Dividend Income & Financial Independence Journey Update – Apr 2019

It’s the beginning of the month and that means it’s my favourite time of the month – it’s time for the monthly dividend income update! For those of you who are new here, I am doing these monthly updates to keep us honest and demonstrate that it is possible to build up a sizable dividend portfolio so it generates sufficient dividend income to cover our expenses. When our dividend income and other passive income exceeds our annual expenses, we can call ourselves financially independent. Simple right?

Other than the occasional dividend stock purchases, for the most part, we don’t really keep too much attention to our portfolio value. We usually review the portfolio value every quarter when we do a net worth update. The stock market has been on an upward tick since January, so our portfolio value has grown quite a bit when we checked at beginning of April.

Thanks to a bit nicer weather, we have been busy doing yard works. Mrs. T has stated planting various vegetables in our backyard vegetable garden. We have also been sprouting new plants in our new indoor grow light garden as well. We are very much looking forward to harvesting time later in the summer. It is our goal to be more self-sustainable during the summer by eating produce from our garden.

Sprouting new plants in our new indoor grow light garden
Flowers in our front yard


Dividend Income

In April, we received dividend income from the following companies:

  • BCE (BCE.TO)
  • Bank of Nova Scotia (BNS.TO)
  • CIBC (CM.TO)
  • Canadian Natural Resources (CNQ.TO)
  • Dream Office REIT (D.UN)
  • Dream Industrial REIT (DIR.UN)
  • Dream Global (DGR.UN)
  • H&R REIT (HR.UN)
  • Inter Pipeline (IPL.TO)
  • KEG Income Trust (KEG.UN)
  • Coca-Cola (KO)
  • Nurien Ltd (NTR.TO)
  • Prariesky Royalty (PSK.TO)
  • Rogers (RCI.B)
  • RioCan REIT (REI.UN)
  • SmartCenteres REIT (SRU.UN)
  • Telus (T.TO)
  • TD (TD.TO)
  • TransCanada Corp (TRP.TO)
  • Domtar Corp (UFS.TO)
  • Vanguard Can All Cap ETF (VCN.TO)
  • Ventas (VTR)
  • Wal-Mart (WMT)

In total, we received 23 pay cheques that added up to $1,914.01. For the second month in a row, we received over $1,900 in dividend income. Nice!

Of the $1,914.01 received, $173.88 was in USD and $1740.13 was in CAD or about a 10/90 split. April was a month when we received majority of our dividend income in CAD currency. Please note, we use a 1 to 1 currency rate approach. We do not convert dividends received in USD to CAD. We are ignoring the exchange rate 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 April 2019 came from Telus, TD, Bank of Nova Scotia, CIBC, and BCE (not in order). Dividend payout from these 5 companies accounted for $1,146.37 or 59.9% of our April dividend income total.

Dividend Breakdown

Tax efficiency is very important to us. Therefore, each year we try to max out our TFSA and RRSP contribution rooms before contributing to our taxable accounts, as I outlined in the recent dividend FAQ. Between TFSA, RRSP, and taxable accounts, we also hold different kinds of dividend stocks – we only purchase US listed dividend paying stocks in our RRSPs; REITs and income trusts in our TFSAs and RRSPs; and Canadian dividend stocks that pay eligible dividends in our taxable accounts. The plan is to pay as close to $0 in income tax when we are financially independent and living off our dividend income.

For April 2019, here’s the breakdown of the different accounts:

  • TFSA: $844.13 or 44.1%
  • RRSP: $515.02 or 26.9%
  • Taxable: $554.86 or 29%

Effectively only 29% of our April dividend income was taxable and the amount is split between Mrs. T and I.

Dividend Growth

Compared to April 2018, we saw a YoY increase of 23.85%. While this wasn’t as good as the 38.01% that we saw in last month, it was still pretty awesome considering the growth was still above 20%. As mentioned in my previous post, we are starting to face the law of large number, so it is becoming increasingly more and more difficult to sustain a YoY growth rate of more than 15%.

The total dividend income that we received up to April 2018 was $5,679.13. After 4 months in 2019 we have collected $7,207.61. This means we have realized a 26.9% YoY so far. If we were able to keep up such growth rate up for the entire year, we would end up with over $23,500 of annual dividend. It would be nice to collect over $23,000 in dividend income, but we’ll have to wait and see whether we can sustain such a high YoY percentage for the entire year.

