As a dividend growth investor (DGI), I am driven to keep track of both my inflows and outflows. Increases in investment income represent one measure to assess whether I am winning or losing the game of money. While I have been diligent to track my progress on a quarterly and annual basis over the past few years, I have recently decided to include monthly status reports.
|Company||CAD Payments ($)||Div Increase (%)|
|Toronto-Dominion Bank (TD)||48.00|
|RioCan Real Estate Investment Trust (OTCPK:RIOCF)||30.67|
|BCE Inc. (BCE)||157.85|
|Canadian Imperial Bank of Commerce (CM)||15.60|
|Bank of Nova Scotia (BNS)||19.75|
|TELUS Corporation (TU)||35.35||4.12|
|Rogers Communications Inc. (RCI)||26.40|
|Canadian Pacific Railway Limited (CP)||3.38|
|Chartwell Retirement Residence (TSE:CSH.UN) (OTC:CWSRF)||4.80|
|Company||USD Payments ($)||Div Increase (%)|
|PepsiCo, Inc. (PEP)||6.85|
|Walmart Inc. (WMT)||6.51|
The month of January has generated $341.80 CAD and $13.36 USD. Given that this will be my first monthly dividend update, I do not have a comparable against which to reference my dividend income. Still, I have to say that it’s a good feeling to receive this dividend income without needing to work actively to generate it. I don’t take for granted the wonders of dividend income flowing to my coffers on a regular basis.
My sole dividend increase this month came from TU in the amount of 4.12%. It is worth noting that TU tends to increase its quarterly dividend twice per year and is currently promoting its intention to maintain increases in a range between 7-10% annually through the end of 2019.
Two names that should continue appearing on a regular basis within these monthly reports are RIOCF and CSH.UN. Both companies pay monthly distributions and are names I am hoping to be in for the long term.
On the USD side of my portfolio there really wasn't much activity with the relatively small dividend payments and no increase in payouts. WMT did announce a name change, so that's something, right?
Of the 22 quarterly dividend payers in my portfolio, 10 of them pay on a quarterly schedule beginning January. While I am not personally yet at the point in my life when I will begin using these payments to finance my lifestyle, this is the sort of thing a “Dividend Retiree” would want to bear in mind when planning a budget. With ~45% of one’s incoming coming in every three months, it may be necessary to set some money aside to help cover the leaner periods.
There are even dividend strategies which espouse the methodology of buying companies specifically because of their payment schedules in order to balance out payments. By that mindset, if an investor was receiving 40% of payments on a Jan-Apr-Jul-Oct schedule and another 40% on a Feb-May-Aug-Nov schedule, they would want to look for a company that pays on Mar-Jun-Sep-Dec increments in order to increase the 20% weighting which would at that time be producing 50% less income than the others. I personally believe this is a poor dividend investing strategy as my goal is always to aim for quality; it is easier to figure out how to distribute the dividends across time for myself than to deal with the capital loss of having bought a company which turns out to be a lemon and cuts its dividend.
While I have historically only made a few stock purchases per year, January represented a busy month for me with two stock purchases.
My first buy was for an additional 50 shares of Corby Spirit and Wine Ltd. (OTCPK:CBYDF) on the Toronto Stock Exchange in CAD. On the current $0.22 CAD quarterly dividend, I expect this to generate $11.00 quarterly or $44.00 annually.
My second acquisition was for 15 additional shares of BNS, also on the Toronto Stock Exchange in CAD. Given the quarterly dividend of $0.79, I expect this to bring in $11.85 quarterly or $47.40 annually.
Taken in aggregate, these two purchases are currently set to bring in $91.40 in annual forward income. I am pleased to make both acquisitions early in the year so they will be accretive to my 2018 dividend totals right from the outset. Further, these are both additions to positions I already owned which is consistent with my overall stated intent to deepen my portfolio organically rather than continue expanding into new territories. The amount of companies I already need to keep track of is considerable and retrenching somewhat at this stage is sensible.
Writing this now, well into the second week of February, I would be remiss not to comment on the volatility within the stock market over the past ten-odd days. From one day to the next we are seeing multi-year records either on the way down or on the way back up. What is the average investor to make of the wild ride we’ve all been subject to? From my vantage point, volatility is tantamount to opportunity.
For an investor who plans to be in the market for years to come, fretting over daily oscillations in the market is a recipe for disaster. Instead of worrying about a few percentage points here or there, I love when the market gives me the chance to average down on positions I already own. In other cases, I don’t mind averaging up if the equity is of particularly high value and I was previously fortunate to get it at a low entry price.
There have been a fair number of articles circulating the web hypothesizing as to how low the market can go or discussing when the bottom will be reached. All of my experience in the market has taught me to avoid attempting the art of clairvoyance. Instead, I keep my emphasis squarely rooted on my long term of goals of increasing my income year over year on a consistent basis. The key for me to achieve my goals and stay on track for my Five Year Plan is to stay invested and add more fuel to the fire. With every share I accrue, I move ever closer to the ultimate goal of financial freedom built on a foundation of passive income.
Given the elevated market over the past year, I have been keeping my eye open for dividend yields exceeding 4% on top notch dividend payers. Given that I have been accumulating excess amounts of free cash flow and socking it away at 2.3% at my bank (a rate I negotiated until the end of March), I am now feeling a bit more liberal in terms of putting that money to work.
I am excited to begin tallying my dividend income on a more regular basis. This gives me an opportunity to keep a closer eye on developments within my portfolio and likewise to generate greater discussion with readers as I have found this to be one of the most effective ways to increase my own efficacy as a steward of the wealth I have thus far accumulated.
Similarly, keeping my finger on the pulse of how much I am earning on a monthly basis allows me to feel more tangibly that my strategy is being employed effectively. Quarterly snapshots have proven too few and far between to allow me to feel that I am current with the happenings within my portfolio.
Thank you for reading and I hope your year is off to a fine start as well.
All Canadian companies owned in CAD on Canadian exchanges.
Disclosure: I am/we are long TD, RIOCF, BCE, CM, BNS, TU, RCI, CP, PEP, WMT, CBYDF.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.