Blog

January’21 – Monthly Passive Income update!

5 Comments

Hi there!

First of all, I want to begin the first update for 2021 by thanking you for being part of our journey. I started writing about my personal finance back in June of 2020 in the midst of pandemic. It is my way of staying the course, be disciplined and showing commitment to our goal towards financial independence, please browse our monthly updates on passive income when you get a chance. By this blog I also hope to inspire few people to stay committed with their saving, investment and financial wellbeing, it is so so important in a time we all are witnessing presently. As usual, our monthly update begins with updating below two pages with the latest data:

  • 2025 Goal tracker on homepage – You will notice a negative income to begin with, this is because of more expenses than earnings in January
  • Dividend Portfolio with latest holdings

Passive Income Pie

For the first time since I started reporting, our diversity pie shaped up like this, with no rental income at all! Our end state 2025 pie would ideally have the following income split:

  • Rental Income – 45% – $3000 per month
  • Dividends – 40% – $2500 per month
  • Lending Interest – 15% – $1000 per month

In coming days (..and years) I aim to smoothen out the ratio and expect less fluctuations with different passive income sources. We also wish to explore other passive income sources to build a solid foundation for our 2025 goals with good diversification and sustainability.

Monthly Dividend Earnings

While we ended 2020 on a solid note by crossing $6000 in annual dividend and not to mention beating our 2020 goal handsomely, we also started the year with a bang by raking in the highest monthly dividend ever! This surely gives us the confidence to beat this year’s dividend goal of $8500 as well. Key points from this month’s dividend income are:

  • We received dividend deposits from total 20 companies (19 Canadian & 1 US), with total value of $939.15
  • CIBC is the biggest contributor for Jan-Apr-Jul-Oct months and with its help I am looking forward to see a 4 digit monthly dividend amount for the first time in April (or certainly July!)
  • Dripped 11.3 additional shares for CIBC, Diversified Royalty, Pizza Pizza, Plaza REIT, Telus & Transcontinental
  • Received increased dividends from: Telus 6.8% & Transcontinental 3.5%

Dividend Goal Tracker – Planned vs Actual

Planned Yearly: Blue bars | Actual Yearly: Pink bars | Planned Monthly: Green line | Actual Monthly: Green plot

I have mentioned this several times in the past – this is my favourite visual of our dividend earnings as it helps visualizing where we stand with our dividend goal. As per our Dividend Portfolio, the projected annual dividend earning is just over $6700, so every bit of dividend raise will help narrowing the gap of $1800 that I currently have. I will be monitoring the progress closely and take every action possible to meet the goal if not beat it!

My Marketplace

I sold 209 shares of Brookfield Property Partners (BPY.UN) under one of our TFSA account, with about 9% of profit (including dividends earned over little over two years), this reduced our forward annual dividend by about $360. With the sales proceed I grabbed the opportunity with both hands by buying 100 shares of Alimentation Couche-tard (ATD.B) when it dropped 10% on the news of Carrefour acquisition, which failed later on due to French government’s rejection by stating it will risk their food safety. The purchase value appreciated little over 6% already in less than a month. This purchase also makes ATD.B our biggest TFSA holding and added $35 to forward annual dividend. They were also one of the contender of my Top 2021 stock picks but didn’t make the final three, nevertheless I see it as a company with great growth potential, both in terms of share appreciation and dividend raises.

I also bought miniscule amount of Nio Inc which do not pay any dividend. They are known as a Chinese Tesla and are in the business of designing, manufacturing and selling electric vehicles primarily in China and several other countries. The stock price appreciated more than 3550% in the last one and a half year and they reported 7225 vehicle sales in January which is 352% sales growth year-over-year. With a long timeframe to retire I wish to tilt the scale a little bit towards growth stock as compared to dividend payers and this buy was a step towards it.

I also kept accumulating CIBC shares as part of my regular RRSP contribution through my employer, they match 50 cents to every dollar I contribute up to an annual limit of $2550. I will repeat again, if you have such contribution plan with your employes, don’t leave money on the table and enrol NOW!

Rental Earnings

The rental property which we own 50% with our real estate agent is vacant now. Tenant’s last month was January and hence no rent but we did had mortgage and other bills to pay which led our passive income to go below zero. Our plan is to spend some money in renovation and put it in the market for sale. If you followed us in the past, you will know that we bought this townhouse in Jan’20 for $495000 and it was rented for $2100, with all expenses we were neither earning nor losing but price appreciated drastically. So we are thinking of cashing it on the current market run and deploy the money elsewhere. We bought another investment property back in Sept’20 and it was a rundown bungalow. We spend a good amount of borrowed money in renovating upstairs and had applied for a legal basement permit which came in last week, We are now in the process of screening contractors and collecting estimate and have almost zeroed in on one, hopefully we will kick-off the construction soon. It would take eight to ten weeks to wrap up the work before we put it out for rental. Currently due to people working remotely, a lot moved out of Toronto downtown (and pockets of GTA as well) which impacted the rental market and rents came down by 10%-25% or more. I am already having difficulty finding a tenant for one of our downtown property and hopefully we will find a good tenant soon. Else we keep depleting our personal money and achieving new height with line of credit balances and paying higher and higher interests every month! That’s all for now for rental income update and we really aim to bring back the rental earnings on track soon.

Lending Interest Earnings

As we are paying a lot of interest on borrowed money from line of credit, the net interest earning is quite low but thanks to the private lending money, we are still in green! The commitment for lending is ending this month and we will receive the principal back, which will partly go towards the basement construction and rest to reduce line of credit balances. We have literally exhausted most of the balance and let me tell you.. we have quite a good limits under different accounts! We may again look at private lending when we sell the townhouse and have some cash to lend, I am pretty comfortable with the arrangement and have good and reliable contact. As far as our Lending Loop income goes, all I want to say is.. it roughly pays for a Pizza every month! Ever since Covid started, the new funding needs from small businesses have almost stopped, we hardly get one request a month while pre-Covid the average was 4-6 requests a month. This itself shows the impact on small businesses!

As a new year’s resolution we decided to share our good fortune in a measured approach where we aim to giveaway 10% of our previous year’s passive income towards good cause. I also decided to express more gratitude and appreciation towards the little things in life that I feel blessed about and enjoy, but is mostly taken for granted. Sharing with Society & Gratitude & Goodness are dedicated towards these new goals of life, please do visit them when you get a chance.

This is a wrap for our first update of the year. Please do subscribe using the widget at the bottom of the page to get monthly updates, I don’t spam and you will only get an email whenever I post on this website.

Stay indoor, Stay safe and Save-Invest-Repeat. Do share with people in need and count your blessings.. Good luck! 😊

Our Top 3 Picks – Canadian Dividend Stocks

1 Comment

This post saw its existence only after Bob contacted me to contribute to his upcoming post on top Canadian dividend stock picks for 2021. Bob is a renowned blogger known for his site Tawcan where he routinely publish articles recording his financial independence journey. He aims to reach financial independence by 2025 or earlier mainly through Dividend investing, frugal approach towards personal finance and other passive income streams.

I got so excited by the idea that I immediately responded back listing my top 3 picks and in exactly 3 minutes he shot back saying – Can you write up some analysis/reasoning behind your picks? I then took a deep breath, a step back and decided to take a measured approach to this and document it in the form of an article. Thank you Bob for this opportunity as it gave me a chance to revisit my original picks and I would admit here that the names changed a bit (..no I am not divulging the original stocks!). Our personal 2025 goal is to generate monthly passive income of $6,500 out of which $2,500 is aimed to come from our Dividend portfolio. Last year we not only beat our annual dividend target of $5,500 but exceeded to give us a head start to this year’s goal of $8,500, I publish our monthly passive income progress comprising of dividends, rents and lending interest. Since we are in our early 40s we have the flexibility to focus on growth of our portfolio but at the same time not compromising too much on planned dividend goals. Keeping this in mind, I started compiling subset of stocks out off my favourite source of information, the Canadian Dividend All Star List December’20 edition. A big shout out to them for putting together useful source of information to be used readily! Since the theme is growth, my criteria is as below.

Last Dividend Increase greater than 20%

I got me the following 9 stocks with dividend raise ranging from 22% to all the way up to unbelievable 100%! I didn’t knew that Constellation Software raised its dividend by a whopping 100% last time.

