Dividend Income – April 2021 Update

It’s that time of the month once again where I provide a monthly dividend income update. For those readers new to this site, although technically we are financially independent, we decided to delay our FI journey. Instead of the typical 4% withdrawals from our portfolio, we are creating a passive income stream by holding top Canadian dividend stocks, US divided stocks, and international index ETF in our investment portfolio. When our passive income (i.e. dividend income) exceeds our annual expenses, we can call ourselves financially independent.

How much do we need to live off dividends? We estimate we need around $60,000 in dividend income per year. At a 4% dividend yield, that would mean we need to build a dividend portfolio worth $1.5M. Our plan is to hit this target in 2025 or earlier.

That’s our plan and we all know plan can change. But having a plan and reviewing our plan is better than no plans at all right?

Just like the past number of months, we stayed at home mostly to help prevent the spread of COVID-19. It’s hard to believe that I have been working from home for over a year already! I feel very grateful and fortunate that I can do my day-to-day job at home without heading to the office. I am eternally grateful for all the health and essential workers and their hard work throughout this global pandemic. I can’t imagine a world without them.

With sunnier weather in April, we were busy working in our backyard garden. We expanded our backyard garden this year to allow for more plants. A bigger backyard garden meant the need for more soil, so Mrs. T ordered eight yards of manure and the two of us (mostly me) were busy shoveling manure throughout the month.

Here are some pictures from the backyard garden. Based on experience from previous years, the backyard garden will be very green in the summer.

Tawcan backyard garden
The expanded backyard garden. Previously the backyard garden was only to the far right bean tower.
Straws on top of the potatoes. Also planted some potatoes in the bags.
The greenhouse is looking a bit sparse now… just wait till the summer
Tawcan backyard garden
We decided to grow celeries this year
Tawcan backyard garden
Garlic
Tawcan backyard garden
Mrs. T grew these onion plants from seeds
Tawcan backyard garden
Strawberry plants

We are very excited about this year’s harvest. It would be really cool if we can live off our garden’s production for a few months.

Dividend Income – April 2021

Back to the main topic of this post – dividend income. In April 2021 we received pay cheques from the following companies:

  • Algonquin Power & Utilities (AQN.TO)
  • BCE Inc (BCE.TO)
  • Bank of Nova Scotia (BNS.TO)
  • CIBC (CM.TO)
  • Canadian Natural Resources (CNQ.TO)
  • Capital Power Corp (CPX.TO)
  • Dream Office REIT (D.UN)
  • Dream Industrial REIT (DIR.UN)
  • European Residential REIT (ERE.UN)
  • Granite REIT (GRT.UN)
  • H&R REIT (HR.UN)
  • Coca-Cola (KO)
  • Rogers (RCI.B)
  • RioCan REIT (REI.UN)
  • SmartCentres REIT (SRU.UN)
  • Telus (T.TO)
  • TD (TD.TO)
  • TC Energy Corp (TRP.TO)
  • Wal-Mart (WMT)
Tawcan Dividend Income

In total, 19 pay cheques added up to $3,052.04. We almost beat our all-time monthly dividend income record! Hopefully in another quarter (July), we can receive over $3,100 in dividend income.

Out of the $3,052.04 received, $227.51 was in USD and $2,824.53 was in CAD. Please note, to keep things simple, we do not convert USD to CAD when reporting our monthly dividend income. I have been using this approach to avoid fluctuations in our monthly dividend income due to changes in the exchange rate.

The top five dividend payers were Algonquin Power & Utilities, TC Energy, TD, CIBC, and Bank of Nova Scotia (not in order). These top five dividend payouts accounted for $2,079.3 or 68.1% of our April dividend income.

Dividend Growth

Compare to April 2020, we saw a YoY growth of 19.84%. It’s not quite the +20% YoY growth that I’m aiming for but it’s still pretty decent.

Tawcan dividend income - April 2021 YoY growth

As our dividend income gets bigger, we start running into the law of big numbers. It will require larger and larger sums of money to sustain a +20% YoY growth. For example, getting a 20% YoY growth for $100 dividend income will only require an additional $500 at a 4% dividend yield ($20 extra at 4% dividend yield). But getting a 20% YoY growth for $30,000 dividend income will require $150,000 in new capital at a 4% dividend yield.

So as your dividend income gets bigger, it gets harder and hard to sustain the large YoY growth rate.

Dividend Transactions

Last month, we deployed over $20,000 to purchase dividend paying stocks and ETF. Not surprisingly, April was a much quieter month when it came to dividend transactions.

In April we purchased 51 shares of TC Energy (TRP.TO) and added $177.48 toward our forward looking dividend income.

