Dividend Income – Nov 2020 Update

Can you believe there’s only one more month to go before we wrap up 2020? Since the time change, we are getting less and less daylight in Vancouver. It is not unusual to wake up before sunrise and see sunset before I finish work. So when it’s nice out, I try to head out and enjoy some Vitamin D.

Although BC has done a good job in flattening the COVID-19 curve in the spring, the number of cases has been increasing at an alarming rate since September. It is quite sad that over 500 people have passed away in BC because of COVID-19. Considering BC has been in a stay-at-home advisory since late November and the cases have continued to increase, I have the feeling that Christmas will not be the same this year. I really hope that we can slow down the spread of this virus and that vaccines will soon be available for the high-risk folks and the frontline health workers. It is highly possible that we will need to continue to stay home in the foreseeable future. 2011 may be another year of limited travel.

Since I have been working from home and limiting my social interactions, I took part in Movember this year. It had been many years since I have taken part. For fun, Mrs. T and I decided to re-create a picture we took together when we first met at a Movember party 11 years ago.

View this post on Instagram

A post shared by Bob Lai (@tawcan)

Clearly I still can’t grow any facial hair!

Dividend Income

Ok, let’s get back on topic…dividend income. In November 2020, we received dividend 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)
• Granite REIT (GRT.UN)
• H&R REIT (HR.UN)
• Inter Pipeline (IPL.TO)
• KEG Income Trust (KEG.UN)
• Metro (MRU.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)
• Unilever plc (UL)
• Verizon (VZ)

In total, we collected 23 cheques, and they added up to $1,827.66. Since February, May, August, and November have been the weakest months for us in terms of dividend income, it wasn’t a complete shock to see an amount below $2,000.

So, perhaps one of our 2021 goals is to receive over $2,000 in dividend income for these weaker months.

Despite only receiving slightly over $1,800 in dividend income, we are still extremely pleased and feeling grateful that our dividend portfolio is generating money for us even when we are sleeping.

Of the $1,827.66 dividends received, $443.50 was in USD and $1,384.16 was in CAD, or about a 25-75 split. Please note, we did not convert USD to CAD when reporting our dividend income. Instead, we used a 1 to 1 currency rate approach. Why? Because we wanted to avoid fluctuations in dividend income over time because of changes in the exchange rate.

The top five dividend payouts came from Emera, Bank of Montreal, National Bank, Royal Bank, and Omega Healthcare (not in order). These payouts accounted for $1,203.97 or 65.9% of our November dividend income.

Dividend Growth

Due to many companies cutting their dividends, 2020 has been a tough year in terms of dividend growth, especially in these “weaker” dividend income months. As a result, we saw a -1.20% YoY growth compared to November 2019. This marked the second time we saw negative YoY growth in 2020. It was disheartening to see a negative YoY number, but it is inspiring Mrs. T and me to save and invest more so we can continue to grow our dividend income.

Dividend Transactions

After a busy October, where we invested over $20k, November was a quiet month. Other than dripping additional shares, we didn’t make any dividend purchases. We did close out our Suncor position in my taxable account for tax harvest reasons. This would allow me to offset the ShareOwner capital gains.

We are saving up money so we can transfer $12,000 to our TFSAs on January 1st, 2021. Once the money shows up in our TFSAs, we will be busy buying some more dividend paying stocks at the beginning of the new year.

Dividend Reinvestment Plan (DRIP)

We like to keep our investment strategy as straightforward as possible. To do so, we enroll in dividend reinvestment plan (DRIP) whenever we are eligible. By enrolling in drip, we can re-invest dividend payments right away by adding more shares to our portfolio. The dripped shares can quickly add up. For example, thanks to DRIP, we have added over 150 shares of Manulife at an average cost basis much lower than the current market price.

In November, we dripped 25 more shares to our dividend portfolio.

• 1 share of Bank of Montreal
• 1 share of Dream Office REIT
• 1 share of Emera
• 1 share of European Residential REIT
• 2 shares of H&R REIT
• 3 shares of Inter Pipeline
• 3 shares of National Bank
• 2 shares of Omega Heathcare
• 4 shares of RioCan REIT
• 3 shares of Royal Bank
• 2 shares of SmartCentre REIT
• 2 shares of AT&T

The 25 dripped shares added up to $993.65. This meant we reinvested 54.4% of our November dividend income via the dividend reinvestment plan. All these dripped shares added $49.25 towards our annual dividend income at an equivalent yield of 4.96%.

Dividend Increases

There are three key factors we count on to increase our dividend income. They are:

• Investing fresh capital
• Drip additional shares
• Organic dividend growth

As the value of our dividend portfolio and our dividend income get bigger, it becomes harder and harder to grow dividend income by investing fresh capital alone. Therefore, we need to pay attention to organic dividend growth. Therefore, we have a combination of low yield, high dividend growth stocks and high yield, low dividend growth stocks in our portfolio.

In November, two companies announced dividend payout increases:

• Telus (T.TO) increased its dividend payout by 6.8% to $0.3112 per share.
• Canadian Tire Corp (CTC.A) increased its dividend payout by 3.3% to $1.175 per share.

These dividend increases added $51.70 toward our forward-looking dividend income.

The best news in November came from Costco. Costco declared a $10 per share special dividend, to be paid in Dec. The special dividend will see Costco sending $4 billion to shareholders. As a result, we will see a sizable dividend payment from Costco in December.

Financial Independence Goal

Long time readers will know that it is our goal to one day live off our dividend income. To do so, we estimate we need between $50,000 to $60,000 in dividend income. At 4% dividend yield, this would equate to a dividend portfolio with a market value of $1.25 million to $1.5 million.

We are over 50% completed on our financial independence goal, and it is quite amazing to look at our monthly dividend income on a chart over the years.

Summary

We have come a long way since we started our financial independence journey and got serious with dividend growth investing in 2011. With all the dividend cuts and suspensions in 2020 caused by the global pandemic, it has been a tough year for all dividend investors. Despite not going to hit our dividend income goal of $30,000, we are still very pleased with our progress. With one month left in 2020, we have received $24,205.33 in dividend income.

To put things in perspective…

• That’s $3.01 per hour we’re earning, regardless of what we’re doing. So after an eight-hour sleep, we’d have $24.08 in our pocket.
• At $40 per hour rate, our dividend portfolio has saved us over 15 weeks’ worth of work. This means we didn’t have to work until the week of April 12.
• In terms of an hourly wage, this is equivalent to $11.64 per hour.

We are very thankful that our dividend portfolio is working hard for us, so we don’t have to.

With the holidays around the corner, I want to encourage readers to provide a helping hand to those in need. The global pandemic has created a lot of financial hardship for many families. More than ever, people and families need financial help. Therefore, I encourage readers to consider providing a helping hand by making charitable donations.

https://twitter.com/Tawcan/status/1333567445496254466

Dear readers, how was your November dividend income.