Investing beyond dividends: How some non-dividend paying stocks supercharge my portfolio

I'm excited to say that my annual dividend income is almost at $12,200, with only $0.67 left to reach that milestone. One of the largest holdings in my RRSP is Emera Incorporated (EMA), and I have a DRIP set up for that investment, which means that the maximum dividend earned is automatically transformed into new shares each quarter. Recently, I received my dividend from EMA, and my new Emera shares quickly followed, bringing me one step closer to my goal.

However, I don't expect any dividend increase from Emera when the company releases its Q4 2022 results on February 23. In my opinion, the controversy surrounding the increase in electricity bills for residents of Nova Scotia makes it unlikely that Emera will raise its dividend distribution. According to reports, power rates in Nova Scotia are set to increase by almost 14% over the next two years, which will directly impact Nova Scotia Power's customers. If Emera were to announce a dividend increase in this context, it would likely reflect poorly on the company and come at the expense of its customers.

Currently, Emera's dividend yield stands at a strong 5.039%.

In yesterday's post, I revealed that I hold many stocks across my four investment portfolios: my non-registered portfolio, US portfolio, TFSA portfolio, and RRSP portfolio. I haven't actually counted the number of stocks I hold, but there are certainly quite a few. One reason for this is that I don't want to miss any investment opportunities, and I like to add new investments to my portfolio from time to time. Despite this, I've been relatively quiet over the past few weeks and months on that matter, as I haven't made any new investments recently. Even if my blog is being named "The Dividend Girl", not all of the stocks that I hold in my various portfolios are dividend payers. There are several reasons for this.

I know this for a fact, maximizing your investment portfolio can be a tricky balancing act, and one factor to consider is the role of dividend payments. Dividend payments are a portion of a company's profits that are distributed to shareholders. Some investors like myself prioritize dividends because they provide a steady stream of income, while others focus on capital appreciation, which is an increase in the stock price. However, there are many stocks that don't pay dividends, also known as non-dividend payers. These companies reinvest their profits back into the business, which can lead to potential growth in the future. While they may not offer an immediate source of income, non-dividend payers can still be a valuable addition to an investment portfolio.

When searching for new stocks to invest in, I look for a variety of factors to ensure I'm making the best possible investment decisions. One of those factors is the dividend payment status of the company. However, if I come across a stock with a perfect chart, solid fundamentals, and everything else in place except for the fact that it doesn't pay dividends, I may still consider it for my investment portfolio.

Years ago, I decided to invest in several stocks that don't pay dividends, including Berkshire Hathaway Inc. (BRK.B), CAE Inc. (CAE), CGI Group Inc. Class A Subordinate Voting Shares (GIB.A), and JFT Strategies Fund Class A Units (JFS.UN). While these companies may not provide an immediate source of income, I still believe they have strong potential for long-term growth and are valuable additions to a diversified investment portfolio.

Let's start with Berkshire Hathaway Inc. (BRK.B). I invested in BRK.B back in August 2016, and since then, my shares have gained over 113% in my US portfolio. That's a fantastic return on my investment. However, BRK.B does not pay any dividends. This is because the CEO of Berkshire Hathaway Inc., Warren Buffett, is widely regarded as one of the best investors of our time, and he believes in reinvesting profits back into the company rather than paying dividends to shareholders. While it's possible that the company's dividend policy may change in the future, especially after Warren Buffett steps down as CEO, it's difficult to predict. Regardless, as an investor, I am happy to hold onto my BRK.B shares for the long-term potential for capital appreciation. Don't expect Berkshire Hathaway Inc. to become a dividend payer anytime soon.

It's because of this awesome chart that I have BRK.B in my US portfolio:

Inside my RRSP portfolio, my non-dividend payers are CAE Inc. (CAE), CGI Group Inc. (GIB.A), and JFT Strategies Fund Class A Units (JFS.UN). CAE went through a difficult time during the COVID pandemic. They operate in the aviation sector and are well-known for providing aviation training for pilots. CAE used to pay dividends before, but in recent years they have cut them off due to the challenges faced by the industry. CAE Inc. has been in my portfolio since 2017 and is currently showing a gain of +39.97%, which is not bad considering the difficulties the company has faced. Another stock that I hold in my RRSP portfolio that doesn't pay any dividends is JFT Strategies Fund Class A Units (JFS.UN). In my RRSP portfolio, JFS.UN has gained +7.51%.

When I first invested in JFT Strategies Fund Class A Units (JFS.UN), I didn't fully understand it. I was frustrated to see that while many of my stocks were performing well, JFS.UN wasn't on the same track. This led me to sell the shares I had initially bought when it first traded, but I later decided to buy again. That's why you can now find some units of JFT Strategies Fund Class A Units (JFS.UN) in my RRSP and TFSA portfolios.

In my RRSP portfolio, JFT Strategies Fund Class A Units (JFS.UN) has experienced a gain of +7.51%, and in my TFSA portfolio, it has gained +8.42%. Over the years, I have come to appreciate my investments in JFT Strategies Fund. I consider it a money stabilizer since investing in JFS.UN almost guarantees a return in the short to medium term, and the capital is also almost guaranteed. However, it's important to note that nothing is 100% guaranteed, of course.

I also hold another great non-dividend-paying stock, CGI Inc. (GIB.A), in my TFSA portfolio. My investment in CGI Inc. (GIB.A) has gained +28.75%. Just like Berkshire Hathaway Inc. (BRK.B), CGI Inc. (GIB.A) has a chart that looks almost perfect. Take a look for yourself:

I like all of those stocks, even though they don't pay any dividend distribution. If I were to sell all my shares of BRK.B, CAE, GIB.A, and JFS.UN, I would be able to collect around $20,000. If I invested that money in dividend-paying stocks, I could generate an extra $930 annually in dividend income. However, I prefer to keep things the way they are. I don't believe in investing exclusively in dividend-paying stocks. Non-dividend-paying stocks, like my BRK.B, CAE, GIB.A, and JFS.UN, can represent great investment opportunities and are very precious to me. When evaluating non-dividend-paying stocks, it's important to look at their financial health, growth prospects, and industry trends. Companies with a solid balance sheet, strong management, and a competitive edge in their market are more likely to succeed in the long run. I use a simple and easy tool to evaluate stocks quickly, which is their chart. Charts never lie.

Choosing to invest in a mix of dividend-paying or non-dividend-paying stocks, like I do, can help reduce overall risk and potentially maximize returns. For me, it's worth considering both dividend and non-dividend payers when building my investment strategy.