Dividend Income – July 2018 Update

It’s hard to believe that July is over and August is already upon us. Time sure passes by when you are having fun!

For the first half of July, Mrs. T, the kids, and I were busy tending our backyard garden. It felt really good that all the hard work we did in the spring was paying off as we were harvesting lots of fresh veggies and produce. Growing our own veggies has been a very worthwhile and humbling experience.

Garlic harvest

Beets

Inside of our little greenhouse

Tomatoes

Cucumber

In the garden jungle

Nice harvest from the garden. Red currant, black currant, raspberries, and strawberries.

In the latter half of July, we hopped on a plane to go visit family and friends in Denmark. We’ll be spending over a month in Denmark. Having been to Denmark many times (7th time for me), it is now feeling like a second home. It’s also nice to have some authentic Danish food that we typically don’t get in Canada.

Unfortunately, that meant we couldn’t enjoy all the veggies from our garden. Hopefully, when we get back at the end of August, there will be a ton of veggies waiting for us still.

shrimp smørrebrød (open face sandwich)

salmon smørrebrød and pickled herring smørrebrød. Yum!

I’m starting to understanding a bit more Danish but there’s a long way before I can be considered as fluent in Danish. It’s funny because Baby T1.0 is completely fluent in Danish and Baby T2.0 can understand Danish (and speak a little bit) just fine. I need to step it up!

July Dividend Income

In July we received dividends 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 Global REIT (DRG.UN)
  • Dream Industrial REIT (DIR.UN)
  • Enbridge Income Trust (ENF.TO)
  • Evertz Technology (ET.TO)
  • H&R REIT (HR.UN)
  • Inter Pipeline (IPL.TO)
  • KEG Income Trust (KEG.UN)
  • Coca-Cola (KO)
  • Nutrien (NTR.TO)
  • Prairiesky Royalty (PSK.TO)
  • Rogers (RCI.B)
  • RioCan (REI.UN)
  • SmartCentres REIT (SRU.UN)
  • Telus (T.TO)
  • TD (TD.TO)
  • TransCanada Corp (TRP.TO)
  • Domatar Corp (UFS.TO)
  • Vanguard Canada All Cap (VCN)
  • Ventas (VTR)
  • Vanguard All-World Ex Canada (VXC)

In total, we received $1,594.35 from 25 companies in July 2018. Although we didn’t break any monthly dividend income record in July, like what we did for 5 out of 6 months prior, $1,594.35 was the second highest amount received ever! That by itself was very encouraging to see.

Compared to the previous quarter (April), $1,594.35 was only a small increase. The increase was mostly contributed by organic dividend increase and DRIP.

Out of the $1,594.35 received, $141.78 were in USD and $1,452.57 were in CAD. Or about a 10-90 split. If you are a long time reader to our monthly dividend income reports, you know that 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 July 2018 were Bank of Nova Scotia, Coca-Cola, TD, Telus, and CIBC (not in order). Dividend payouts from these 5 companies accounted for 47.9% of our July dividend income, or $764.32. In order words, the top 5 payers contributed significant amount of July dividend income. While we like to diversify our dividend income source, sometimes it’s unavoidable to have a high concentration from certain companies.

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.

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

  • Taxable: $437.31 or 27.4%
  • RRSPs: $427.11 or 26.8%
  • TFSAs: $729.93 or 45.8%

Having 73.2% of dividend income in TFSAs and taxable accounts meant we could easily assess the money if we had to start utilizing our dividend income to cover everyday expenses.

As a reminder, we only hold US dividend paying stocks in our RRSPs to avoid the 15% withholding tax. If we were to hold US dividend paying stocks in taxable accounts, we would lose $0.15 for every dividend dollar received, however, we do get the foreign tax credit. If we were to hold US dividend paying stock in TFSA’s, not only we would lose $0.15 for every dollar of dividend received, we would not get the foreign tax credit.

Dividend Growth

Compared to July 2017, we saw a respectable YOY growth of 19.56%.

An almost a 20% YOY growth! I’m very pleased to see such great performance. I suppose the high YOY growth has to do with investing over $50,000 so far in 2018.

Dividend Increases

Although most of our dividend income growth is contributed by investing new capital in our dividend portfolio, lately we have been putting more focus on organic dividend growth. Why? Because once we stop investing a large sum of new capital (i.e. we’ve stopped working), we will be relying on organic dividend growth to keep up with inflation.

In July only one company that we hold announced dividend payout increases.

  • Coca-Cola raised its dividend by 5.41% to $0.39 per share.

Coca-Cola keeps its dividend increase streak alive. A 5.41% raise is a bit low, but a raise is a raise.

Dividend Stock Transactions

In July we made a few dividend stock transactions. First, we purchased 62 shares of Laurentian Bank (LB.TO). This is the third time this year that we purchased LB. We have been slowly building up our LB position because the stock price has been suppressed all year. The dividend yield is above 5% while the payout ratio is below 50%. We may continue to buy more LB if the price stays flat the next few months.

In addition to the LB.TO purchase, we decided to close out our BP and ConocoPhillips positions. I have outlined some of the reason in an earlier post. With the extra US cash, we may decide to purchase more US dividend paying stocks, or we may take advantage of the recent FAANG (Facebook, Apple, Amazon, Netflix, Google) price drop and add some shares (FYI, I don’t discuss our non-dividend-paying stock transactions on this blog).

Ironically after closing out our BP position, BP announced a 2.5% dividend increase, first one since 2014. Oh well.

Conclusion

So far in 2018, we have received a total of $10,424.06 in dividend income. It’s really nice to see that we’ve already broken the $10k mark with 5 more months to go in the year. We didn’t break the $10k mark until September of 2017. Furthermore, we have already exceeded the total dividend amount for the entire year of 2015.

It’s nice to see our awesome progress!!!

If we look at our dividend income from a quantitative perspective, at $40/hr ($83,200 annual salary), we have saved ourselves over 260 hours or 6.5 working weeks. This is a perfect example of how our money is working hard for us so we don’t have to.

With 5 more months to go, if we average $1,500 a month, we would be on track to receive close to $17,500 in dividend income for the entire year. We do plan to purchase more dividend paying stocks for the rest of 2018, so hopefully we can end the year at above $18,000 in annual dividend income.

Dear readers, how was your July dividend income? Did you break any personal record?

Written by Tawcan
Hi I’m Bob from Vancouver Canada, I am working toward joyful life and financial independence through frugal living, dividend investing, passive income generation, life balance, and self-improvement. This blog is my way to chronicle my journey and share my stories and thoughts along the way. Stay in touch on Facebook and Twitter. Or sign up via Newsletter