Well, we went through another month of province-wide COVID-19 restrictions. Other than the kids going to school and me going out to shop for groceries every two weeks or so, we pretty much stayed at home for the entire month of January. Since this has been more or less our approach since September, we didn’t think too much about the restrictions. We are doing our part to prevent the spread of COVID-19 and bending the curve. With the restrictions extended indefinitely, looks like we’re in this new normal for a while.
The restrictions have been hard for my parents, though. They really missed seeing their grandkids. We have been getting more video and phone calls from my parents lately so they can talk to the kids. I think both kids also missed their grandparents and both have been asking when they can go over to my parents’ house to play. For now, we’re going to follow Dr. Henry’s orders and stay vigilant. Hopefully the restrictions will be lifted soon. With the vaccines getting approved and rolling out slowly, I really hope we will go back to the old normal soon.
We also have been supporting local businesses whenever we can. With the Hot Chocolate Vancouver Festival going on, we tried the different hot chocolate flavours from local cafes. Because of COVID-19 restrictions, it meant we had to enjoy the hot chocolates at home rather than at the cafes.
I was really pleased to learn the chef that used to work at my company’s cafeteria about ten or eleven years ago started a food delivery service recently. The chef, Ravi, was famously known for his butter chicken dish. Back when he was at my work’s cafeteria, whenever butter chicken was on the lunch menu, there would be a super long lineup, often as long as 20 minutes!
I was thrilled to find out about Ravi’s delivery service from my co-workers and placed a few orders of butter chicken recently. The butter chicken did not disappoint and it was exactly how I remembered! Mrs. T finally had a chance to taste Ravi’s highly praised butter chicken (I’ve been talking about it for years). If you’re in the Metro Vancouver area, definitely check out Chef Ravi’s Rendezvous food delivery service. Let’s do our best to support local businesses!
Dividend Income – January 2021
Back to the main topic of this post…dividend income. In January 2021 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)
- Dream Office REIT (D.UN)
- Dream Industrial REIT (DIR.UN)
- European Residential REI (ERE.UN)
- Granite REIT (GRT.UN)
- H&R REIT (HR.UN)
- Inter Pipeline (IPL.TO)
- KEG Income Trust (KEG.UN)
- Nutrien (NTR.TO)
- PepsiCo (PEP)
- Rogers (RCI.B)
- RioCan (REI.UN)
- Saputo (SAP.TO)
- SmartCentres REIT (SRU.UN)
- Telus (T.TO)
- TD (TD.TO)
- TC Energy Corp (TRP.TO)
- Vanguard Canada All Cap ETF (VCN.TO)
- Wal-Mart (WMT)
- iShares Ex Canada ETF (XAW.TO)
The 24 dividend pay cheques added up to $3,074.46. This was the highest amount of monthly dividend income we have received to date! After breaking our all-time-record in December, it was awesome to break the record again in January. It was also really cool to see our monthly dividend income to start with a three.
If you go through the 24 companies that paid us dividends in January, you’ll notice that majority of them were Canadian companies. January was a CAD dividend heavy month. As a result, we only received $208.61 in USD with the rest in CAD. Please note, we did not convert USD to CAD when reporting our dividend income. Instead, we used a 1 to 1 currency rate approach. Why? Because we wanted to avoid fluctuations in dividend income over time because of changes in the exchange rate.
The top five dividend payouts came from iShares Ex Canada ETF, TD, Telus, Bank of Nova Scotia, and CIBC (not in order). These payouts accounted for $2,082.04 or 67.7% of our January dividend income.
Compared to January 2020, we saw a YoY dividend growth of 36.66%! This is a fantastic YoY number to start the new year! It’s probably very unlikely for us to continue with the +30% YoY growth for the entire 2021 though.
If we can end 2021 with a 20% YoY growth I would be extremely happy.
A new year means new TFSA contribution limits. This year, Mrs. T and I could put in $12,000 in our TFSA. After we transferred the money in our TFSA on January 1st, we were busy looking for deals the first week of January.
One of my goals for 2021 is to simplify our dividend portfolio, so I have been looking at our holdings and determining which stocks we might close out. Another goal of mine is to decrease our portfolio’s weighting in the Canadian market.
While contemplating which stocks to close out, Brookfield Asset Management (BAM) announced on January 4th that they plan to acquire 100% of the units of Brookfield Property Partners and take BPY private. This announcement caught many BPY and BAM investors by surprise, myself included. Given that that BPY has performed poorly due to COVID-19, I thought the acquisition provides a good opportunity for us to close out our BPY position and invest the money elsewhere.
As hybrid investors that hold both dividend paying stocks and broad market index ETFs, Mrs. T and I have been holding Vanguard Canada All Cap Index ETF (VCN.TO) and iShares Ex-Canada Index ETF (XAW.TO). VCN’s top ten holding consists of many best Canadian dividend stocks like Royal Bank, TD, Canadian National Railway, Enbridge, etc. Since we already own many of these stocks in our portfolio, I wondered if it makes sense to hold VCN. After much consideration and a few discussions with Mrs. T, we decided to close out VCN and re-invest that money elsewhere.
