First of all, I want to apologize for posting the October dividend income update so late. While I do spend a lot of time writing new posts and replying to emails from readers, sometimes I have to pay more attention to higher priority things in life, such as Mrs. T, two growing kids, housework, my full-time job, Scouts, etc.
As I write this post, it seemed that October was a distant memory. October was a tale of seasons. The first half of the month, it was sunny and warm in Metro Vancouver. For a few days, I walked around in a t-shirt and shorts. Then the rain came and it got cold and wet quickly. However, given the drought and the forest fires, the change in weather was welcomed.
One day in late summer, Kid 1 noticed something hanging on one of our trees. Upon a closer look, it was a black hornet nest! We thought about calling the professional and getting it removed. After doing some research, we learned that the hornets would die in the winter, leaving an empty nest.
We figured we’d cut the tree branch and remove the nest when it’s cold out. Throughout October, we started noticing birds pecking away at the hornet’s nest, tearing the outer membrane apart. The nest then fell down when it was windy one day.
It seemed that nature took care of itself and solved the problem for us. 🙂
It was really neat to see the nest up close. Kid 1 even took the nest to his school for a show and tell.
In typical October fashion, we also harvested a lot of pumpkins from our backyard garden. I’m sure we’ll be having a lot of pumpkin soup, pumpkin pies, and other pumpkin food items for the rest of the fall and throughout the winter.
Last year just before Christmas, we had to put down our beloved cat, Perlemus. We still miss her dearly and the house just doesn’t seem the same without a cat (Kid 2 would cry at night from time to time, saying she misses Perlemus). One of our neighbours recently got a cat and he has been visiting us quite frequently. Both kids always got excited to see him. Perhaps we should consider getting a cat in the near future?
On a lighter note, Mrs. T has been trying vegan alternatives to eggs. We found out that aquafaba (chickpea water) could be whipped up to make fabulous meringue. I wasn’t able to differentiate between egg white meringue and aquafaba meringue.
Needless to say, these treats were very popular with both of our kids.
Dividend Income – October 2022
Back to the main topic of this post…dividend income.
In October, we received dividends from the following companies:
- Algonquin Power & Utilities (AQN.TO)
- BCE Inc (BCE.TO)
- Bank of Nova Scotia (BNS.TO)
- CIBC (CM.TO)
- Canadian Natural Resources (CNQ.TO)
- Capital Power Corp (CPX.TO)
- Dream Industrial REIT (DIR.UN)
- Granite REIT (GRT.UN)
- Coca-Cola (KO)
- RioCan REIT (REI.UN)
- SmartCentres REIT (SRU.UN)
- Telus (T.TO)
- TD (TD.TO)
- TC Energy Corp (TRP.TO)
- VICI Properties (VICI)
Although we only received 15 dividend pay cheques in October, the total amount added up to $4,497.32. Another fantastic month! October dividend income was the second-highest amount so far in 2022.
I was really hoping our October dividend income beat our monthly record of $4,528.69 from July. So I was slightly disappointed that we fell short of this wish.
The important part is I’m 100% sure we will break this monthly record by early next year.
Thanks to all the new cash we have added and organic dividend growth, we saw a 32.11% year over year (YoY) growth compared to October last year. I’m really pleased with the dramatic jump in the chart above.
What’s even more amazing is that we are averaging a 37.10% YoY growth after 10 months. Crazy right?
It’s very unlikely we will be able to keep up this kind of insane YoY growth in 2023. Looking at our historical YoY growth below, I’d guess that we probably will go back down to around 15% YoY dividend growth next year.
Out of the $4,497.32 received, $275 was in USD and $4,222.32 was in CAD. October was one of those months that was CAD dividend heavy.
Long time readers will remember that we do not convert USD to CAD when reporting our dividend income. This is because we want to keep the math easy and avoid fluctuations in our monthly dividend income caused by changes in the exchange rate.
The top five dividend payers in October were Algonquin Power & Utilities, TD, CIBC, BCE, and Bank of Nova Scotia (not in order). The dividends from these five payers added up to $3,197.56 and accounted for 71% of our October dividend income.
Dividend Reinvestment Plans (DRIP)
As many readers know, we try to enroll in dividend reinvestment plans whenever we’re eligible. This allows us to get additional shares either every quarter or every month. This compound effect really starts to add up once you have sizable shares, as you can drip more shares at each dividend payout.
