It’s a new month and that means it’s time for a monthly dividend income update. The reason for doing these monthly updates is to keep us honest and demonstrate that it is possible to build up a sizable dividend portfolio and use the dividend income to cover our expenses. While we technically can be financially independent today if we wanted to, we decided to prolong our FI journey. So when our dividend income can cover our expenses, we can call ourselves financially independent.
It was wet and cold here in Vancouver throughout October. It even down poured a few days and our street was flooded. Fortunately, we also had a number of nice brisk sunny fall days. With all the fall colours on display, it really reminded me why I love fall so much.
For the Thanksgiving Weekend, Mrs. T attended Cents Positive, a retreat for women to talk about money, in Seattle. She really enjoyed the event and connected with many ladies at the event. I thought it was fabulous that she was able to talk about money and financial independence retire early openly with other women without any judgments. The kids and I tagged along, and we toured around Seattle for the entire weekend. The highlight of the trip, for the kids at least, was visiting multiple donought shops around downtown Seattle. A FIRE meetup was held once Cents Positive was wrapped up, and Mrs. T and I were able to connect with a few Seattle locals. On Thanksgiving Monday, we all visited Angela from Tread Lightly Retire Early and had dinner with a few other local bloggers like Purple from A Purple Life, Felicity from Fetching Financial Freedom, and Stephonee from Poor Than You (who was in Seattle from DC for Cents Positive). Needless to say, it was great to spend time with fellow bloggers.
Dividend Income – Oct 2019
In October, we received dividend income from the following companies:
- BCE (BCE.TO)
- Bank of Nova Scotia (BNS.TO)
- CIBC (CM.TO)
- Canadian Natural Resources (CNR.TO)
- Dream Office REIT (D.UN)
- Dream Industrial REIT (DIR.UN)
- H&R REIT (HR.UN)
- Inter Pipeline (IPL.TO)
- KEG Income Trust (KEG.UN)
- Coca-Cola (KO)
- Nutrien Ltd (NTR.TO)
- Prairiesky Royalty (PSK.TO)
- Rogers (RCI.B)
- RioCan REIT (REI.UN)
- SmartCentres REIT (SRU.UN)
- Telus (T.TO)
- TD (TD.TO)
- TransCanada Corp (TRP.TO)
- Domtar Corp (UFS.TO)
- Vanguard All Cap (VCN.TO)
- Ventas (VTR)
In total, we received 21 different pay cheques that added up to $2,112.71. This was the second month in a row that we received more than $2,100 in dividend income. Woohoo! If I look back our 2019 dividend history we received over $1,900 in March and April. The amount increased to over $2,000 for June and July. Then we increased that number again to $2,100 in September and October. Such quarter-over-quarter increases are really great and very encouraging to see. It just shows that we have been busy increasing our dividend income by adding more shares either through fresh capital or dividend reinvestment plans (DRIP).
Of the $2,112.71 received, $342.84 was in USD and $1,769.87 was in CAD. That’s about a 15/85 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 5 dividend payouts in October 2019 came from Bank of Nova Scotia, Inter Pipeline, CIBC, Telus, and TD (not in order). Dividend payout from these 5 companies accounted for $1,303.68 or 61.7% of our October dividend income total.
Compared to October 2019, we saw an outstanding YoY growth rate of 31.75%! Wow I was totally surprised when I saw this performance number. This was the second time in 2019 that we crossed the 30% YoY rate in a single month. It would be super cool to continue the 30% YoY growth rate for November and December but I won’t hold my breath of this.
Unfortunately, October was a quiet month when it comes to dividend increases. Only one company announced dividend increase.
- SmartCentre REIT increased its dividend payout by 2.8% to $0.154 per share.
- Visa increased its dividend payout by 20% to $0.30 per share.
- Omega Healthcare increased its dividend payout by 1.52% to $0.67 per share.
This effectively increased our forward annual dividend by almost $40. At 4% dividend yield, that’s like adding $1,000 into our dividend portfolio. I’ll take any dividend raises any day!
Taxes on Dividend Income
As you may know, we utilize tax-advantaged accounts like RRSP and TFSA for our dividend investments. We have been maximizing our RRSPs and TFSAs each year. Once we max out these two accounts, we then start investing in our taxable accounts.
We only hold US dividend-paying stocks in RRSPs to avoid paying the 15% withholding tax on foreign dividends. When it comes to income trusts and REITs, we only hold them in either RRSPs and TFSAs. For taxable accounts, we only hold Canadian companies that pay eligible dividends.
This is our way to be as tax efficient as possible. Our October dividend income is, therefore, spread across the three different accounts per below:
- RRSP: 25.9%
- TFSA: 43.5%
- Taxable: 30.6%
Effectively, only 30.6% of our October dividend income or $646.32 is taxable. This amount is then split between Mrs. T and me in about a 30/70 mix.
Dividend Stock Transactions
In September, we closed out our Dream Global position. We didn’t deploy the cash from this transaction in September but decided to deploy that cash in early October when the market was very volatile.
After monitoring different Canadian dividend stocks for a few weeks, I decided to purchase 70 shares of Rogers (RCI.B). Rogers has been trending around 52-weeks low. Given that people are addicted to their cellphones and data plans, I figured it would be good to increase our stack in Rogers slightly.
This transaction added $140 toward our annual dividend income.
With ten months in the book, we have received a total of $19,106.97 in dividend income. Given that our annual dividend income goal was $23,000, we are off by $3893.03. This means we need to receive at least $1,946.52 of monthly dividend income in the remaining months of the year. Looking at our dividend income history, I don’t think we can hit that number of November. But for December, we should be able to receive over $2,000 in dividend income. Therefore, I remain optimistic that we can hit our annual dividend income goal by the end of 2019.
To put our dividend income into a quantitative perspective, at $40 per hour, we have saved ourselves over 477 hours, almost 60 working days, or almost 12 weeks. In case you are wondering, that’s 23% of the year. If we can receive over $23,000 in dividend income for 2019, that’d mean the dividend income would over 27% of the year. This would be amazing to accomplish.
Dear readers, how was your October dividend income?