Wow, can you believe it’s already September 2021 and it’s time for another school year? Where did the time go? Since the Vancouver rainy season will soon be upon us, we have been trying to spend as much time as possible outside and enjoy the great outdoor.
So we camped at Gold Ears Provincial Park a couple of times in August. For one of the camping trips both my parents, my brother, sister-in-law, and their kid joined us. We haven’t done a big family trip together since the COVID-19 pandemic started so it was great to spend time with them.
When I was in my late 20’s, I used to do a lot of adventurous trips where I would hike or ski for hours and camp in the middle of nowhere. I guess those days are behind me or at least until both kids are a bit older. It would be fantastic to show them the BC backcountry in the near future when can carry some gear on their backs.
Just like the previous months, we have been busy with our backyard garden. We enjoyed harvesting produce from the garden and be somewhat self-sufficient. We’d often make meals with produce entirely from our garden and no store-bought items.
All the work that we put in the spring to expand our kitchen garden was definitely worth it! There are simply so many benefits of having your own kitchen garden.
Dividend Income – August 2021
Enough pictures, let’s talk about dividend income, shall we? In August 2021 we received dividends from the following companies:
- Apple (APPL)
- AbbVie (ABBV)
- Bank of Montreal (BMO.TO)
- Costco (COST)
- Dream Office REIT (D.UN)
- Dream Indsturial REIT (DIR.UN)
- Emera (EMA.TO)
- European Residential REIT (ERE.UN)
- Granite REIT (GRT.UN)
- H&R REIT (HR.UN)
- National Bank (NA.TO)
- Omega Healthcare (OHI)
- Procter & Gamble (PG)
- RioCan REIT (REI.UN)
- Royal Bank (RY.TO)
- Starbucks (SBUX)
- SmartCentres REIT (SRU.UN)
- Verizon (VZ)
In total, we received 18 dividend paycheques that added up to $1,776.26. Per the Canadian dividend calendar, February, May, August, and November are months with weaker dividend payments. So it shouldn’t come as a surprise that our dividend income for August was lower than $2,000. Given an excellent month in July, it is OK to have a weak dividend income month.
Out of the $1,776.26 received, $417.64 was in USD and the rest was in CAD, or about a 25-75 split. Please note, 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 because of changes in the exchange rate
The top five dividend payers for August were Royal Bank, National Bank, Omega Healthcare, Bank of Montreal, and Emera (not in order). These five payers accounted for 71.1% of our August dividend income or a total of $1,263.58. In other words, August’s dividend income was highly concentrated to the top five dividend payers.
Dividend Growth
A lower dividend income month meant we had a -1.45% year-over-year growth (YoY) compared to August 2020. Since we have made a bunch of changes to our dividend portfolio since last March, our monthly dividend incomes are still normalizing, especially for the weaker months.
Overall we are looking at an average 15.06% YoY growth after eight months. We need to continue to work on getting this average YoY growth closer to 20%.
Dividend Reinvestment Plans
As mentioned before, we try to keep dividend investing as simple as possible. Basically, we want to be owners of well-run and profitable businesses. The more people rely on the products these businesses produce, the better. To keep things simple and allow our portfolio to compound itself, we enroll in dividend reinvestment plans (DRIP) whenever we are eligible. This approach allows us to dollar cost average over time and purchases additional shares without paying any fees.
Furthermore, some companies provide DRIP discounts so you can get shares at a slightly discounted price (note: TD honours the DRIP discounts but Questrade doesn’t).
Despite a smaller dividend income month in August, we still managed to drip the following shares in our RRSPs, TFSAs, and taxable accounts:
- Bank of Montreal (BMO.TO) – 1 share
- Emera (EMA.TO) – 1 share
- European Residential REIT (ERE.UN) – 1 share
- National Bank (NA.TO) – 2 shares
- Omega Healthcare (OHI) – 3 shares
- RioCan REIT (REI.UN) – 1 share
- Royal Bank (RY.TO) – 2 shares
- SmartCentres REIT (SRU.UN) – 2 shares
We dripped 13 more shares in August and reinvested $834.53. In other words, we had a drip ratio of 46.98%. It’s not quite the above 50% drip ratio target that we have but it’s still pretty solid nonetheless.
