Welcome to another monthly dividend update. Since I started this blog in July 2014, I have been posting these updates each month. It’s hard to believe that this little blog has been in existence for over seven years already. Wow, time sure flies!
Why do I continue to post these updates every single month? One, I’d like to show readers that it is possible to build up a sizable dividend portfolio that generates passive income over time. Rome wasn’t built in one day so neither should your dividend portfolio. Second, I’d like to demonstrate that it is possible to eventually live off dividends. Finally, I want to keep us accountable and stay true to our long term investing strategy. With so many different types of investment options available, more than ever, it is important to remember to get in line and stay in line.
Despite a very volatile April and our dividend portfolio dropping over $65k in value at one point, our dividend portfolio continues to work hard for us, generating passive income. The regular dividends help us to stay focused and avoid emotional selling – we can collect dividends and wait for stock price to recover. This is one of the many reasons why dividend growth investing works for me. Having said that, even with my years of DIY investing experience, from time to time, I have to remind myself to ignore the short term noises, focus on time in the market, and have a long term view. Considering the market has been quite bearish throughout May, having the long term view is even more important than ever.
On the home front, we were pretty busy throughout April.
Mrs. T and I spent quite a bit of time in our backyard garden. We took out A LOT of garden weeds so Mrs. T could start planting. Luckily, I didn’t need to shovel any manure or soil this spring (I shovelled 13 yards of dirt/manure last year).
Mrs. T has been germinating seeds indoors since February and the plants were finally ready to be planted outside.
Since September, I have been on double duty as a Scouter for both the Beaver Scouts colony and the Cub Scouts pack. This meant I played an important role in teaching kids between ages 5 to 11 various scouting skills. Having gone through Scouts as a kid myself and earned awards like the Chief Scout’s Award, the Queen’s Venturer Award, and the Duke of Edinburgh award, I really appreciate all the important skills I had learned from Scouting. I also had some very fond memories from scouting as well.
It is my hope that I could share some of these valuable skills and experiences with kids in my groups.
After reading Die with Zero, Mrs. T and I have become even more conscious of what we want to spend our money on. So, one Saturday we surprised both kids by taking them to Cirque Du Soleil. We all thoroughly enjoyed the experience.
Dividend Income – April 2022
Enough with life updates and let’s get back to dividend income update, shall we? In April we received dividends from the following companies:
- Algonquin Power & Utilities (AQN.TO)
- BCE Inc (BEC.TO)
- Bank of Nova Scotia (BNS.TO)
- CIBC (CM.TO)
- Canadian Natural Resources (CNQ.TO)
- Capital Power Corp (CPX.TO)
- Dream Industrial REIT (DIR.UN)
- European Residential REIT (ERE.UN)
- Granite REIT (GRT.UN)
- Coca-Cola (KO)
- Power Corp (POW.TO)
- Rogers (RCI.B)
- RioCan REIT (REI.UN)
- SmartCentres REIT (SRU.UN)
- Telus (T.TO)
- TD (TD.TO)
- TC Energy Corp (TRP.TO)
- VICI Properties (VICI)
- Wal-Mart (WMT)
Payments from these 19 companies added to $4,283.52. This marked the second time this year we crossed the $4,000 dividend income per month milestone! I suppose the next key milestone for us is hitting $4,500 per month.
As you can see from the chart above, we’ve been tracking our dividend income before I started this blog. In fact, we’ve been tracking monthly dividend income for over 11 years. It is pretty amazing to see the overall upward trend. Looking at the chart, the monthly average trend line has really steepened over the last couple of years.
Compare April’s dividend income to last year’s, we saw a stunning 40.35% YoY increase! This is really incredible considering we’re already encountering the law of the big numbers. If you ask me, I’d say it will be extremely difficult to maintain such a high YoY increase for next year.
Out of the $4,283.52 received, only $281.87 was in USD with the rest in CAD. April was one of those heavy CAD months. Please note that we do not convert USD to CAD when reporting our monthly dividend income. This is to keep the math easy and avoid fluctuations in our monthly dividend income caused by changes in the exchange rate.
Like the previous months, the top five payers were significant contributors to the monthly dividend income. The top five payers for April were Algonquin Power & Utilities, TC Energy Corp, Bank of Nova Scotia, TD, and CIBC. These payments added to $2,733.88 or 63.8% of our April dividend income.
April 2022 Dividend Transactions
As mentioned earlier, the market was extremely volatile in the latter half of April, after the Fed and the Bank of Canada raised their respective overnight rates. The higher rates sent the market on a downward spiral.
I’ve seen quite some newish investors calling the recent volatility a total “bloodbath.” These investors probably have only started investing in the last five years or so and have been so used to the continued bull market. A 1% or 2% daily drop isn’t really a bloodbath. In fact, I don’t think a 5% daily drop should be considered a bloodbath. To me, one should really be using that word when the market drops 10% or more for more than a week or so.
Let’s not forget that it is normal to see volatility in the stock market. For investors like us who are still accumulating assets and building up their investment portfolios, we should be welcoming market drops and selloffs with open arms.