But then we can’t judge a company only by its last raise, as personally I like to buy and hold for a long long time, if not forever! And this made me apply the next filter.

Last Dividend Increase within last 1 year

Even though my focus is growth I won’t like to own a stock which do not increase the dividend at least once a year. Even if Constellation Software increased the dividend by 100%, it was nearly 9 years ago! I am not saying it is not a good investment, but it just doesn’t fit my scheme of things. And for the same reason, neither does Altius Minerals nor Osisko Gold Royalties, whose last raises were more than 1.5 years and 3 years ago respectively. I am looking for companies which have good dividend growth rate and more so, consistent dividend growth track record. We own a bit of Canadian Information Technology Index ETF – XIT in our RRSP account, which holds Constellation Software shares as their second highest holding (at about 24%), so we do hold CSU indirectly!

Hence I removed them leaving me with six companies to proceed with. I went back looking at their dividend growth rates more closely by expanding the growth rate to three years instead of just looking at the last raise.

Last 3 Years Average Dividend Increase greater than 15%

If you look at the top four stocks, they all have impressive last dividend (and one year average) raise greater than 45% & three year average greater than 30%, leaving bottom two behind by a considerable margin. Again not that anything is wrong with them but for now I will go ahead with top four stocks and look at few other metrics.

At this point I would like to mention that Alimentation Couche-Tard is one of our biggest holding in my TFSA account and I recently added more when it dipped 10% due to an acquisition news. XIT (Canadian Information Technology Index ETF) also owns about 2% of Enghouse Systems shares out of its total holding and as I mentioned earlier, we have this ETF in our portfolio, I can say we indirectly hold some ENGH as well!

Our entire portfolio holdings can be found at this link, and you can make a copy of the google sheet and reuse if you want. It automatically populates the Latest Price, Annual Dividend, Dividend Yield and Projected Annual Dividend for you if you provide the TIcker & Number of shares you hold.

Target Price & Analyst Ratings

While you should always take analyst ratings and recommendation with a pinch of salt, as they may have their own ulterior motive behind their analysis, it does provide a fair idea if you look at quite a few of them. CDASL sheet provides both Analyst Ratings & Average target price for all stocks and also tells number of analysts it considered for the ratings. Additionally I also grabbed the target price from marketbeat website for comparison purpose and it showed some significant deviation from CDASL list and I don’t know why, could be source of information.

As per CDASL, the Target price and Upside for Quebecor Inc is $37.95 and 24% respectively while MarketBeat website states – 4 Wall Street analysts have issued ratings and price targets in the last 12 months. Their average twelve-month price target is $37.57 (upside of 22.8% at current price). The high price target is $40 and the low price target is $35 and there are currently 1 hold rating and 3 buy ratings for the stock, resulting in a consensus rating of Buy. Current dividend yield is 2.61% with dividend payout ratio of about 38% and its EPS has been growing at 34% a year over the past five years. All the metrics reviewed so far are favourable but I personally feel it is a still a provincial player with limited geographical reach, with mostly no intent or appetite to expand elsewhere. This makes it a narrow moat company and hence I will pass for now but will monitor it.

As per CDASL, the Target price and Upside for Kirkland Lake Gold Ltd is $60.34 and 22.8% respectively while MarketBeat website states – 4 Wall Street analysts have issued ratings and price targets in the last 12 months. Their average twelve-month price target is $79.75 (upside of 62.3% at current price). The high price target is $95 and the low price target is $68 and there are currently 4 buy ratings for the stock, resulting in a consensus rating of Buy. Current dividend yield is 1.95% with payout ratio of about 21% and during last three years, Kirkland Lake Gold achieved compound earnings per share growth of 72% per year. Its total debt to equity ratio is 0.5% meaning they have negligible debt and hence considering all the metrics reviewed so far, they makes it my number one pick of the year. I don’t own it but would like to add it to my registered account as soon as I get an opportunity. More information about them can be found at their investor’s page here.

As per CDASL, the Target price and Upside for GoEasy Ltd is $98.67 and 5.6% respectively while MarketBeat website states – 3 Wall Street analysts have issued ratings and price targets in the last 12 months. Their average twelve-month price target is $107 (upside of 14.5% at current price). The high price target is $122 and the low price target is $92 and there are currently 3 buy ratings for the stock, resulting in a consensus rating of Buy. Current dividend yield is 1.93% with payout ratio of about 30%. GoEasy’s earning per share has grown 30% each year, compound, over three years with about 25% of insiders holding the stock, making it a stock to buy and hold for long term and is second on my list to add more. We already hold this in TFSA since last 1 year and it is up by 50%, and when opportunity comes up I plan to add more to our position. More information about GoEasy can be found on their investor’s page here.

As per CDASL, the Target price and Upside for Agnico Eagle Mines Ltd is $97.07 and 8.7% respectively while MarketBeat website states – 5 Wall Street analysts have issued ratings and price targets in the last 12 months. Their average twelve-month price target is $117 (upside of 31.1% at current price). The high price target for AEM is $140 and the low price target for AEM is $95 and there are currently 2 hold ratings and 3 buy ratings for the stock, resulting in a consensus rating of Buy. Current dividend yield is 2.09% with payout ratio of about 42% and debt-to-equity ratio is 31% and based on overall metrics and analyst recommendation, I am putting this third on my buy list for this year. More on why to invest in Agnico can be found on their investor’s page here.

To conclude, my criteria revolved around dividend growth and while it may not be the best approach to compare or judge a company, it surely is one of the yardstick for a company to be financially sound and reliable. While there is no guarantee that past performance or results will repeat itself, a low payout ratio and good EPS growth does further indicates potential in future dividend raises. Below is the last chart I present from morningstar website, which compares the top four companies I discussed above. The comparable is for 10K growth over the period of 5 years and as you can see – Kirkland Lake Gold Ltd, GoEasy Financials & Agnico Eagle Mines leads the race.

Happy Investing and Good luck with whatever you buy!

December’20 – Year End Passive Income update!

2 Comments

Hi there! First of all.. I wish you and yours’ a very Happy New Year, hope this year let you achieve whatever you aim for, be it spiritual or materialistic. Finally 2020 ended and oh boy.. what a year we all witnessed! I am sure most of us will remember this year for a long long time and will have many interesting incidents and stories to share with our grandchildren. Personally we were not impacted at all by this ongoing pandemic and hope it end soon but this whole situation makes us realize how lucky we are and are thankful to the invisible power behind it! In fact this realization lead me to kickstart following two blogs:

  1. Gratitude & Goodness – Write one gratitude (or something good in life) for each week of 2021! I plan to append one paragraph every week, please do visit when you get a chance. 😊
  2. Sharing with Society – Measured yet thoughtful approach towards helping an organization or an individual in need, all year long. ✌️

Now getting back to business, as I mentioned last time, we achieved our 2020 dividend goal in November itself and our portfolio attained a milestone of crossing $150K mark! As usual, our monthly update begins with updating below two areas with the latest data:

Passive Income Pie

The diversity pie which depicts the split between our various income stream for this month shaped up pretty nicely, to my liking. Over time I expect the ups and downs to smoothen out and get closer to below split which I consider ideal for our situation:

  • Rental Income – 45% – $3000 per month
  • Dividends – 40% – $2500 per month
  • Lending Interest – 15% – $1000 per month

As I keep mentioning, in coming years we also wish to add at least one more solid income source and hence we shall start exploring other opportunities as soon as our debt situation improves, to ensure our 2025 goals is amply diversified and sustainable.

