Dividend Income Update – Dec 2019 & 2019 Summary

A happy new year and happy new decade everyone! I hope everyone enjoyed their holidays and spent some time with family and friends.

Just like November, I did a lot of travel in December. First, our entire family flew to Copenhagen from Vancouver in early December. The next day, I jetted off to Stockholm and Gothenburg for a quick 2-day business trip. Once I got back from the business trip, we then visited Mrs. T’s good friend and her family close by Malmö for a couple of days. The week after I went on another business trip where I visited Oulu, Düsseldorf, Madrid and Paris. In a span of 12 days, I had gotten on and off 14 different airplanes. Needless to say, I was very happy to stay grounded for a few weeks.

In case you’re curious, my travels were something like this…

Vancouver -> Reykjavik -> Copenhagen -> Stockholm -> Gothenburg -> Copenhagen -> Billund -> Helsinki -> Oulu -> Helsinki -> Dusseldorf -> Madrid -> Paris -> Stockholm -> Billund.

We spent Christmas and New Year’s in Denmark with Mrs. T’s family and had a great time. We also had some really delicious food. Yum!

IMG 20191224 210643

While I didn’t quite stay off devices completely as planned but I did manage to turn off my phone and not check any emails for a few days. I suppose I’ll take that as a small win.

December Dividend Income

In December 2019, we received pay cheques from the following companies:

  • Brookfield Renewable (BEP.UN)
  • Canadian National Railway (CNR.TO)
  • Canadian Tire (CTC.A)
  • Canadian Utilities (CU.TO)
  • Chevron (CVX)
  • Dream Office (D.UN)
  • Dream Industrial (DIR.UN)
  • Enbridge (ENB.TO)
  • Evertz Technologies (ET.TO)
  • Fortis (FTS.TO)
  • Hydro One (H.TO)
  • H&R REIT (HR.UN)
  • Intact Financial (INF.TO)
  • Inter Pipeline (IPL.TO)
  • Intel (INTC)
  • Johnson & Johnson (JNJ)
  • KEG Income Trust (KEG.UN)
  • Coca-Cola (KO)
  • Magellan Aerospace (MAL.TO)
  • McDonald’s (MCD)
  • Manulife Financial (MFC.TO)
  • Magna International (MG.TO)
  • Prairiesky Royalty (PSK.TO)
  • Qualcomm (QCOM)
  • RioCan REIT (REI.UN)
  • Saputo (SAP.TO)
  • SmartCentre REIT (SRU.UN)
  • Suncor (SU.TO)
  • Target (TGT)
  • Unilever plc (UL)
  • Visa (V)
  • Waste Management (WM)
  • Exco Technologies (XTC.TO)
Tawcan dividend income Dec 2019 chart

After receiving payments from 33 different companies, our December 2019 dividend income came out to $2,092.24. What a great month we had to close out the year! While it wasn’t quite an all-time monthly dividend record, it was another month that we received more than $2,000 in dividend income. We were so close to the $2,100 mark too! Darn it!

Out of the $2,092.24 received, $427.30 was in USD and $1,664.94 was in CAD, or about a 20/80 split. Please note, we use a 1 to 1 currency rate approach. We do not convert dividends received in USD to CAD, because we want to keep the math simple. This is our way to avoid fluctuations in dividend income over time due to changes in the exchange rate.

The top five dividend payouts in December 2019 came from Enbridge, Inter Pipeline, Manulife, Suncor, and Coca Cola (not in order). Dividend payout from these five companies accounted for $1,074.64, or 51.4% of our December dividend income.

Dividend Growth

Compared to December 2018, we saw a YoY growth of 14.02%. This was the lowest YoY performance of all 2019 so it was slightly disappointing to see. However, if I took a closer look at the 2018 dividend income, I noticed that we received the highest amount of monthly dividend income for all of 2018 in December 2018. So the low YoY growth number made some sense.

Tawcan dividend income Dec 2019 YoY growth

Dividend Increases

In December, we saw a number of stocks in our dividend portfolio announced dividend payout increase:

  • Bank of Montreal increased the dividend payout by 2.9% to $1.06 per share.
  • National Bank increased the dividend payout by 4.4% to $0.71 per share.
  • Laurentian Bank increased the dividend by 1.5% to $0.67 per share.
  • Enbridge increased the dividend payout by 9.8% to $0.81 per share.

All these raises have increased our forward-looking dividend income by $291.22. At 4% dividend yield, it would require $7,280.50 to generate the same amount of dividend income. Instead, when we do contribute this amount of money, we can generate an additional $291.22. This is the power of organic dividend growth!

