Dividends | Settling Nomad!

Jun’23 – Side Income Update

Hello readers!

While the post is coming late, the memories of June is still fresh and sweet! We were in Italy for the whole first week of June visiting Venice, Pisa & Rome. The weather was hot and humid and evenings were full of mosquitoes but these weren’t deterrent to our joy of just being there, wandering in the narrow stone paved alleys which stood there for centuries. There is rich history scattered everywhere and it fascinates how they have preserved it for the world to witness. Read about one of our scariest moment on this trip where we got lost in Venice at midnight with 2% mobile battery left and many more fun incidents here. I am also going to share detailed itinerary, hotel recommendation, places we visited and of course lot of pictures from Paris, Bern, Zurich, Jungfrau, Lucerne, Venice, Pisa & Rome!

It took us a while to adjust to routine post this vacation as mind was still there thinking about the memories we made, places we visited and great time we had. It was an expensive tip but totally worth it considering we haven’t been travelling much post Covid. Post this vacation, getting back to work was a rude awakening and a reminder that working towards financial freedom is more important than ever! We also got few surprises from Switzerland in terms of speeding tickets, more on this will be share in our Europe trip article I am putting together. Getting to this month’s business, please find below our May updates which as usual starts by updating below two pages with the latest data:

2025 Goal tracker on our homepage – At the beginning of 2023 we revised our 2025 passive income goals after careful consideration and keeping in mind heavy financial obligations we carry currently. You can read more about it here under our 2025 goals
Dividend Portfolio with our latest holdings. We are aggressively modifying our holdings to align more with growth mindset instead of income at present.

Passive Income Pie

This month, our passive income split comprised 34% of Dividends, 66% in Rental income & a miniscule interest earnings from Lending loop. Our 2025 goal is to have income from below sources with target percentage split as mentioned:

Dividend Income: 50.00% ($1500 per month)
Rental Income: 32.50% ($975 per month)
Lending Interest: 0.83% ($25 per month)
Restaurant Earning: 16.66% ($500 per month)

Over time we will work to smoothen the earning fluctuations so to have steady monthly side income from these hustles. As I mentioned in previous months we haven’t seen any income from our restaurant business yet and the first earning distribution is aimed for Oct’23 (on it’s 2nd anniversary) and thereafter we will have annual profit sharing. For now I just added a token amount of $500 monthly and will update to a more realistic number post first earnings. Also, the other Grocers business we invested isn’t considered yet as we are years if not quarters from seeing any profit! In all likeliness, we will re-strategize our financial freedom goal post more clarity on the businesses.

Monthly Dividend Earnings

Our dividend journey so far have been quite a rollercoaster ride, May’23 brought us just couple of hundred bucks but June raked in four times higher! As I keep saying, over the period of time I would like to bring in regular and reliable earnings meaning it would require to smoothen out the monthly figures.

Key highlights from this month’s dividend income are:

We received dividend deposits from a 20 different companies (17 Canadian & 3 US), with total value of $826.80, a 14% YoY increase from Jun’22
For ease and simplicity, we consider 1 CAD = 1 USD
Top 3 dividend contributors were Enbridge Gas, Pembina Pipelines and Manulife Insurance
We dripped 11 shares – 3 from Enbridge, 2 from Pembina and 1 each from Manulife, Pizza Pizza, Plaza REIT, Suncor, Whitecap Resources & XAW (Ex Canada index fund)
We received 4 dividend raises this month: Equitable bank: 5.71%, XAW: 4.88%, Pizza Pizza: 3.45% & Pembina Pipelines: 2.3%
Average monthly dividends for 2023 so far is $796.49 or about $26.50 a day. By 2025, we aim to reach $1500 monthly (or $50 daily)

**BLACK**: Unchanged | **GREEN**: Increased | **RED**: Reduced/Suspended

Dividend Goal Tracker – Planned vs Actual

**BLUE BAR**: Planned Yearly | **PINK BAR**: Actual Yearly | **GREEN LINE**: Planned Monthly | **GREEN PLOT**: Actual Monthly

Our aspirational dividend earnings for this year is $12000 and five months into the year, we achieved 40% of our goal so far. Due to many other expenses and financial commitments, the money is quite tight right now for investing and hence finding money to invest this year is quite a task – for now, we saves as much money as possible from our day jobs, then divert a major portion of that savings immediately towards paying off high interest debts & with a much smaller portion we invest under our TFSA accounts to narrow down the wide contribution limit gap! Most of our buys under TFSA are focused on companies with low yield but with a track record of double digits dividend growth over past 5 years minimum. While many don’t like significant debt, we are not that uncomfortable with it and hence are still trying to maintain a fine balance between debt repayment & investing. Readers may know we carry a significant debt right now which was taken to fund couple of businesses. This situation forced us to reduce our 2025 dividend goals from $30000 to $18000 and if the businesses continue to demand additional capital, we may even have to sell some/all of our TFSA holdings.

My Marketplace

In May’23, we sold Transcontinental Inc (TSE:TCL.A) as the price declined almost 50% in past 5 years alone! We used the proceeds to buy Canadian Natural Resources Ltd (TSE:CNQ) and Intact Financial Corporation (TSE:IFC). While past performance do not guarantee future outcome, but their last 10 years growth both in terms of price appreciation and dividend growth have been phenomenal and expect to grow at par if not better. Both these buys were in RRSP and shall increase the PADI by $290.80.