Monthly Dividend Earnings

We ended 2020 crossing $6000 in annual dividend and it was the first time ever in my life, hope to continue this journey and keeping beating our goals, year after year. Key points from this month’s dividend income are:

  • We received dividend deposits from total 20 companies (18 Canadian & 2 US), with total value of $581.62
  • Dripped 12 additional shares for Brookfield Property, Diversified Royalty, Enbridge, Exxon Mobil, Pizza Pizza, Plaza REIT & Suncor
  • Received increased dividends from: Alimentation Couche-Tard 25%, Fortis 5.8% and OTEX 15%

Dividend Goal Tracker – Planned vs Actual

Planned Yearly: Blue bars | Actual Yearly: Pink bars | Planned Monthly: Green line | Actual Monthly: Green plot

We beat 2020 dividend goal by $658 which gives us the much needed headstart for 2021 goal of $8500 in dividends. As per our Dividend Portfolio, the projected annual dividend earning is just over $7000, so we are short by $1500 to attain our laid out goal. If we consider achieving the goal by pumping new money only (the worst case scenario), then at a healthy yield of 4%, we will need to contribute additional $37,500. Looking at our debt situation, most of our savings this year will go towards paying off the debts and hence contributing to dividend portfolio will be quite challenging. Apart from regular payroll deduction under RRSP, we can probably look at adding some funds in TFSA or take yet another loan for RRSP. On the other hand, we have many quality stocks and upcoming dividend raises and drips will surely help us narrow down the gap. The good part about dividend investing for us is we have no plan to take out any money any time soon and we also have ample contribution room under both TFSA & RRSP. In short, the 2021 journey is steep but not unattainable.🤞

My Marketplace

George Soros said – If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring. I strictly followed his philosophy this month and stayed away from the market and news, most of the time. I just kept accumulating CIBC shares as part of my regular contributions in RRSP through my employer.

Rental Earnings

There was no change in cash flow from the rental property in which we have 50% ownership. After deducting mortgage & maintenance fee from the rent, the property gives us $180, and if we split two ways then our shares is $90. We let the money accumulate in our joint bank account and it is mostly used for the property tax installments; factoring this we are losing about $100 a month. This doesn’t include any random tap leak or heat malfunctioning or any other issue with the property. There is an upcoming kitchen cabinet change and some other cosmetic repairs, which will further drain money. Having said this, we still believe we are doing pretty well as based on few comparables, this property shows a price appreciation of 25% already in just 1 year. If you keep a tab on GTA real estate market, you will know the madness, it is much hot and surely more exciting than stock market! To give you an example, a house was sold in the end of 22-Sept-20 for $790,000 after which they renovated and sold again on 4-Jan-21 for $998,000, got sold in just 1 day! The signage in the front lawn proudly boasts – Sold at highest price on the street! Even if the buyer spent $100,000 (which is quite lavish) for the renovation work and 3 months of mortgage, they still earned $100,000 in 3 months. This property is on the same street we bought a house, also back in Sept’20 and are awaiting legal basement permit. We have no plan to sell it anytime soon but are eagerly waiting for it to start bearing fruit.

Lending Interest Earnings

The interest we received reduced yet another month as we are paying half of the incoming interest towards various line of credit accounts. This income stream is going to end up in a month or two as the contract is coming to an end, we will use the proceed to pay off some of our debt. Once we are financially comfortable I totally want to get back to this yet again.

This is a wrap for 2020 and overall we are quite pleased with our achievements. We are super excited and looking forward to 2021 and its offering. Thank you for being part of our journey and once again we wish you and your family a great new year. Please subscribe using the widget at the bottom of the page to get monthly updates, I don’t spam and you will only get an email whenever I post on this website. Stay indoor, Stay safe and Save-Invest-Repeat. 😊

Sharing with Society

5 Comments

If one is fortunate and blessed with money, we believe it is our responsibility to share it with the society. At times we keep deferring it with others in anticipation of a “better situation” for ourselves, which rarely comes. It is a human nature to keep satisfying never ending materialistic goals and targets, which is not totally wrong but then at the same time we should be mindful towards the greater good. We couldn’t have been brought into this world just to satisfy our own materialistic needs, but also to help each other especially if we are capable. There is no right (or wrong) time to share our fortune with society and my better half taught this to me with her more aware approach. Currently we are in a solid red situation financially due to a chew-more-than-you-can-swallow project and my approach to giving was to shelve it till we are in a comfortable position, my wife went ahead and kickstarted it nevertheless. Situation may never get ideal and perfect for us but there is so much suffering and need in the world requiring our assistance that you can almost always come across a needy when you go out and observe. While we have been helping randomly since we started earning on our own and have tried doing “our part” in helping people (both relatives and unknowns), I think this is the right time to put some structured and calculated approach to it.

We have decided to start sharing 10% of our passive income to start with and see how it goes and we will surely increase our contribution to society when we shed some personal responsibilities. Since our 2020 passive income was about $28,000, our aim is to share $2,800 with various organization and individuals, as we see appropriate. Below table will be updated on monthly basis to keep a tab. 🙂

SickKids Hospital

If you are in Canada, it is highly unlikely that you haven’t heard of them. They are not just a hospital, they instil hope in every parent who is in extreme pain and fear due to their child been sick. In a very delicate and fragile situation, they with their Compassion, Integrity, Expertise & Excellence, help people from all walks of life. Their vision is “Healthier Children. A Better World.” and we strongly believe in this. We have witnessed two second hand cases where SickKids went above and beyond to help sick kids and parents. My wife’s timing to donate was absolutely perfect, all the donations till 31-Dec-20 was tripled matched by Levine Financial Group (up to $1.075M) meaning our $200 turned into $600, just like that! Not only this, all new monthly donors registered before 31-Dec-20 will have their donations triple matched all year long by a generous anonymous donor (up to $3.5M) and hence we registered for $100 monthly contribution as well. You can read more on this here.

We canceled our monthly automated payments after receiving the generous “triple-matched” benefits for few months but we continued ad-hoc donations throughout the 2021 and intent to continue in future as well, as long as we can. Please join us and donate generously to SickKids!

World Vision India

World Vision India is one of the country’s largest child-focused humanitarian organisations and they works across India impacting around 2.6 million children and their families to address issues affecting children in partnership with governments, civil societies, donors and corporates. With over six decades of experience at the grassroots, they employ proven, effective development, public engagement and relief practices empowering vulnerable children and communities living in contexts of poverty and injustice to become self-sufficient and bring lasting change. We are personally associated with World Vision since 2011 when we adopted a child for her education and believe me, there is no feeling such as knowing you are giving a child an opportunity to grow and one day she could be the light in other people’s life. We contribute towards her school expenses in March & September of each year till she completes her schooling.

Please donate to World Vision to uplift children from poverty and suffering and help them make this world a better place!

Anonymous

An old friend recently contacted me asking for help due to Covid making a mess with his family’s life. His sudden approach took me by surprise as we haven’t been in personal touch since our school days and it tells a lot about his need. It appals me how this pandemic has impacted lives of the majority and the helplessness it can cause. I am glad he contacted me and I could help and really wish everyone in need have someone who they can reach out to without hesitation, in a desperate time like this.

Code to Enhance Learning

As per their website, CEL is a nonprofit organization run by my brother-in-law and they work with schools and organizations to bring coding to elementary grade children so that they learn a skill, much needed in current digital world, to express feelings and nurture creativity and problem solving. However, the skill is limited to few privileged kids only. There are 80 million kids in primary education in India and 80% of the coding potential remain untapped  in schools as per a report. CEL conducted Kids hackathon attracted more than 1000 kids!

Please donate to CEL to empower underprivileged kids through coding skills.

Sewa International

Founded in 2003, Sewa International is a nonprofit service organization and is part of a larger movement that started in India in 1989 and is active in twenty countries. Sewa serves humanity irrespective of race, color, religion, gender or nationality and specializes in disaster relief and rehabilitation. Their development programs focus on family services; child, tribal and refugee welfare; women empowerment; health; and education. They undertake development projects in US, Colombia, Guyana, India, Kenya, Pakistan and Sri Lanka.

According to their website, April 21 brought a severe second wave of COVID-19 across India and the country’s healthcare system is overwhelmed. The number of new cases are crossing 300,000 every day and the death toll is increasing, due to which hospitals are struggling to accommodate new patients and an acute shortage of hospital beds, ventilators and oxygen is causing serious stress all over the nation. Hundreds of volunteers from Sewa International are serving across India in different ways and they are working on building a digital helpdesk to provide critical information such as ambulance service, hospital bed availability and blood and medicinal supplies to people. As the pandemic is causing economic hardships by forcing partial lockdowns, they are planning to distribute over 10,000 essential item kits to families and assist more than 1,000 orphanages and senior care centers. This is a collective effort that can save lives, defeat hunger, assure distressed people, and help India in its decisive fight against COVID-19.

Please join them in this fight by donating generously to Sewa for this cause.

Anonymous

An old friend of my wife contacted her asking for help, again due to Covid hardship and lack of income. It is heartbreaking to hear individual stories of people’s suffering this pandemic. There are any who can’t pay their rent, school fee or for the food and helping them with whatever we could seems the right way at the moment. Please take care of a family around you in this time of need, no matter how less you can contribute, any kind of help will be appreciated.

