Welcome to a new year of dividend income updates!
For those of you that are new, every month I provide a monthly dividend income update on this blog. This is my way to chronicle our financial independence journey. It also forces me to stay accountable with our living off dividends approach.
January saw us making our way back to Canada from Denmark. Fortunately, the return trip was relatively uneventful and we didn’t have to run to catch our connecting flight in Toronto.
While in Denmark, we enjoyed a lot of hygge in the form of coffee, cookies, and cakes. Kid 1.0 also learned how to build a birdhouse using different hand tools (under close adult supervision of course).
Two weeks after getting back from our Danish trip, we decided to hit the slopes. Thanks to a deal from StayVancouverHotels, we were able to stay in the fabulous Westin Bayshore for under $150 CAD a night and make the trip as a little staycation.
I was really pleased to see that both kids were skiing quite well. We plan to take them to Whistler before the skiing season ends.
Thanks to my Bonvoy Elite status, we were upgraded to a 1 bedroom suite and had a nice panoramic view of Coal Harbour.
Accommodation cost has gone up in the last year or so, so considering we also got a free breakfast buffet for two adults, a $150 staycation for the four of us was a really sweet good deal.
January also saw a big change on my job front – after months of shareholder, government, and regulatory body reviews & approvals, my company was officially acquired by an American company. While I have gone through quite a number of acquisitions, my company had always been the acquirer.
This, however, was my first time being on the other side.
Getting acquired meant many changes, including organizational changes and people getting let go. For me, it meant reporting to a new boss. While things seem to have stabilized for now, I wouldn’t be surprised to see more changes in the upcoming months.
Dividend Income – January 2023
Back to dividend income update, we received dividend paycheques from the following companies in January:
- Algonquin Power & Utilities (AQN.TO)
- BCE Inc (BCE.TO)
- Bank of Nova Scotia (BNS.TO)
- CIBC (CM.TO)
- Canadian Natural Resources (CNQ.TO)
- Capital Power Corp (CPX.TO)
- Dream Industrial REIT (D.UN)
- Granite REIT (GRT.UN)
- PepsiCo (PEP)
- 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 Ex Canada Global ETF (XAW)
The 17 dividend paycheques added up to $5,193.45. This has been the highest monthly dividend income ever for us.
A record-setting month! Woohoo!
Compared to January 2022, we saw a YoY growth of 17.60%. A very reputable YoY growth.
The goal this year is to receive over $49,000 in dividends. This means we need to maintain a YoY growth rate of 15.8% for the entire year to accomplish this challenging goal.
Out of the $5,193.45 received, $210.78 was in USD while $4,982.67 was in CAD, or about a 5-95 breakdown. Ideally, we’d like to increase our USD dividend over time. Please note that we do not convert USD to CAD when reporting our dividend income. This is our attempt to keep the math easy and avoid fluctuations in our monthly dividend income due to the constantly changing exchange rate.
January’s top five dividend payers were Bank of Nova Scotia, BCE, Algonquin Power & Utilities, TD, and iShares Ex-Canada International ETF (not in order). The total of these five dividend payers was $3,376.30 or about 65% of our January dividend income.
In January, the following companies we own announced dividend hikes:
- Metro (MRU.TO) increased its dividend payout by 10% to $0.3025 per share.
- Canadian National Railway (CNR.TO) increased its dividend payout by 8% to $0.79 per share.
- BCE (BCE.TO) increased its dividend payout by 5.2% to $0.09675 per share.
- BlackRock (BLK) increased its dividend payout by 2.5% to $5.00 per share.
These dividend hikes increased our forward dividend income by $186.06. At a 4% dividend yield, that’s the equivalent of adding $4,651.50 of new capital.
I was really happy to see four dividend hikes in January, hopefully, we will continue to see dividend hikes every month for the rest of the year.
Dividend Reinvestment Plan (DRIP)
To keep our investment strategy as simple as possible, we aim to purchase enough shares so we can enroll in DRIP. Enrolling in DRIP and being able to add new shares at each dividend payout allows us to take advantage of the powerful compounding effect.