Dividend Transactions

Given that I was travelling a lot and took two weeks off, it was an extremely quiet month when it came to dividend transactions. However, January will be a busy month as we plan to purchase dividend-paying stocks with our $12,000 TFSA contribution for 2020. Secretly I am hoping for a market crash so we can purchase stocks at a discounted price.

However, it seems that I might be disappointed with this market crash wish…

2019 Dividend Income Review

In 2019 we received a total of $23,049.16 in dividend income. We have met our very challenging goal of receiving over $23,000 in annual dividend income! Woohoo! Compared to an annual dividend income of $18,734.29 in 2018, we saw an increase of 23.03% in 2019. This was a fantastic number, making it the second year in a row that we had a +20% YoY growth.

Annual dividend growth 2019
Annual YoY growth over the years

2019 stock transaction overview

Throughout the year we were busy buying and selling individual dividend paying stocks and index ETFs. We closed out six of our positions in 2019. After much deliberation, we moved from VXC to XAW to reduce the overall management fees.

Below are the individual dividend-paying stocks that we purchased throughout 2019:

  • 144 shares of TD (TD.TO)
  • 687 shares of Inter Pipeline (IPL.TO)
  • 44 shares of Bank of Montreal (BMO.TO)
  • 24 shares of Canadian Tire (CTC.A)
  • 168 shares of Bank of Nova Scotia (BNS.TO)
  • 19 shares of Canadian National Railway (CNR.TO)
  • 39 shares of AbbVie (ABBV)
  • 41 shares of Canadian Imperial Bank of Commerce (CM.TO)
  • 10 shares of Apple
  • 70 shares of Rogers (RCI.B)

In addition, we took advantage of the free ETF trader from Questrade and purchased VCN and XAW shares throughout the year.

All these purchases added over $3,200 toward our annual dividend income.

Dividend Income Breakdown

As you may know, we take advantage of the Canadian tax-advantaged accounts like the TFSA and the RRSP to minimize the amount of income tax on dividends received. The $23,049.16 annual dividend income received was spread across the different accounts per below:

  • TFSA: $8,255.42 or 35.8%
  • RRSP: $8,258.16 or 35.8%
  • Taxable: $6,535.58 or 28.4%

Since Mrs. T and I both have all three different types of accounts, the dividend income was spread across the two of us for further tax efficiency. Ideally, we’d like the dividend income to split 50-50 down the middle between the two of us for max tax efficiency, but that probably wouldn’t ever be possible.

Here’s the 2019 dividend income breakdown between the two of us across the different accounts:

  • My TFSA: $4,343.11 or 18.8%
  • Mrs. T’s TFSA: $3,912.31 or 17%
  • My RRSP: $6,470.65 or 28.1%
  • Mrs. T’s RRSP: $1,787.51 or 7.8%
  • My Taxable: $4,015.42 or 17.4%
  • Mrs. T’s Taxable: $2,520.16 or 10.9%

A couple of things to keep in mind. First, Mrs. T didn’t become a Canadian permanent resident until 2011, so she did not have TFSA contribution rooms for 2009 and 2010 ($10,000 in total. As you may recall, we had mistakenly over-contributed her TFSA and had to beg the CRA for mercy). Therefore, it makes sense that her TFSA doesn’t generate as much dividend income compared to my TFSA. Second, since we are a single income family, Mrs. T’s RRSP is a spousal RRSP that we set up a few years ago. In the last few years, I have been making my RRSP contributions to her RRSP account. It is our goal that once we eventual start early RRSP withdrawals, we can take out about the same amount of money each year to reduce withholding and income taxes.

As you can see, my accounts produced 64.3% of the dividend income while Mrs. T’s accounts produced 35.7%. In 2018 the dividend income split was 68% and 32% respectively. Therefore, we are getting closer to the 60-40 split that we used in our financial independence tax assumptions.

Summary & Financial Independence Progress

Tawcan dividend income Dec 2019 summary

At $23,049.16, our dividend income was able to cover 41.98% of our 2019 total expenses or 69.4% of our necessities. Well it wasn’t quite the 50% dividend income to total expenses ratio that I was aiming for but I think we did pretty well nonetheless. It was also nice to see that our dividend income was able to cover a large part of our necessities.

At $40 per hour wage ($83,200 annually), we were able to save over 576 work hours, which is an equivalent of 72 days, 14.4 weeks, or 27.7% of the 52-week work week. It felt fantastic to see what our dividend income meant quantitatively.

At the beginning of 2019, Mrs. T and I set out a very challenging goal of receiving $23,000 in dividend income for the year. We are over the moon that we managed to overachieve this goal.