Crohn’s & Colitis Canada – Gutsy Walk

Crohn’s and Colitis Canada (CCC) is the only Canadian national, volunteer-based charity focused on finding the cures for Crohn’s disease and ulcerative colitis and improving the lives of children and adults affected by these diseases. Their promise is to cure these chronic diseases and improve the lives of affected by children and adults. They are one of the top two health charity funders of Crohn’s and colitis research in the world, investing over $135 million in research since 1974, leading to important breakthroughs in genetics, gut microbes, inflammation and cell repair as well as laying the groundwork for new and better treatments. With their funding, they are transforming the lives of people affected by Crohn’s and colitis (the two main forms of inflammatory bowel disease) through research, patient programs, advocacy, and awareness. I was diagnosed with Crohn’s back in 2006 and ever since I had multiple flare-ups and surgeries so I personally know how terrible these diseases are. While I will leave to share my experience for another blog, I know how desperately we patients need a cure.

Gutsy Walk is CCC’s signature campaign which is responsible for most of their fundraising. This walk is scheduled in early June every year and had been virtual since past 2 years due to pandemic. People from all walk of life are actively engaged with this campaign for various personal reason and it surely brings a ray of hope and support. I had also created my own page this year, please support us by donating whatever amount you can and help us overcome these diseases.

An Old Friend’s Demise

I woke up one fine day and saw a friend created an online campaign to gather fundings for another old friend’s kids. Although I was not in touch with him post college, my heart sank looking at the campaign. He was almost same age as mine and passed away due to an heart attack leaving behind his homemaker wife with a five years old son and eleven years old daughter to face an arduous life ahead. We spent 3 years together in a college hostel and ate, played, roamed around, had fun together with bunch of other friends. The campaign is aimed to gather money to fund kids education. Please share whatever you can to help this family gather courage and take the journey forward. The donation link is open for about 45 days.

We achieved our 2021 target of sharing $2800 by Oct’21 itself but did continued a little more, because – why not! As I said above, I personally tried postponing the givings till our situation improves, and I totally understand your situation. But as someone said – Sharing is caring, and Giving gives back. You can always do your part, no matter what situation you are in. Thank you for sharing and reading! 🙂

Gratitude & Goodness

2 Comments

Happy New Year.. May this year let you achieve what you couldn’t last year, along with keeping you and yours safe and happy! I don’t normally make new year resolutions but seeing how terrible 2020 unfolded for many, I realized how thankful we are by not getting affected by it. I also realize how I take things for granted and do not express gratitude when needed. It is not that I am not aware of being privileged in so many ways but mostly due to me being reserved and self contained, lacking expressiveness. Recently I started reading Neil Pasricha’s book – You Are Awesome, gifted to me by a close friend, whilst I haven’t finished the book yet, I got an idea to have a resolution – To write one gratitude (or something good) a week in 2021. This is inspired by Neil’s 1000 Awesome things where he publishes one awesome thing a week, this blog went on to become the best blog in the world, two years in a row! I don’t even remotely aim for such widespread recognition, I just wish to thank people and goodness around me, to feel more positive and be grateful towards life and it’s offering. To begin with, I plan to append one short paragraph to this post, each week for 52 weeks and see how it goes. 😊

#1 (01.Jan.21) – Wife is Life

I met my better half (far far better actually) 20 years ago which is like half of my entire life! As much as I am fully aware of how she make our lives joyous and easy, I must admit I don’t thank her enough (if not at all!) for her tireless contribution. She’s the binding gel who pitches in for everything – be it household chores, emotional support or most importantly making our house a home. She does it ALL for us and make it look so effortless that we often take her hardwork and dedication for granted. I realize her importance and in fact secretly hates it when she isn’t around even for few hours! Her juggling abilities with her own work which also consume a considerable amount of time is admirable. Reflecting back on all these years of togetherness, we have dealt with our fair (or unfair) share of thick and thins and her rock solid support is nothing but a blessing. With my constant struggle with health, I couldn’t have asked for anyone else to be my partner in fighting through it, be it pumping a needle to staying up all night in a hospital. I can’t thank her enough for all she do for all of us and being so supportive and I am fully aware of how lucky we all are for having her in our lives. 🙏🏼 💞

#2 (08.Jan.21) – The First Born

Most father can resonate with me on their experience for their first born! I simply can’t do justice to my feeling towards my elder daughter in a paragraph, too difficult.. but I will try. I still clearly remember my expectation with our first child when we came to know we are expecting, I was very particular in what “I wanted” – a GIRL, extremely demanding, hot headed and spoilt, who can exhaust the freak out of me. To my amazement and joy (and a bit of sweet pain), we were blessed with exactly what I longed for, and more! Now I will also admit that after 10 years, many a times, she gives me complete nervous breakdown and headache but it vanishes in split seconds, when I look at her or hug her, every single time. I now feel (and gladly so) I am born to serve her, right from day one when I lifted the carriage off the bumps so not to disturb her sleep to present days where anything she wants (or even vaguely mentions) automatically comes to my mind when I go shopping. From putting an extra blanket on her in the middle of the night to not moving my arm when she slept on, from completing stories even when she’s asleep to hugging her little extra tight; I am so thankful that so far I am able to provide for her (..oh well a Pet is a big no-no) until she starts asking for a Louis Vuitton or a Lamborghini! So what that she turned into a bit spoilt and lazy and delicate, she’s my precious child and special, my second love. I am so glad to have you in my life, you bring our daily dose of love, affection and challenges, I wish you the best of health, all the happiness and success in life. ❤️ 🤗

#3 (16.Jan.21) – Blessed Again

When we expected our second child, I must say at least my requirement was cloudy, all I wanted was a healthy child. There was no clear expectation on gender or personality, not even names, in fact we finalized the name of our daughter after coming home from hospital! Don’t get me wrong here, I was super excited but since we had gone through the experience earlier, we quite knew the feeling (and the routine). But oh boy.. we were in for a joyride! We immediately made the “connection” and needless to mention, she’s precious and really special in her own little ways. She amazes us every single day as she’s so different than her elder sister (..makes me wonder if both are our children only), be it her desire to do everything on her own (no matter how messy it gets..) to asking smart questions and giving thoughtful responses! She need to know what all road signages mean and even want me to explain the meaning of hindi songs. Once I told her the meaning of Suhana Safar aur yeh mausam haseen, Humein dar hai hum kho na jaye kahin, and she immediately says – silly Papu we can’t get lost, we have a GSP. She is a non stop chatterbox and if asked to stop, she gives back – Its my house too and I can talk when I want, can’t I? She is just three but would randomly appear out of nowhere and say Papu.. and on asking what is it.. she will say I love you or give a hug! If she finds me lost in some random thought she immediately inquires.. What are you thinking? or will snuggle and say Let’s talk. She’s such a joy to be with and an absolute stressbuster in any situation and I am just blown away by her curiosity (..she even wants to know why are we proud of her!), ability to relate to different things, kindness and her immense care for all of us, at this early age. I didn’t even remotely expected this and we all are so so blessed to have you in our lives and I wish you the best of health, the happiness and all the goodness this world can offer. ❤️ 🥰

#4 (23.Jan.21) – Parents, the Creator

Life is a relentless pursuit towards betterment and progress of oneself and people associated with you, so much that we don’t get a chance to retract our moves. While there is always an option to reconsider and go back to our roots but at times our needs become the necessity and retracting is not easy. In my chase for a better future, heightened responsibilities, desire, and a bit of helplessness; I lost both my parents and both times I wasn’t there in their last days. No guilt even remotely compares to this feeling and believe me it saddens you every time you think of them and moist your eyes. I have immense respect and admiration for people who can hit that reset button, take a step back. Only solace for me is I had my siblings to take care of my parents and I am heartfelt grateful to them for their backing and being there. Both my parents were humble, down to earth and more than anything kind and helpful to anybody and everybody. I remember back in the days, my dad housed a total stranger (..and later his family as well) and ensured he is self-sustained before letting them go! They took every opportunity to assist family and others as needed, within and many times outside their means. I recall most of my phone calls with mom were around helping others and “won’t-you-give” conversations and now when I think about it, I feel so proud to have them as my creators. I am so thankful to both of them to instill values such as care, share, going above and beyond to help people (..even random stranger) and stay away from the noise and greed. Love you Didi and Pappa, while I can’t bring back the past, I try to live by your beliefs and legacy and I am so blessed to have you as my parents. 🙏 😔

#5 (30.Jan.21) – Three Cheers for Laziness!