In October we dripped the following shares:
- 37 shares of AQN.TO
- 8 shares of BCE.TO
- 9 shares of BNS.TO
- 7 shares of CM.TO
- 1 share of CNQ.TO
- 1 share of CPX.TO
- 1 share of DIR.UN
- 1 share of KO
- 2 shares of REI.UN
- 5 shares of SRU.UN
- 8 shares of T.TO
- 7 shares of TD.TO
- 5 shares of TRP.TO
- 2 shares of VICI
It’s hard to beat dripping 94 shares without paying any trading commission! By enrolling in DRIP, we immediately reinvested $3,560.07. Furthermore, because TD honours DRIP discounts, we were able to obtain shares between 1% to 5% discount of the market share price.
Dripping 94 shares in October added $192.56 toward our annual dividend income. At a 4% dividend yield, that’s equivalent to adding $4,814 worth of new cash.
In October, the following companies announced dividend hikes:
- McDonald’s (MCD) increased its dividend payout by 10% to $1.52 per share
- Visa (V) increased its dividend payout by 20% to $0.45 per share
- AbbVie (ABBV) increased its dividend payout by 5% to $1.48 per share
The three dividend hikes added $50.72 toward our annual dividend income. It’s not a lot of money but a raise is better than no raise at all.
In case you’re wondering, after ten months, we have grown our forward dividend income by $2,679.94 thanks to DRIP and organic dividend growth. In other words, on average, we have increased our forward dividend income by $267.99 per month.
How powerful is the ability to grow dividend income without having to do anything? Well, at a 4% dividend yield, that’s the equivalent of investing $66,998.5.
So instead of having to invest almost $67k worth of new cash to generate $2,679.94, our portfolio is doing that for us automatically. It’s like a snowball rolling down the hill, getting bigger and bigger. More importantly, when we actually do invest $67k worth of new cash, we’d generate an additional $2,700 in forward dividend income.
This is a perfect example of having your money working hard for you so you don’t have to.
Financial Independence Journey Update
With ten months down, our dividend portfolio has generated $35,891.75 for us. It always bewilders me when I look at the chart below and how much progress we’ve made in the last 11 years.
Long term readers will know that it is our plan to live off dividends in the near future. Living off dividends, however, does not mean we won’t ever sell principal. In the early years of early retirement, living off dividends and not selling any shares should provide some margin of safety, especially when there’s a prolonged bear market. But later on, I think it’s important to consider selling some shares for either additional income or for tax efficiency/estate planning purposes.
So where are we on our financial independence journey? After ten months we have spent a total of $34,607.30 or $3,460.73 per month under our Necessities account. This means that our dividend income covered 103.7% of our essential expenses like property tax, food, house insurance, car insurance, life insurance, utilities, clothing, car gas, internet, phone, household items, etc.
One thing to keep in mind is that essential expenses do not include expenses like eating out, entertainment, charitable donation, vacation, day camps, and other so called “non-essential” expenses.
Compared to other years, we have spent a bit more so far in 2022. But this perhaps shouldn’t come as a surprise considering the higher inflation rate and two growing kids.
Historical Tawcan household spending
|Total Necessities||Necessities per month||Total Annual Spending||Total Spending per month|
Do we have enough to retire in 2023? The short and simple answer is no but we’re getting pretty darn close. Work part time and slowing down a bit is certainly an option as well. Knowing that we’re getting quite close to our FI target is giving us many potential options. It’s always good to have multiple options in life. This also makes me feel a lot calmer working in a fast-paced-massive-layoffs-happen-often-high-tech environment.
It’s pretty much a guarantee that we will beat our annual dividend income goal of $36,000 in 2022. In fact, I’m pretty certain that we will end up with more than $40,000 at the end of this year The question is how much we will end up with. Can we beat our 2023 dividend income projection of $41,500?
Who knows, there might just be a chance. 🙂 If that happens, it would be pretty amazing to expedite our projection by a whole year.
To put our dividend income into perspective:
- After 304 days, our dividend portfolio generated $118.06 per day or $4.92 per hour.
- After 45 working weeks, our dividend portfolio generated an equivalent of $159.52 per day or an hourly wage of $19.94. This is $4.29 higher than BC’s minimum wage.
We continue to feel blessed and appreciative of our dividend portfolio. As Christmas is just around the corner, it is important for us to remember to help out people in need by donating to charities.
Dear readers, how was your October dividend income?