Wow, it’s hard to believe January 2022 is done and we’re in February already. Hopefully 2022 doesn’t fly by this quickly.
Thanks to work giving me January 4th off, we enjoyed a fun day skiing with almost no crowd up at Grouse Mountain. Best of all, it was snowing all day so we got to ski on the fresh powder! It was nice to see that both kids were getting better on skis. They even tried the blue run a few times.
We are aiming to head out and ski a few more times before the season ends.
In mid-January, Baby T1.0 and I also enjoyed a day of snowshoeing with the Cub Scouts. Since the trail was mostly hard-packed, I ditched my snowshoes and hiked around with crampons. It was fun hiking around crampons and it certainly made me think of some of the mountaineering adventures I had in my 20’s.
Every year, Mrs. T and I would try out the different types of hot chocolate during the Greater Vancouver Hot Chocolate Festival. This year was no different.
Although the financial independence journey is about saving and investing money for the future, we believe it is vital to enjoy the present moment as well. Spending money isn’t the enemy, what you prioritize and the purpose behind the spending are what we need to focus on.
Note: For those that have contacted me via emails, I’d like to thank you for supporting this little blog of mine. I am always pleased to connect with readers but due to the large number of emails lately, I haven’t been able to rely as quickly and provide in-depth responses as I’d like to be. Please do not take offence if I wasn’t able to provide all the analysis you’re looking for.
For those readers that are looking for more in-depth and one-on-one guidance please feel free to take a look at the coaching service.
Dividend Income – January 2022
Ok enough pictures, back to dividend income shall we? In January 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)
- Capital Power Corp (CPX.TO)
- Dream Industrial REIT (DIR.UN)
- European Residential REIT (ERE.UN)
- Granite REIT (GRT.UN)
- PepsiCo (PEP)
- Rogers (RCI.B)
- RioCan REIT (REI.UN)
- SmartCentres REIT (SRU.UN)
- Telus (T.TO)
- TD (TD.TO)
- TC Energy Corp (TRP.TO)
- VICI Properties (VICI)
- Wal-Mart (WMT)
- iShares All World Ex-Canada ETF (XAW.TO)
These 19 dividend paycheques added up to a whopping $4,416.06!
Wow, wow wow! We surpassed the $4,000 monthly dividend milestone for the very first time and set a new monthly dividend income record! It is absolutely amazing to start the year off with a very strong monthly dividend income.
As you can see from the chart below, the monthly dividend income is trending upward quite nicely. We are starting to see a slight exponential growth in the last few years.
Compared to dividend income from January 2021, we saw a fantastic YoY growth of 43.64%. That’s right, over 40% growth. This was mostly contributed by a larger than expected payment from XAW.
Out of the $4,416.06 received, 229.19 was in USD and $4,186.87 was in CAD or about a 5-95 split. Long time readers will recall that we do not convert USD to CAD when reporting our monthly dividend income. This is to keep the math easy and avoid fluctuations in our monthly dividend income caused by changes in the exchange rate.
The top five dividend payers for January were Algonquin Power & Utilities, CIBC, Bank of Nova Scotia, TD, and XAW. These top five dividend payer amounts added up to $2,932.47 or 66.4% of our January dividend income.
January 2022 Dividend Transactions
We are always happy to see January 1 because that means new TFSA contribution limits. So on January 1st, we transferred $6,000 to each of our TFSA. We also transferred some additional money to the spousal RRSP and non-registered accounts for additional dividend stock purchases.
Some readers may recall that I recently wrote about the 6 stocks that I plan to add more of in 2022. With money in our TFSAs, spousal RRSP, and non-registered accounts, we purchased the following dividend paying stocks:
- 203 shares of Smart Centres REIT
- 64 shares of Granite REIT
- 320 shares of Enbridge
- 387 shares of Algonquin Power & Utilities
- 26 shares of Brookfield Rewewable Energy Corp
Roughly $37,000 was deployed throughout January and these purchases increased our annual dividend income by $1,970. Adding almost $2,000 toward our annual dividend income at the beginning of the year should help us with this year’s goal of $36,000 dividend income.
Some readers may wonder why we’re purchasing stocks when prices are so high. First of all, we believe in time in the market rather than timing the market. I would rather have most of our money invested in the market rather than sitting on the sideline waiting for a possible market drop or correction. Can you really predict accurately when a market drop or connection will happen? I sure can’t.