In my mind laziness and laid back attitude in personal life is a blessing and not everyone possesses it. Work that need to be done, gets done in its due time so stressing it out or making a fuss is unneeded. Once in a while, just focus on a single chore instead of multitasking all the time. In this fast paced environment, your body and mind deserves to be indulged with laziness. There is abundant enjoyment in occasionally lying in a cozy bed till late morning and let the mind go blank, trust me. If you have an option, talk to a child, uninterrupted by anything else and bask in the power of their innocence and purity. Regrettably we live in a world of high expectation and need to excel, all around, all the time. If we are fortunate enough, we also have a special knack to put ourselves in pressured situations! If you can afford (like me..).. go slow, smell the flower, stop to admire the “view”, feel the breeze (..or raindrops), or just stop for a coffee. Laziness is a pleasure. 😌 🦥

#6 (9.Feb.21) – Pleasure of Cooking

I find cooking joyful and calming, it is an effective and a cheap (..well unless you fancy cooking with saffron or truffles) way to relax. You should give it a try but don’t get burdened to dole out delicious and exquisite cuisines. You don’t have to go through high hopes and expectations, consider it as a therapy. The chopping, dicing, mixing, simmering, tossing with a music in the background and sips of beer (..or whatever), transports you altogether to a different zone! It will bring delight to the faces of your loved one if you master the skill.. but even if not, the whole process is quite therapeutic and worth a shot. 😋 👨‍🍳

November’20 – My Passive Income Update!

1 Comment

We are almost at the end of 2020 and it had been a heck of a year. Who knew we will see days akin a zombie or pandemic movie showing empty ghost town with people walking in masks and gloves! Below are few pictures I snapped recently on my unavoidable visit to the downtown. It is heartbreaking to see near empty streets, stations and trains at 11AM in the morning. In a normal day at this time, these places will be choked with honking cars and bustling people.

While these scenes are surreal, there will be countless heartbreaking stories from small and big business owners which almost entirely depended on the inflow of people into the downtown. With empty offices and near zero traffic, most of these business are already closed or breathing on government assistance. I know of a place where we use to go after work and recently read that it is closed auctioning off the kitchen equipments and furnitures; felt sorry for so many lives in suffering! Personally for us the only inconvenience was the lockdown and restrictions, which is nothing as compared to hardship faced by numerous others. We consider ourselves quite fortunate and are thankful that our lives remained unimpacted.

While October brought us our highest dividend ever, November is again a special month for us in two ways – we surpassed our annual dividend goal in Nov itself; and our portfolio hit the highest value ever surpassing a special milestone! As usual, our update begins with updating below two areas with the latest data:

Passive Income Pie

The diversity pie keeps fluctuating every month drastically and I must admit, I don’t like it! Over time I expect the ups and downs to smoothen out and get closer to below split:

  • Rental Income – 45% – $3000 per month
  • Dividends – 40% – $2500 per month
  • Lending Interest – 15% – $1000 per month

In coming years we also wish to add at least one more solid income source and hence we shall start exploring other opportunities as soon as our debt situation improves, to ensure our 2025 goals is amply diversified and sustainable.

Monthly Dividend Earnings

Nov’20 is the second time (after Aug’20) this year that our year-over-year dividend dipped, while last dip was 11% this time it is 16%.. ouch, it surely hurts!! This as I mentioned back in Aug was due to bad purchase choices I made such as VET, CHW, CHR etc where I lost plenty of capital as well as $140 per month in Dividends. Nevertheless this month was still an awesome as we hit our yearly dividend goal a month earlier and we couldn’t be any happier. Key points from this month’s dividend income are:

  • We received dividend deposits from total 14 companies (9 Canadian & 5 US), with total value of $214.16
  • Dripped 3 additional shares for Diversified Royalty, Pizza Pizza & Plaza REIT
  • Received increased dividends from: General Mills 4.1%, Saratoga Investment: 2.5%, Pizza Pizza – 10%
  • As I mentioned last month, A&W announced a special dividend of 0.30 per share on top of their regular 0.10, and it got deposited this month! This special payment compensated for Apr-May-Jun months when they had suspended their dividends.
  • Fortis announced a dividend raise of 5.8% while OTEX raised it by staggering 15%, both effective Dec’20

Dividend Goal Tracker – Planned vs Actual

Planned Yearly – Blue bars | Actual Yearly – Pink bars | Planned Monthly – Green dotted line | Actual Monthly – Green plot

As you can see from the tracker, we beat 2020 dividend goal by $77 with a month to spare. All dividends now on will contribute towards 2021 goal of $8500, which is quite steep. Currently our entire portfolio’s projected annual dividend earning is about $7000 meaning we have to fill the gap of about $1500 in dividends by Drips, Raises & More money! I have many quality stocks with rich history of dividend growth and some of this gap will surely be filled by the raises. Also, not to forget all dividends earned are reinvested via drips or occasional buyings, which will again increase the future dividends. Worst case I need to pump in $30000 in new money to increase my annual dividend by $1500 at 5% yield, some of it will be taken care of by RRSP investment at work and for the rest, I may have to rob a bank or Oh yes.. just take a RRSP loan!

My Marketplace

November was also the busiest month in entire year and I literally had to come up with a quick table to show the trades! I ripped off the bandage on my laggard stocks which I was considering selling ever since pandemic hit and they dropped by like 60%-90%. I booked nearly $11000 in losses on just 4 stocks but I am quite happy with the sellouts as I was able to deploy the proceeds (and some additional cash) in much better options which already started showing results. While I opened no new position, I added to my existing ownerships in 7 different companies. I have full faith in all of them except Suncor which I bought to lower my book value a bit. These buyings will boost the annual dividend by about $400 at a healthy yield of 3.7%.

Along with above trades, I kept accumulating CIBC shares as part of my regular contributions in RRSP through my employer.

Rental Earnings

The cash flow from the rental property in which we have 50% ownership remained the same. After deducting mortgage & maintenance fee from the rent, the property gives us about $180 in positive cash flow. The months when we also have to pay the property tax installment, the cash flow dips to negative. Overall we are losing about $100 a month but it is still a good deal when you look at the bigger picture. The price appreciation on this townhouse is already about 20% in less than a year and the longer we keep the better capital gain we’ll see. The other property that we bought is still far from fruition and the patience as well as cash continues to drain! But I have full confidence in the investment.

Lending Interest Earnings

Lending income kept nosediving as compared to previous months as we are paying more interest on various line of credit accounts and hence net earning continue to slide. This aligns with our goal to decrease the interest earnings and continue diverting the funds to real estate or better investment prospects.

Concluding November reporting gives immense satisfaction as we reached our yearly dividend goal and we already started looking at the next years’ planning and implementation. Feel free to subscribe using a widget at the bottom of the page to get an update on our monthly blog, I don’t spam and you will only get an email whenever I post on this website.

Thank you for the read and see you next month and until then… Stay indoor, stay safe and Save-Invest-Repeat. 😊

October’20 – My Passive Income Update!

1 Comment

Hi there.. I hope you all ducked the pandemic and other related challenges that 2020 offered so far, if there is any consolation we only have about 6 weeks to go! While we can’t predict what future has to offer but hoping new year bring along some positivity and overall situation improves. After many failed drug trials the Pfizer announcement on a possible Covid-19 vaccine sounds promising and most likely we shall see them mass producing the vaccine in coming weeks if not months. According to their press release – Vaccine candidate was found to be more than 90% effective in preventing COVID-19 and based on current projections we expect to produce globally up to 50 million vaccine doses in 2020 and up to 1.3 billion doses in 2021. So far worldwide 54.2M Covid cases and 1.31M deaths have been reported and not to mention the impact it had on millions of families in terms of life or job losses, hardship it brought along and businesses ruined. I personally know so many people who had cases of Covid in their family, fortunately no fatality but even so, I can only imagine how scary it could get and disrupt the life. With second wave picking up, a vaccine would certainly be seen as the light at the end of the tunnel. If you were able to stay clear of the direct or indirect impact, you should consider yourself lucky, as we do.

