Dividend Income – May 2021 Update

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With BC’s Restart Plan, I’m finally seeing light at the end of the tunnel. If BC meets all the criteria, we may be back to normal social contact by September 7 at the earliest. It is encouraging to see the COVID-19 curves trending down across Canada and things slowly starting to re-open again. However, it will remain interesting to see when overseas international travel without quarantines will be possible. I suspect this won’t happen until early next year.

Normal social contact would mean heading back to the office by this fall. I have really enjoyed working from home since mid-March last year. The biggest draw for me has been the disappearance of my daily commute. I have also noticed that I am more focused and more efficient when working at home. I do miss the social interactions with my fellow co-workers though.

The other day I was talking to my manager and we both agreed that we probably can just work from home full time and only head into the office occasionally once the office does re-open. My manager even went as far as saying that we probably wouldn’t need a desk at the office anymore. This is music to my ears and it would be absolutely amazing if I could work from home permanently.

Maybe this would be the first step to allow us to geo-arbitrage in the future?

Like the previous months, we spent most of May at home. Since the weather was warmer, we kept ourselves busy in our backyard garden.

garden
Strawberries
Strawberry plants
Spinach
Spinach growing like they’re on steroids
Chives
harvest
Harvesting fresh spinach and chives from the garden

Both kids have been helping out in the garden, too. When they aren’t helping out, their favourite activity has been digging holes, filling them up with water, and getting themselves covered in dirt from head to toe!

potatoes
Potato plants
greenhouse
The greenhouse is looking somewhat empty….this will change soon as the plants grow bigger
Garlic
Garlic
cabbages
garden
Our little piece of heaven

We feel very fortunate and blessed to have our backyard garden, especially during the COVID-19 global pandemic.

Dividend Income – May 2021

Anyway, back to the main topic – dividend income!

In May 2021, we received dividends 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)
  • Granite REIT (GRT.UN)
  • H&R REIT (HR.UN)
  • National Bank (NA.TO)
  • Omega Healthcare (OHI)
  • Procter & Gamble (PG)
  • RioCan REIT (REI.UN)
  • Royal Bank (RY.TO)
  • Starbucks
  • SmartCentre REIT (SRU.UN)
  • AT&T (T)
Tawcan Dividend Income

The 18 pay cheques that we received added up to $1,778.16. According to the Canadian all star dividend calendar, Feb, May, August, and November are months with low dividend payouts. Therefore, it shouldn’t come as a surprise that our dividend income lines up with this trend. After a very solid month in April where we received over $3,000 in dividend income, it is totally OK to have a lower dividend income month.

Out of the $1,778.16 received, $426.68 was in USD and $1,351.48 was in CAD. Long time readers will remember that we do not convert USD to CAD when reporting our monthly dividend income. I have been using this approach to avoid fluctuations in our monthly dividend income due to changes in the exchange rate.

If we had been converting USD back to CAD, we would have inflated our dividend income over the last few years. Now the Canadian dollar is stronger, our dividend income would have been arbitrarily lowered.

The top five dividend payers were Royal Bank, Bank of Montreal, Omega Healthcare, National Bank, and Emera (not in order). These top five dividend payouts accounted for $1,256.29 or 70.6% of our May dividend income. Seeing that these five companies made up over 70% of our May dividend income means we need to spend some time reviewing our dividend portfolio and try to diversify our dividend income further.

Dividend Growth

Since the dividend growth YoY parameter compares each month, it will take the rest of 2021 for our dividend income to stabilize and establish a new trend.

Tawcan dividend income May 2021 YoY growth

If we look at the overall YoY growth so far in 2021 (five months), we have a YoY growth rate of about 12%. This is definitely lower than the +15% target we’re aiming for. We definitely need to add more new cash and purchase more dividend paying stocks.

Dividend Transactions

For May, we made a few changes in our dividend portfolio. First, after seeing news on the AT&T and Discovery merger and that AT&T plans to cut its dividends, we decided to close out our AT&T position completely.

A few months ago I opted to sell all Verizon shares and kept AT&T shares because I liked the idea of HBO Max. So far, HBO Max hasn’t panned out as well as I expected. The AT&T share price hasn’t really moved anywhere the last number of years. Since we care about the total return of our portfolio and not just dividend income alone, it makes sense to sell AT&T shares and invest the money elsewhere.

The merger between AT&T and Discovery will create a giant content creator and provider but there are so many details that need to be worked out. As an investor, I wanted to see these details laid out before we continue to invest in AT&T (or whatever the new company will be called).

The recent news of Amazon acquiring MGM for more than $8 billion is another indictor to me that there’s a huge war brewing in the streaming content world. I prefer to sit on the sideline and observe how things will play out before joining the playing field. Who knows, maybe in the near future we may decide to invest in the new AT&T/Discovery company.

Although I wrote about the idea of selling Canadian Tire and Saputo shares in last month’s dividend income update, I did absolutely nothing with them. As it turned out, both Canadian Tire and Saputo saw a nice jump in share price in late May. It just shows that sometimes, it is simply best to just leave your investments alone and not tinker too much. With that said, we plan to continue to add more shares of the best Canadian dividend stocks, most of which we already own.

In May, with the proceeds from the AT&T shares and some new cash, we then purchased 52 shares of Verizon and 56 shares of Enbridge, roughly $5,500 total. I invested in Verizon again so we have a play in the US telecommunication sector. I added more Enbridge shares to take advantage of the recent price slide caused by the possible Line 5 closure.

These transactions added roughly $150 toward our annual dividend income.

Dividend Increases

We were very pleased to see several dividend increases throughout May. These increases were nice to see, considering there were no increases last May at all.

