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Welcome to the October edition of Money While You Sleep. This is the second month in a row where we saw the TSX down. We made some big moves this month as we continue to align the portfolio for the future. I’ll get to that in a bit, here is what we have been up to.

• We celebrated our daughter Z’s 8th birthday
• Z received her 1KM medal and completed it within 30 minutes. Pretty impressive as some don’t complete this until age 12, not that I’m bragging or anything.
• We had a fantastic halloween.

Here are a few pictures

Portfolio details:

This month the TSX dropped for the second time since the pandemic (month over month) by dropping from $16,121 to $15,580.64 which is a decrease of 3.3%. We have seen our portfolio outperform the market with an increase of 18% in August, 1% September and 1.5% in October. This would mean we outperformed the TSX in October by almost 5%, I’ll take it! This was a very busy month for us adding some solid new holdings and let a couple go which I go into detail below.

Sold

BNS.TO

Sold at a small profit after ex dividend date, received dividend and moved over to BMO which I will get why into in a bit.

CTC.A.TO

Canadian tire took it on the chin when Covid hit. Recently they have turned it around by basically gaining all of it back. We bought this before the pandemic and were able to get out of this position during it all with a decent profit shockingly. Although I like the company, I don’t like the retail space right now specifically companies that have many brick and mortar locations that may pose a risk headed into the second wave. There are many other companies that have more potential currently IMO.

MIC.TO

Genworth got a takeover offer on Oct 26 at a very impressive premium. Sold and allocated this elsewhere. This was a solid profit as we only bought less than 3 months ago.

Bought

Added to our Bank of Montreal position, 36 shares @ $78.56

Who is BMO.TO:

The Bank of Montreal is a Canadian multinational investment bank and financial services company. Founded in Montreal, Quebec, in 1817 as Montreal Bank, its head office remains in Montreal, with its operational headquarters and executive offices in Toronto, Ontario, since 1977

Our why:

We had purchased some shares back in August and you can find our reasons why HERE. We like BMO more than BNS moving forward so decided to sell BNS and convert the $ over to BMO. This gets us closer to finally dripping status. I like bank prices at current rates and if they perform strong on 3rd quarter results we should see a strong fourth quarter.

Opened a position in Vital Hub Corp by purchasing 1,300 shares at an average share price of $3.07

Who is VHI.VN:

Software for Health and Human Services providers designed to simplify the user experience & optimize outcomes.

VitalHub provides technology to Health and Human Services providers including; Hospitals, Regional Health Authorities, Mental Health, Long Term Care, Home Health, Community and Social Services. VitalHub solutions span the categories of Electronic Health Record (EHR), Case Management, Care Coordination, Patient Flow & Operational Visibility, and DOCit Mobile Apps.

The Company has a robust two-pronged growth strategy, targeting organic growth opportunities within its product suite, and pursuing an aggressive M&A plan. Currently, VitalHub serves 275+ clients across Canada, USA, UK, Australia, Qatar, and Latvia. VitalHub is based in Toronto, Canada, with an offshore development hub in Sri Lanka.

Our why:

If any of you have been in a hospital and looked around you may see some of the same concerns as I do. I see slow/old technology. Vital Hub provides advanced technology to move hospitals into a more efficient system. Covid has done a pretty good job in showing us where we fall short in multiple sectors, including health care. Revenue took a minor hit in the second quarter however they beat on the EPS by earning $0.01 vs expectation of -$0.01. Assets on record are over 38 million and debt is sitting at just over 8 million, which is a massive improvement of 14 million since Dec 31, 2019. With multiple announcements over the past couple months I see this accelerating moving forward. Here are multiple links to recent announcements if you would like to look into them a bit more.

