July’20 – My Passive Income Update continues!

This is my second monthly update and I tell you I still haven’t gotten used to this whole idea of posting our deeds in front of people! But as I mentioned in my earlier posts, I am doing this to discipline myself and hoping to “inspire” the readers, hope in the end it is all worthwhile. I think it will probably take few more months before this exercise a habit and eventually it will be a piece-of-cake! July was quite a busy month on touring front and we went to quite a few nearby places almost every week, to make the most out of this summer. I guess this hunger and urge was fueled by months of quarantine and cold weather so within a month we went to three different beaches, Niagara falls (again!!) and Cherry picking! The Covid-19 lockdown in our province was relaxed as the new cases count was on decrease and I must say the government is doing an admirable job balancing between lockdown to contain the virus but at the same time also opening up businesses in phases to ensure this battered economy get a boost. I strongly believe the wellbeing of people is as important as ensuring business do not suffer more, hence a measured approach is the need of the hour. While mayors and premiers are doing what is necessary, the citizens have an equally important role to play in this by being responsible and follow the laid out guidelines. I was appalled by seeing flood of people at Niagara falls with no mask or maintaining no social distancing at all! I think before this whole thing settles down, we all should try avoiding visits to crowded places, if at all one has to go, masks and six feet rule is a must. In the end we are all in this together and if we don’t take care then this pandemic will last much longer than we all want it to.

On the other hand the investment scene was totally lacklustre and boring, in fact there was no trading at all! Partly because of travels and mostly because I feels the market is not at all in sync with pandemic related economic downfall and business losses. To my amazement I have seen some of my watchlist stocks such as Apple surging 10% in a day on the news of stock split and decent quarterly result. The stock crossed $400 barrier for the first time and ended at an all time high of $425. To put it in perspective, Apple share price almost doubled in last 4 months since March crash! There have been several other crazy rallies I have seen sitting on the fence, and one of these days I may nervously jump into one of the technology stock, south of the border, I do have some cash on hand! As far as my 2025 Goal goes, I am still on track but mulling some decisions mentioned below.

As I mentioned in my June posting, I updated below two pages to reflect the latest data, along with month specific details further in other sections.

• 2025 Goal tracker on homepage
• Dividend Portfolio with latest holdings

Passive Income Split

Monthly Dividend Earnings

July dividend earnings had been quite a month from Dividend perspective as Covid-19 is still contributing to uncertainty and creating a havoc on earnings, resulting in companies either reducing or worst case, suspending dividends altogether. While many sectors have been on recovery path as the lockdown is relaxed, there are few exceptions such as Technology (especially eCommerce, Remote working enablers), Consumer-Staples, Utilities which have seen growth during pandemic. Key highlights for this month’s dividend income are:

• I received dividend deposits from 17 companies out of which CIBC is set to drip, total value of $764.26
• This is almost $300 more than June because of my large holding in CIBC, which I aim to reduce by increasing investment in other solid companies
• As I mentioned in last month’s post, A&W indeed resumed its dividend (royalty actually) after suspending it from Apr-Jun. Though it is not at par with March payment, it is still a positive sign and we hope to see an increase in coming months. This will contribute $60 towards forward annual dividend income for 2020.

Dividend Goal Tracker – Planned vs Actual

It is quite satisfying to see we crossing entire last year’s dividend earnings in July itself. We still have 5 months to go and are strongly on-track to achieve our 2020 dividend goal of $5500.

My Marketplace

No new addition this month except adding/dripping CIBC shares under RRSP account. As I mentioned last month, this is one of the best way to passively increase your earnings, icing on the cake it, employer matching a portion of your contribution. If you haven’t checked/enrolled into employer backed retirement plan, you should enquire immediately!

I have about 3% of cash left to be deployed and I am strongly mulling one of the technology stocks, either US or Canadian. I do hold bunch of top tiered Canadian IT stocks as part of XIT holding, which by the way is firing on all cylinders and adding further to the position may not be a bad idea at all! Another technology holding of mine Sylogist announced a dividend increase yet again, making it two quarters in a row, and I am still considering adding further more. On the other hand the recent Microsoft & Apple rallies are quite impressive and it is worth riding the wave, only demotivator is the CAD to USD conversion rate. Currently my dividend income comprises 90% out of Canadian companies and just 10% from US based stocks (keep in mind for me CAD = USD for simplicity!). I would love to alter this ratio to 50-50 and hence I may jump the gun on one of these US stock, sooner than later!

Rental Earnings

We aim to reduce lending interest earnings and increase rental income instead, it is also shown in the colourful pie above. Over the past few weeks we have been thinking and considering buying a rental property by deploying some of the lending money towards the property down payment. With this intention, we were quite busy looking at several properties. Running down the numbers to see what you can afford, finalize the neighbourhood, browse through the listings, checking photos and virtual tours, shortlisting, working with real estate agent to book visits, tour the property, review renovation need, scanning the neighbourhood, exploring commute options, check rental prospects, look at future appreciation potential, making an offer, applying for mortgage, providing papers, inspection, arranging down payment etc, the activity list is quite long, tiring and tedious. But I tell you it is equally exciting provided you are interested in real estate.

The single most important activity remains going through the numbers to look at your affordability and potential cash flow from the rental property. Always look at the risk and reward, in the end you are doing this to increase your passive income, not increase your blood pressure! Try keeping it simple, if you think the numbers doesn’t make sense and you can’t afford it then don’t get into it. After careful thinking we have put a conditional offer on a property, hopefully more on this in August!

Lending Interest Earnings

There is no significant change in interest earnings, and this is one of the reason lending money is a bit satisfying, the income more or less remains stable month after month. If our rental property deal materializes then there will be a huge dip in this income stream but it aligns with our overall goal to rejig our ratios. As I said under first steps for lending income, it still remains a high risk high reward endeavour if you have money to spare. There is not enough options to consider which consistently earns you 12% on your money.

Thank you for reading through the updates and as always, I welcome your comment and feedback. I hope you enjoyed the read and take away the main objective of these postings – Save-Invest-Repeat. Until next month! 😊