Dividend Income – October 2021 Update

Wow, I can’t believe that there are only two months left for 2021. Maybe time flies by quicker when one works from home?

I have been working from home since last mid-March and there’s currently no timeline for returning to the office. Working from home has worked very well for me. The biggest benefit is that I don’t have to sit in the car for more than an hour each day. My day is also more flexible. I do, however, miss the social aspect of working in the office. It has been harder to keep up with co-workers and build relationships.

With both kids back in school, the house has been awfully quiet during weekdays. To take advantage of the new free time, Mrs. T signed up for pottery classes and has been busy making various things out of clay. I am very impressed with Mrs. T’s pottery skills. My spidey sense tells me that my Christmas present will be something made with clay…

Mrs. T got a lot of ideas from watching Youtube videos. I think the teapot below is super cool and it’s neat that Mrs. T made the main part using the pottery wheel. Unfortunately, a crack developed when the teapot was baking in the clay oven so we can’t use it for making tea. It is a nice decoration piece though.

On a more personal front, I was extremely pleased to hit my 70th whole blood donation in October!

Since 2008, I have been donating whole blood regularly as a way to help out those in need. This is my way of honouring my Scouts leader who passed away from cancer and a friend who tragically died in a car accident. Due to COVID-19, I didn’t donate blood for months and have only started donating again this summer.

I hit the 50 donations milestone in 2017. My next goal is to donate 100 times. Since I have to wait for a minimum of 56 days between whole blood donations, it will take me at least another 1,680 days or 4.5 years to hit this major milestone.

Since the donation clinic is a 30-minute drive from home, it takes a lot of commitment on my part to regularly donate blood. Funny enough, I have found that there are many similarities between the FI journey and blood donation – it takes time and patience to hit the different milestones.

Dividend Income – October 2021

Back to dividend income update… in October we received paycheques from the following companies:

1. Algonquin Power & Utilities (AQN.TO)
2. BCE Inc. (BCE.TO)
3. Bank of Nova Scotia (BNS.TO)
4. CIBC (CM.TO)
5. Canadian Natural Resources (CNQ.TO)
6. Capital Power Corp (CPX.TO)
7. Dream Industrial REIT (DIR.UN)
8. European Residential REIT (ERE.UN)
9. Granite REIT (GRT.UN)
10. Coca-Cola (KO)
11. Rogers (RCI.B)
12. RioCan REIT (REI.UN)
13. SmartCentres REIT (SRU.UN)
14. Telus (T.TO)
15. TD (TD.TO)
16. TC Energy Corp (TRP.TO)
17. VICI Properties (VICI)

As you can see from the chart, October 2021 has been the best dividend month since we started focusing on dividend growth investing. The 17 paycheques added up to $3,404.25. We have officially hit the $3,300 and $3,400 monthly dividend income milestones!

It’s pretty amazing considering that we crossed the $2,000 monthly dividend income milestone only two years ago. For the most part, our dividend growth has been contributed to adding new cash but I’d say about 20 to 25% of our dividend growth is contributed to organic dividend growth and dividend reinvestment plans.

Out of the $3,404.25 dividend income received, $215.87 was in USD and $3,188.38 was in CAD. October was one of those months that was low in USD dividends. Please note, we do not convert USD to CAD when reporting our monthly dividend income. We are doing this to avoid fluctuations in our monthly dividend income caused by changes in the exchange rate.

In October, the top five dividend payers were TD, Trans Canada Corp, Algonquin Power & Utilities, CM, and Bank of Nova Scotia. These five dividend payers accounted for 67.8% of October dividend income, or $2,308.43.

Dividend Growth

Given the record-breaking monthly dividend income, it shouldn’t be a surprise that we had a solid YoY dividend growth as well. Compared to October 2020, we saw a YoY growth rate of 24.43%. This is absolutely fantastic!

The ten-month running YoY growth rate also increased from 15.95% to 16.99%. Hopefully we can end the year with a YoY growth rate closer to 20%.

Dividend Transactions

Thanks to being frugal, we enjoy a relatively high savings rate to allow us to save money each month. In addition, any side hustle income is used for investment purposes.

For October, we purchased the following dividend stocks:

• 15 shares of Bank of Montreal (BMO.TO)
• 226 shares of Algonquin Power & Utilities (AQN.TO)

These purchases added $217.82 to our annual dividend income.

Out of the six Canadian banks that we hold, the Bank of Montreal has the lowest percentage. Adding more shares of BMO.TO brings up the overall weighting to about 3% of our portfolio. Ideally, we’d like to increase this number to between 4 to 5%.

We also took advantage of the AQN share price dip caused by the acquisition announcement of Kentucky Power Company. Over the last couple of years, we’ve been slowly adding more AQN shares. Mrs. T and I like the renewable sector and believe it is the future. AQN’s share price has performed poorly this year, but I believe AQN will do just fine in the long term and will reward shareholders handsomely. This is why I included AQN as one of the best Canadian dividend stocks as well as one of the best Canadian utility stocks.

Dividend Increases

I was very happy to see a number of dividend increases throughout October.