Dividend Increases

In April a few of the stocks that we own announced dividend increases:

  • Procter & Gamble raised its quarterly dividend by 4% to $0.7459 per share.
  • Johnson & Johnson raised its quarterly dividend by 5.56% to $0.95 per share.
  • Apple raised its quarterly dividend by 5.5% to $0.77 per share.
  • Unilever raised its quarterly dividend by 6% to €0.4104 per share.

This added $40 toward our annual dividend income. At 4% dividend yield, that meant we saved ourselves from needing to add $1,000 of fresh capital in our dividend portfolio.

Dividend Stock Transactions

In April, we were “relatively” quiet on the dividend stock transaction front compared to March. We only purchased 3 stocks.

  • 157 shares of iShares all world ex Canada index ETF (XAW.TO)
  • 27 shares of Bank of Nova Scotia (BNS.TO)
  • 19 shares of Canadian National Railway (CNR.TO)

These transactions added approximately $220 toward our annual dividend income.

There are a few stocks that are on my radar, but we haven’t pulled the buy trigger yet. These stocks are: Bank of Montreal (BMO.TO), Fortis (FTS.TO), SmartCentres REIT (SRU.UN) and Metro (MRU.TO). I plan to continue monitor these stocks and see if there are buying opportunities.

Financial Independence Journey Progress

The $1,914.01 dividend income received in April was able to cover 28.9% of our total spending in April. The ratio was really low this month and to be honest, it was very disappointing to see such a low dividend to expenses ratio. However, our April expenses was higher than usual for a reason though – we had many planned expenses. Some of these planned expanses included: a regular maintenance for our only car, we purchased a new mattress, a kids-free stayaction, Mrs. T and I attended a weekend marriage course and stayed in Vancouver the entire weekend, we ate out a bit more than usual (visitors, staycation, the weekend course, etc), and we signed the kids up for a few summer camps.

If we look at our necessities spending, the April dividend was able to cover 57.1%. In other words, most of the extra expenses this month were non-necessities.

Given that we like credit welcome points (i.e. travel hacking), we applied new rewards credit cards ahead of time and charged these planned expenses. As a result, we will be getting the welcome bonus points soon. Applying new credit cards and getting welcome bonus points when we anticipate large expenses is exactly how we travel hacked our way to Maui last year and saved ourselves over $10,000.

Summary

After 4 months in 2019, we have received $7,207.61 in dividend income. If we use a $40 per hour rate ($83,200 annually), that would mean we have been able to save ourselves almost 180 hours worth of work or an equivalent of over 4 weeks. It’s a really nice feeling to know that our money is working hard for us, so we don’t have to.

For the month of May, we plan to continue to save money and purchase more dividend paying stocks and index ETFs. Hopefully the market will turn volatile, so we can find some buying opportunities to deploy cash on hand.

How was your April dividend income? Did the growth live up to your expectation?

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24 Comments

  • Reply
    Passivecanadianincome
    May 13, 2019 at 8:29 am

    Just awesome Bob.

    Congrats on the start of the garden too! Normally may 24 weekend we can plant veggies but its been so cold here, Ill probably delay it a week or 2.

    1900 in dividend income is huge man, congrats!

    Got to love how much that snowball will grow now. Do you drip those stocks or deploy the cash as your choose?

    keep it up. Got to love seeing your progress.
    cheers

    • Reply
      Tawcan
      May 13, 2019 at 9:27 am

      Thanks man. We’ve been “planting” indoor for a while now. Very excited about harvest later this year.

      We DRIP quite a few stocks and deploy the cash once we have some sitting on the sideline. 🙂

  • Reply
    DivHut
    May 13, 2019 at 10:41 am

    Amazing job for the month. Your dividend portfolio continues to generate some serious passive cash each month with very sizable year over year growth too. Keep it going. You mentioned that 5 companies accounted for more than half of your income for the month. Do you plan to further diversify your income generation so as to not be too reliant on just a handful of stocks for the majority of your income?

    • Reply
      Tawcan
      May 13, 2019 at 1:21 pm

      Thanks DivHut. Yea we do plan to further diversify our income generation but the Canadian banks are pretty stable when it comes to dividend income payouts, so I’m not too worried.

  • Reply
    Mr. Tako
    May 13, 2019 at 11:03 am

    Looking good Bob! Solid dividend growth! Our income was lower than yours last month, but my portfolio is a lot lumpier in its payouts than yours. We’ll catch up soon! 😉

    • Reply
      Tawcan
      May 13, 2019 at 1:22 pm

      Thanks Mr. Tako. Haha, it’ll be a while until we catch up to your dividend income level. 😉

  • Reply
    xrayvsn
    May 13, 2019 at 11:53 am

    Does Canadian dividends get distributed monthly? Your month to month dividend returns are relatively stable.

