Dividend Income – August 2024 Update

It’s hard to believe it’s September already and we’re back to the typical school programming – school, Scouting, and other extracurricular activities. September usually means sunny but comfortable temperatures in the low 20s. Hopefully this is the case for this month and we won’t see any rain until late October.

I noted in my Q2 goals and resolutions update that I slacked off quite a bit during the quarter. To be specific, I gained a bit of weight from all the different work and personal trips I was on. So since getting back from Denmark and Iceland, I have been putting in the effort by working out and swimming regularly and taking advantage of the annual recreational pass we purchased in January. On the days that I was short on time, I would work out in the garage with my trusty 16 kg (35 lbs). I have also been watching what I eat. 

I’m pleased to report that I have made some progress in my overall fitness level. Although my weight hasn’t decreased much, I have noticed that my body is more toned with six-packs slightly visible. 

In August I did a quick three-day work trip to San Jose and San Francisco. My co-workers and I were very impressed with one particular high-tech company in San Francisco. The office was right next to the Oakland Bay Bridge with a spectacular view of the bay, and the company offered free snacks, breakfast, drinks, barista coffee, and lunch. You can even get free dinner too if you work late. 

From a quick look on the job board, the positions at this high tech company are very well paid. But San Francisco and San Jose have an extremely high cost of living (even higher than Vancouver). Talking to a few people from this company, they all live quite far from the office and have more than 1 hour plus daily commute each way. To me, the long commute time and long work hours are not worth the higher pay. 

At home, we have been busy tending our backyard garden, harvesting veggies, and making food.

Both kids also have been involved in different summer activities. We signed them up for online drawing classes. The classes inspired Kid 2.0 to draw her version of the Mona Lisa.

Kid 1.0 wanted to try sailing so we enrolled him in a week long sailing course with a local sailing club. He had a blast! I was envious of him getting such a fantastic opportunity to learn how to sail.

Dividend Income – August 2024

In August we received dividends from the following companies:

• Apple (APPL)
• AbbVie (ABBV)
• Bank of Montreal (BMO.TO)
• Costco (COST)
• Emera (EMA.TO)
• Granite REIT (GRT.UN)
• National Bank (NA.TO)
• Power Corp (POW.TO)
• Procter & Gamble (PG)
• Royal Bank (RY.TO)
• SmartCentres REIT (SRU.UN)
• Waste Connections (WCN.TO)

The 12 payments added to $3,450.05. This amount is lower than the rolling seven-month average of ~$5,000. It’s okay though because August is one of the lower dividend income months for us, mostly due to fewer companies paying dividends per the Canadian dividend calendar. 

Compared to August 2024, we saw a YoY dividend growth of 15.69%. To be honest, I was a bit surprised by this number because I was expecting around 10% YoY growth. 

The YoY dividend growth was mostly contributed by organic dividend growth and investing new cash in existing holdings in our dividend portfolio.

Dividend Hikes

Unfortunately, we didn’t see any dividend hikes in August. Dividend hikes have really dried up in June, July, and August as we only saw an increase of $11.13 in forward annual dividend income for these months.

Fingers crossed that September will be much kinder when it comes to dividend hikes. 

Dividend Reinvestment Plans (DRIP)

Many readers know that we utilize three key pillars to increase our dividend income – investing new cash, organic dividend growth (i.e. dividend hikes), and dividend reinvestment plans (DRIP). 

Before moving my self directed RRSP and TFSA from Questrade and TD Direct to WealthSimple Trade, we enrolled in DRIP whenever we are eligible. With WealthSimple Trade, we enabled fraction DRIP so all the dividends received are reinvested. With our other accounts (non-registered, Mrs. T’s TFSA & RRSP), we continue to enroll in DRIP whenever we’re eligible. 

By turning on the DRIP machine, we can take advantage of the magic of compounding. 

We dripped the following shares in August:

• 0.353 shares of Apple 
• 0.593 shares of AbbVie
• 5 shares of Bank of Montreal
• 0.05 shares of Costco
• 3.216 shares of Emera
• 0.487 shares of Granite REIT
• 6.249 shares of National Bank
• 0.559 shares of Procter & Gamble
• 5.438 shares of Royal Bank
• 7 shares of SmartCentre REIT
• 0.069 shares of Waste Connections

We automatically dripped 29.014 shares and reinvested $2,835.96 out of the $3,450.05 received. 

Thanks to DRIP we added $119.76 toward our annual forward dividend income. 

Stock Transactions 

Throughout August we continued what we have been doing since our financial epiphany in 2011 – earn money, spend less than we earn, and invest the money saved. 

Since I’m the type of investor who likes to do lump sum investments rather than spreading the money out across many months, we decided to deploy some cash and add more shares. 

