Dividend Income – Jan 2018 Update

Wow, January flew by! I can’t believe it’s already February. Here in Vancouver, January was an exceptional wet month. We had 249.4 millimetres (9.82 inches) of rain, making it the fifth wettest January on record. The previous record was set in January 2006 when 283.6 millimetres (11.2 inches) of rain fell on Vancouver. In case you are wondering, the normal amount for the month of January is 168.4 millimetres (6.63 inches). To put this into perspective, the annual rainfall for Phoenix is 204.22 millimetres (8.04 inches). No wonder there are so many Canadian snowbirds heading down to Phoenix in the winter.

Speaking of rain…here’s a Vancouver joke for you!

Vancouver doesn’t rain a lot…just twice a week. Once for 4 days, another for 3 days

This joke has some truth to it!!!

Fortunately, this kind of record rainfall in the city meant a crazy amount of snow up in the mountains, and I managed to head out to enjoy a fine day of kids-free-skiing.

 

View this post on Instagram

Happiness. 😀😁😀😁⛷️

A post shared by Bob Lai (@tawcan) on

Some of my outdoor friends have been enjoying wicked powder in the backcountry.

Looking good!!!

In January and the recent February days, there have been a lot of volatility in the stock market. Many people seem to be freaking out over the record stock market drops. If you are freaking out, please take a deep breath and read this article a couple of times. Once you have done that, you might understand why I tweeted out this on Feb 5th.

 

Moving along…

 

January Dividend Income

In January 2018 we received dividend income from the following companies:

  • Pure Industrial REIT (AAR.UN)
  • BCE Inc (BCE.TO)
  • Bank of Nova Scotia (BNS.TO)
  • Corus Entertainment (CJR.B)
  • CIBC (CM.TO)
  • Canadian Natural Resources (CNQ.TO)
  • Dream Office REIT (D.UN)
  • Dream Global REIT (DRG.UN)
  • Dream Industrial REIT (DIR.UN)
  • Enbridge Income Trust (ENF.TO)
  • H&R REIT (HR.UN)
  • Inter Pipeline (IPL.TO)
  • KEG Income Trust (KEG.UN)
  • MCAN Mortgage Corp (MKP.TO)
  • Nutrien Ltd (NTR.TO) – from Agrium shares
  • Prairiesky Royalty (PSK.TO)
  • Rogers (RCI.B)
  • RioCan (REI.UN)
  • SmartCentres REIT (SRU.UN)
  • Telus (T.TO)
  • TD (TD.TO)
  • TransCanada Corp (TRP.TO)
  • Domtar Corp (UFS.TO)
  • Vanguard Cana All Cap (VCN)
  • Ventas (VTR)
  • Vanguard All-World Ex Canada (VXC)
  • Wal-Mart (WMT)

We received a total of 27 paycheques in January 2018 that added up to $1,340.83. Talk about having a great start to the year! The highest monthly dividend income so far! Woohoo!

Out of the $1,340.83 received, $84.32 was in USD and $1,256.51 was in CAD. So January was a CAD heavy month when it comes to dividend income.

Please note, we use a 1 to 1 currency rate approach. Therefore, we do not convert dividends received in USD to CAD. We are ignoring 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 January 2018 were Bank of Nova Scotia, CIBC, TD, Telus, and BCE. Dividend payouts from these 5 companies accounted for 54.54% or $731.31 of our January dividend income.

 

Dividend Income Breakdown

We hold our dividend stocks in taxable accounts, RRSPs, and TFSAs. Every year, we maximize tax-advantaged accounts first before investing in taxable accounts.

We do this so we can be as tax efficient as possible. Why pay extra taxes when we can avoid them by utilizing these tax-advantaged accounts? It seems like a no brainer to me. This is why I am always shocked to hear people who are investing using taxable accounts when they have tons of RRSP and/or TFSA contribution rooms left.

For January 2018 dividend income, here’s the breakdown of the different accounts:

  • Taxable: $306.21or 22.84%
  • RRSPs: $317.87 or 23.71%
  • TFSAs: $716.75 or 53.46%

Effectively, only 22.84% of our January dividend income was taxable. We constructed our taxable accounts so we only receive from stocks that pay out eligible dividend income.