So where do we go from here? Why not challenge ourselves and set another challenging goal of receiving $30,000 for 2020? This would mean a YoY increase of 30.16%. At 4% dividend yield it would mean $173,771 of new capital invested (wow that’s A LOT of money!!!). Yup, it’s a super ambitious goal but it’s better to aim for the moon than set a low hanging fruit goal right?

Dear readers, how was your December and 2019 dividend income?

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29 thoughts on “Dividend Income Update – Dec 2019 & 2019 Summary”

  1. $30K is indeed a very challenging goal for 2020, but I’m sure you will get there.

    I also am secretly hoping for a bit of a crash so that we can buy stocks for cheap, LOL.

    My bet is you’ll get to $29K in dividend income for 2020. This is purely a gut call. Haha.

    Reply
      • I took a look at APR.UN and went through their financial reports. Not 100% convinced about this company given that I don’t know the auto industry all that well. The stock looks interesting though.

        Reply
    • Hi Christopher,

      Unfortunately that’s a tough question to answer as it depends on which dividend paying stocks and index funds you pick. It also depends on what your investment goals are. 🙂

      Reply
  2. Nice closing out the year with over $2K in dividends! Congrats! I say shoot for the stars and go for the $30,000 in 2020! I fell short on one of my 2019 dividend goals, but I was so close it still felt great! Keep up the impressive work! 🙂

    Reply
    • Hi My Dividend Dynasty,

      Thank you, we were very happy that we got over $2k in Dec. $30k or 2020 is going to be extremely challenging but I like to challenge ourselves. Too bad that you fell short on one of your 2019 dividend goals, but getting close to it is still great.

      Reply
  3. Looks like a solid year all around, and the compounded growth is really starting to add up these last couple years. Well done.

    I see you hold Exco. I had it on my watchlist a couple years ago but never pulled the trigger. The stock has come crashing down over the last couple years. At least they’ve continued to increase the dividend.
    Just curious, since I haven’t followed it as closely lately, is there any hope for a recovery? Will you continue to hold it?

    Cheers.

    Reply
    • Thank you MoneyMaaster. The snowball is getting bigger and bigger that’s for sure.

      In terms of Exco, I’m looking at a sizable loss. I don’t particularly want to add more shares so I’ll ride it out and see what happens. I do see the share price eventually recovery but it may take time.

      Reply
  4. Another amazing review Bob, well done on your work. The one question I have, especially with the EU capital firms and now Blackrock stating they will challenge their investment designs with companies that earn more than 25% from fossil fuels, is what is your forward looking position. You are heavy into pipelines and imagine a few other firms.

    Lastly, oh man Xmas in Copenhagen must have been amazing as I see it all warm and softly lit with everyone enjoying mulled wine… LOL I just finished reading “Happy as a Dane” and then “Little Book of Hygge” . We could also then get into a discussion on social programs and taxation as from the reading I appreciate their approach to helping out the greater community.

    Reply
    • Thanks Chris. Moving forward we are trying to invest in more renewable energy related companies. Pipelines are not great but we do rely on them.

      Xmas and New Year in Denmark was pretty awesome. We had a lot of hygge that’s for sure.

      Reply
  5. I’m a few years behind you in dividend income but I’m keeping at it 🙂 I also love that you compare your passive income to saving work hours. That’s a powerful mindset that can help to finding a faster path to financial freedom. Thanks Bob for sharing your journey and insight!

    Reply
  6. Congrats on a solid year Bob, 23k in dividend income is amazing! Love seeing that last chart of yours that shows the power of compounding.

    On my end I was able to hit the 4k mark in annual dividends for the year which I wax excited about. Aiming for 6200-6400 for 2020.

    Reply
  7. I mean, Bob. Come on. What isn’t great to see here? You continue to amaze and post excellent results. $30k is definitely a stretch, but you’re going to crush it. Look how hard you pushed yourself this year. YOU’VE GOT THIS!!

    Bert

    Reply
  8. Hi Bob!

    You had a very busy month in December. I was thinking here and I did not flight this amount for the entire year of 2019. I hope you liked all those travels.

    On the income side, congratulations on 2019 achievement. Nothing better than reach the goals, especially when it was as challenging as yours. The 30k for 2020 looks challenging as well, good luck on it.

    Here in Odysseus’ household, we had a good month, keeping the passive income above €1000.

    All the best.

    Cheers!

    Reply
  9. Hi I wanted to start my dividend portfolio but just realized even if the investment is done through TFSA, you have to pay taxes on US dividends…

    Would you recommend investing in Canadian dividend stocks/ETF?

    Reply

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