We plan to continue to purchase more dividend paying stocks in May. With the market going higher and higher, it is getting harder to find attractive stocks to purchase. Here are some stocks we are keeping a close eye on:

  • Algonquin Power & Utilities (AQN.TO)
  • Telus (T.TO)
  • Pepsi (PEP)
  • TC Energy (TRP.TO)
  • Enbridge (ENB.TO)

I am debating whether it makes sense to close out our positions in Canadian Tire and Saputo and invest the money elsewhere. I am also considering getting rid of shares of underperforming REITs like Dream Office REIT and H&R REIT, then focus on retail and apartment REITs.

I guess I will have to do some analysis and go through some quarterly reports to decide our moves.

Dividend Reinvestment Plan (DRIP)

For the most part, we try to avoid touching our divided portfolio too much. Once we purchase a stock, we try to buy more shares so we are eligible to reinvestment dividends. Once that happens, we’d enroll in DRIP and put that investment on autopilot.

DRIP allows us to add more shares and dollar cost average our cost basis. Furthermore, dripping additional shares allows us to increase our dividend income.

In April we were able to drip the following shares:

  • 8 shares of AQN.TO
  • 2 shares of BCE.TO
  • 5 shares of BNS.TO
  • 1 share of CNR.TO
  • 1 share of CPX.TO
  • 1 share of D.UN
  • 1 share of ERE.UN
  • 2 shares of HR.UN
  • 1 share of KT
  • 1 share of RCI.B
  • 2 shares of REI.UN
  • 2 shares of SRU.UN
  • 5 shares of T.TO
  • 5 shares of TD.TO
  • 2 shares of TRP.TO

We managed to drip 39 additional shares in April and increased our annual dividend income by $76.74.

Due to the recent run up of Canadian banks, the dividends received from CIBC weren’t enough to drip any additional shares (we hold CIBC across different accounts). This is unfortunate but at the same time, this is OK. Dripping allows us to dollar cost average over time. When the stock price is low, we can drip additional share(s); when the stock price is high, we stop dripping share(s) to avoid buying shares at an inflated share price.

Dividend Increases

In April, the following companies announced dividend increases:

  • Procter & Gamble (PG) increased its dividend payout by 10% to $0.8698  per share.
  • Costco (COST) increased its dividend payout by 12.8% to $0.79 per share.
  • Johnson & Johnson (JNJ) increased its dividend payout by 5% to $1.06 per share.
  • Apple (APPL) increased its dividend payout by 7% to $0.22 per share.

These raises increased our forward dividend income by $65.27. It’s not a big amount but I will take a raise over no raise any time. At a 4% dividend yield, that’s like adding $1,631.75 new capital.

Summary

So far in 2021 we have received a total of $10,341.71 in dividend income. This means we have already exceeded our annual dividend income in 2015. It’s pretty neat to look at our dividend income progress over the years.

Tawcan dividend income - April 2021

We certainly have come a long way since 2011! Our dividend goal for 2021 is to receive over $32,000 in dividend income. If we can do that, it’d mean in ten years our dividend income would have increased by a a whopping 4,639%!!!

Annual dividend income - April 2021

To put our dividend income in perspective…

  • Our dividend income produced $3.59 per hour after four months in 2021.
  • Assuming I work at 40-hour work week, our dividend income would be equivalent of earning $14.36 per hour.

So what does that means? First, it means when we go to bed at night and have an eight hour sleep, our dividend income would generate $28.72 for us, enough to buy a few cups of fancy Starbucks coffee.

It also means that our dividend portfolio is generating almost enough income to match BC’s minimum wage of $15.20 per hour. But we are probably getting more money after tax overall since some of the dividend income is tax-free from TFSA and tax-deferred from RRSP.

Dear readers, how was your April dividend income?

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43 thoughts on “Dividend Income – April 2021 Update”

  1. How much more investment capital did you add each year, if any? I am guessing that your dividend income did not just increase by nearly 60% from 2013 to 2014 without any additional investment.

    Reply
  2. It’s surprising how leafy celery is. I guess in the grocery store they remove most of the leaves on top. Great job on the dividend income. $3K is a lot of passive income. And it’s an awesome year over year growth rate. I’m pretty sure you can hit your $32,000 goal by the end of 2021. 🙂

    My April dividend income came in around $1,500. I dripped 5 shares of TD as well so we probably have a similar position size of this bank in our portfolios. Although I risk selling 200 shares if TD goes above $90.

    Reply
    • Yes, I think grocery stores have removed move of the leaves on top. Thank you. April was one of those higher dividend months so it was nice to see the $3k dividend income. 🙂

      You’re doing well too Liquid!