We also sold iShares S&P/TSX Capped Information Tech Index ETF (TSE:XIT) which we bought in Feb’20 and sold this month for a profit of just a bit over 41%. As their name suggests, they are an index fund of Canadian IT companies with nearly 80% in just 4 stocks (Constellation, Shopify, CGI & OTEX) and I already own OTEX outside so thought 0.60% fund fee when I can hold them separately. I shall look at deploying some funds in remaining stocks in future if need be.

Also, as usual we also kept accumulating CIBC (TSE:CM) under automated bi-weekly contributions going straight into my RRSP account and fractional shares of Equitable Bank (TSE: EQB), Metro Inc (TSE:MRU) and Thomson Reuters (TSE:TRI) via WealthSimple.

We also dripped total of 11 shares of various companies and received dividend raises from 4 companies we hold which contributed to a bit as well to our Projected Annual Dividend Income (PADI) for the month. Overall our PADI increased by $381.28!

As I mentioned in the past as well, Wealthsimple is an excellent trading platform for commission free trades & fractional buys! They now have introduced enrolling in automated DRIP program which can be used to put earned dividends immediately to work by buying more shares of the same company you received dividends from! If you don’t have a WS Account and would like to try them out, you can use my WealthSimple referral link to earn $5-$3000 to invest in stocks!

On Crypto front, yet again we did nothing and don’t think I have any funds or appetite to deploy any more than what we currently have. Last year was pretty rough year for cryptocurrencies both in terms of price depreciation & many providers declaring bankruptcy. Unfortunately Celsius network was one such platform on which we had all our Bitcoin & Ethereum holdings and since August of 2022 they have stopped paying interests on holding cryptos & even withdrawals from their platform is halted. So money is stuck there, let’s see when we could recover our holdings. Once we are able to recover our money, we will redeploy on CoinSquare platform which apparently hold the fort pretty well when others kept collapsing! Also, once our financial situation improves we will resume investing in cryptocurrencies.

Rental Earnings

Our readers will know that at present we own one principal and two investment properties and provide an insight on our monthly cashflow. The cashflow is calculated by subtracting rent collected by all expenses including but not limited to mortgage, property tax, insurance, utilities and repairs (if any). These numbers don’t exactly translate on tax filing as I am not taking into consideration the interests we pay to the bank for mortgage or on any other loan we took to renovate the property. I will do the final calculation at the time of tax filing and don’t intent to share it here.

Due to the steep interest rate increase by Bank of Canada in last 1.5 years, it doesn’t make sense to invest in Real Estate at present and we shall evaluate the market and take actions accordingly once the market improves a bit. Read about the interest rate increase and it’s impact in our last month‘s updates where I shared how our variable rate mortgages are impacted by the rate increase and challenges we are facing.

The net cashflow for all our properties for the month are as below:

Principal residence – We rent out a portion of our basement which is built as a legal second dwelling. We occupy the upstairs and a portion of the basement, for which we add $2500 as rent payable by us, which is a bit low as compared to prevailing market rentals. The net cashflow from our principal residence for this month is $63.98. While the cashflow doesn’t look appealing at all but imagine bearing all the cost by ourselves with $0 external support in this high interest market!

Investment property 1 – Net cashflow from this property for this month is $1596.58 and this property acts as a backbone to many of our financial needs including paying off the interests for all outstanding line of credits. Once the real estate market improves I plan to test the waters by putting this house for sale and see what is being offered. Depending on it we may sell it and consolidate some of the debt we carry, I will keep you’ll posted!

Investment property 2 – The net cashflow from this property for the month is negative $46.49 and if you read my Jan’23 updates, you will know that this house was purchased in equal partnership with a friend of mine and hence I am only going to consider 50% of the income/loss. Our near term (1-3 years) intention with this house is to sell and book profit for which we will wait for the market to improve, no rush.

Lending Interest Earnings

We earned $10.76 in total interests this month from several lending loop commitments (loans) worth combined total of $2000 dumped back in 2019. It fluctuates a bit on monthly basis but no complains for now. At present both principal and interest amounts are insignificant but if I have spare cash, I would surely lend more on this platform. You can also explore this option with a smaller capital and if you invest, we both can earn $25 each using our lending loop referral ink, once you invest $1,500 on their platform.

That’s it for now readers for this month and I hope our journey irrespective of the baby steps, help you in some way. Please do subscribe using the widget at the bottom of the page to get our once a month update, I don’t spam and you will only get an email or two in a month, whenever I post on this website.

Stay safe, stay cool, and most importantly Save-Invest-Repeat! 😊

May’23 – Side Income Update

20-Aug-2320-Aug-23RLeave a comment

Hello readers!

It had been a while since I wrote our monthly updates and as you can see May is been written in August! It was quite a busy past few months due to travels, personal work and foremost enjoying the weather! Summer is finally here and for some reason it feels quite different in terms of weather conditions. The hot days (..which are quite few so far) are extremely hot, evening gets surprisingly colder that you need a light jacket/hoodie and it rains almost every day. I don’t recall witnessing so much rain in any of the past nine summers we have been in Canada! I don’t know whether this is a changing environmental phenomenon or just in my head, but I certainly feel the difference. Anyways we are trying to make full use of the weather by visiting places and enjoying the warm temperature. As I mentioned in our April updates, we went on a trip with family and friends to Europe and you can read about this trip of our life by clicking on the link. I am going to share detailed itinerary, hotel recommendation, places we visited and of course lot of pictures from Paris, Bern, Zurich, Jungfrau, Lucerne, Venice, Pisa & Rome!