 

Dividend Growth

Compared to January 2017, we saw a very respectable YOY growth of 17.04%. I am very happy to see the YOY growth to be above 15%.

It will be interesting to see what the rest of the year holds.

 

Dividend Increases

In January, a number of stocks that we own in our portfolio announced dividend increase:

  • Omega Healthcare Inc raised its dividend by 1.54% to $0.66 per share.
  • Canadian National Railway raised its dividend by 10.30% to $0.455 per share.
  • Metro raised its dividend by 10.77% to $0.18 per share.
  • Chevron raised its dividend by 3.70% to $1.12 per share.
  • Visa raised its dividend by 7.69% to $0.21 per share.
  • Enbridge Income Fund raised its dividend by 7.13% to $0.1883 per share.

These announcements have increased our annual dividend income by $48.68.

At 3% dividend yield, that’s equivalent to adding $1,622.67 of fresh capital into our dividend portfolio.

 

Dividend Stock Transaction

As I hinted in our 2017 Year End Dividend Income Update, January was going to be a huge buying month for us. This is mostly because the additional $5,500 per person in TFSA contribution room. Once we maximized our TFSAs and making sure that our RRSPs are maxed out as well, we started making purchases in our taxable accounts.

Since the beginning of 2018, we have made the following transactions:

  • Closed out our Corus Entertainment position (115 shares in total)
  • Purchased 44 shares of Bank of Nova Scotia (BNS.TO)
  • Purchased 36 shares of Enbridge (ENB.TO)
  • Purchased 36 shares of National Bank (NA.TO)
  • Purchased 100 shares of Canadian Utilities (CU.TO)
  • Purchased 122 shares of Smart REIT (SRU.UN)
  • Purchased 22 shares of Laurentian Bank of Canada (LA.TO)
  • Purchased 50 shares of Emera (EMA.TO)
  • Purchased 50 shares of BCE (BCE.TO)
  • Purchased 100 shares of Magellan Aerospace (MAL.TO)
  • Purchased 29 shares of Vanguard All-World Ex Canada

Roughly $24.5k worth of transactions.

Or roughly $927.71 increase in our annual dividend income.

Phew!

Some thoughts…

 

Corus Entertainment Inc (CJR.B)

After the latest disappointing quarterly results, I began questioning Corus Entertainment’s ability to generate profits. This was the third quarterly disappointment in a row. The consolidated revenues decreased 2% for the quarter, and the consolidated segment profit decreased 7% for the quarter. At over 100% payout ratio, this was simply unsustainable. While the dividend yield is extremely high, the payout ratio indicates CJR.B is extremely risky to hold.

Since our purchase in July 2014, the share price has tumbled. Given that more and more people are cutting cable and moving to Netflix, I was not convinced that Corus Entertainment can recover to its glory days.

So I decided to bite the bullet and liquidated all of our CJR.B shares.

 

Bank of Nova Scotia, Enbridge, National Bank, Smart REIT, Emra, & BCE

I made these purchases to simply add more shares to our existing positions. All of these stocks are considered long-term holdings for us. With the share prices taking a hit due to the recent market volatility, I figured I might as well take advantage of the opportunity.

You can take a look at some of my reasoning behind considering these stocks here.

 

Laurentian Bank of Canada & Magellan Aerospace

I purchased a few shares of Laurentian Bank of Canada for the sole purpose to diversify within the Canadian banking space. LA is not as big as TD, RY, BMO, BNS, CIBC, or NA, but it does have a pretty decent dividend record. It also happens to be the cheapest Canadian bank from a PE analysis point of view. The share price has taken a hit due to concerns of high exposure to residential mortgages. As a long-term investor, however, I believe this is a good opportunity to initiate a small position of the company.

