FFJ Portfolio - March 2019 Update

This is my May 2019 FFJ Portfolio update. The portfolio was created in January 2017 for the purpose of demonstrating how investing in high quality companies with competitive advantages and with a record of consistently increasing dividends can assist investors in reaching their long-term financial goals without the need to speculate or to chase dividend yield.


The month-end holdings within the FFJ Portfolio’s Core and Side accounts can be viewed here. The monthly dividend income reports for all of 2018 and YTD2019 can be accessed here.

Over the past few months I have viewed the valuation of most companies as having become increasingly detached from the underlying fundamentals. As a result, I have minimized the degree to which I have deployed new money.

Following the release of less than stellar results by Becton, Dickinson and Company (BDX) in early May I increased my exposure based on my long-term outlook. Details can be found in this article.

More recently, the major Canadian banks released their Q2 results. Although the banks generated reasonably solid results they fell short of the investment community’s expectations and the share prices have pulled back.

While I only wrote about increasing my exposure to The Canadian Imperial Bank of Commerce (CM) and The Royal Bank of Canada (RY) I also increased my exposure to The Bank of Montreal (BMO), The Bank of Nova Scotia (BNS), and The Toronto-Dominion Bank (TD).

3M Company (MMM) has certainly fallen out of favor with the investment community. It faces significant headwinds that are unlikely to be resolved in short order. I am, however, optimistic that MMM will be a more valuable franchise several years into the future and have acquired additional shares on weakness and disclosed this in my recent MMM article.

With market conditions becoming increasingly fragile I am now taking the opportunity to write articles about companies in which I do not currently have exposure and which are on my ‘Watch List’. These companies are, in my opinion, currently overvalued. I am, however, optimistic that conditions are becoming increasingly ideal for broad market pullback. Should this pullback materialize I want to be prepared to consider initiating a position in a few high quality companies. My two most recent articles touch upon Ecolab Inc. (ECL) and Intercontinental Exchange, Inc. (ICE). The articles can be accessed here.

Dividend Income

May is one of the 4 months of the year in which the FFJ Portfolio generates the least amount of dividend income.

The holdings within the Core component of the FFJ Portfolio generated dividends totalling ~$580 CDN and ~$1153 USD bringing the YTD dividend income to ~$5900 CDN and ~$6500 USD.

The holdings within the Side component of the FFJ Portfolio generated dividends totalling ~$1355 CDN and ~$245 USD bringing the YTD dividend income to ~$7600 CDN and ~$3850 USD.

Although the YTD dividend income is less than what I had anticipated at the outset of the year, I am not prepared to acquire shares at unreasonable valuations just for the sake of trying to generate a certain level of dividend income.

In my April 2019 FFJ Portfolio update I indicated I am also generating option income. I have not set any option income targets and currently have no intention of setting any. I am, however, cautiously optimistic $10K - $20K of option income will be generated this year.

Final Thoughts

Conditions are such that I think a broad market pullback is becoming increasingly probable. I don’t think the US and China will resolve their trade negotiations any time soon (see here) and the threat of tariffs being imposed on goods from Mexico (see here) is certainly not going to allay investor concerns. In addition, EU-US trade talks do not currently look promising (see here).

I certainly can not definitively tell you what will happen in the short-term. I do, however, expect we will have opportunities in which to acquire shares in great companies which have been, and continue to be, overvalued. I, therefore, suggest you have money sitting on the sidelines which can be deployed toward the purchase of shares of high quality companies if/when market conditions turn ugly.

That’s my roundup for May.

I wish you much success on your journey to financial freedom!

Note: Thanks for reading this article. Please send any feedback, corrections, or questions to [email protected].

Disclaimer: I have no knowledge of your individual circumstances and am not providing individualized advice or recommendations. I encourage you not to make any investment decision without conducting your own research and due diligence. You should also consult your financial advisor about your specific situation.

I wrote this article myself and it expresses my own opinions. I am not receiving compensation for it and have no business relationship with any company whose stock is mentioned in this article.

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