October was a great month for us and our passive income, we saw little over $1500 from different sources, and to my liking the dividend income was the frontrunner. Like previous months, my update begins with refreshing below two areas with the latest data:

Passive Income Pie

The rental income as I mentioned in my September’20 updates decreased significantly as we resumed paying the mortgage on our investment property. Also as we had quite an increase in dividend income this month, the diversification landscape changed drastically. By 2025, we aim to diversify the existing three passive income sources as follows, while adjusting the split as needed:

  • Rental Income – 45% – $3000 per month
  • Dividends – 40% – $2500 per month
  • Lending Interest – 15% – $1000 per month

In coming years we also wish to add at least one more solid income source and hence we shall start exploring other opportunities as soon as our debt situation improves, to ensure our 2025 goals is amply diversified and sustainable. For now we are recouping from our last month’s property deal and we would like to take some time off any spending or risk taking and focus just on savings and paying off our line of credit balances!

Monthly Dividend Earnings

I feel immense joy to see (and tell..) that October was our highest dividend income month EVER! We crossed $800 a month mark for the first time with 18% year-over-year growth. It surely does pay to stay the course and show patience and discipline. Key points from this month’s dividend income are:

  • We received dividend deposits from total 17 companies (16 Canadian & 1 US), with total value of $827.87
  • CIBC with $556.24 in dividends comprised 67% of total dividends, dripping 5.5 shares. They pays in Jan-Apr-Jul-Oct and hence these months are pretty huge deals for us!
  • Dripped 3.5 additional shares for Algonquin Power, Diversified Royalty & Transcontinental
  • Philip Morris was the only company which announced a dividend raise by 2.6%
  • A&W Royalties & Pizza Pizza continued paying their reduced dividend. As I mentioned last month, A&W announced a one time 0.30 per share special dividend, which I saw deposited in first week of Nov, sweet!!

Dividend Goal Tracker – Planned vs Actual

Planned Yearly – Blue bars | Actual Yearly – Pink bars | Planned Monthly – Green dotted line | Actual Monthly – Green plot

While I like all the charts I have to track passive income, I must admit this one is my favourite as it tells how we are doing at any given time and it is quite important to track progress. Looking at this chart, I am highly optimistic that we will reach our 2020 dividend goal in Nov itself. With 1 month early it shall give us the much needed head start to the steep next year’s goal of $8500! Other than regular RRSP contribution, I don’t foresee much scope for new money allocation toward buying new shares in 2021 and hence we will rely a lot on dividend growths and price appreciation. This also means buying some of the duds that I own and redeploy towards better companies such as Telus who have guidelines in place for their dividend growth for next 2-3 years.

My Marketplace

We had zero action once again except dripping few shares and nibbling through CIBC shares as part of regular contributions in RRSP. All sell limit orders expired one more time and were set for November again with hope to see some price appreciation and curtail the loss. We have about $3000 in cash from last month’s Maxar sell proceed and dividends, but been sitting on the fence and taking our own sweet time to deploy them. In October we set few more stocks to DRIP and should start seeing accumulations in coming months, the more I think about it the more I realize now that I should have set drips long back for eligible stocks. It is indeed a great way to let solid companies be on auto pilot/accumulation to see increased dividends by each passing month, especially if you also don’t have much time on hand to focus on the portfolio.

Rental Earnings

If you read my last month’s post, we had a closing on an investment property in September and then October was completely dedicated to renovating the upstair portion of the house. Most of the planned work got wrapped up with few things yet to be taken care of. Now to realize the full potential of our investment, we chose to take the right approach and apply for legalization of basement apartment as a second dwelling. The house is having a partially finished basement and we plan to tear apart the full area and build it in two sections – a 1 bedroom self contained apartment and a big sized recreation room with attached washroom. An architect was hired to put our ambition on paper and he put together a decent design for the basement apartment and submitted it to the city for permit. It normally takes about 8-12 weeks to get the design approved but considering covid related delays and backlogs, it may take little longer. Looking at the timelines, we shall be able to get the permit in March but most likely have to wait another month or so as we can’t kickoff the work during mid of winter. The first step is cutting the exterior wall to build a separate entrance which descending staircases and apparently this can’t be done with snow and cold outside. This is actually good as it will give us a breather to arrange funding and finalize contractor(s) for April-May to begin the work and get it done in 2-3 months.

Don’t trust anyone if they tell you that real estate investment is the easiest, while it is surely a time tested and proven way to grow your money, it surely isn’t as easy as it may look. In the last 7 years we have been part of about 11 different deals (Buy or Sell) and each had its own set of challenges but I personally see this as a hobby, rewards is secondary to me. From my personal experience the whole process can be quite stressful and full of hassles, so unless you also enjoy the process like I do, you should look for an opportunity elsewhere.

Lending Interest Earnings

Our lending income decreased 60% as compared to last month as we settled majority of our principal to fund the investment property. This is in line with our long term goal and I expect further reduction in first quarter of next year to pay off the line of credit balance and fund the basement renovation. As I mentioned in last month’s update, we dip deep into our line of credit to fund this a new property and renovation meaning we are paying significant interest, which again eats into our overall lending income.

This is a wrap for October passive income updates and overall I am quite satisfied with the way we are heading. Please do subscribe using a widget at the bottom of the page to get an update on my monthly blog, I don’t spam and you will only get an email whenever I post on this website which is about 1-2 a month. Thank you for the read and see you next month and until then… Stay indoor, stay safe and Save-Invest-Repeat. 😊

September’20 – My Passive Income Update!

Leave a comment

Hope you all are staying Safe-N-Sound, maintaining social distancing and staying indoors as much as possible, who knew we have to live in a time like this? I had a funny encounter a week ago when I was at a tiles wholesaler with my real estate agent to pick up some hardwood floor. Someone greeted him and my agent friend couldn’t identify the person behind the mask so the guy had to clarify – Hey.. I am Steve! I guess this is the new normal, earlier to forego small talks, you avoided eye contact by pretending to read an advertisement, now you simply wear a mask and stare at a known person without any hesitation! Schools started this month and it was expected that Covid-19 cases may increase and it did. Probably schools weren’t the only reason, relaxed social distancing norms, indoor rules relaxation and people taking Covid-19 less seriously also added to this second wave. I have seen a family of four coming to Costco which could be easily avoided. If your kids are getting restless, I would rather recommend going for a long walk outdoors as it is safer than an indoor crowded spaces. There are plenty of other safe outdoor activities that you can chose over a grocery shopping. We decided not to send our elder one to school and let her join online instead, and I am noticing she’s getting more independent with her computer skills and enjoying the short breaks to play with her sister. While our daughter do miss the social interaction and I’ll admit, also causes a bit of a trouble for us as we work from home as well, we still thought it would be wise to wait and watch which direction the cases go. Besides, there will always be another chance to enroll for physical schooling and we can take an informed decision, avoiding some risks. It is a bit of a pain with all the adjustments and while nobody asked for it, we need to live with the fact that restraints will be needed especially till a vaccine is available. We are all in this together and some patience and better decisioning will help us all contribute towards the eradication of this pandemic. September was one heck of a stressful month, both in my professional 9-5 life as well as part time investment gig. If you read my August passive income update, we had put an offer on an Investment property in July, Mortgage got approved in August and Closing was in September; and hence the stress. I will discuss some learnings and best practices further down under Rental Earnings section.

As usual, my monthly updates begins with updating below two pages with the latest data:

Passive Income Pie

The net cash flow from rental income decreased significantly as I terminated Covid-19 mortgage deferral program, leading to change in income split drastically. Anyway the relief program was scheduled to end in September, I had to cut it short a month early to secure a mortgage on new investment property, you can’t justify an ongoing deferred mortgage while seeking a new one! This action changed the whole landscape drastically and lending income comprised 70% of total passive income. By 2025, I am aiming roughly for following income diversification and may adjust as reality sinks in:

  • Rental Income – 45% – $3000 per month
  • Dividends – 40% – $2500 per month
  • Lending Interest – 15% – $1000 per month

We will continue to explore more passive income sources and opportunities and revise diversification and ratio as needed, to achieve our 2025 goals.