Magellan Aerospace Corp popped up when I was reviewing the Canadian Dividend All-Star list. I decided to purchase a full lot of MAL because I liked its dividend track record and that it’s in a very specialized sector. When a company is in a specialized sector, typically it is harder for a competitor to enter the sector. The MAL purchase was about $2,000 in, a small fraction of our dividend portfolio, but it provides us with some sector diversification. We will have to see how Magellan Aerospace Corp does in the next few years.

 

Conclusion

We started off the new year with a bang, receiving a total of $1,340.83 in dividend income. This is a fantastic result, considering in 2011 we only received about half of this amount for the entire year, and in 2014 we didn’t cross the $1,300 mark until the middle of March. In addition, we started the year with a major shopping spree and plan to continue adding new capital to our dividend portfolio. With 11 more months to go, 2018 is looking very bright.

Dear readers, how was your January dividend income?

 

You Might Also Like

33 Comments

  • Reply
    Jay @ The Expat Investor
    February 12, 2018 at 8:10 am

    Nice dividends coming in for the start of the year. Seem like you’re doing very good. That’s a lot of transaction for January. Keep up the good work.

    • Reply
      Tawcan
      February 13, 2018 at 10:11 am

      Yup, lots of transactions in Jan. Hoping to do a few more in Feb to take advantage of the market volatility.

  • Reply
    Rob @ Passivecanadianincome
    February 12, 2018 at 8:13 am

    Just awesome Bob. Great income and some solid buys. You threw down alot of cash and will be rewarded.

    Corus is getting spit on by everyone. Im even considering selling it with everyone knocking it.

    They are still a massive media powerhouse in Canada though.

    Keep it up
    Cheers

    • Reply
      Tawcan
      February 13, 2018 at 10:12 am

      Thanks Rob.

      Yes Corus is still a massive media powerhouse in Canada but the profitability is deteriorating. If they had decided to cut the dividend, I might have decided to continue to hold the stock. But at the current unsustainable yield, I’m out.

  • Reply
    Accidental FIRE
    February 12, 2018 at 8:24 am

    Great job Bob. I don’t have the time nor desire to research stocks like that and invest that way but I definitely respect folks like you who do. You’re killing it, kudos!

    • Reply
      Tawcan
      February 13, 2018 at 10:13 am

      Thank you Accidental FIRE. Index ETFs is a great way to go too, we are certainly doing that approach as well.

  • Reply
    Doug
    February 12, 2018 at 11:03 am

    Good job. You killing it with over 1,000 every month. We got very little rain and a spitting of snow here in the high desert of NM.

    • Reply
      Tawcan
      February 13, 2018 at 10:14 am

      I wouldn’t mind seeing some snow here in Van. It’s kinda nice… but maybe not like 6 months of the year lol.

  • Reply
    Mr. Tako
    February 12, 2018 at 12:03 pm

    I’m totally stealing that rain joke Tawcan! Whew, it’s nice to finally have a few dry days (even if it is really cold).

    Congrats on the 17% dividend growth! That’s pretty incredible. I’m hoping to maintain the same level of dividend income this year — we had a bunch of preferred share redemptions that are going to be hard to reinvest.

    Cheers!

    • Reply
      Tawcan
      February 13, 2018 at 10:14 am

      Thanks Mr. Tako. Gotta continue adding new money in the portfolio to generate that growth.

  • Reply
    gofi
    February 12, 2018 at 12:42 pm

    wow – incredible dividends, and congrats. Quick question – Have you thought of, or what dividend ETFs would you recommend? Curious why you haven’t taken the Vanguard Dividend Yielding ETFs route, and simplified your process – please respond in detail? 🙂

  • Reply
    Dividend Driven
    February 12, 2018 at 2:04 pm

    Congrats Tawcan! A $200+ increase year over year is fantastic for one month. The power of compounding with new purchases + dividend increases is truly amazing to see.

    • Reply
      Tawcan
      February 13, 2018 at 10:16 am

      Thanks Dividend Driven. Very happy to see the dividend increase. 🙂

  • Reply
    Tom @ Dividends Diversify
    February 12, 2018 at 3:54 pm

    Tawcan, You have been busy. Good job. Tom

    • Reply
      Tawcan
      February 13, 2018 at 10:16 am

      Thanks Tom, a busy month for sure.