In many ways, enrolling in DRIP allows us to dollar cost average over time – when the stock price is depressed due to market volatility or bad news, we can add additional shares at a lower price; when the stock price is inflated and the price is above the dividend amount we’re collecting, we simply don’t drip any more shares and can reinvest the money elsewhere.
In January, we dripped the following shares:
- 52 shares of AQN.TO
- 7 shares of BCE.TO
- 8 shares of BNS.TO
- 8 shares of CM.TO
- 1 share of CNQ.TO
- 1 share of CPX.TO
- 2 shares of REI.UN
- 5 shares of SRU.UN
- 10 shares of T.TO
- 7 shares of TD.TO
- 5 shares of TRP.TO
- 2 shares of VICI
- 30 shares of XAW
By enrolling in DRIP, we added 142 shares without paying any trading commissions. In case you’re wondering, the 142 shares added up to $4,137.18, or a DRIP ratio of 79.7%. Furthermore, because TD honours the DRIP discounts, it meant we added AQN, CIBC, and TD shares at a 2% price discount.
Readers will notice that we dripped a LARGE number of AQN shares. This was the last dividend payout before the unfortunate 40% dividend payout cut from AQN. The company has struggled quite a bit over the last few years and the share price is a reflection of the struggle. For now, we plan to hold AQN and continue to dollar cost average via DRIP. If the share price does eventually recover, we may consider selling some AQN shares.
The 142 dripped shares added $198.93 toward our annual dividend income.
In January, we added $384.99 toward our forward annual dividend income thanks to organic dividend growth and DRIP. At a 4% dividend yield, this is equivalent to adding $9,624.75 of new capital. In other words, thanks to organic dividend growth and DRIP, when we do invest $9,624.75 we can add another $384.99 toward our forward annual dividend income.
Do you believe in the power of organic dividend growth and DRIP? I sure do!
Like other years, most of our purchases usually happen in the 1st half of the year. This is because we usually save up money in the 2nd half of the year to allow us to max out TFSA contributions on January 1st in the following year.
We are doing the same approach this year.
In addition to the new TFSA contribution room, we had a large sum of cash to invest because all my restricted stock units (RSUs) were vested, as a result of my company being acquired.
So with the new TFSA contributions, money from the vested RSUs, and additional savings, we added the following shares in January:
- 172 shares of Brookfield Asset Company (BAM.TO)
- 128 shares of CIBC (CM.TO)
- 157 shares of TC Energy Corp (TRP.TO)
- 63 shares of Enbridge (ENB.TO)
- 30 shares of National Bank (NA.TO)
- 70 shares of Telus (T.TO)
- 57 shares of Bank of Nova Scotia (BNS.TO)
- 67 shares of TD (TD.TO)
- 66 shares of Royal Bank (RY.TO)
Phew, what a list!
The list above might not be a true reflection of the 5 stocks we plan to buy in 2023 I listed, but don’t worry, we will pull the buy trigger on those 5 stocks later this year.
In total, we added over $55,000 worth of dividend paying stocks throughout January and increased our forward annual dividend income by $2,836.21, or about 5.1% yield on cost.
Over $55,000 worth of purchases is A LOT of money for any household. Let me make it clear here, we do not have that kind of cash sitting around every month.
I will admit that we got lucky and the stars aligned in January to allow us to have a large sum of cash to invest. It’s very unlikely for us to pull this kind of large purchase again in 2023.
Dividend Income – January 2023 Summary
Well, 2023 started with a very loud bang and I’m extremely pleased to see that we had a monthly dividend income record.
To put things in perspective, $5,193.45 is equivalent of:
- $167.53 per day or $6.93 per hour
- $25.97 hourly wage, or $207.74 per day
It is absolutely amazing to have our money working hard for us so we don’t have to.
One month down, 11 months to go for us to hit the $49,000 dividend income goal for this year.
Dear readers, how did January treat you in terms of dividend income?