Getting to this month’s business, please find below our May updates which as usual starts by updating below two pages with the latest data:

2025 Goal tracker on our homepage – At the beginning of 2023 we revised our 2025 passive income goals after careful consideration and keeping in mind heavy financial obligations we carry currently. You can read more about it here under our 2025 goals
Dividend Portfolio with our latest holdings. We are aggressively modifying our holdings to align more with growth mindset instead of income at present.

Passive Income Pie

This month, our passive income split comprised 11% of Dividends, 88% in Rental income & a miniscule 1% interest earnings from Lending loop. Our 2025 goal is to have income from below sources with target percentage split as mentioned:

Dividend Income: 50.00% ($1500 per month)
Rental Income: 32.50% ($975 per month)
Lending Interest: 0.83% ($25 per month)
Restaurant Earning: 16.66% ($500 per month)

Monthly Dividend Earnings

Our dividend journey so far have been full of ups and downs, if last month was our record high month (read Apr’23 update if you haven’t already), this month brought us just couple of hundred dollars! Over the period of next few years of continued investment, the wide monthly fluctuations shall smoothen out and during consumption years, we will have a bucket of funds for monthly expenses with a healthy cushion for stress free expenditure.

Key highlights from this month’s dividend income are:

We received dividend deposits from a 13 different companies (9 Canadian & 4 US), with total value of $227.85, a 6% YoY increase from May’22
For ease and simplicity, we consider 1 CAD = 1 USD
Top 3 dividend contributors were Royal Bank of Canada, Abbvie and Metro Inc
We dripped 3 shares – 1 each from Pizza Pizza, Plaza REIT & Whitecap Resources
We received 2 dividend raises this month: Enghouse Ltd: 18.92% & Apple Inc: 4.3%
Average monthly dividends for 2023 so far is $790.43 or about $26 a day. By 2025, we aim to reach $1500 monthly (or $50 daily)

Dividend Goal Tracker – Planned vs Actual

Our aspirational dividend earnings for this year is $12000 and five months into the year, we achieved 31% of our goal so far. Due to many other expenses and financial commitments, the money is quite tight right now for investing and hence finding money to invest this year is quite a task – for now, we saves as much money as possible from our day jobs, then divert a major portion of that savings immediately towards paying off high interest debts & with a much smaller portion we invest under our TFSA accounts to narrow down the wide contribution limit gap! Most of our buys under TFSA are focused on companies with low yield but with a track record of double digits dividend growth over past 5 years minimum. While many don’t like significant debt, we are not that uncomfortable with it and hence are still trying to maintain a fine balance between debt repayment & investing. Readers may know we carry a significant debt right now which was taken to fund couple of businesses. This situation forced us to reduce our 2025 dividend goals from $30000 to $18000 and if the businesses continue to demand additional capital, we may even have to sell some/all of our TFSA holdings.

My Marketplace

In Apr’23, we sold Algonquin Powers (TSE:AQN) and used the proceeds to buy better dividend grower and a more stable Thomson Reuters Corp (TSE:TRI). Comparatively this month passed without buying anything except we just kept accumulating CIBC (TSE:CM) under automated bi-weekly contributions going straight into my RRSP account. On the other hand we sold Transcontinental Inc (TSE:TCL.A) on which I ran out of patience. Although the company has a lucrative dividend yield of 7.03% (as of writing on 13-Aug-23), the price lost almost 60% in last 5 years! At current stage of my investing life, I am looking more for total value rather then chasing high yield and hence getting rid of this was a good decision in my opinion.

We also dripped total of 3 shares of various companies and received dividend raises from 2 companies we hold which contributed to a bit as well to our Projected Annual Dividend Income (PADI) for the month. The sell of Transcontinental reduced annual dividend by $90 impacting our PADI and hence the net PADI for the month is negative $22.52. In June I am looking forward to use the sell proceeds to buy and increase PADI yet again.

As I keep mentioning month after months, for commission free trades & fractional buys we use WealthSimple platform, which has now introduced enrolling in automated DRIP program which can be used to put earned dividends immediately to work by buying more shares of the same company you received dividends from! If you don’t have a WS Account and would like to try them out, you can use my WealthSimple referral link to earn $5-$3000 to invest in stocks!

Rental Earnings

Two of our mortgages are unfortunately variable meaning the interest rates are tied to the underlying policy interest rate change and hence with each change, the mortgage interest rate also changes. As you can see from the graph below, the Canadian policy interest rate have increased from 2.45% (Feb’22) to 7.20% (Jul’23), which is nearly triple under a short span 1.5 years!

Due to this exorbitant rate increase, the monthly mortgage payments are going in entirety towards the interest portion only of our loan and even after that it is still not sufficient to cover it. As bank haven’t changed our monthly payments (fortunately), the principal is increasing with each monthly payment and hence the amortization period is increasing as well! Last I checked, the mortgage period have increased from 30 years to 80+ years, which is quite a scary situation to be in! Our lender presented me with below three options:

Increase monthly payment (capped at 20%) which would still not be enough to cover interests so not a viable option.
Convert our variable mortgage to a fixed one with nominal penalty.
Start paying a lumpsum amount frequently which is again capped at 20% of outstanding principal. These payments will bring down the principal.

Only the third option made little sense to me but then at present I don’t have extra funds to pay so I am just letting the principal increase. Once the market becomes a little favorable, we will look at selling the investment properties and pay off towards the principal residence outstanding to bring it down. If not done, we are up for a shock at the time of renewal!