  • Reply
    JC
    February 12, 2018 at 3:56 pm

    What another fantastic month Bob. Over $1300 for January and barring any catastrophes you should be well over $1k per month for 2018.

    • Reply
      Tawcan
      February 13, 2018 at 10:17 am

      Thanks JC, yup we should be well over $1k per month for 2018. Probably more like $1,200+ per month.

  • Reply
    dividendgeek
    February 12, 2018 at 6:41 pm

    Awesome month mate! Nice dividends. The number of companies paying you dividends …. WOW! Nice portfolio.

    • Reply
      Tawcan
      February 13, 2018 at 10:18 am

      Thank you dividendgeek.

  • Reply
    Mr. Groovy
    February 12, 2018 at 8:17 pm

    Love the skiing pictures. Canada sure is a beautiful country. Nice job on the dividends. Mrs. Groovy and I haven’t ventured into dividend stocks. All our dividends come from bond funds. Right now, we’re getting a little over a $1,200 a month. Not bad, but it could be much better. Perhaps if I keep coming to this site, I’ll learn enough to give dividend investing a try. Keep on trucking, my friend. Cheers.

    • Reply
      Tawcan
      February 13, 2018 at 10:18 am

      I’m jealous of my friends, looking at those backcountry pics. 🙂

      Wow $1,200 a month from bond funds is pretty impressive!

  • Reply
    Tessa
    February 13, 2018 at 8:00 am

    I think you should do an article on a stock market crash or an advice for ppl who are starting to invest in later stages of their lives.
    All this FI seems like a fluff for ppl who didn’t start investing early for whatever financial and family reasons.

  • Reply
    Dividend Income Stocks
    February 14, 2018 at 9:06 am

    Hey Bob! January was a great month for you. Congrats on the record income and that 17% YoY growth. I like how you relocated the capital to buy Banks, REITs, telcoes and utility stocks. That was a great move!

    • Reply
      Tawcan
      February 14, 2018 at 1:53 pm

      Thanks Dividend Income Stocks. 🙂

  • Reply
    DivHut
    February 14, 2018 at 4:11 pm

    That was a great start to 2018. As always, you have a nice long list of dividend payers spreading out your payments and growing. Those were some amazing powder photos. I never skied in true powder. The closest thing I got to do was ski in fresh man made snow in southern Calif! Keep up the good work!

    • Reply
      Tawcan
      February 15, 2018 at 11:11 am

      Thanks DivHut. Skiing in waist deep powder is a lot of fun, it’s also quite a bit of work too!

  • Reply
    Wealthy Content
    February 15, 2018 at 3:38 am

    Well done, very good showing. Great to see a consistent strategy is paying dividends (excuse the pun).

    • Reply
      Tawcan
      February 15, 2018 at 11:13 am

      Haha good pun, love it. 🙂

  • Reply
    freddy smidlap
    February 22, 2018 at 10:38 am

    i have canadian national rail in my bulletproof dividend portfolio, although i sold shares in real life. i’ll be swapping out exxon mobile in favor of roper (ROP). I have Brookfield Renewable on a watch list and PEGI is another american wind energy stock i’m watching. we have a lot of the same names it looks like.

  • Reply
    Chris
    March 4, 2018 at 8:33 pm

    Can you explain how you get dividend checks from Wal-Mart. I’m an extreme novice. We’ve had Wal-Mart stock for years. I assume our dividends are reinvested but the annual amount is very low.

    • Reply
      Tawcan
      March 6, 2018 at 12:15 am

      Hi Chris,

      Dividends from Wal-Mart get deposited in my broker account as cash every quarter. For discount brokers, typically you won’t be able to reinvest dividend unless you can buy a full share (synthetic DRIP). If you purchase shares through the transfer agent, you may be able to buy fractional shares (full DRIP). Best to double check your statements.

    Leave a Reply

    This site uses Akismet to reduce spam. Learn how your comment data is processed.