Tag: Dividend Update

July’20 – My Passive Income Update continues!

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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.

Passive Income Split

This colourful doughnut represents monthly percentage split between all 4 income streams. As in June, I am still pretty heavy on lending interest. I am targeting to adjust to a more comfortable ratio of:

  • Dividends – 60%
  • Lending Interest – 25%
  • Rental Income – 15%

The aim is to keep looking at opportunities to rebalance these streams till above ratio is reached or close enough to our liking.

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

This chart represents our Aspirational Dividend earnings by 2025 and shows Planned – Yearly (Blue bars), Monthly (Green dotted line) and tracks Actuals – Yearly (Pink bars) and Monthly (Green plot)

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! 😊

June’20 – My first ever Passive Income Update!

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This is my first monthly update since I created this website last month and I must admit I totally misjudged the amount of work involved to update, month after months. It is quite overwhelming to gather the past month’s data to the best of my ability, collate it, and most importantly to put it in a presentable format and sequence it, for readers to follow through. In the end, the monthly reporting and performance should contribute towards the 2025 Goal and the reporting should clearly show the progress and identify any corrective action required on my part. I am already feeling disciplined by this whole exercise which makes me believe I am in the right direction!

While reporting is an evolving process and I will fine tune it as we go along, I for now chose to report below metrics on monthly basis:

  • Update 2025 Goal tracker on homepage
  • Update Dividend Portfolio with latest holdings
  • Passive Income Split between Dividend, Rental & Lending incomes
  • Monthly Dividend Earnings
  • Dividend Goal Tracker – Planned vs Actual
  • My Marketplace – Highlighting my trades for the month

Now since this is the first update, I am also including two additional sections which will be optional for regular monthly updates, as I may not have enough changes or update to share.

  • Rental Earnings
  • Lending Interest Earnings

Passive Income Split

This colourful doughnut represents monthly percentage split between all 4 income streams. Currently I am pretty heavy on lending interest income but as per 2025 Goal, a more comfortable ratio would be:

  • Dividends – 60%
  • Lending Interest – 25%
  • Rental Income – 15%

The aim would be to keep looking at opportunities to rebalance these streams till above ratio is reached or close enough to the liking.

Monthly Dividend Earnings

June 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:

  • Out of 25 expected Dividend deposits, I only received payout from 23 companies totalling $474.54
  • Chesswood cut their dividend by 50% in Apr’20 and then took an unfortunate decision to suspend it indefinitely in May’20, reducing annual dividend by $262.50
  • TORC Oil & Gas reduced their dividend by 80% in Feb’20 and then suspended in May’20, reducing the annual dividend by $67.76
  • Suncor cut their dividend by 55% in May’20, reducing annual dividend further by $111.39
  • Total Jun’20 dividend loss is $43.05 while Forward annual dividend income loss is $441.65

Dividend Goal Tracker – Planned vs Actual

This chart represents our Aspirational Dividend earnings by 2025 and shows Planned – Yearly (Blue bars), Monthly (Green dotted line) and tracks Actuals – Yearly (Pink bars) and Monthly (Green plot)

This is a great visual telling us if we are on track or need adjustments to the portfolio. As you can see, so far, we are on-track to achieve our 2020 dividend goal of $5500 unless more of our companies chose to reduce/suspend their payouts. Considering the situation we are in due to Covid-19, my strategy is to have patience and not to sell any stock, even after a dividend cut. Once the tide settles down and if they still don’t reinstate the dividend, I may change my position. We are in this for the long haul so don’t see a point to panic and book a loss. I already heard that A&W Royalty is resuming their monthly distribution, more on it in the Jul’20 updates. Fingers crossed!

My Marketplace

As usual, I kept nibbling on CIBC shares under RRSP where my employer also adds 50% of my contribution up to a certain limit. I must say, it is a sheer waste of money if anybody who’s having this option from their employer and not using it. I can’t think of any bigger lost opportunity then this! There are several benefits with employee share purchase program primarily being Tax deduction under RRSP contribution, 50% upfront benefit (in my case and may differ for each), and not to forget the usuals like share price appreciation and all those dividends. In fact this was the whole reason I got interested in Dividend investing! Regular nominal payroll deductions to fund this only hurts first few months and after that you (and your budget) automatically adjust to it. Besides, regular contributions is one of the most efficient way to reduce risk due to share price fluctuations and grow your investment.

I also bought 100 shares of MAXR at $22 a piece. I didn’t buy this for dividend and don’t intend to keep it for a long term. It is purely a quick play as I had made some money on this in the past as well and I see some potential again. Those who don’t know this company, Maxar Technologies is a space technology company headquartered in Colorado, USA and specializes in niche area of Space communication, Satellite products, and related services. Their share price plunged from mid $80s in early 2018 to about $6 in a year after the company reported a technical glitch in one of their satellite preventing it from taking images. It was a nasty ride for both the company and investors and they had to sell assets and subsidiaries to cope up. Also a news back in mid 2019 that insurance payment clearance for the failed satellite to the tune of $183M had been quite helpful to revive the company. Recently they made an announcement to acquire Vricon, a global leader in satellite-derived 3D data for defense and intelligence markets, with software and products that enhance 3D mapping. So the road to recovery looks bright to me and my entry is purely from growth perspective. Needless to say the stock price is quite volatile and I may exit once I see the price in the range of $27-$32.

My last trade of the month was TOG where I bought 1650 stocks and sold at a profit of 0.42 cents a share, minus trading fees. TOG is a small cap Oil & Gas company operating out of Alberta, Canada and price had been volatile ever since the beginning of 2019. While this company is recommended as a buy by different analysts and bloggers, I am sitting on the side and satisfied with small tradings, while things settle down. If you have noticed, I do have a small position left in my portfolio and may sell it with my next “trade” as they have suspended their dividend in May’20.

Rental Earnings

Increasing net cash flow from an investment property is quite a task and requires tons of patience and more so, savings! The incoming rent is gobbled mostly within a week by Mortgage payments, Insurance, Maintenance fee, Property tax, Property management or some random expense going towards a leaking pipe or a broken switch! You are lucky if by the end of the month, you are still in green. We have a 50% partnership in an investment property which we acquired at the beginning of this year. It is rented out for now and the outgoing pretty much balanced out by the incoming. Due to Covid-19 situation, all Canadian banks offered mortgage deferral for six months for qualified owners. We had applied for it and got approved to put the mortgage on hold for 6 months (till Sept’20) and that’s the reason we are getting profit out of this property. By the end of the deferral term, we will get the new monthly mortgage payment amount including some of the interest which we haven’t been paying for 6 months. You didn’t thought this six months deferral is free, did you? Nothing is for free in this world, not even relief packages!

Lending Interest Earnings

Income from Lending interest is steady and predictable, and you can read about our strategy documented under first steps for lending income. The only notable is I waited for too long to get lending loop monthly statement which didn’t arrived till 10th of the month and hence I gave up. Instead going forward, for my monthly updates, I will include last month’s income (May’20 in this case).

I wholeheartedly hope you enjoyed the updates and please let me know if you have any feedback on monthly updates or if there’s any specific data that you would like to see. Good luck with whatever you chose to do with your money though I wish you Save-Invest-Repeat. See you next month! 😊