Dividend Income – May 2020 Update
I hope everyone is staying healthy and practising social distancing despite some countries have slowly eased on the stay-home orders. I also hope everyone is speaking up against all the social injustices rather than staying silent and hope things will get shoved under the rug.
It’s hard to believe that we have been voluntarily staying at home for over two months due to the global pandemic. Having all four of us staying under the same roof 24/7 has raised some challenges and personal struggles. At the same time, staying home meant we were able to creatively save and earn some more money.
For the most part, May was very similar to April where we continued to enjoy ourselves in the confines of our home. Since the weather was better, we spent more time outside and worked on our garden. Things are growing nicely in the garden already as we have started to harvest arugula, spinach, broccoli, and various herbs like oregano, and thyme.
On May 23rd, Mrs. T and I both participated in the 24×24 Photo Marathon. The marathon started at 00:00 UTC on May 23 and ran for 24 hours. Each hour on the hour, a theme is announced. Each participant would need to take a picture that represents the theme and post it on Twitter or Instagram. The participates had to post all the pictures order. I have participated in four photo marathons in the past. These four photo marathons lasted only 12 hours and I had to use a film camera with only 12 shots. So this photo marathon was slightly different.
Here are some pictures that I took in the previous photo marathons.
Given that Lost’s final episode was aired on May 23, 2010, I decided to challenge myself and use Lost as the overall theme for the 24×24 Photo Marathon. Boy, it sure was a challenge. Here are some pics I took.
Both Mrs. T and I had a lot of fun. And in case you’re wondering, we didn’t stay up the entire 24 hours. We had about 8 hours of sleep and caught up once we woke up. 🙂
This post was a dividend income update, right? I better get back to the topic and start providing a monthly dividend update! In May 2020 we received income from the following companies:
- Apple (APPL)
- AbbVie (ABBV)
- Bank of Montreal (BMO.TO)
- Costco (COST)
- Dream Office REIT (D.UN)
- Dream Industrial REIT (DIR.UN)
- Emera (EMA.TO)
- European Residential REIT (ERE.UN)
- H&R REIT (HR.UN)
- Inter Pipeline (IPL.TO)
- KEG Income Trust (KEG.UN)
- Laurentian Bank (LB.TO)
- National Bank (NA.TO)
- Omega Healthcare (OHI)
- Procter & Gamble (PG)
- RioCan REIT (REI.UN)
- Royal Bank (RY.TO)
- Starbucks (SBUX)
- SmartCentres REIT (SRU.UN)
- AT&T (T)
- Verizon (VZ)
The paycheques from 21 companies added up to be $1,850.04. After a record-setting month in April where we received $2,546.86, it was slightly disappointing to see a number below $2,000. We would have been closer to the $2,000 mark in May if it weren’t for all the dividend cuts that we have faced. Oh well, you live and learn, right?
Out of the $1,850.04 received $418.03 was in USD and $1,432.01 was in CAD, or about a 25-75 split. Please note, we do not convert the USD to CAD when reporting our dividend income. Instead, we use a 1 to 1 currency rate approach. Why do we do that? Because we want to avoid fluctuations in dividend income over time due to changes in the exchange rate.
The top five dividend payers for May 2020 were Royal Bank, Bank of Montreal, Emera, National Bank, and Omega Healthcare (not in order). The payout from these five companies added up to $1,176.83 or 63.6% of the May dividend income. Given these five companies contributed to over 50% of our May dividend income, it showed me that we should consider further dividend income diversification.
Compared to May 2019 we saw a disappointing YoY growth of 6.79%. This was the first time we saw a below 10% YoY growth in 2020. The disappointing growth was caused mainly by the dividend cuts of Inter Pipeline, KEG Income Trust, and H&R REIT. If the dividend cuts didn’t happen, I think we would have come out with a YoY growth of over 15%.
May was not a big month for dividend increases and only a couple of companies announced dividend increases.
- Pepsi increased its dividend payout by 7.1% to $1.0225 per share.
- Hydro One increased its dividend payout by 5% to $0.2536 per share.
This announcement increased our annual dividend income by $11.20. It’s not a lot of money but I will take any increase right now.
Unfortunately, we saw a few more dividend reduction announcements in May. To be honest, it was quite disheartening to see these announcements. Our forward-looking annual dividend income has certainly taken a hit because of these cuts or suspensions.
- Suncor reduced its dividends from $0.465 to $0.21, a 54.8% reduction.
- Domtar Corp suspended dividends.
- H&R REITs reduced its dividends by 50% from $0.115 per unit to $0.0575 per unit.
These announcements have reduced our forward-looking annual dividend income by $873.37. Ouch! Thanks to all the dividend reductions and suspensions, our forward-looking annual dividend is slightly over $26,000. If the suspensions and cuts didn’t happen, it would have been over $28,000.
Would we see more dividend reductions or suspensions? This is certainly quite possible although I remain optimistic that we won’t see more dividend cuts or suspensions. Fingers crossed!
Dividend Stock Transactions
Given the dividend cut/suspension announcements and the continued poor performance on some of the stocks that we own in our dividend portfolio, we decided to close out our positions in Domtar Corp, Ventas, Magellan Aerospace, and Laurentian Bank. We took a bit of loss on all four of these positions. I hate to take a loss when selling stocks. But I figured it was time to cut the losses and move on rather than continue to water the weeds. After all, if I’d be insane to believe that weeds will eventually turn into beautiful roses.
By closing out Domtar Corp, Ventas, Magellan Aerospace, and Laurentian Bank, our dividend income was reduced by $489.36 (Note: the pre-dividend cut/suspension amount).
With the cash from liquidating the four positions above and some new capital, we added the following dividend-paying stocks in May:
- Added 43 shares of Canadian Utilities at $32.24.
- Added 52 shares of Bank of Nova Scotia at $51.69.
- Added 24 shares of CIBC at $82.40.
These purchases added $402.25 to our annual dividend income. We are still short by almost $90 considering the dividend decreased caused by closing out the four positions mentioned above. Therefore, it is our plan to continue buying dividend stocks throughout 2020. To do this, that means we are busy saving money for investing.
After five months, we have received $10,900.34 in dividend income. This means we have already surpassed the annual dividend income from 2015. It’s pretty cool to know that it was last month that we surpassed the annual dividend income of 2014. Looking forward, I suspect we will surpass the annual dividend income of 2016 next month (assuming no further cuts and suspensions).
To put our 2020 dividend income in a quantitative perspective that means…
- We are getting paid $2.99 per hour so far in 2020. This is regardless of what we are doing, whether we are sleeping, eating, or taking a shower.
- At a $40 per hour wage, it means our dividend income has saved us over 272 hours of work, or an equivalent of almost 6 weeks.
2020 has been a really tough year when it comes to dividend growth investing, considering that the market has taken a giant hit due to the COVID-19 pandemic and many companies have cut or suspended their dividends. At the beginning of this year, I set out a very challenging and ambitious goal of receiving over $30,000 in dividend income for 2020. I have come to the conclusion that this goal simply is not attainable this year. Rather than trying to hit this goal by buying high yield, riskier dividend-paying stocks, my focus moving forward will be on dividend safety.
Looking back, I definitely took some gambles by purchasing the likes of Inter Pipeline and Suncor because of the high dividend yield and because I was so focused on hitting the $30k dividend income goal. Needless to say, this has been a valuable lesson for me.
Dear readers, how was your May dividend income?