Recent news over past 2 months:

• https://ca.finance.yahoo.com/news/vitalhub-corp-completes-acquisition-transforming-191900350.html
• https://ca.finance.yahoo.com/news/vitalhub-announces-deployment-intouch-health-113000658.html
• https://ca.finance.yahoo.com/news/vitalhub-introduces-subsidiary-transforming-systems-113000894.html
• https://ca.finance.yahoo.com/news/vitalhub-announces-licensing-digital-pre-110000120.html
• https://ca.finance.yahoo.com/news/vitalhub-subsidiary-transforming-systems-builds-113000989.html
• https://ca.finance.yahoo.com/news/vitalhub-announces-large-scale-expansion-113000319.html
• https://ca.finance.yahoo.com/news/vitalhub-announces-licensing-digital-outpatient-113000729.html
• https://ca.finance.yahoo.com/news/vitalhub-innovative-digital-pre-operative-113000265.html
• https://ca.finance.yahoo.com/news/vitalhub-continues-increase-nhs-uk-113000617.html

Finally opened our first position in Fortis within the RESP account by adding 40 shares @$52.70

Who is FTS.TO

Fortis Inc. operates as an electric and gas utility company in Canada, the United States, and the Caribbean countries. It generates, transmits, and distributes electricity to approximately 429,000 retail customers in southeastern Arizona; and 97,000 retail customers in Arizona’s Mohave and Santa Cruz counties with an aggregate capacity of 3,143 megawatts (MW), including 59 MW of solar capacity. The company also sells wholesale electricity to other entities in the western United States; owns gas-fired and hydroelectric generating capacity totaling 65 MW; and distributes natural gas to approximately 1,041,000 residential, commercial and industrial and transportation customers in British Columbia, Canada. In addition, it owns and operates the electricity distribution system that serves approximately 568,000 customers in southern and central Alberta; owns 4 hydroelectric generating facilities with a combined capacity of 225 MW; and provides operation, maintenance, and management services to five hydroelectric generating facilities. Further, the company distributes electricity in the island portion of Newfoundland and Labrador with an installed generating capacity of 143 MW; and on Prince Edward Island with a generating capacity of 140 MW. Additionally, it provides integrated electric utility service to approximately 66,000 customers in Ontario; approximately 269,000 customers in Newfoundland and Labrador; approximately 31,000 customers on Grand Cayman, Cayman Islands; and approximately 15,000 customers on certain islands in Turks and Caicos. The company also holds long-term contracted generation assets in Belize consisting of 3 hydroelectric generating facilities with a combined capacity of 51 MW; and the Aitken Creek natural gas storage facility. It also owns and operates approximately 91,000 circuit Kilometers (km) of distribution lines; and approximately 49,500 km of natural gas pipelines. Fortis Inc. was founded in 1885 and is headquartered in St. John’s, Canada.

Our why:

Our why is simple, stability. Over 95% of earnings are regulated giving support to the company stock price. 3rd quarter results missed expectations slightly and we bought the dip. Any company that can provide the returns Fortis has to their shareholders over almost 50 years can have my investment any day of the week. They also offer an attractive dividend of over 3.8% annually with a payout ratio of around 70%. I feel confident tucking this away in our kids education account.

Added to Barrick Gold by purchasing 50 shares @$35.30

Who is FTS.TO

Barrick Gold Corporation engages in the exploration, mine development, production, and sale of gold and copper properties. It has ownership interests in producing gold mines that are located in Argentina, Canada, Côte d’Ivoire, the Democratic Republic of Congo, Dominican Republic, Mali, Papua New Guinea, Tanzania, and the United States. The company also has ownership interests in producing copper mines located in Chile, Saudi Arabia, and Zambia; and various other projects located throughout the Americas and Africa. Barrick Gold Corporation was founded in 1983 and is headquartered in Toronto, Canada.

My Why:

Here is my post on why i recently bought Barrick and this purchase goes in line with the same fundamentals LINK. Furthermore Gold companies have been reporting solid 3rd quarter results and I have no question Barrick will provide the same on Nov 5. Yield is small however future capital growth could be massive.

Opened our first position in Enghouse Systems Limited by adding 25 shares @$68.49

Who is ENGH.TO:

Enghouse Systems Limited develops enterprise software solutions worldwide. It operates through two segments, Interactive Management Group and Asset Management Group. The Interactive Management Group segment provides customer interaction software and services. Its technologies include contact center, attendant console, interactive voice response, dialers, video collaboration, agent performance optimization, and analytics that support various telephony environment. This segment serves insurance companies, telecoms, banks, as well as technology, health care, and hospitality companies using deployment models, such as cloud, on-premise, hosted, and hybrid. The Asset Management Group segment offers a portfolio of products to telecom service providers. Its products include operations support systems, business support systems, and mobile value added services solutions, video and IPTV services as well as data conversion services. This segment also provides fleet routing, dispatch, scheduling, transit e-ticketing and automated fare collection, communications, and emergency control center solutions for the transportation, government, first responders, distribution, and security sectors. Further, it offers public transport agencies and operators with e-ticketing solutions; and integrated software platform for wholesale billing and partner settlements; client, server and cloud software products as well as system integration services; and also offers customer engagement software. The company was founded in 1984 and is headquartered in Markham, Canada.