Monthly Dividend Earnings

While August saw a dip in year-over-year dividend, September was quite heartening as the dividend earnings increased 38% as compared to last September, thanks to new money and few dividend growths. Due to increased demand from day job and new investment property, I realized I am not doing justice to deploying accumulating dividends to immediate use, hence we set up DRIP on selected stocks which we want to keep for long term and are also get enough dividend to buy at least one or more share. Highlights from this month’s dividend income are:

  • We received dividend deposits from total 24 companies (22 Canadian & 2 US stocks), total value of $542.06
  • Dripped 13 shares in total for Brookfield Property, Diversified Royalty & Pivot Technology
  • Saputo & Sylogist raised their dividend by 2.9% & impressive 13.6% respectively
  • A&W, Pizza Pizza and Suncor continued paying their reduced dividend though I read A&W announcing a one time 0.30 per share special dividend!
  • My top two earners were Brookfield Property & Enbridge, contributed about 40% of total dividends
  • USD comprised of 11% of total dividend earned, though for this reporting I consider 1 USD = 1 CAD

Dividend Goal Tracker – Planned vs Actual

Planned Yearly – Blue bars | Actual Yearly – Pink bars | Planned Monthly – Green dotted line | Actual Monthly – Green plot

With 3 months remaining in year completion, we are about $1000 less in achieving our annual dividend goal of $5500. Looking at the forward dividend earnings, I am pretty confident we will meet if don’t exceed our target. This shall give us a good head start to next year’s target of $8500!

My Marketplace

My August wish to sell some of the losers remained unfulfilled as all sell limit order expired unexecuted! I know we are too heavy in Oil & Gas sector and overall portfolio is still about 8.5% down and it is mostly due to stocks in this sector. As much as I do wish to get rid of them, I think I am not ready to book heavy losses yet. I haven’t placed new sell orders yet, but I surely will in coming days giving some careful consideration to the selling price. While I wasn’t able to sell any losers, I did sold a winner Maxar Technologies as part of my preplanned swing trade. I bought 100 shares in June for 22 a piece and sold half of them at 37 each, adding little over $700 under my RRSP account. Talk about filling the whole tank, drop by drop! This trade made remaining shares almost free and I do plan to keep them and see how it goes, at the time of writing it already breached $42 mark!

We didn’t bought any new stock this month and have been pondering what to add with the proceeds from Maxar trade and so far I am tilted towards adding more Sylogist or Telus. For the first time, we also set multiple stocks on DRIP this month, keeping in mind busy schedule and lesser focus on portfolio or stock market in general. I figured it is easier to let the keepers keep accumulating and grow forward dividends on auto pilot without any attention; besides DRIPing also saves some transaction fee! As usual we also kept nibbling CIBC shares as part of RRSP contribution & Employee share purchase plan, it is usually 5-12 shares per month depending on current price and also dividend months when we DRIP more shares.

Rental Earnings

As I mentioned in my August post, we had a closing in end of September for an investment property we finalized. The mortgage was preapproved with staggering 16 conditions! With our high debt-to-earning ratio, we were fortunate to even gotten considered. Bank pre-approved in first week of August and it took me and mortgage advisor almost 7 weeks to fulfil them as per bank’s satisfaction. I have been through many property deals in the past but this was most nerve wracking as we got the final approval merely one day before closing deadline. No one should undergo the stress like this as it makes your night go sleepless. If you can’t secure a timely mortgage you won’t be able to close the deal and it shall have cascading effect starting with losing your deposit money. It would still be fine if you just lose the deposit but more severe consequences could be but not limited to – seller asking for punitive damages (at times legitimate but mostly outrageous) and drag you to court, your own plan to move-in/rent/renovate may go out of control. To me, the worst thing would be to recoup the confidence and get back on track. Sometimes the trauma and suffering could have long lasting impact and you may lose the optimism and self-confidence. Some of my learnings and best practices from this deal would be:

  • ALWAYS secure your firm mortgage approval at least 1 week before closing day
  • While shopping around for lower rate is good, also give importance to the mortgage advisor. A flexible and creative advisor makes this tedious process easier. One has to be equally well versed with the processes and loopholes and guide you with your unique situation.
  • TRY to negotiate the deposit amount with seller agent, most of the time a lower deposit is acceptable
  • ALWAYS ask your mortgage advisor for Cash back, most of the time bank offers $1000-$3000 back. If you go via brokerage, they usually keep this money (apart from their commission) and won’t tell you!
  • Ask your mortgage advisor to register the property for a reasonably higher amount, they can do this easily and it can save you lawyer fee while refinancing in future
  • Try to ALWAYS put 20% down payment towards the property as it helps avoiding CMHC insurance cost and secure better mortgage deal
  • CONNECT directly with seller agent as it increases your chance of closing the deal and that too at a cheaper price, as agentless buyer save seller agent about 2% in commission payable to buyer agent

While closing was stressful, we only planned for 1 month for renovating upstairs, again put ourselves into a stressful situation! Real estate construction is a tricky landscape full with all kinds and you will be in luck if you find right people at right price at right time. And renovating 3 bedrooms with living room, kitchen and washroom can lead you to deal with bunch of contractors and challenges at each stage. You have the choice to give full contract to an established professional but then it will cost you much higher and mostly they don’t get their hands in smaller renovation work, so a bit difficult to find and could take much longer. My real estate agent is helping with the renovation as time is less and we live 50 kilometers to keep an eye on day to day work. At a high level, work involves demolition of entire upstairs – removing carpets, hardwood floor & doors, washroom and kitchen tiles & fixtures, scraping walls, tearing down the staircases and couple of walls to build an open concept kitchen; re-laying hardwood floor throughout the bedrooms and living area, tiles in kitchen, washroom and entry landing; redoing entire electricals including changing switchboards, wiring and lights/potlights; relocating & changing furnace, AC, HVAC, even water tank; cutting through the wall and adding a sliding door to patio; building new cabinets and island in the kitchen overlooking living room, adding a gas pipeline; fitting in new standing shower, toilet and vanity in washroom, minor plumbing job; changing staircase & doors; painting & finally cleaning. I missed on numerous smaller subtasks but trust me even when you have right people on the job, there are decisioning required every two hours and I am not even exaggerating! If all goes well and our calculation holds true, we should see a 20% appreciation in property value immediately and renting should see cash flow of about $1000 per month. Our plan is to keep it for long term and let the value appreciate assuming the GTA real estate market will continue to be in top gear in coming years. Fingers crossed, all the hard work that went into this deal, risk taken and primarily the time-money spent shall make this a successful investment. I will keep you updating on how this shapes up in coming days, feel free to subscribe via widget at the bottom of the page to stay updated.

Lending Interest Earnings

I had to settle half of the lending money to pay towards down payment of the property so this month the cumulative interest earning shot up significantly due to previous pending dues settlement. This action will also decrease our monthly interest by half starting October and is aligned with our goal to reduce interest earnings anyway. Also, to fund renovation work we have taken out heavy debt from our personal line of credit, hence we will also be paying significant interest towards it, which will further decrease the overall interest income.

That’s all for September folks! Tons of work still need to be done on all fronts and all we need is not to get restless, tons of patience, aggressive savings and staying focused. I don’t know about you but for us, this whole isolation thing have increased our savings – be it less commuting expense or negligible indulgence on unnecessary mall visits or no expense at all on formal clothes! While all our savings got diverted in buying a new property, I hope once things normalize we will be able to divert some of these savings towards new stock positions. Thank you for the read and as always, would love to see your take on savings and investment ideas.

See you next month and until then… Save-Invest-Repeat. 😊

Canadian Dividend Calendar

Leave a comment

I often come across fancy Dividend calendars for US based companies but have rarely seen any for Canadian stocks. Few days ago I even read someone enquiring about the same on a Facebook group which made me think – it shouldn’t be that difficult to come up with a quick list and stick them on a slide, may take 30 minutes tops. But it seems nothing is straightforward and when I started working on it, it took about 4 hours! This makes me wonder how some people keep churning quality article after articles at quick succession! It took me longer as I wanted to spend some time telling the thought process behind the list, the calendars I have seen normally don’t talk about the selection process or criteria behind the list, hence I also added a quick write-up. Please pardon the lack of creative juice and imagination, the calendar turned up quite vanilla! Selection criteria was quite simple and straightforward. The list comprises of:

  • Quarterly dividend payers (duh!!) with long and credible history of dividend payments as well as growth
  • Diverse sectors where most of the companies are leaders by market cap in their respective sectors (highlighted in bold font)

Since the calendar comprises only of quarterly payers, 4 companies should have been sufficient for this calendar. But as I also wanted to diversify, I first went with 12 companies, one for each month and then I ended up with 16 companies as I couldn’t decide one over another! I used CDASL Sept’20 spreadsheet for come up with the initial list based on market capital, dividend streak, growth and chowder rule; Google Finance for the latest price, Marketbeat and Company’s Investor relations pages for Dividend schedule and amounts.