The net cashflow for all our properties for the month are as below:

Principal residence – We rent out a portion of our basement which is built as a legal second dwelling. We occupy the upstairs and a portion of the basement, for which we add $2500 as rent payable by us, which is a bit low as compared to prevailing market rentals. The net cashflow from our principal residence for this month is $242.03. While the cashflow doesn’t look appealing at all but imagine bearing all the cost by ourselves with $0 external support in this high interest market!

Investment property 1 – Net cashflow from this property for this month is $1083.25 and this property acts as a backbone to many of our financial needs including paying off the interests for all outstanding line of credits. Once the real estate market improves I plan to test the waters by putting this house for sale and see what is being offered. Depending on it we may sell it and consolidate some of the debt we carry, I will keep you’ll posted!

Investment property 2 – The net cashflow from this property for the month is $433.95 and if you read my Jan’23 updates, you will know that this house was purchased in equal partnership with a friend of mine and hence I am only going to consider 50% of the income/loss. Our near term (1-3 years) intention with this house is to sell and book profit for which we will wait for the market to improve, no rush.

Lending Interest Earnings

We earned $11.35 in total interests this month from several lending loop commitments (loans) worth combined total of $2000 dumped back in 2019. It fluctuates a bit on monthly basis but no complains for now. At present both principal and interest amounts are insignificant but if I have spare cash, I would surely lend more on this platform. You can also explore this option with a smaller capital and if you invest, we both can earn $25 each using our lending loop referral ink, once you invest $1,500 on their platform.

Stay safe, stay cool, and most importantly Save-Invest-Repeat! 😊

April’23 – Side Income Update

22-May-2322-May-23RLeave a comment

Hello!

Hope you all are doing great regardless of the constant flip-flops with the weather! April is a special month in our household as we celebrate my better half’s birthday. If not everyday, at least this day is a solid reminder to all of us that how fortunate we are to have her in our lives. She makes it super easy on all of us by taking care of us relentlessly and effortlessly. The other day it was my physical office day and I was amazed to notice how much she accomplished before I even stepped out of bed – she cooked for kids, packed their lunches, fed them breakfast, gotten them ready and dropped both to school. All before I got ready and came to the dining table for my breakfast; and then she dropped me to the train station when I learnt she even got some of her freelancing work done a bit. Talk about super-woman! We celebrate birthdays almost every year the same way – by cutting a cake at midnight but this year was a bit different as our youngest one was under the weather and hence we let her sleep. Instead we cut the cake first thing in the morning and gave our gifts to her. April was also busy as we started planning for our upcoming Europe trip with friends. We plan to spend 16 days in Switzerland & Italy in May and we all are pretty excited for the trip as it will be our first major holiday post pandemic.

Getting to this month’s business, please find below our April updates which as usual starts by updating below two pages with the latest data:

2025 Goal tracker on our homepage – At the beginning of 2023 we revised our 2025 passive income goals after careful consideration and keeping in mind heavy financial obligations we carry currently. You can read more about it here under our 2025 goals
Dividend Portfolio with our latest holdings. We are aggressively modifying our holdings to align more with growth mindset instead of income at present.

Passive Income Pie

This month, our passive income split comprised 85% of Dividends, 14% in Rental income & a miniscule 1% interest earnings from Lending loop. Our 2025 goal is to have income from below sources with target percentage split as mentioned:

Dividend Income: 50.00% ($1500 per month)
Rental Income: 32.50% ($975 per month)
Lending Interest: 0.83% ($25 per month)
Restaurant Earning: 16.66% ($500 per month)

Monthly Dividend Earnings

Last month brought us little over $800 in dividends and if you missed reading my monthly update, you can read it at Mar’23. This month broke all our previous monthly record and fetch almost $1400 in dividends! While we still have a long way to go, I feel the dividend incomes have finally started taking shape with considerable amounts coming in month after month. Once we reach consumption phase, we will have 3-6 months of emergency funds and monthly dividends will just be added to that pool for our daily needs and hence any monthly fluctuations will have no impact on our budget and cause no stress.

Key highlights from this month’s dividend income are:

We received dividend deposits from a 15 different companies (14 Canadian & 1 US), with total value of $1370.21, a 16% YoY increase from Apr’22
For ease and simplicity, we consider 1 CAD = 1 USD
Top 3 dividend contributors were CIBC, GoEasy Ltd and Telus Corp
We dripped 27.72 shares in total – 17.72 from CIBC, 2 each from Algonquin & Telus and 1 each from Pizza Pizza, Plaza REIT, Transcontinental & Whitecap Resources
We received 2 dividend raises this month: GoEasy Ltd: 5.49% & Pizza Pizza: 3.57% whereas Algonquin Power & Utilities reduced their dividend by 39.99%
Average monthly dividends for 2023 so far is $931.07 or about $31 a day. By 2025, we aim to reach $1500 monthly (or $50 daily)

Dividend Goal Tracker – Planned vs Actual

Our aspirational dividend earnings for this year is $12000 and four months into the year, we achieved 31% of our goal so far. Due to other financial commitments, the money is quite tight right now for investing and hence finding money to invest this year is a pain – For now, we saves as much money as possible from our day jobs, then divert a major portion of that savings immediately towards paying off high interest debts & with a much smaller portion we invest under our TFSA accounts to narrow down the wide contribution limit gap! Most of our buys under TFSA are focused on companies with low yield but with a track record of double digits dividend growth over past 5 years minimum. While many don’t like significant debt, we are not that uncomfortable with it and hence are still trying to maintain a fine balance between debt repayment & investing. Readers may know we carry a significant debt right now which was taken to fund couple of businesses. This situation forced us to reduce our 2025 dividend goals from $30000 to $18000 and if the businesses continue to demand additional capital, we may even have to sell some/all of our TFSA holdings.