Dividend Transactions
As I hinted in last month’s dividend income update, I have been considering closing out several positions. After reviewing my original investing thesis and examine the future market outlook, we have decided to close out the following positions:
- H&R REIT (HR.UN)
- Saputo (SAP.TO)
- Dream Office REIT (D.UN)
We closed out both H&R REIT and Dream Office REIT because both have a high percentage of their REIT portfolios in office properties. As the COVID-19 delta variant becomes more and more prominent and countries resume restrictions, I don’t believe workers will be heading back to offices any time soon. In fact, many high tech companies like Google and Apple have delayed their return to office target. Rather than continue to invest in office REITs, we decided to invest the money elsewhere.
We invested in Saputo many years ago, thinking that Saputo has significant advantages in the North American dairy market. However, this hasn’t been the case. Saputo’s stock price has been relatively flat for the last five years. Yes, Saputo has increased dividend payout for 23 straight years and a 20 year dividend growth rate of 15.7%, but the dividend growth in recent years has slowed. In fact, Saputo’s one year and three year dividend growth rates are below 5%. Considering a 2% dividend yield, both stock price growth and dividend growth simply don’t excite me anymore. Therefore, like HR.UN and D.UN, we decided to invest the money elsewhere.
With the money from the sale of the three positions and some new cash, we added the following stocks:
- 57 shares of TC Energy (TRP.TO)
- 51 shares of Enbrige (ENB.TO)
- 250 shares of Power Corp of Canada (POW.TO)
- 219 shares of SmartCentre REIT (SRU.UN)
TC Energy, Enbridge, and SmartCentre REIT are existing holdings. We decided to add more SmartCentre REIT because we think that the retail REIT sector will remain strong despite the pandemic. Even though online shopping has become more popular in recent years, people often prefer to shop in physical stores and get the merchandise right away rather than wait for shipping.
Power Corp is a management and holding company that focuses on financial services in North America, Europe, and Asia. Its core holdings are insurance, retirement, and wealth management and investment management. The company owns over 60% of Canada Life, IG Wealth Management, and Mackenzie Investments. It also owns 55.9% of Wealthsimple through Power Financial, Lifeco, and IGM. Since I’m bullish on Wealthsimple, I want to be an owner of its parent company. This is the exact same reason why we purchased BlackRock back in March.
For September, we will continue to monitor the market and add more shares of dividend paying stocks. Some of these stocks that I have been monitoring include Appel, Telus, Bank of Montreal, VICI Properties, and Realty Income Corp.
Summary
With eight months in the books for 2021, we have received a total of $20,109.65 in dividend income. This is absolutely amazing considering this is income that our money has generated without us having to lift a single finger.
To put things in perspective:
- After eight months or 243 days, we have earned $3.45 per hour so far in 2021.
- An hourly wage equivalent of $13.97 per hour (36 working weeks, eight hours per day, five days a week).
Both of these numbers have dropped slightly compared to last month but we are still ecstatic about how much work our dividend portfolio has been doing for us so we don’t have to.
Dear reader, how was your August dividend income?
More like $1 million since it is a combination of dividends and growth. I like that approach.
Hi Bob,
Thanks for update and it’s truly amazing.
What’s your average yield for your portfolio? or put it another way, how much did you invest to achieve your current dividend income flow
Will
Hi Will,
Sorry, I don’t disclose the value of our portfolio for privacy reason. Now if you’re interested you can read a bit more here – https://www.tawcan.com/dividend-income-financial-independence-journey-july-2021-update/
Should be around $400-$500K
Let’s just say it’s way higher than that range…
Nice cracking the $20K mark in dividends for the year. Receiving $1776 in dividends on an “off” month is very impressive. Congrats! 🙂
Thank you My Dividend Dynasty. It’s nice to crack the $20k mark for sure.
“[Power Corporation] owns 70.1% of Wealthsimple through Power Financial, Lifeco, and IGM. Since I’m bullish on Wealthsimple, I want to be an owner of its parent company.”
Power’s ownership of Wealthsimple is lower now, due to new rounds of equity raising. The valuations were very good (the pie got bigger), but it did dilute POW’s percentage (smaller slice of a much bigger pie). From the Q2 report: “At June 30, 2021, Portage I, Power Financial and IGM collectively held, through a limited partnership controlled by Power Financial, an undiluted equity interest in Wealthsimple of 55.9% (74.9% at December 31, 2020), representing a voting interest
of 56.5% and a fully diluted equity interest of 42.6%.”
Thanks for pointing that out. I guess I looked up some old numbers. Regardless, POW owns Wealthsimple and owning POW shares is a great way to tab into the Wealthsimple empire.
“[Power Corporation] owns 100% of Canada Life, IG Wealth Management, and Mackenzie Investments.”