      Reply
  3. Great update and excellent YoY growth!

    Your garden is quite impressive. We have a tiny one and my husband finally used some old windows to build a cold frame, and we have been enjoying our lettuce for a few weeks now. I am interested in your greenhouse and where you bought it. My husband and I were just thinking it might be wise to invest in one, as we will be home more often now.

    Reply
  4. Solid month Bob! It’s cool to see that dividend growth rate back up to a (nearly) 20% rate! Amazing growth. Good job putting those dollars to work!

    We’ve also run into the law of large numbers. At over $60k in dividend income a year, the name of the game is now about dividend raises for us. Moving the needle gets harder!

    Reply
  5. I own $4300 worth of ABT stock. This weekend, I received $16 in dividends from ABT. My question is whether I should keep ABT or look to buy something with more shares? Do you have stock positions that pay so little? Is it worth it among a larger portfolio of dividend paying stocks? I’m just trying to get advice on whether a stock, which may end up paying me $200/year in 20 years is worth keeping? Thoughts?

    Reply
    • Well ABT yields 1.54% so it’s not known for its dividend payments. What was your investment thesis for investing in ABT?

      We own Apple that yields way less (<1%).

      I can't answer the question whether you should continue holding or not. You gotta answer what your original investment thesis was and has this changed.

      Reply
      • I bought a diversified portfolio of stocks that pay dividends. Most are above 1% yield. I own Apple too.

        My question is not about ABT stock. That was just the example. My question is whether you hold smaller positions in your portfolio that will likely not make a big contribution to your overall income? Or, is it only wise to have larger holdings that will contribute $1000 in dividends per year? This has nothing to do with any specific stock.

        Reply
        • Typically lower yield stocks have higher dividend growth. So we’re holding those for the dividend growth. Our portfolio has a mix of high yield lower growth and low yield higher growth dividend stocks. Hope that makes sense.

          Reply
  6. Wow, you bought $20,000 of stock just in April? That’s a lot. Is that normal-ish or a one-time thing? I think we did a lot in April, but it was because we had to deposit it for tax advantages as it was getting near a tax deadline.

    Reply
  7. hi. i recently sold some old mutual funds and am changing my portfolio to dividend paying stocks. i,ve spent about half of my capital and am trying to figure out when to deploy the rest. any advice on how quickly i should spend the rest? given the high stock markets, im wondering if it would make sense to hang on to cash and wait for a dip. the only problem is that im missing out on the dividends. thoughts? thanks

    Reply
  8. I’ve never thought about the hourly rate of passive income. Ignoring the benefit of registered holdings, and assuming a typical 37.5 hour work week, Im around $30/hour.

    In April/May I bought some beaten up capital growth plays that I am hoping rebound as consumers return to the market. Truth-be-told it’s made me uneasy to move away from the dividend building model. Need to fix that.

    Reply
  9. Love your garden more than the dividend income!

    Congrats on an awesome $3K+ month! Love the progress you made over the past years. It is very impressive and inspiring! Keep up the amazing work! Hopefully, we can be where you are now in 5 years. Fingers Crossed.

    Reply
  10. Hi
    I like your dividend updates but also the pictures and news on your garden as well. Looks great, there will be a good harvest.
    Great companies in your portfolio and glad to have you as fellow shareholder in wonderful businesses like PepsiCo and Apple.
    As I‘ve read we have quite similar numbers, my wife and I target FI by end of 2024, by then we would like to see passive income cover our spendings, currently (in the last few years) being in a range of USD 50‘000-60‘000 per year. We are quite well on track but there is still some work to do.
    Looking forward to your next update and all the best.
    Cheers
    MyFinancialShape

    Reply
  11. For Algonquin Power & Utilities (AQN.TO), it has dipped recently so might be a good time to pick up some shares. I picked up some more recently but it’s dipped further into the $18 territory recently.

    Reply
  12. That’s a lot of strawberry plants! You could have your own “U-Pick” strawberry and make a few dollars and have people come and pick strawberries, lol.

    Is that tall stick thing for beans? It looks really tall, like 8 feet tall!

    Reply
  13. Great month and great garden! But, no tomatoes? You should think about adding some, they are not expensive, and are a delicious and healthy meals when making salads! Great job Bob!

    Reply
  14. Your savings rate continues to be VERY high buddy if you can buy 51 or so shares at will/on demand of stocks each month. Incredible work. Congrats! You’ll be financially independent in a few more years at this rate.

    Keep the garden photos coming!

    All my best,
    Mark

    Reply

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