Dividend Income & Financial Independence Journey Update – Nov 2019
For November, I was on the road a lot. First I was away in Asia for business and visited Beijing, Shanghai, Shenzhen, Guangzhou, Hong Kong, and Taipei. I was hit by jet lag pretty hard when I got back to Vancouver as I slept for 14 hours and 12 hours on the first weekend. Then a week after my Asian trip, I went down to San Jose for a quick two-day work trip. I was invited to go to Boise the last week of November for another quick two-day work trip but I decided to turn it down. I didn’t want to fly every single week for the month of November. That’s simply too much travel!
I definitely have to give Mrs. T a lot of kudos for looking after the kids all by herself while I was away. It was definitely not easy!
Given that we didn’t really have much one-on-one time throughout November, Mrs. T and I decided to have a stayaction just the two of us by staying at a JW Marriott Parq Vancouver one November weekend (we had some credits on one of the credit cards and wanted to redeem the credits before closing the card). It was great to be able to spend time together without the kids and really connect as a couple.
As part of the stayation, we decided to walk up to Cirque du Soleil ticket booth around 40 minutes before the show to see if there were any last-minute cheap tickets. As it turned out, there were! We spent $132 (~25% off) for the two of us and thoroughly enjoyed the show. Years ago I would have been very hesitant to spend money like that. Nowadays I have a different perspective when it comes to spending money (i.e. finding a personal balance that works for you), I was happy to spend the money to have a wonderful experience with Mrs. T.
Dividend Income – Nov 2019
While I was busy travelling all over in Asia, our dividend portfolio was busy producing income for us. In November 2019 we received pay cheques from the following companies:
- Apple (AAPL)
- AbbVie (ABBV)
- Bank of Montreal (BMO.TO)
- Costco (COST)
- Dream Office REIT (D.UN)
- Dream Industrial REIT (DIR.UN)
- Emera (EMA.TO)
- General Mills (GIS)
- H&R REIT (HR.UN)
- Inter Pipeline (IPL.TO)
- KEG Income Trust (KEG.UN)
- Laurentian Bank (LB.TO)
- Metro (MRU.TO)
- National Bank (NA.TO)
- Omega Healthcare (OHI)
- Procter & Gamble (PG)
- Prairiesky Royalty (PSK.TO)
- RioCan REIT (REI.UN)
- Royal Bank (RY.TO)
- Starbucks (SBUX)
- SmartCentres REIT (SRU.UN)
- AT&T (T)
- Verizon (VZ)
After tallying 23 different pay cheques, our November dividend income came to $1,849.95. Our streak of $2,000 dividend income per month is broken but I expected this streak to be broken in November. At $1,849.95 it meant we had a quarter over quarter growth of 2.3%, which was strictly contributed by DRIP and organic dividend growth.
Out of the $1,849.95 received, $419.19 was in USD and $1,430.76 was in CAD, or about a 25/75 split. Please note, we use a 1 to 1 currency rate approach. We do not convert dividends received in USD to CAD, because we want to keep the math simple. This is our way to avoid fluctuations in dividend income over time due to changes in the exchange rate.
The top 5 dividend payouts in November 2019 came from Bank of Montreal, National Bank, Emera, Inter Pipeline, and Royal Bank (not in order). Dividend payout from these five companies accounted for $1,106.51 or 59.8% of our November dividend income. Given that Bank of Montreal, National Bank, Emera, and Royal Bank have a long dividend-paying history, I am not concerned at all that five companies accounts for almost 60% of our monthly dividend income.
Compared to November 2018, we saw a YoY growth of 16.6%. This is the second-lowest YoY growth performance in 2019. The worst being in August at 13.79%. The third worst was May at 18.68%. Interestingly May, August, and November are all three months apart (i.e. a quarter). While our dividend income seems quite stable, it looks like our weakest months are definitely in February, May, August, and November.
Dividend Stock Transactions
Given that the market was on an upward trajectory throughout November, we didn’t make any dividend stock transactions. I was tempted to add to some existing positions like Rogers, Johnson & Johnson, and TD but just couldn’t get myself to do it. It was also tempting to purchase a stock that would pay dividends in December, so we would ensure that we could reach our $23,000 annual dividend income goal. However, I don’t like purchasing something for the sake of purchasing. I want to purchase stocks when the evaluation looks great. Right now, I am finding a hard time finding stocks with good evaluations, especially considering how cheap things were only a few months ago.
For December, we probably will remain quiet on the stock transaction front. The TFSA contribution limit for 2020 is $6,000 per person, so that means between Mrs. T and I, we can contribute a total of $12,000. We have the amount saved up already and we’re simply waiting for January 1st to hit. I am secretly hoping for a stock market correction in early January. Who’s with me?
In November, a number of companies announced dividend increases.
- Canadian Tire Corporation increased its dividend payout by 9.6% to $1.1375 per share.
- Telus increased its dividend payout by 3.6% to $0.5825 per share.
All these dividend increases added about $35 toward our annual dividend income. At 4% dividend yield, we would have to contribute $875 of fresh capital to get this kind of dividend increase. Although $35 isn’t a huge raise, a raise is a raise.
Financial Independence Journey Progress
The key reason that we invest in dividend growth stocks is that we aim to receive more dividend income than our expenses in the near future. When this happens, we can call ourselves financially independent. Therefore, we track our dividend income to expenses ratio quite closely.
In November, despite a lower than usual necessities spending, we spent more money on Give and Play accounts. The $1,849.95 in dividend income was able to cover 46.1% of our November monthly spending. It too bad we weren’t able to manage to hit over 50% of dividend income to expenses ratio.
Our goal for 2019 is to have a dividend income to expenses ratio of over 50%. As of now, it looks like is is very unlikely to hit this goal.
After eleven months, we received a total of $20,956.92 in dividend income. It felt fantastic to break the $20,000 in annual dividend income milestone. Woohoo! Our dividend income goal for 2019 is $23,000. This means we need to receive at least $2,043.08 in dividend income in December. Looking at our dividend income history, I am very optimistic that we can pull this off. At the same time, I am a bit nervous that we won’t be able to pull it off. I guess we will find out next month.
Dear readers, how was your November dividend income?