them. On the inside it is a mass of interconnecting wires. This how if you are on a Telus network and you phone someone on a Bell network the call goes straight through. As a long -term investor I think Both AQN and AP will recover to their former highs. I like to call my dividend investing approach as GET RICH SLOW.
Yes, AQN will be interesting to watch for sure!
AP.UN might struggle near term I think but I can’t really predict the future either 🙂
Ha.
Mark
Hi Mark: I like your five stocks but would only buy AQN and Manulife the reason being as I have said in the past, I don’t like buying expensive stocks and a stock such as TD at $88.00 is too expensive. I think AQN is a keeper. They lost money last quarter, so the analysts cut their price. One must not forget that they have a deal to buy Kentucky Power which when completed should add to their balance sheet. By the way have you noticed that the analysts, even with an outperform rating that their target price is lower than their former target price. A friend of my dad’s used to say that” them fellas are sitting to close to the action”. What he meant by that was that they were buried in their computer screens and went over every little detail. The market doesn’t work like that as what is up one week is down another. Stocks don’t have to be bought right away. One can see a good buy and sit back and mull it over before actually pulling the trigger.
I like it Ronald! I try not to make too many snap decisions these days, rightly or wrongly!
Mark
If you like nice distributions and Banks, consider HCAL as an ETF choice to cover the banks rather than just buying TD.
Thanks Paul. I own all big-6 banks and EQB now, but I see your point. Do you own HCAL yourself?
Cheers,
Mark
I do I have some quality individual dividend stocks, but more recently i have been migrating more over to income ETF’s and HCAL is one of them.
Like you said above, ETF’s are less work as long as they have quality companies, a professional team managing them, and the cost is fair, then I’m happy.
Personally I prefer to focus on a stable monthly income stream with a small growing distribution to combat inflation, and care less what the “unrealized” overall portfolio maximum value that I “could be” missing out on “may be” down the road.
I know some folks argue against that, but investing has to be comfortable to each person. I feel more comfortable this way than going into retirement with the potential of selling shares or “units” in a sustained downturn to convert it into income. If your units or shares are down 30% for one or two years and you have to sell them, you will have to sell more of them to make your required monthly budget.
Hey Paul, I find HCAL very interesting and I could be a buyer once I see some history to evaluate total returns – but I totally understand the transition you are describing, and I may lean in that direction eventually myself. What I’m most interested in is if HCAL will regularly increase their distributions or not. To me that would make them a game changer.
Thanks and yes, ETFs are less work for sure if you don’t like individual stocks per se – including owning all big-6 banks.
Since I already own all big-6 banks, very likely for me to own HCAL but I can the appeal!
I do love getting paid via dividends or distributions (as you know) so I can consider capital gains a form of gravy in the coming years. I will of course sell stocks over time but not in the early years of semi-retirement/part-time work.
Mark
I’m not saying he’s right, but Mike Heroux makes a good case for why the dividend might be safe, and why they might even increase it further in 2023. It’s a stretch, but his arguments are compelling and why I’m thinking it’s no worse than 50/50 for a dividend cut.
Ya, I liked Mike’s take on that. I’ll link to another video on AQN in my Weekend Reading – Stocktrades.ca isn’t so optimistic!
I don’t think they should increase any dividend at all of course. I would be fine if they froze it for a year or so and kept debt in check.
Mark
FYI….GLOBE & MAIL NOV.14, 2022
“The steep sell-off has driven up the dividend yield to 8.7 per cent, which is a dramatic change for a stock that yielded about 5 per cent at the start of this year.
The high yield suggests that investors have concerns over whether the current distribution is sustainable, given that the annualized payout is now as big or bigger than the after-tax profits the company will likely generate this year or next year, according to analysts.
“We have taken all dividend growth out of our model and, even still, the payout ratio remains 103 per cent of earnings per share in 2023 and 97 per cent in 2024,” Robert Hope, an analyst at Bank of Nova Scotia, said in a note.
Algonquin’s management said last week that it was targeting a dividend payout ratio of 80 per cent to 90 per cent, meaning that the company expects to distribute no more than 90 per cent of its profits as dividends over the longer term.
“This payout ratio target would be above its peers and, in general, makes growing the business without external equity more difficult. If the company does pursue a full reset, we could see a reduction in the dividend,” Mr. Hope said.
Algonquin did not immediately respond to a request for comment.
This has been a challenging year for utilities and renewable power producers.”
I see a divy cut coming….IMHO
Thanks for those details, pittbeau – I think you’re right and a cut is coming in early 2023. Just a hunch. How big?
25% or 50%?
I’m OK with the latter as long as they fix some debt 🙂
Mark
I was in and out of AQN a couple of times in the last 18 months. I put a stink bid in this morning, good until Friday for a small position. If it doesn’t fill I’ll be okay with it. It has always been my view that AQN is not a prolific green energy generator, nor is that their objective, but I think they were happy to get promoted as being such in the past. They are a distribution utility first and foremost – and they are good at it. The sell off of their generation assets should clear the air on what kind of company they want to be, and how they want to make their money.
I’m on the fence as to whether they’ll cut the dividend. I think a lot depends on their rate case filings and how successful they are at increasing rates. Having said that, their write-offs might increase as well, so it’s a balancing act. I’d say no worse than 50/50 they cut the divvy, but if they do, they’ll do everything they can to restore it as soon as possible, IMO.
“They are a distribution utility first and foremost – and they are good at it.”
I agree.
I think they’ll need to cut the dividend since that yield (anything over 6-7% sustained) is not sustainable IMO.
I’ll continue to hold (for now) but it ain’t fun to watch or be part of James!
Mark
I’m somewhat confused by the two huge drops in stock price on Friday and Monday since both EBIDTA and AFFO (adjusted funds from operations) increased from the same period last year. I know the 27% drop in net earnings is not a good thing, but isn’t the payout ratio for a utility, similar to a REIT, typically determined by the AFFO (which accounts for depreciation among other things)? AFFO increased from 170.2 million USD to 205.5 million USD. There are posters in other forums that have calculated that the dividend is well-covered by the AFFO; Also why would AQN recently raise the dividend without foreseeing a a coming problem with earnings?
Anyways, I guess I’m stuck with my position in AQN as I didn’t have the ability to forecast a Shopify-like drop on earnings and get out in time. I will wait for the recovery, whether it takes 2 years or 20 years to fix it. I have other utility positions in Fortis, and Brookfield Renewable Partners/Corporate which I’ve being adding to….have Capital Power too, but waiting for greater price drop. Is AQN still a hold forever stock for you Mark? I might have to hold it forever just to get back to par lol
I agree Lawrence, re: AFFO.
I too, will wait, given I also have other utility positions in Fortis, EMA, CPX and BEPC and BIPC here.
Ha – yes, AQN still a “forever hold” stock for now but I can appreciate the road has been very bumpy. We can test if I was wrong on this one in the coming years 🙂
Thanks for your comment,
Mark