Below table shows if you have $10,000 to spend and you spread them amongst these 16 companies, it would be $625 (or 6.25% allocation) for each company. The table also shows how many shares you will be able to buy for each of the company at last recorded price. To keep it simple I am not considering any commission paid but you can add roughly $160 for commission at $10 per trade. Total annual dividend earned on $10,000 will be about $290, meaning dividend yield would be 2.9%, not considering any growth or ad-hoc bonuses. I captured below information in this google sheet as well.

Few additional points about above table:

  • The Dividend used is current and do not consider any upcoming raise or ad-hoc bonuses
  • Waste Connections, Thomson Reuters, Opentext & Algonquin Power pays their dividend in USD and hence the actual payout amount will fluctuate a bit based on prevailing conversion

My belief is one shouldn’t consider buying into a company based on their dividend schedule, instead one should focus on good companies. All the companies mentioned in my calendar are solid stocks with great history. If you are living out of dividend money and require regular withdrawals then also planning and budgeting for it would be better than relying on company paying in a specific month. There is a wise saying that you should have 3 months of your expenses as liquid emergency fund, so letting dividends accumulate and have money parked in High interest savings account would be a good idea. In coming days I plan to work on a similar calendar for monthly paying stocks and you can subscribe using below link to get an email notification.

Happy Investing and Good luck with whatever you buy!

Top 6 Canadian Banks Comparison

Leave a comment

I repeatedly see questions on Social media such as – “TD or RBC?”, “Is BNS a buy at this rate?”, “Which is the best bank to buy?”, “Is NA worth a shot?” etc, and have met few people asking the same standard questions personally. Canadian banks have a strong global reputation for safety and reliability and are recognized worldwide. Their names often appear in sentences also having words such as Mature, Stable, Predictable, Consistent and it is because of sound Canadian regulatory framework and relatively risk-averse approach. Most of these banks are amongst the oldest ones on earth and have a long history of dividend payments and growth; in fact BMO started paying the dividends in 1829. Can you believe it?! Almost 200 years of rich history of banking and dividends. Top 6 banks of Canada are Royal bank, TD, Bank of Nova Scotia, BMO, CIBC & National bank and contributes hefty 25% of entire TSX60 market capital and hence financial sector is considered the backbone of Canadian economy. Nearly 375,000 people (including myself!) are employed by these 6 banks and hence are graciously supported by federal & provincial governments in the time of crisis. While the past history or track record do not guarantee future performance, the whole ecosystem of regulations and sheer vastness makes them “safe”, “too-big-to-fail” and are hence considered must-haves in any Dividend portfolio.

Below I take a stab at putting together some basic metrics for top 6 Canadian banks and also take the liberty to explain them in the simplest form. Some of the numbers mentioned here may be teeny weeny off and you should look at the latest data for accuracy. I gathered them from variety of sources such as Google Finance, CDASL August’20 spreadsheet, FinBox, as well as Investor’s page of respective banks. Since dividend plays a key role in my personal financial independence journey, I will start with dividend data comparison itself, the favourable metrics are highlighted in Green.

As per the latest share price, BNS commands the highest dividend yield of 6.53% and dividend payout ratio is about 64%. Though high yield shouldn’t be chased and I have personally gotten burnt by tempting yields, it surely is worth pursuing as it is unlikely that BNS will cut the dividend. If you go by safe yardstick of less than 50% payout ratio then National bank looks far better in comparison to others and the 4% yield is not bad at all. If dividend growth entices to you the most then TD is by far the best, averaging 9.5% growth in last 5 years (or 9% in last 10 years). Accordingly chowder ratio (coined by Seeking Alpha contributor Chowder) is highest for TD. Chowder rule is the sum of current dividend yield & 5 years of average dividend growth rate, normally the higher it is the better as it signifies the company is having both good and growing dividend. Lastly, each of these banks have a history of good dividend growth streak of 9-10 years.

Next set of metrics will give you a glimpse on financial data and health of these six banks starting with 5 years Compound Annual Growth Rate (CAGR) and both BMO & CIBC fairs well, meaning their revenue grew faster than other banks.

CAGR in simple term is an average of year-on-year revenue growth for set number of years and below is a 5 years CAGR example from finbox website for Royal Bank.

Next column is the Price-to-Earnings (PE) ratio and as highlighted in Green, Bank of Nova Scotia has lowest value meaning it is the cheapest stock at present to buy. This metric is used to find out whether a company is overvalued or undervalued and the lower the value the better it is. As the name suggests, PE ratio is the ratio of a company’s share price to the company’s earnings per share (more on this in next paragraph). PE ratio comparison should always be done with the peers and companies under same sector meaning a Bank’s PE ratio shouldn’t be compared with a Technology stock.

On the other hand Diluted Earning per Share (EPS) is highest for CIBC amongst all banks, higher EPS is the sign of higher earnings, strong financials and hence a reliable company to trust for your hard earned money. There are two type of EPS – Basic & Diluted and the former is always higher than the latter. Below is a simple yet excellent visual showing the difference between them, it is sourced from slideshare.net which I also find quite useful to understand various fundamentals in easy forms.

Going back to data comparison, be mindful that CIBC may be leading the diluted EPS race at present but it decreased by 17% over Q3 2019 and if you look carefully the diluted EPS didn’t changed since last year for National bank! So focusing on just the present value of any metrics is not wise, the trend should also be taken into consideration. National bank also netted the best Profit margin among all other banks, little over 32% and the net profit margin increased about 2% year over year. This tells a great success story about National bank especially since this Q3 ending result had 5 months of Covid pandemic outrage. It is also worthwhile to mention, it is the only bank whose profit margin increased over last year, every other bank’s profit margin decreased minimum by 9%! The last piece of financial information I am showing is Net Income, which in itself is a relative term. Royal bank’s net income was more than 3B but then it’s market value is also more than BMO, CIBC & National bank combined! On the other hand, Net income for National bank was only 589M but notably it is the only bank whose income decreased the least year over year. I think the last two metrics tilts the comparison a bit in favour of National bank, so they should be looked as key outlier and deserve some more thought and research.

Besides above metrics I also documented some additional data in a google sheet, feel free to copy and use however you want. But before I wrap up I would also like to point your attention to two other factors which should also be considered while making any decision. First is Credit Quality also known as Provision for Credit Losses (PCL), in simpler terms it means expected losses from bad loans that may become a reality in future. Each bank keeps a track of such potential loss and report it as part of their quarterly results. As of Q3 for fiscal year 2020, TD reported the lowest PCL of 32 points and Bank of Nova Scotia reported the highest with 58 points. If such loss materializes then it may have severe influence on future earning and results and eventually impact the share price. Second point to keep in mind is bank’s diversification outside Canada and both BNS & TD leads the pack. BNS is the most diversified bank with presence in USA & Latin American nations such as Chile, Caribbeans, Mexico, Peru & Colombia and on the other hand TD is having a noteworthy presence in USA generating 35% net income from south of the border. Royal bank, BMO & CIBC also have significant presence in USA but National bank is having negligible diversification. In extreme case of Canadian economy slowdown, diversification may provide cushion to the bank’s performance and well diversified bank shall do better.

I am no financial analyst or advisor and fairly new to looking at numbers myself and apologies if I confused you even further or misled in any way. While I can’t point you to a specific bank to buy, we personally have CIBC as our biggest holding and a little bit of BNS in our Dividend portfolio. I am learning new things everyday as getting more serious about investing our hard earned money in stock market. I believe our future literally depend on quality of shares we buy now and it is important to do some level of due diligence before owning a piece of any company (well most of the times if not all the time!). I must admit the whole process is not that simple but I can also tell you that for me personally, writing helps. It gives me an opportunity to do some research and in the process teaches a thing or two! I hope this honest and humble attempt of mine may help you at least with the data if not with the decision.

Happy Investing and Good luck with whatever you buy!