  • Pepsi Co (PEP) increased its dividend payout by 5.1% to $1.075 per share.
  • Algonquin Power & Utilities (AQN.TO) increased its dividend payout by 10% to $0.1706 per share.
  • Telus (T.TO) increased its dividend payout by 1.6% to $0.3162 per share.
  • Hydro One (H.TO) increased its dividend payout by 5% to $0.2663 per share.

All these dividend raises increased our annual dividend income by $99.21. At 4% dividend yield, that’s equivalent of investing $2,480.33 of new capital.

By receiving organic dividend growth, we essentially doubled our annual dividend income (organic dividend growth plus investing new capital). This is a perfect example of having your money working hard for you, so you don’t have to.

Summary

Tawcan dividend income May 2021

With five months in the books, we have received a grant total of $12,119.87 in dividends. We are very close to exceeding the annual dividend income from 2016. Given that June dividend income should be strong, I expect by the end of next month, our dividend income for the year will exceed the 2017 total of $14,834.38.

It is certainly very nice to see how much progress we have made over the last ten years. I have no doubt by 2031 our dividend income will exceed our expenses and we can live off dividends and continue to share our experience with the Canadian dividend blog community.

Tawcan's annual dividend income

At $12,119.87, it means our dividend portfolio has generated $13.17 per hour, assuming working 40 hours a week and 23 weeks so far in 2021. Since most of our dividend income is generated within TFSAs and RRSPs, only a very small portion is taxed. In fact, only slightly over $4,000 dividends came from our taxable accounts. In other words, we would pocket a lot more money than if we were earning $13.17 per hour salary from an actual job.

Dear readers, how was your May dividend income?

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18 thoughts on “Dividend Income – May 2021 Update”

  1. Those spinach look so green and fresh Bob. And great work on the investment side of things. The negative YoY growth in May is still less than the one from February, so I think you’re going in the right direction. 🙂

    I earned $1,698 of dividends in May, which was lower than typical. But I’m excited for next month when my TD shares will distribute $400 in dividend income. TD.TO is one of my largest holdings.

    Reply
  2. Thank you for the wonderful work you’re doing, sharing your knowledge and educating people. I recently discovered your blog; I only wish I had put into practice what you preach 10 or 20 years ago!

    Reply
  3. Love your garden and how it is growing! Almost feels like dividend investments!

    Well, month is low in income but hey it is still a lot of money. Congratulations!

    Good to hear finally your manager is okay with the remote work! We won’t even have an office. Current lease ends by Dec 31st and no renewal. Might just go to the shared office route. We only need to have a warehouse and a server room.

    PS. Nomination is done 🙂 Good luck.

    Reply
    • Thank you Mr. Dreamer. We are eating a lot of produce from the garden. 🙂

      We’ll see how work unfolds in the next little while. Remote work will be good though.

      Reply
  4. Wow, what a wonderful garden you have there! Those fresh green vegetables look amazing. We have a small garden but the wild rabbits come by and eat the leaves.

    I also sold AT&T in my parents’ retirement account. The juicy dividends were great while it lasted.

    Great job on the dividends this month.

    Reply
  5. I earned $33, which is significant as it is my first dividend payout! I’m excited to finally have some money invested. I’ve heard lots about FOMO, but I wonder how many people are FOGIes like me? (Fear Of Getting In!) I spent a lot of time deciding what type of investing was right for me, and then a lot more time finding a style that was right for both me and my wife!

    Reply
  6. I love seeing your dividend growth charts. Maybe one day, your dividend growth will grow so much that it’ll literally be off the charts 🙂

    AT&T is a company I’m eying. I’m seeing that it may have actually dipped significantly so.. Time to snatch it up?

    Reply
  7. Hi Bob,

    Our May dividend income was $1,806. The number I really track each month is the 12 month forward dividend income which, at the end of May, was $36,028.

    We currently have everything on DRIP, but I’m considering stopping some drips to help open new positions. For instance we currently do not own TD or RY but due to capital gains I’m reluctant to rebalance. I do think TD will do a significant divvy raise once the banks get the green light to do so.

    We’re in a period with single income, so savings are higher than usual and no new money is being invested. Hopefully we’ll be back to dual incomes in the near future which is when we get to supercharge our deposits to our investment accounts.

    Having read last month’s blog and the various comments a few times now I’ve firmly decided we won’t contribute to RSP’s any longer, beyond what my employer matches – which isn’t a lot. That means maximum annual contributions to our TFSA accounts, and then everything else in our non registered account. Currently, our non-registered account is about 67% of our total portfolio.

    We also have a goal of living off dividends in the future and I want to address the dividends in my RSP/RIF being taxed as income. I’m considering melting down the RSP, other than my group RSP. My wife will have a modest defined benefit pension which, when combined with our dividends, may allow us to defer CPP and OAS. Time will tell as we have about 7 years to go before our desired retirement.

    I plan to get some second opinions on this, so no big decisions for the time being!

    I really enjoyed the garden pictures! Nice job!

    Reply
    • Hi James,

      Thank you. Congrats on a very solid month. We are dripping whenever we are eligible to keep things simple but I get what you mean by stopping to allow for some new positions.

      The decision to not contribute to RRSP any longer need to be examined closely by running a few different analysis. It is also best to consult with a tax specialist to make sure you didn’t miss anything.

      Reply
  8. Hi Bob,
    Thank you so much for all you do and for this great updates and pictures, I’m glad some of your plants survived the few extrem heat that we received last week in Vancouver 🙂
    Regarding Enb aren’t you a little worried about the company from all the legal battles like Line 3 and 5 and what a possiblility of shutting down Line 5 mean for the company ?
    Thanks

    Reply
    • You’re welcome James. It was simply too hot last week in Vancouver!

      I’m not worried about Enbridge. If Line 5 were to shut down, a lot of people will be impacted and that will cause a big chaos.

      Reply

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