Why? Because market selloffs mean we can purchase stocks at a discount. The key, of course, is to invest in highly profitable companies that will continue to grow their revenues and dividends for years to come. As Warren Buffett said…
“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
With that mentality in mind, we added 26 shares of Bank of Montreal to our dividend portfolio and increased our annual dividend income by $138.32. To be completely honest, we purchased these shares in mid-April, before the market really went south. I wanted to add more BMO shares because BMO was underweight relative to the other five Canadian banks we own. Am I worried that BMO’s share price had gone down by over 5% since our purchase?
Nope, I’m not concerned at all. I know the Bank of Montreal will continue to generate billions of revenue each quarter at a profit margin of between 20 to 30%. Canadians will continue to bank with the Bank of Montreal, use credit cards from BMO, invest with BMO’s direct investing, and take out loans with BMO. In other words, I’m perfectly happy to hold BMO shares, collect dividends, and ignore the share price if the market were to shut down for 10 years.
Therefore, think long term, don’t freak out over the short term stock price movements.
Dividend Reinvestment Plan (DRIP)
Currently, the key that drives our dividend income growth is the injection of new cash. However, as our dividend income gets larger and larger, it is becoming increasingly harder and harder to grow dividend income by adding new cash alone. Naturally, we need to rely more on organic dividend growth and dividend reinvestment to grow our dividend income.
When it comes to dividend investing, we have a very simple strategy – whenever we invest in a company, we try to purchase enough shares to enroll in DRIP. We’d then dollar cost average via the dripped shares. We’d check the stock from time to time to see whether the company continues to have competitive compared to its peers. Keeping a dividend scorecard also is vital.
In April we were able to drip the following shares:
- 22 shares of AQN.TO (drip every quarter, by next quarter, should drip more than 22 shares)
- 3 shares of BCE.TO (drip every quarter)
- 6 shares of BNS.TO (drip every quarter, by next quarter, should drip more than 6 shares)
- 1 share of CM.TO (drip every quarter)
- 1 share of CNQ.TO (drip every quarter)
- 1 share of CPX.TO (drip every quarter)
- 1 share of ERE.UN (drip every month)
- 1 share of KO (drip every quarter)
- 5 shares of POW.TO (drip every quarter, next quarter should drip more than 5 shares)
- 1 share of RCI.B (drip every quarter)
- 1 share of REI.UN (drip every month)
- 4 shares of SRU.UN (drip every month)
- 8 shares of T.TO (drip every quarter, probably drip more than 8 shares by next quarter)
- 5 shares of TD.TO (drip every quarter, probably drip more than 5 shares by next quarter)
- 3 shares of TRP.TO (drip every quarter)
- 2 shares of VICI (drip every quarter)
Thanks to dividend reinvestment, we automatically added 65 more shares to our dividend portfolio in April and reinvested $2,880.44 of our April dividend income right away. For the remaining money that wasn’t invested immediately across the different accounts, we would wait for the dollar amount to reach over $1,000 before making a purchase.
More importantly, by adding 65 more shares throughout April, we added $125.83 toward our annual dividend income. At a 4% dividend yield, that’s equivalent to adding $3,145.87 worth of new capital.
In April, a number of companies that we own announced dividend increases:
- Procter & Gamble (PG) increased its dividend payout by 2.2% to $0.9133 per share.
- Costco (COST) increased its dividend payout by 13.9% to $0.90 per share.
- Johnson & Johnson (JNJ) increased its dividend payout by 6.6% to $1.13 per share.
- Apple (AAPL) increased its dividend payout by 5% to $0.23 per share.
These four dividend increases added $54.34 toward our annual dividend income. It may not seem much but $50 a month here, another $50 a month here, and 12 months later that’s an increase of $600! It’s pretty amazing how quickly the small dividend amounts add up over time.
After four months, our dividend portfolio has generated $14,443.07 for us. This is money that we earn regardless of what we’re doing. It’s pretty amazing to have our money working hard for us so we don’t have to.
Just how much progress have we made since we got serious with dividend growth investing around 2010? Well, the table below will demonstrate that having patience, staying true to your core investment strategy, and staying in the market do pay off.
And for those readers that prefer visual representation…
In four months, we have almost surpassed the dividend income that we receive for the entire 2017! I’m blown away at what five years of adding new cash, reinvesting dividends, and compounding can do.
To put our dividend income into perspective:
- Thanks to organic dividend growth and drips, on average, our dividend income is increasing organically by more than $200 a month so far in 2022.
- $8,626.61 out of $14,443.07, or 59.7% of the dividend income is either tax-free or tax-deferred.
- $14,443.07 of dividend income after four months is equivalent to earning $5.01 per hour, even when we’re sleeping! That’s $120.24 per day that our dividend portfolio is generating for us.
- After 18 work weeks, at 40 hours a week, our dividend income translates to $20.06 per hour.
We continue to be extremely appreciative of our dividend portfolio.
Dear readers, how was your April dividend income?