My Marketplace

Unlike Mar’23, we did not sell any stock this month. For tax efficiency, I contributed $5000 to my RRSP account by dipping into RRSP loan as I don’t had any other resources available. This fund is used to buy Thomson Reuters Corp (TSE:TRI) which again like last month buys, have low yield and high dividend growth with 5 years CAGR just over 200%. As usual, we also continued accumulating CIBC (TSE:CM) under automated bi-weekly contributions going straight into my RRSP account.

WealthSimple (referral link) had an offer where any deposit of $500 or above was eligible to enter a draw to win $5000 (10 prizes). While my luck at these draws is quite bad, I couldn’t stop myself from depositing $500 each under both mine as well as wife’s account. These deposits were used to buy fractional shares of Equitable Bank Inc (TSE:EQB) & TFI International Inc (TSE:TFII) under our respective TFSA accounts.

We also dripped 25.72 shares of various companies and received dividend raises from 2 companies we hold which contributed to a bit as well to our Projected Annual Dividend Income (PADI) for the month. On the other hand Algonquin Powers reduced their dividend by almost 40% impacting our PADI. The net increased hence was $157.81, not a huge amount but by giving it time and being disciplined & determination, we should see much bigger increases in next few years.

For fractional buys we use WealthSimple which is a zero-commission stock trading platform and hence putting our money immediately to work for us. If you don’t have WS Account and would like to try them out, you can use my WealthSimple referral link to earn $5-$3000 to invest in stocks!

On Crypto front, we did nothing at all in entire 2022 and don’t think I have any funds or appetite to deploy any more than what we currently have. Last year was pretty rough year for cryptocurrencies both in terms of price depreciation & many providers declaring bankruptcy. Unfortunately Celsius network was one such platform on which we had all our Bitcoin & Ethereum holdings and since August of 2022 they have stopped paying interests on holding cryptos & even withdrawals from their platform is halted. So money is stuck there, let’s see when we could recover our holdings. Once we are able to recover our money, we will redeploy on CoinSquare platform which apparently hold the fort pretty well when others kept collapsing! Also, once our financial situation improves we will resume investing in cryptocurrencies.

Rental Earnings

The cashflow is calculated by subtracting rent collected by all expenses including but not limited to mortgage, property tax, insurance, utilities and repairs (if any). These numbers don’t exactly translate on tax filing as I don’t take into consideration the interests we pay to the bank for mortgage or on any other loan we took to renovate the property. I do the final calculation at the time of tax season and don’t intent to share it here. The net cashflow for all our properties for the month are as below:

Principal residence – We rent out a portion of our basement which is legally built as a second unit and we occupy upstairs with a portion of the basement, for which we add $2500 as rent payable by us for our dwelling. The net cashflow from our principal residence for this month is -$953.51 which is lower than usual as we have to pay property taxes in Feb-Mar-Apr-Jul-Aug-Sept months, which eats up the cashflow. While the cashflow doesn’t look appealing at all but imagine bearing all the cost by ourselves with $0 external support in this high interest market!

Investment property 1 – Net cashflow from this property for this month is $1027.46 and this property acts as a backbone to many of our financial needs including paying off the interests for all outstanding line of credits. Once the real estate market improves I plan to test the waters by putting this house for sale and see what is being offered. Depending on it we may sell it and consolidate some of the debt we carry, I will keep you’ll posted!

Investment property 2 – The net cashflow from this property for the month is $156.52 and if you read my Jan’23 updates, you will know that this house was purchased in equal partnership with a friend of mine and hence I am only going to consider 50% of the income/loss. Our near term (2-4 years) intention with this house is to sell and book profit for which we will wait for the market to improve, no rush.

Lending Interest Earnings

We earned $12.92 in total interests this month from several lending loop commitments (loans) worth combined total of $2000 dumped back in 2019. It fluctuates a bit on monthly basis but no complains for now. At present both principal and interest amounts are insignificant but if I have spare cash, I would surely lend more on this platform. You can also explore this option with a smaller capital and if you invest, we both can earn $25 each using our lending loop referral ink, once you invest $1,500 on their platform.

Stay safe, stay cool, and most importantly Save-Invest-Repeat! 😊

March’23 – Side Income Update

07-May-2307-May-23RLeave a comment

Hi there!

Hoping you are having the best days of your lives! If not, at least I wish you are trying to make it better and in the process, enjoying the journey. Afterall progress and growth is more important than hitting stagnancy and it helps a lot if you have a defined goal(s) for yourself. For us, March was a busy month for our restaurants as both establishments catered for almost 800 guests combined! Although we have fulltime managing partners at each place, I had to pitch in and help with both events on 2 consecutive weekends. We are still fairly new and hadn’t catered to this sized event yet hence we are on a learning roller-coaster gaining experience and insight. For both events combined, the menu was quite elaborate with 25+ food items for buffet including many variety of salads, appetizers, entrees and sweets. The events were a huge success in terms of customer satisfaction, praises we got for our food & most importantly follow-up customers that we attracted back to our businesses for their food needs. We aren’t making much money with our restaurant and grocers is bleeding quite heavily month-over-month and so it is quite stressful phase of many of our lives and trying to enjoy when we can and hoping for a brighter future for these initiatives.

Getting to this month’s business, please find below our March updates which as usual starts by updating below two pages with the latest data:

2025 Goal tracker on our homepage – At the beginning of 2023 we revised our 2025 passive income goals after careful consideration and keeping in mind heavy financial obligations we carry currently. You can read more about it here under our 2025 goals
Dividend Portfolio with our latest holdings. We are aggressively modifying our holdings to align more with growth mindset instead of income at present.