• Visa (V) increased its dividend payout by 17% to $0.375 per share.
• AbbVie (ABBV) increased its dividend payout by 8.5% to $1.41 per share.
• Suncor (SU) increased its dividend payout by 100% to $0.42 per share.

The three announcements mean $137.72 was added toward our annual dividend income. At a 4% dividend yield, that’s equivalent to adding $3,443 to our portfolio.

The energy companies like Suncor are finally coming back and returning to big profits. We sold a huge portion of our Suncor holding for the past 19 months. Originally I was planning to close out Suncor completely but now I am having a second thought. Since the energy sector is very cyclical, for long term planning, it may make sense to close Suncor completely and invest the money elsewhere.

DRIP

For the most part, our dividend portfolio is on auto-pilot. We buy more shares whenever we can and enroll in dividend reinvestment plans (DRIP) when we are eligible. DRIP has allowed us to take advantage of dollar cost average and add more shares without paying any trading commissions. Best of all, some companies provide DRIP discounts to allow shareholders to add shares at a slightly discounted price. (Note: not all discount broker honours these DRIP discounts).

For October, we dripped the following shares:

• 13 shares of AQN.TO
• 3 shares of BCE.TO
• 5 shares of BNS.TO
• 1 share of CNQ.TO
• 1 share of CPX.TO
• 1 share of KO
• 1 share of RCI.B
• 1 share of REI.UN
• 3 shares of SRU.UN
• 8 shares of T.TO
• 5 shares of TD.TO
• 3 shares of TRP.TO

$2,040.62 of the $3,404.25 October dividend income was re-invested right away to allow us to receive 46 more shares. This is equivalent to a DRIP ratio of 80.59%. The 46 additional shares added $87.86 toward our annual dividend income.

Looking forward

Because of the ongoing Rogers family feud, many readers have asked what is our plan with the Rogers shares

Rogers is Canada’s largest wireless company with more than 11 million customers. It also has holdings in cable and internet service, TV broadcasting, radio and sports. There is also a pending merger with Shaw Communications.

There are two different types of shares – voting shares and non-voting shares. The Rogers family controls about 97% of the voting shares (A shares) while individual shareholders control the non-voting shares (B shares). Edward Rogers, the chair of the family trust is trying to change five of 14 directors so he and his allies will have the majority on the board. This is being pushed back by the other faction of the Rogers family. As a result, the matter is now in BC court to determine the outcome.

If the court rules in Edward Roger’s favour, it means he’ll get the board changes he wants and the other family members will be out of the board. If the court rules against Edward Roger, then a shareholder meeting will commence, the fiasco will drag on, and it is unknown who the shareholders will court with.

For us, although the company is in a bit of turmoil, I don’t think it makes sense to sell our shares right now. We plan to continue holding and wait for this fiasco to be sorted before determining what to do. We don’t hold that many Rogers shares so we will just wait and continue collecting dividends in the meantime.

On November 4, the Office of the Superintendent of Financial Institutions (OSFI) gave the green light to Canadian banks to resume share buybacks and dividend hikes. Banks can immediately begin to increase dividends. Subject to approval by the superintendent, banks can also start share buyback. This announcement also affects insurance companies like Manulife and Intact Financial.

This is excellent news for dividend investors that hold shares of Canadian banks and Canadian insurance companies, us included. From what I’ve read, we may see Bank on Montreal and National Bank raise dividends by more than 30%. Whatever the dividend hikes turned out to be from the big six Canadian banks, we should rack in the rewards and see a nice boost in our dividend income next year.

Since 2022 is just around the corner, we also have been busy saving up for 2022’s TFSA contributions. We have to wait and see whether the contribution limit will stay at $6,000 or if it will increase to $6,500. For purchases, we will stick with one of the best Canadian dividend stocks or one of the best Canadian monthly dividend stocks. Some names we will be considering include Algonquin Power & Utilities Corp, Brookfield Renewable, National Bank, Royal Bank, and Granite REIT.

Summary

With two more months to go for 2021, we have received a total of $26,179.04 in dividend income. We are only $795.97 short of our 2020 dividend total. This is absolutely amazing and just showed how far we’ve come on our dividend investment journey.

Since I like to put things in perspective…

• We are earning $3.59 per hour, a slight increase of $0.10 per hour compared to the average hourly earn rate last month.
• We are earning $14.54 per hour after 45 working weeks. We are slowly inching our way toward BC’s minimum wage of $15.20 per hour.

We expect our November dividend income to be under $2,000 (it’s one of the low dividend income months for us) but we should end December on a high note. We should end up with more than $30,000 dividend income this year. Having said that, it is very unlikely we’ll be able to meet our $32,000 annual dividend income goal.

As the year is about to wrap up, we are going through the year-end financial checklist. One of the things we plan to do is to donate some money to charities to claim as much charitable tax credit for 2021 as possible. We are very grateful that we’re doing very well financially and want to provide a helping hand to those in need. I’d strongly encourage all readers to donate money to local charities. To maximize charitable tax credit and minimize capital gains, you may also want to consider donating securities to charities.

October was a fantastic month for our dividend income. How was your October dividend income?