    My portfolio, like Mr. Tako said above, seems a lot more “lumpier” as divided payouts tend to be very large at the end of every quarter (March, June, Sept, Dec) than the other months. So dividend returns are way more erratic appearing.

    To be honest I prefer your setup once I am in retirement/decumulation phase so that it would be a little bit more constant (but hey I will take it any way I can get it I guess 🙂 ).

    • Reply
      Tawcan
      May 13, 2019 at 1:24 pm

      Good question, it was a pure coincidence that our monthly to month dividend incomes are relatively stable. I think it has to do with the fact that we own a bunch stocks that pay monthly dividends, so they create a nice base. And just so it happens, the companies that pay dividends quarterly are spread out across rather than concentrated at specific months. Again, we didn’t “create” our dividend income this way, it was a pure coincidence.

  • Reply
    Doug
    May 13, 2019 at 5:27 pm

    Solid numbers again. You will hit that awesome round number of $2000.00 give or take for whatever currency rate is lol.

    • Reply
      Tawcan
      May 14, 2019 at 9:45 am

      Thanks Dough. Should be able to hit the $2k mark later this year I think.

  • Reply
    Frugal Fortunes
    May 13, 2019 at 8:01 pm

    Seeing the garden pictures takes me back… I live in the heart of Baltimore city now and can’t wait to move back to the countryside. I gardened a lot growing up and that taught me a lot about delayed gratification (and sustainability). It’s a powerful lesson that plays into successful investing.

    • Reply
      Tawcan
      May 14, 2019 at 9:46 am

      Mrs. T grew up on a farm, so she loved growing things in the garden. 🙂

  • Reply
    Buy, Hold Long
    May 14, 2019 at 1:51 am

    Wow, that’s awesome, you’re absolutely killing it!

    • Reply
      Tawcan
      May 14, 2019 at 9:46 am

      Thank you, Buy Hold Long.

  • Reply
    Odysseus
    May 14, 2019 at 7:56 am

    Hi Bob,

    Congrats on the dividends received in April and in 2019 so far. It is nice to see that in less than 10 years you are receiving per month 3x more than you received durin the entire year of 2011.

    Your garden Looks very nice. Besides the basil, what other herbs do you cultivate? I tried basil, parsley and Rosemary but I did not succeed for long :/

    All the best.

    Cheers!

    • Reply
      Tawcan
      May 14, 2019 at 9:48 am

      Thanks, that’s a cool way to see it, that in less than 10 years we are receiving per month 3x more than we received during the entire year of 2011. It’s nice to see for sure. 🙂

      Besides basil, we have oregano, cilantro, parsley, rosemary, and thyme in the garden.

  • Reply
    Max Out of Pocket
    May 14, 2019 at 5:23 pm

    Hi Bob,

    Putting up some great growth! My wife is Canadian (we live in the states) and I have always been interested in those bank stocks! I remember reading about them years ago and thinking they sounded pretty solid. Vancouver is on our list to visit one day. We went to Banff a few years back and did drive over to BC (Yoho?) just to say we did it but it was hardly a visit. Anyway – thought I would drop you a note and say hello! Have a good Tuesday!

    • Reply
      Tawcan
      May 15, 2019 at 1:28 pm

      Thank you Max Out of Pocket. Banff is very pretty, you definitely should come and check out Vancouver one day.

  • Reply
    Dividends Down Under
    May 15, 2019 at 5:21 am

    Awesome work Bob.

    After following you for several years now it is pretty great to see how much progress you’ve already made in those years.

    I hope you and Mrs T are extremely proud of what you’ve built so far and you should give yourselves a big pat on the back for how much you have actually achieved in less than a decade.

    • Reply
      Tawcan
      May 15, 2019 at 1:28 pm

      Thank you Dividends Down Under. We are very happy and proud of what we’ve built so far.

  • Reply
    My Dividend Dynasty
    May 15, 2019 at 2:01 pm

    Congrats on another month of impressive numbers! Nearly $2K and an amazing 24% YOY growth! Keep it up! 🙂

    • Reply
      Tawcan
      May 16, 2019 at 9:17 am

      Thank you My Dividend Dynasty.

  • Reply
    FindependenceCanada
    May 16, 2019 at 5:15 pm

    Been following for a long time, first time commenting though. Great to see you progressing to the level you’re at now. It’s posts like these that keep me motivated to grow my dividend portfolio. Thanks for your work.

    • Reply
      Tawcan
      May 17, 2019 at 7:22 am

      Thank you for commenting for the very first time. 🙂

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