Passive Income Pie

This month, our passive income split comprised 52% of Dividends, 47% in Rental income & a miniscule 1% interest earnings from Lending loop. Our 2025 goal is to have income from below sources with target percentage split as mentioned:

Dividend Income: 50.00% ($1500 per month)
Rental Income: 32.50% ($975 per month)
Lending Interest: 0.83% ($25 per month)
Restaurant Earning: 16.66% ($500 per month)

Over time we will work to smoothen the earning fluctuations so to have steady monthly side income from these hustles. As I also mentioned last month we haven’t seen any income from our restaurant adventure yet and the first earning distribution is aimed for Oct’23 (its 2nd anniversary) and thereafter we will have annual profit sharing. For now I just added a token amount of $500 monthly and will update to a more realistic number post first earnings. Also, the grocers is not even considered yet as we are years if not quarters from seeing any Green! In all likeliness, we will re-strategize our financial freedom goal post more clarity on the businesses.

Monthly Dividend Earnings

While Jan’23 gave us an all time high dividends, Feb’23 was quite dull and in the midst, March is not that bad as compared! I would prefer less variations but this isn’t a big deal as when we get into consumption phase, we would have 3-6 months of emergency funds handy and these monthly dividends will just be added to that pool for our daily needs. Besides majority of good companies pay in Jan-Apr-Jul-Oct months as their quarter ends on Mar-Jun-Sept-Dec months.

Key highlights from this month’s dividend income are:

We received dividend deposits from a 20 different companies (17 Canadian & 3 US), with total value of $810.29, a 26% YoY increase from Mar’22
For ease and simplicity, we consider 1 CAD = 1 USD
Top 3 dividend contributors were Enbridge, Pembina pipelines and Suncor
We dripped 12 shares in total – 3 from Enbridge, 2 each from Manulife, Pembina pipelines and Suncor & 1 each from Pizza Pizza, Plaza REIT & Whitecap Resources
We received 6 dividend raises this month: Canadian National Railway: 7.85%, Enbridge: 3.2%, Equitable Bank: 6.06%, Manulife Insurance: 11%, Metro: 10% & Plaza REIT: 0.13%
Average monthly dividends for 2023 so far is $784.68 or about $26 a day. By 2025, we aim to reach $1500 monthly (or $50 daily)

Dividend Goal Tracker – Planned vs Actual

Our aspirational dividend earnings for this year is $12000 and three months into the year, we achieved about 20% of our goal. Due to other financial commitments, the money is quite tight right now for investing and the skyrocketing rate of interest isn’t making sense anymore to invest from available line of credits. Hence investment strategy for this year is a pain – We saves as much money as possible from our day jobs, then divert a major portion of that savings immediately towards paying off high interest debts & with a much smaller portion we invest under our TFSA accounts to narrow down the wide contribution limit gap! Most of our buys under TFSA are focused on companies with low yield but with a track record of double digits dividend growth over past 5 years minimum. While many don’t like significant debt, we are not that uncomfortable with it and hence are still trying to maintain a fine balance between debt repayment & investing. Readers may know we carry a significant debt right now which was taken to fund couple of businesses. This situation forced us to reduce our 2025 dividend goals from $30000 to $18000 and if the businesses continue to demand additional capital, we may even have to sell some/all of our TFSA holdings.

My Marketplace

This was an unusually busy month for both BUYING & SELLING! We closed our Bank of Nova Scotia (TSE:BNS) position after holding it for 4 years. While the dividend yield was juicy with just over 6%, which was increased by 14.11% in 2022, but what got me frustrated was the price which declined 16% in past 5 years. The dividend yield or the raise wasn’t enough to keep my interest going. We also sold Northland Power Inc (TSE:NPI) whose last dividend raise was back in Jan’18 of 11.11% and this itself was enough to exit our position. Another position we exited was Maxar Technologies (TSE:MAXR) which appreciated more than double post the new of their acquisition. We just had 50 shares left and they were also free and hence the exit was quite satisfying. Our final sell was Suncor Energy Inc (TSE:SU) which we partially sold to book some profits after their recent bull run due to increase in crude oil appreciation. We still have a partial position which we will continue to hold.

With significant sell proceeds, we added Waste Connections Inc (TSE:WCN) to our existing position & started new positions for Canadian Natural Resources Ltd (TSE:CNQ), Enghouse Systems Ltd (TSE:ENGH) and Intact Financial Corp (TSE:IFC). All these companies have low dividend yield but have a history of double digit dividend growth & CAGR over past 5-10 years and hence I believe have a good runway for growth over coming years. We also continued accumulating CIBC (TSE:CM) under automated bi-weekly contributions going straight into my RRSP account. And finally we also used the incoming dividends to buy fractional shares of Equitable Bank Inc (TSE:EQB) & Metro Inc (TSE:MRU) under our TFSA accounts.

We also dripped 12 additional shares and received dividend raises from 6 companies we hold which contributed to a bit as well to our Projected Annual Dividend Income (PADI) for the month, which in total increased by $21.91, not a huge amount but by giving it time and being disciplined & determination, we should see much bigger increases in next few years.

Rental Earnings

Principal residence – We rent out a portion of our basement which is legally built as a second unit and we occupy upstairs with a portion of the basement, for which we add $2500 as rent payable by us for our dwelling. The net cashflow from our principal residence for this month is -$575.44 which is lower than usual as we have to pay property taxes in Feb-Mar-Apr-Jul-Aug-Sept months, which eats up the cashflow. I know the picture doesn’t look rosy but imagine bearing all the cost by ourselves with $0 external support in this high interest market!