My why:

ENG has been on my watch list for quite some time. I was looking at adding a bit more in the technology sector and when the market sold off big time (ENG dropped more than 10%) in late Oct we made our move. Q2 EPS of $0.37 beat expectations by 85% and Q3 EPS of $0.46 beat expectations by 40% showing us that ENG knows how to deliver by averaging over 31% in Adjusted Ebitda over the last 8 quarters alone. Yes please, happy to add this to the portfolio any day of the week.

Dividend increases and decreases

• Savaria increased dividend 4.3%
• No Cuts

2016 – 2017 – 2018 – 2019 – 2020 Dividends and Rebates received

October dividends came in at $356.70 which is an impressive increase over last October of 38%. This is keeping us in line with our 2020 goal of receiving $3,100 in dividends.

Dividends received

Stock List	Dividend	Drip
FRU.TO	$1.76	No
EXE.TO	$7.20	Yes
CSH.UN	$15.81	Yes
ALA.TO	$5.36	Not enough
PLZ.UN	$9.94	Yes
NPI.TO	$14.10	Not enough
SIS.TO	$5.40	Not enough
EIF.TO	$6.84	Not enough
EFX.TO	$1.60	No
IMO.TO	$19.36	No
TD.TO	$79.79	Have not set drip
CM.TO	$61.32	No
BNS.TO	$45.00	No
AQN.TO	$20.12	Not enough
POW.TO	$63.10	Yes
Total:	$356.70	

My thoughts moving forward

Current economy conditions

Canada unemployment rates are starting to improve by going from 12.3% in June to 10.9% in July to 10.2% in August and 9% in September. Consensus in October is 8.8%. We are continuing to go in the right direction, we will see if it holds as the second wave in coming in very fast.

Careful where you put your money

We have yet to see a major drop since Feb/March. If your going to put your money in this market take the extra effort to know exactly what your buying. In current market conditions I’d say its healthy to have some cash on the sidelines so you can take advantage of solid companies when the market is acting wonky. We are sitting with about 10% ready to deploy when the time comes.

Sectors I like

• Financials
• Communications
• Healthcare
• Technology
• Utilities

As you can see all our purchases this month fall into these categories.

What to look for

As we are into the fourth quarter it is very important to have a good peak at third quarter results. Here are some tips when looking into the financials:

• What do 3rd quarter current revenues look like in comparison to last years 3rd quarter? How about quarter over quarter?
• Have assets dropped?
• Have liabilities taken a turn for the worse? Any additional debt taken on? If so at what interest rate, short term or long term?
• How do assets compare to liabilities?
• What is shareholder equity vs. market cap and current growth plans?
• Did you read the full report? This is important so you don’t miss something, it’s your hard earned money your investing so you want to be sure there are no bad apples in the small print.

Keep an eye on earnings vs analysts expectations. Look for any forward guidance in the report that can help you better understand what management expects over the next few quarters. When checking if the dividend is in good shape focus on three metrics, Free Cash Flow %, Operating Cash Flow % and Payout Ratio %, these metrics can help determine the health of the current dividend.

Current companies I’m watching. I own many of these but don’t have a full position that’s why they are still on the list.

PIF.TO, ARE.TO, RY.TO, BMO.TO, EQB.TO, MFC.TO, SLF.TO, NWH.UN.TO, FTS.TO,CPX.TO, AQN.TO, T.TO, NFI.TO,BCE.TO, POW.TO, MIC.TO, DOC.V, NEWU, REAL.TO

Thanks for reading and feel free to leave a comment!

Invest in yourself

Brian

Disclosure:  I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. Please ensure you do your own research.