Given we own several telecommunication companies, we have been considering closing out some of these holdings. I started comparison growth potentials between AT&T and Verizon. I feel that the growth potentials for Verizon are a bit limited because Verizon is limited to people subscribing to its telecommunication services (wireless, internet, TV, and phone services). Meanwhile, AT&T has a streaming service (HBO Max) which should allow for higher future growth. From a pure potential growth point of view, I feel AT&T is a better stock to hold.
As a result, we sold all of our BPY, VCN.TO, and VZ shares in early January.
We also started contributing to our RRSPs as part of the 2021 contributions. (Many people don’t know that contributions in the first 60 days can be used for previous and current year’s filing. Check out the ultimate RRSP guide for more information).
With the TFSA and RRSP contributions and the proceeds from selling of BPY and VCN.TO, we purchased the following stocks:
- TD (TD.TO) – I think TD is one of the top Canadian banking stocks to hold and we simply added more shares to increase our exposure to TD.
- Granite REIT (GRT.UN) – I like industrial REITs because online retailers like Amazon and Wayfair will always need warehouses to store their merchandise. Other companies like automobile manufacturers, automobile part suppliers, building material suppliers, brewers, etc will also need warehouses to store their products. I like particularly like Granite REIT because it has properties in Canada, the US, England, the Netherlands, Germany, Poland, Austria, and the Czech Republic. GRT.UN’s stock price has increased nicely since our original purchase in 2020. Although the dividend yield isn’t as high as other REITs, Granite REIT has a nine-year dividend increase streak with a ten-year dividend growth rate of 15.1%.
- Enbridge (ENB.TO) – I bought more Enbridge shares because I think Enbridge is undervalued. With the stoppage of Keystone XL, suddenly, existing pipelines are more valuable than ever. Enbridge will continue to generate money for many years.
- Algonquin Power & Utilities (AQN.TO) – we like renewable energy and want to increase our exposure to the renewable/utility sector. So we added more AQN shares.
- Fortis (FTS.TO) – Fortis is a steady dividend paying stock and the company has increased dividends for 46 years straight. Given the stable dividend payments and growths, I see Fortis as a bond replacement.
- iShares Ex-Canada ETF (XAW.TO) – XAW is our way to increase our international exposure without having to convert CAD to USD. We plan to continue to add XAW throughout 2021. Ideally, we would like XAW to be the top holding in our portfolio.
- Capital Power Corp (CPX.TO) – Capital Power is a new position for us. I like CPX because of its exposure to the renewable sector (see the buying trend here?). Capital Power owns approximately 6,500 megawatts of power generation capacity at 28 facilities across North America. Most of its facilities are relatively young, with an average age of 14 years and only 2% of the current generation portfolio is expected to retire in the next decade. Capital Power also has seven renewable projects under development. With a six year dividend increase streak, a five year dividend growth rate of 7.2%, and a dividend yield of around 5.5%, CPX appears to be a great Canadian dividend stock to hold in our portfolio.
These dividend transactions added approximately $1,500 net toward our annual dividend income.
In January, the following companies announced dividend increases:
- Metro (MRU.TO) increased its dividend payout by 11.1% to $0.25 per share.
- Canadian National Railway (CNR.TO) increased its dividend payout by 7% to $0.615 per share.
- Intel (INTC) increased its dividend payout by 5% to $0.3475 per share.
- Canadian Utilities (CU.TO) increased its dividend payout by 1.01% to $0.4398 per share.
These dividend increases added $35.18 toward our annual dividend income. Hopefully companies will continue to raise dividend payouts throughout 2021.
Dividend Reinvestments (DRIP)
To keep our investment strategy as simple as possible, we enroll in dividend reinvestment plan (DRIP) whenever we are eligible. Dripping allows us to re-invest the dividend payments right away. Adding more shares also allows us to dollar cost average over time: when the stock price is suppressed, we can buy more shares; when the stock price is too high, we’d get the dividend amount deposited and we can invest the cash elsewhere.
In January we were able to DRIP the following shares:
- 3 shares of AQN.TO
- 2 shares of BCE.TO
- 6 shares of BNS.TO
- 1 shares of CM.TO
- 1 share of D.UN
- 1 share of ERE.UN
- 2 shares of HR.UN
- 3 shares of IPL.TO
- 1 share of RCI.B
- 3 shares of REI.UN
- 2 shares of SRU.UN
- 5 shares of T.TO
- 7 shares of TD.TO
- 1 share of TRP.TO
- 7 shares of XAW.TO
Due to the recent market rallies and higher share prices, we couldn’t DRIP as many shares. But that’s OK, since it means we aren’t dripping shares when the prices are high. This would allow us to deploy the cash somewhere else.
Through DRIP, we added 45 more shares of various stocks. We reinvest a total $1,832.58. We dripped 59.6% of our January dividend income. Adding 45 more shares added approximately $31.86 toward our annual dividend income.
I can’t think of a better way to start a new year by setting a new all-time monthly dividend income record. We plan to continue to add new capital and purchase more dividend paying stocks throughout 2021. So hopefully January won’t be the one time we broke our monthly dividend income record.
To put our dividend income to perspective…
- We earned $4.13 per hour so far in 2021. This means each day we’d earn $99.12, enough to have a nice meal for the four of us.
- At $40 per hour salary, our dividend income already saved us over 9 days worth of work!
Here’s to a great 2021!
Dear readers, how was your January 2021 dividend income?