Investment property 1 – Net cashflow from this property for this month is $920.72 and this property acts as a backbone to many of our financial needs including paying off the interests for all outstanding line of credits. Once the real estate market improves I plan to test the waters by putting this house for sale and see what is being offered. Depending on it we may sell it and consolidate some of the debt we carry, I will keep you’ll posted!

Investment property 2 – The net cashflow from this property for the month is $390.28. If you followed us in Jan’23, you will know that this house was purchased in equal partnership with a friend of mine and hence I am only going to consider 50% of the income/loss. Our near term (2-4 years) intention with this house is to sell and book profit for which we will wait for the market to improve, no rush.

Lending Interest Earnings

We earned $13.01 in total interests this month from several lending loop commitments (loans) worth combined total of $2000 dumped back in 2019. It fluctuates a bit on monthly basis but no complains for now. At present both principal and interest amounts are insignificant but if I have spare cash, I would surely lend more on this platform. You can also explore this option with a smaller capital and if you invest, we both can earn $25 each using our lending loop referral ink, once you invest $1,500 on their platform.

Stay safe, stay cool, and most importantly Save-Invest-Repeat! 😊

Our Top 3 Picks – US Dividend Stocks

14-Oct-2114-Oct-21RLeave a comment

At the beginning of 2021, Bob (..from TawCan.com) approached me to contribute for an article which he was working on to list down best Canadian dividend/growth stocks. The ask from me and 17 other Dividend Growth Investors (DGI) was simply to pick our top 3 stocks and provide reasoning! His article took a great shape and became a go to post for beginners to find good stocks, it can be read here – Best Canadian Dividend Stocks. It was my first time collaborating with such masters and in order to come up with my picks, I took a methodical approach which is documented here in my own blog here at 2021 Top 3 Picks – Canadian Dividend Growth.

My top 3 picks for his article back in Jan’21 were GoEasy Financials, Kirkland Lake Gold Ltd & Agnico Eagle Mines and my selection was purely based on dividend growth data for recent past years (one and three). The last dividend raise for Agnico was astonishing 75% while Kirkland raised theirs’ by 50% and GoEasy gave a handsome 45.16% raise! All 3 companies dividend growth were amongst the top and it is worth mentioning that since then GoEasy again raised their dividend by whopping 46.67%. Even if you look at their average three years dividend growth percentage, they are quite envious. In terms of price appreciation, GoEasy lead the pack by YTD increase of 92% (163% in last 1 year!), Kirkland by 1% & Agnico decreased by 25%. If I had invested $10,000 in each of these 3 stocks, my value at the time of writing would have been about $37,000, an increase of 23%. It is a good return by all means but if I had to redo this, I wouldn’t choose 2 gold stocks. Gold miners/stocks have suffered in the last one year due to declining gold prices from the peak of Aug’20 amidst pandemic uncertainty by almost 25%. A bank or an utility company would have been a better choice. For the records, I only got a chance to buy GoEasy (..talk about getting lucky!) and we have doubled our money so far. There was also an announcement coming out in late Sept that Agnico is buying Kirkland Gold for $13.5 billion!

Bob contacted me again few weeks ago and this time he wanted to work on a similar article, but focusing on US based stocks! Again I am both nervous and excited as these exercises are quite enriching and a great learning experience. US stock exchanges – NYSE & NASDAQ are top 2 exchanges in the world in terms of market capitalization while Canada’s own TSX sits at the distant 9th spot. These two US exchanges lists more than 6500 companies with about 35 trillion dollars (give or take) market valuation; TSX in comparison is about 2 trillion dollars only. Given these many stocks to pick from, the task is quite daunting and intimidating but I recall long time ago someone telling me a very basic thing about stock selection – Look around for products/services you use daily and buy the companies that provide them! The idea is quite fundamental yet very strong, imagine a company manufacturing your toothpaste or supplying you electricity/gas or medicines you need or the phone you use or car you drive. These companies are so penetrated in everyday life that it is hard for them to go out of business, even if the consumer usage habit or the rule changes, these companies will adapt and innovate to remain in the business. So.. my approach for this exercise is based on this principle and hence is quite simpler than methodically weeding out stocks based on their fundamentals or dividend data. I am just going to pick 3 different sectors and talk about my favourite stocks from each of them. For now I am going to go with Technology, Financial & Pharmaceutical sectors and these stocks I bet are worldwide household names, especially in ours!

Technology – Apple

If you haven’t heard about Apple Inc then you are probably from a different planet! Apple was founded on 1-Apr-76 and they started their journey building personal computers (..called Macintosh back then) and back then spawned into Camera, Gaming console, Clothing line (wow.. can you believe it!) & iPod to survive! In present world they sells Macbook, iPad, iWatch, Airpods, etc but rules the consumer electronics space worldwide with their iPhones. They have sold nearly 2 billion phones so far with 1 billion active users currently and recently launched the latest iPhone 13 model. In 1985 Steve Jobs was oust from Apple as CEO but was brought back in 1997 when the company was in dire financial situation. And just in 14 years Jobs turned the company’s fortune around with his vision, dedication and ruthless leadership launching one successful product after another focusing on design aesthetics and ease of usage; and in 2011 Apple had more cash than the US treasury!