That will be a surprise to the shareholders who hold Great-West Lifeco shares and IGM shares, to know that their shares have been cancelled. Power has controlling interest, about 60% of the outstanding shares of those subsidiaries.
Ah, you’re right. I made a mistake that. See here – https://www.powercorporation.com/en/companies/organization-chart/
Takes for pointing that out.
Great purchases Bob. Love all those additions. Added $ENB earlier this month but waiting for pull backs on $POW and $TRP probably not happening soon.
Interesting that you sold your $SAP! Very true though that their earnings has been flat for sometime. Still holding $SAP.
Sometimes pullbacks might not happen so it’s better to invest the money rather than sitting on the sideline.
SAP has been an interesting one. I’ve thought they’d take off but they haven’t.
Just wanted to chime in and say I’m looking forward to hearing from you at the Canadian Financial Summit this month! Keep spreading the good word!
Thanks AL.
$20k in dividends would pay for my entire year’s worth of expenses forever into the future. Nice job! Can’t wait to see how you close out the remainder of the year, too.
Thanks David. 🙂
I added more enb in August as well, not that I wanted to as I already hold a pretty large position.
But it went on sale for a couple of days haha.
Congrats on the ENB purchase.
Hi BOB,
Any investment has 2 parts the Dividend and the Capital Growth.
You have detailed the Dividend part very well…..but seldom mention the Capital Growth .
To get a total picture would it be possible to include the capital Growth in your reports..
Keep up the good work….
Best…..nadir
Good point, but capital growth may mean disclosing our portfolio value. I suppose I can provide how much the portfolio has gained over the years? Thanks for the suggestion.
If you do, can you use Annual Rate of Return? I think it’s the best metric since it takes into consideration time.
For example, say I am up 50%, it doesn’t tell you if it’s 1 year or 10 years. Whereas an annual rate of return normalizes the number.
It’s pretty simple. Just use XIRR with your spreadsheet for your starting date. Then the best way is to track all “deposit” of new money in the various accounts and you have your Annual Rate of Return.
Yes, can use the annual rate of return to see what it’s like.
Great stuff Bob.
Love the pics. That camping trip looks fantastic. Like you said it’s great to see the kids just letting their imagination run.
Great garden pics that kale forest is something else!
Great income and nice pickups. personally I still prefer retail shopping vs online.
keep it up
cheers!
Thanks Rob. 🙂
Hi Bob,
Longtime reader, first time comment or. Good move on POW. I have been very happy with the exec leadership, returns and div increase since taking a position last year. I am also bullish on wealth simple and expect it will be highly sought after by one of the big 5 in years to come. Thanks for all your content
Cheers
Josh
You’re very welcome Josh.
The only slight concern is the recent National Bank offering commission free trades. If the other banks following, I wonder if Wealthsimple will lose some customers. We’ll have to wait and see. 🙂
National Bank offering commission-free trades?!?! How did I not hear about this? Investigation required!
They announced it a few weeks ago but I’m not sure if it has been implemented yet or not.
Desjardins in Quebec also offer free trades. So both discount brokers mosty in Quebec have free trades. Will the other big banks compete with them and bring us free trades.
As of note, I got RBC Direct Investing to match Qtrade on trade fees due to my holding size and what I could have received at Qtrade.
If you have a decent size portfolio (ie over $500K), you should try to negotiate. However, a lot of my readers with TD Direct Investing had no luck.
Great trip with the family,great garden,great past trips and great investing!Keep up the good work!
One question.
If and when we have a magor pullback in the market,what will be your plan?Close your eyes and hang in or rework your portfolio?
Thank you.
If and when we have a major pullback in the market we plan to buy more stocks. That’s exactly what we did back in March 2020.
Good plan!
Best of luck and health!
Hey Bob,
Impressive to see what you have accomplished. I also have been adding to OHI, TRP, ENB and CNQ. I have been waiting for a bit of a pullback for POW but maybe it’s just time to add to my position in that stock as well. I really try to add to positions with what is on my “to buy/own” list when the stocks are on sale…. always something down a few points to add 🙂
Not dripping mine in my taxable accounts as of yet as I am using 100% of my dividends to pay down my mortgage which now only has a few short years remaining but setting myself up to DRIP large when its paid off.
Great pics, wish I was as much as a green thumb as your guys are.
Keep well, thanks for your updates.
Charles
You’re welcome, Charles.
Yea I’ve been waiting for a POW pullback but there doesn’t seem to be one. I don’t want to wait on the sideline so I initiated a purchase.