We added:

• 94.862 shares of Canadian Natural Resources (CNQ.TO)
• 28.5496 shares of iShares ex-Canada international ETF (XAW.TO)
• 6.0079 shares of Waste Connections (WCN.TO)

Reasons for adding these shares:

CNQ: Although we have been getting out of pure oil producers over the years, CNQ remained in our dividend portfolio. We like CNQ because the company has shown a lot of resiliency throughout the COVID-19 global pandemic and its aftermath. CNQ’s share price has been doing well the last five years and adding more shares allowed us to increase CNQ’s weighting in our portfolio. 

XAW: We are hybrid investors, meaning we invest in both individual dividend stocks and index ETFs. Adding more XAW allows us to diversify outside of Canada. 

WCN: We like the garbage industry. One of my regrets is not investing more money in waste management about a decade ago. I believe Waste Connections will continue to outperform the market so adding more WCN shares makes sense to me. Ideally, we’d like WCN to make up between two to three percent of our portfolio. I would not have a problem if that number goes up to five percent. 

These three transactions added approximately $223.38 toward our forward annual dividend income. 

Some thoughts on our portfolio 

At the time of writing, we own 42 individual dividend stocks and 2 index ETFs. If you are curious about what we own, please check out our dividend portfolio for all the details. 

Ideally, we’d like to reduce the number of individual dividend stocks to 40 by the end of the year but we aren’t going to close positions simply for the sake of accomplishing this goal. We want to close positions and reinvest the money only when it makes sense. 

For the most part, we are happy with the dividend stocks we hold. However, I have been considering existing out of the REITs sector completely. 

We currently hold Granite REIT, VICI Properties, and SmartCentres REIT. All three have very enticing dividend yields, especially SmartCentre REIT (>7%). 

Although the dividend yields are quite high, the overall growth (i.e. total return) just hasn’t been there. While VICI Properties should provide some decent returns moving forward due to the lucrative real estate the company has in the Las Vegas strip, I am not 100% certain with Granite REIT and SmartCentre REIT. 

Don’t get me wrong, I continue to like Granite REIT and SmartCentre REIT. I especially like Granite REIT because the company provides valuable logistic warehouses and industrial properties. SmartCentre REIT is also interesting in the sense that many of its shopping centres are anchored by big names like Walmart with more than 45% of the rental income from its top ten tenants like Walmart, Canadian Tire, Loblaws, Lowe’s Dollarama, Michaels, Best Buy, and Sobeys. 

To make things more complicated, REIT performance is typically closely tied to interest rates. With interest rates expected to continue to go lower, the REIT share prices, in theory, should start to go up. 

Despite all that, a part of me simply can’t get over the low share price growth aspect of these REITs. 

We would take a big hit in our overall dividend income if we were to close out any of these REITs (a few hundred dollars to a few thousand). But total return will always win over dividend yield and income whichever way you slice it. It seems to make sense to take the short hits in dividend income for the long term gains. 

When it comes to adding to existing positions, we’re likely to continue to add the following:

• XAW: for global diversification
• National Bank: the #6 Canadian bank has been doing well compared to the other Big Five Banks
• Costco: warehouses are always busy whenever we visit. With the recent Costco membership fee increase (first since 2017), this will only increase their revenues (In 2023, Costco earned US$4.6 billion in revenue from membership fees)
• QQQ: for US market diversification purposes 
• BAM & BN: We continue to like Brookfield Asset Management and Brookfield Corporation because Brookfield is very well managed and continues to make excellent acquisitions.

Since we’re in the second of the year, we will focus mostly on saving money for next year’s TFSA and RRSP new contribution rooms. If we inject new capital, it would mostly be for opportunistic purposes.

Dividend Score Card – August 2024

Here’s our dividend score card for August 2024.

It’s too bad we didn’t add any forward annual dividend income from organic growth but that’s completely outside of our control. 

In 2023 we increased our forward annual dividend income by $2,491.14. So far in 2024, we are only totalling $1,250.03 so it would be nice to see a few more dividend hikes between now and the end of the year.

Summary – Dividend Income August 2024 Update

With eight months in the books, we have collected a total of $38,744.80. 

At the current pace, we should hit our goal of $55,000 in dividends by the end of the year, with a good chance of exceeding that amount. But per my thoughts of potentially closing out REITs, that will hit us in the dividend income amount and our dividend income YoY growth may stagger a bit as a result.

To put things in perspective, $38,744.80 is equivalent of:

• $158.79 per day or $6.62 per hour we’re earning thanks to our dividend portfolio
• $1106.99 per week or $27.67 hourly wage after 38 working weeks

Mrs. T and I continue to be grateful and appreciative of discovering financial independence and starting our own FI journey. After 13 years we have made significant progress but we’re not done yet.