December 2016 Dividend Income

Dividends

So the year 2016 has come to an end and so does tracking the year. I’ve greatly improved the way I track all of my investment purchases, dividend raises, and dividend income and growth this year. I know exactly how my investment journey has benefited my passive income cash flow, and ultimately, my net worth and sustainability in relation to expenses.

This past month I’ve finally boosted my dividend income to an average of over $200 a month. It took 22 months to get to this point but it’s become practically clock work to me now and is very feasible for me to continue this journey.

The writing makes it a little more difficult and takes by far the most time, but I get a lot out of it myself and it forces me to think a lot of my decisions over as I’ve forced accountability on myself by sharing this with all the readers. If you’ve been a dedicated reader on the blog here, I truly thank you for making this all possible up to now. Thanks to you, I’ve recently organized to renew the web site for a 3-year period in 2017.

Best of luck to everyone in 2017, I hope the market continues to roar forward and our dividend income can collectively grow and we’re all one year closer to financial independence.

Summary of December Investment Activities

Throughout December, I’ve purchased:

One of my holdings increased their dividend.

None of my holdings were sold to recuperate capital.

None of my holdings reduced their dividends.

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Apple Technology

My First Tech. Investment: Apple (AAPL)

Purchases

On December 28, I initiated a position in Apple Inc. (NASDAQ:AAPL). I purchased 12 shares of AAPL for $116.87 each, with a trading cost of $6.95 for a total investment of $1,409.39 USD.

Interestingly enough, this was my one and only U.S. stock purchase for the year of 2016. I converted a bit more of my CAD to USD at the same time because I need some more geographic diversification to my portfolio, as well as the fact that the U.S. market has much larger corporations which address a niche simply not available for purchase through the Toronto Exchange.

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TransAlta Renewables

Attaining over $200 a month thanks to TransAlta Renewables (RNW)

Purchases

On December 23rd, I added 110 shares of TransAlta Renewables Inc. (TSE: RNW) to The Dividend Beginner’s portfolio. This time around I paid $14.15 per share, whereas I first invested in RNW in May for $12.32 a share.

Renewable energy in Canada has a good deal of tax subsidies and with energy becoming more expensive again, it will be worth it to continue investing in these technologies. I like TransAlta Renewables as it does this, and stands under a more mature parent company, TransAlta Corporation where it receives many drop-downs. In essence, it could be classified as a yieldco at this point, just like my previous investment in Enbridge Income Fund Holdings.

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Enbridge Income Fund

Scooped up More Enbridge Income Fund Holdings (ENF)

Purchases

On December 19th, I added 43 shares of Enbridge Income Fund Holdings. (TSX: ENF) to The Dividend Beginner’s portfolio.

With Trump taking the reins soon and interest rates going up again, I’ve modified my approach a little bit, as I look into sectors which may benefit as a result. According to CIBC,

If history is any indicator, should U.S. rates continue to rise steadily, as anticipated by CIBC Economics, then the cyclical sectors – technology, energy, consumer discretionary, industrials & materials – should fare far better than defensive sectors – consumer staples, telecom, health care & utilities.

While I have not yet decided whether I want to increase my exposure to oil development, I thought that ENF would provide a much less risky attempt at gaining some income from this environment.

This is the second time I invest in ENF, as it’s a nice way to extract very decent income on a monthly basis from a great parent company, Enbridge. I’m not so much a fan of the metrics that ENB boasts, but do like where the company is going. So, for the time being, I parked some money into ENF.

Yield on cost lowered to 5.76%

Considering I paid $34.80 per share of Enbridge Income Fund Holdings, I scored a yield of 5.36%, paid out monthly.

I first bought 50 shares of ENF in March for $30.01, which was a yield on cost of 6.22%. Factoring in my transaction costs, I now have a total cost basis of $3,010.80 for 93 shares. With the annual dividend of $1.866, my shares bring in $173.54 of income. All in all, this equals a total yield on cost of 5.76%.

Dividend Income increased 3.50%

Before Net Increase After
Annual Dividend Income $2,295.24 $80.24 $2,375.48
Monthly Dividend Income $191.27 $6.69 $197.96
Percentage Increase +3.50%
National Bank of Canada Logo

National Bank of Canada raises dividend 2%

Dividend Raises

On December 2nd, the Board of Directors at National Bank of Canada announced “a dividend of 56 cents per common share, up 1 cent or 2%, payable on February 1, 2017 to shareholders of record on December 28, 2016” (www.nbc.ca)

Before Net Increase After
Annual Dividend $2.20 $0.04 $2.24
Monthly Dividend $0.183 $0.004 $0.187
Percentage Increase 1.82%

National Bank was one of my smallest investments made, and yet bears the largest gain at over 55%. That was an unfortunate combination, but this Quebec-based company continues to deliver dividend raises and so I will hold on to my shares and perhaps add more when the market valuation drops and the dividend returns to my large yield-on-cost. At the time, however, it appears that banks with exposure to the U.S.A offer more upside (Royal Bank, or TD).

Dividend Income increased 0.05%

Considering the Dividend Beginner portfolio contains 30 shares of NA, my annual income from NA has increased by $1.20, from $ 66.00 to $67.20. My 12-month forward dividend income has increased from $2,294.04 to $2,295.24, an increase of 0.05%. My income from NA accounts for 2.7% of my annual dividend income.

While a $1.20 increase in annual dividend income seems quite low, think about how it would require an investment of $29.48, at a yield of 4.07% (NA’s dividend yield) to generate $1.20 in dividend income. That’s the equivalent of getting one to three hours of your life back, depending on your wage.