Source: Boston Consulting Group’s annual ranking

A successful company needs a deep pocket to spend on innovation and research, so they keep churning out unique product or service for its customer base. As per Boston Consulting Group, Apple singlehandedly ruled the innovation landscape since 2005 till 2021, not under its hometurf of Technology & Telecommunication sector but also amongst all other sectors.

Apple is also the biggest company in the world in terms of market-cap and the first company to attain every market-cap milestones so far – be it $500 billion or $1 trillion or $2 trillion and now sits at the top with about $2.38 trillion valuation. Apple is followed by Microsoft, Google, Amazon & Facebook in terms of companies valuation and in last 5 years, Apple beats them all in price appreciation of about 400%, quite a returns on investment for its shareholders! The dividend yield is 0.62% with dividend payout ratio of 27% and the last 5 years dividend growth rate is 9.30%

In our home, in total we possess six devices and few more which aren’t used anymore. Even if you go outside and look around, you will surely notice every other person using an iPhone, so with such widespread usage it only makes sense to own a piece of this mammoth of a company!

Financial – Visa

VISA Inc is another such company which you will find in almost every wallet or pocket in the world! It is an American multinational financial services corporation and one of the world’s most valuable companies, which facilitates electronic funds transfers throughout through Visa-branded credit, debit and prepaid cards. Visa do not issue any card by themselves, rather they provides financial institutions with Visa-branded payment products that they then use to offer variety of cards. They IPO’d in 2008 and back then it was the largest IPO in history at $17.9 billion! Visa have about 2.5 billion cards boring their brand name earning transaction fees for them every time their card is swiped/tapped/inserted anywhere and as per 2020 data, a whopping $8.8 trillion transactions were processed by them with net revenue for Visa of $22 billion!

Visa’s competitors are Mastercard, American Express, Discover and many other small players but their main challenger is Mastercard. You will find plenty of articles all over the internet comparing these two companies and choosing one over the other; but my leaning is more towards Visa considering widespread usage in our household. I recall my first debit card had a VISA logo on it and I wondered why as the card belonged to a local bank. Looking at all our current cards, the count is like 8-2 in favour of VISA and the ones belonging to Mastercard are Costco & Walmart cards, with which they have contract! In the last 5 years, Visa stock price appreciated about 170% with dividend yield of 0.58% with dividend payout ratio of 25% and the last 5 years dividend growth rate is 18%

Covid changed the way world shop and pays which in all likeliness is going to stick around now. More and more people are shopping online and if not, at least avoid using cash and this change in behaviour is obviously boosting card payment and hence increase in related transaction fee. More so I read somewhere, the pandemic boosted debit card usage a lot by consumers who preferred cash earlier, and VISA’s debit card programs and penetration is bigger as compared to Mastercard and hence I believe VISA is a good choice.

Pharmaceutical – Abbvie

Abbvie Inc is an American biopharmaceutical company spinned off Abbott Laboratories in 2013 and hence is a relatively young company. After the split, Abbott takes care of medical devices, diagnostic equipments & nutrition products and AbbVie operate as a research-based pharmaceutical manufacturer & seller. Abbvie’s infamous product Humira (..which is used to treat Rheumatoid arthritis, Psoriatic arthritis and Crohn’s disease) is the number one selling drug in the world since 2015! Last year it brought in nearly $20 billion revenue for Abbvie while the second highest selling drug Eliquis made nearly $10 billion for their parent company, so you can judge how mammoth Humira is for Abbvie! While patent for Humira is expiring in different parts of the world, US patent is going to expire in early 2023 and until then there is no doubt Humira will rule Abbvie’s revenue charts and even a bit after that as it may take a while before other companies catchup and brings in biosimilars in the market. Abbvie majorly have 16 products selling in international market and many others in either research pipeline or acquisition plan, last year itself the company acquired Allergan, manufacturer of Botox for about $63 billion.

Abbvie have been consistent with the return on investment for its shareholders, ever since its inception. In last 5 years, Abbvie stock price appreciated about 80% with a juicy dividend yield of 4.79% with dividend payout ratio of 49% and the last 5 years dividend growth rate is 18%. With this kind of yield and a solid past record, Abbvie qualify as a long term stock to hold, at least for me.

Just like Apple & Visa products that are widely used in our household by choice, unfortunately Abbvie was also a company whose product I used in the past! Probably readers know, I am a Crohns disease patient (..or shall I say veteran!) and I have used Humira for more than 5 years.

Key Metrics

Below are some of the metrics I collected for readers from various websites and may be a bit off or stale, so please do check the latest. The focus is mainly on past price appreciation and dividend growth.

Also below is the chart showing Apple, Visa & Abbvie growth in last 5 years.

Conclusion

US market is so huge that picking just 3 stocks is like looking for a needle in a haystack even for professional analysts. I am no analyst and hence I chose 3 safe and boring blue chip stocks with proven track record and dominant position in their respective field. They all are well positioned to survive and grow for at least next few decades and even if the market demand, usage pattern, local rule changes or if they encounter a disrupter, they are all well capable to adapt or acquire to changing landscape. They all are relatively safe companies with no surprise elements and shall benefit their shareholders with double-digits return over years to come along with increased dividends.

We currently own a little bit of both Apple & Abbvie under our dividend portfolio and shall add Visa as well when we get a chance.

Happy Investing and Good luck with whatever you buy! 😊

Our Top 3 Picks – Canadian Dividend Stocks

30-Jan-2114-Oct-21R1 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!

Canadian Dividend Calendar

04-Oct-2004-Oct-20RLeave 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

19-Sep-2021-Sep-20RLeave 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!