Most importantly, we can’t just look at stock price alone. Stock price alone doesn’t tell you whether a particular stock is expensive or not.
For example, consider stock A is trading at $5,000 while stock B is trading at $2. Is it fair to conclude that stock A is ultra-expensive and we shouldn’t invest in stock A by only looking at the stock price?
I don’t think so.
What if I tell you that stock A is trading at a price to earning (PE) ratio of 15 and stock B is trading at a PE ratio of 15.5? Does that change your perception that stock A is ultra-expensive? Sure it is still expensive relative to stock B but I would consider stock A “cheap” since it’s below a PE ratio of 20.
What if I tell you that stock A has a PEG ratio (PE divided by expected growth over 5 years) of 0.5 while stock B has a PEG ratio of 2. Which stock would you rather buy?
What if I tell you that stock A has a profit margin of 44% while stock B has a profit margin of 15%?
What if I tell you that stock A has $1B in cash and generates roughly $250M cash each quarter while stock B has $10M in cash and $35M in debt?
Which stock is more expensive? And which stock would you rather buy?
For me, it is a no-brainer that stock A provided more future growth and better profitability compared to stock B, despite trading at a price that’s 2500 times more than stock B.
So please, do not evaluate stock only on the stock price!
Dividend Reinvestment Plans (DRIPs)
When it comes to dividend investing, we try to keep things pretty simple by enrolling in dividend reinvestment plans whenever we are eligible. Once enrolled, we drip additional shares whenever we receive a dividend payout and allow the dripped shares to dollar cost average for us.
In January we dripped the following shares:
- 19 shares of Algonquin Power & Utilities
- 3 shares of BCE
- 5 shres of Bank of Nova Scotia
- 1 share of Canadian Natural Resources
- 2 shares of Capital Power Corp
- 1 share of European Residential REIT
- 1 share of Rogers
- 1 share of RioCan REIT
- 3 shares of SmartCentres REIT
- 8 shares of Telus
- 5 shares of TD
- 3 shares of TC Energy
- 2 shares of VICI Properties
- 19 shares of XAW
In total 73 shares were dripped and $2,970.61 out of the $4,416.06 received was reinvested immediately. This gave us a drip ratio of 67.3%.
For the remaining cash that wasn’t invested, we typically wait till there’s more than $1,000 in the account before making a purchase to keep the trading commission below 1% of the overall transaction cost.
By enrolling in DRIP we increased our annual dividend income by around $115 which is about a 3.8% initial yield.
I was very pleased to see a number of dividend payout increases throughout January:
- BlackRock (BLK) increased its dividend payout by 18% to $4.88 per share.
- Intel (INTC) increased its dividend payout by 2.9% to $0.365 per share.
- Canadian Utilities (CU.TO) increased its dividend payout by 1% to $0.4442 per share.
- Metro (MRU.TO) increased its dividend payout by 10% to $0.27 per share.
- Canadian National Railway (CNR.TO) increased its dividend payout by 19% to $0.7325 per share.
These five dividend increases added $114.85 toward our annual dividend income.
For the past two years, Canadian Utilities had only increased its payout by 1%. Although CU has had a 50-year dividend increase streak, the less-than-inflation payout increase may be considered as a selling indicator. Despite the high dividend yield and longest dividend streak in Canada, we may consider selling CU at some point and reinvest that money elsewhere.
Looking at the chart above, I can’t help but feel proud of how much progress we’ve made in the last ten years. In the first month of 2022, we have already exceeded the annual dividend income of both 2011 and 2012! We are also only about $1,000 short of the 2013 annual total.
I believe the chart is an excellent example of how powerful the dividend snowball is – by investing new capital, relying on organic dividend growth, and enrolling in dividend reinvestment plans, our monthly dividend income has skyrocketed from less than $60 per month to over $2,700 per month!
If you told me this was possible back in 2011, I would have thought you were insane. So for those of you that are just starting out with dividend growth investing, please do not get discouraged. It takes years to build up a sizable dividend income. Remember to stay focused and support each other along the long financial independence journey.
To put our 2022 dividend income in perspective…
- $5.93 per hour earning rate regardless of what we’re doing
- $27.60 per hour of working wage assuming 4 working weeks and 40 hours a week.
We feel blessed that our dividend portfolio is working hard for us so we don’t have to.
Happy investing everyone. How was your January 2022 divided income?