Before Net Increase After
Annual Dividend $ 2,294.04 $1.20 $ 2,295.24
Monthly Dividend $191.17 $0.10 $191.27
Percentage Increase 0.05%
Dividends November 2016

November 2016 Dividend Income

Dividends

November was an incredible month for dividend raises. The Dividend Beginner portfolio registered FIVE dividend raises from various companies. This is one of those months where the methodology is really paying off and showing something. As the positions get bigger, so will the result of the raises.

In addition to that, a few more positions continued to be dropped from the portfolio as I eased up in some areas to further concentrate in others in the coming year. My portfolio is now down to 21 positions which I would enjoy investing in further given the right conditions. I would like to further rearrange my real estate exposure, but that’s in the future.

Summary of November Investment Activities

Throughout November, I’ve purchased:

  • Nothing!

Five of my holdings increased their dividend.

Two of my holdings were sold to recuperate capital:

None of my holdings reduced their dividends.

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stockbroking success

Overcoming Stockbroking Challenges

Sponsored

Sometime ago, the stock exchanges were for the brokers to take and direct them to whichever direction they desired. All access to exchanges was controlled by brokers. However, the emergence and strengthening of other players in the industry and more stringent rules and regulations has changed the world of stockbroking. While the technological advancement has brought with it many benefits including introduction of big online trading platforms such as CMC Markets which has eased the work of stockbrokers, it has heaped a lot of pressure on brokers to change the way they conduct business. However, this does not mean that stockbroking has lost its promise as one of the most profitable careers as long as you know how to combat the emerging challenges.

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Pure Industrial REIT

Pure Industrial REIT Stumbles Out of my Portfolio

Sales

The Dividend Beginner portfolio continues to off specific positions as they hit their stop loss limits. I’m very happy with the way I’ve decided to liquidate a portion of my portfolio as I decide beforehand what kind of return I’d be happy with – and then let the market decide whether it will continue to rise or drop off.

While Pure Industrial REIT would be a fine buy-and-hold, especially with a roughly 6% dividend yield, I wanted to consolidate my real estate exposure as I have quite a few names in the space, albeit small positions. I would prefer, if I were investing in real estate again, to go with one which consistently raises their dividend; such as Plaza Retail REIT (already own a small position) or Canadian REIT (which unfortunately yields a little low right now).

Due to selling AAR.UN, the Dividend Beginner portfolio now contains a total of 21 stocks. I’m happy with that for now, as I held 25 positions at the beginning of October. I’m not quite sure if there is anything for me to sell now, but I’m debating whether to hold or drop Wal-Mart (WMT). I’m excited to invest further into the same companies I hold in the coming year and to increase the concentration of those positions.

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Plaza Retail REIT

Plaza Retail REIT Delivers a 3% Dividend Raise

Dividend Raises

On November 9th, “Plaza Retail REIT (TSX: PLZ.UN) (“Plaza” or the “REIT”) today announced that its Board of Trustees has approved an increase in its annual distribution to unitholders to $0.27 per unit, representing a 3.8% increase.” (plaza.ca)

Before Net Increase After
Annual Dividend $0.26 $0.01 $0.27
Monthly Dividend $0.0217 $0.0008 $0.0225
Percentage Increase 3.85%

Plaza Retail REIT is my only real estate trust which has a consecutive dividend increase streak, with 14 straight years under their belt. There are very few Canadian REIT which also sport a dividend increase streak. The increases are small but reliable on PLZ.UN, and the share price has been very conservative / non-volatile, while increasing steadily.

Michael Zakuta, President and CEO said, “The distribution increase represents the fourteenth consecutive annual increase since we began paying distributions in 2003.  We have more than tripled our distribution over the last 14 years, as our initial 8 cents per unit distribution has grown to 27 cents per unit.  The more than tripling of our distribution over the last 14 years is a strong confirmation of our value-add business model and our ability to consistently grow our business and deliver results to our unitholders.  Our business continues to benefit and grow from development and redevelopment activity.  Our goal is always to achieve cash flow per unit and NAV growth and pass that growth onto our unitholders.” (plaza.ca)

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exchange income corp logo

EIF.TO Raises Dividend by 4.5% for the Second Time this Year

Dividend Raises

On November 9th, the CEO of Exchange Income Corp. announced: “for the 12th time in our history, the fourth time in the last 24 months, and the second time this year, we are increasing our dividend. Effective with our November dividend, the dividend will increase to an annualized rate of $2.10 up 4.5%. During this two year period, inflation in Canada has totaled approximately 3%, while our dividend has increased 25%.” (exchangeincomecorp.ca)

Before Net Increase After
Annual Dividend $2.01 $0.09 $2.10
Monthly Dividend $0.1675 $0.008 $0.175
Percentage Increase 4.48%

Exchange Income Corp. has really been killing it in the past year and their dividend payout ratio has been improving; now at 54% for the third quarter of 2016, and 60% YTD.

EIF.TO is the only Industrials stock left in my portfolio after recently selling my shares in SNC-Lavalin and Magna International. I am currently sitting on a 26% gain after initially purchasing in May, and then dipping my feet in a second time. It has taken over my portfolio as my largest position, with Alaris Royalty now trailing it after the large drop.

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My publishings on dividendbeginner.com references an opinion and is for information or entertainment purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice. I am not responsible for any decisions you make concerning finances, taxes, or investments. You must perform your own research and always take caution when extending capital.