September 2014 to April 2015 Dividend Income Update

Dividend Income & Line of Credit Interest Chart

Dividends Tell the Truth

Dividends and dividend growth are the real-life signal that a company has the wherewithal to pay you dividends, that it has your interests at heart in the fact that it pays you dividends, and that it is experiencing real growth as proven by the real growth in its real dividends.

Lowell Miller (2006). The Single Best Investment: Creating Wealth with Dividend Growth

My retirement plans involve collecting an increasing stream of dividend income to help pay for retirement expenses and inflation. While I am a ways off from reaching my long term financial goals, I find it encouraging to track and witness my monthly dividends grow over time. As indicated in the quote above, this also acts as a good barometer for my portfolio. If the dividends in my portfolio continue to increase it is a good sign that the companies I have invested in are continuing to perform well. These are just a few reasons I track my dividend income monthly.

Since my last dividend income update things have changed a bit. I liquidated my entire portfolio to help come up with a large down payment for the condo I moved into in August 2014. Since then I’ve started building up my portfolio using the smith manoeuvre (borrowing money to invest). Borrowing to invest is a risky strategy and not one that I want to encourage, but in an effort to be transparent I have decided to include the interest in these monthly summaries. Showing the interest payments alongside the dividend income should provide a more complete picture.

Related articles: I Bought A Condo – Excitement & Worries & Portfolio Update: I’m Selling Everything!

Since I started building my portfolio up after the condo purchase I have purchased McDonald’s, Rogers Communications, International Business Machines, Ensign Energy Services, Suncor Energy and Canadian Western Bank. You can read about these below:

  1. Portfolio Update: Why I purchased McDonald’s
  2. Portfolio Update: Rogers Communications Purchased
  3. Portfolio Update: IBM Purchased
  4. Portfolio Update: Ensign Energy Services and Suncor Energy Purchased
  5. Canadian Western Bank Dividend Stock Analysis & Portfolio Update
  6. Portfolio Update: Canadian Western Bank Purchased … Again

I’m pretty happy with my purchases so far as I’ve seen some dividend growth already. Rogers Communications announced in January that they would increase their quarterly dividend 5%. This increase took place with the dividend payment in April 2015. To be honest I was hoping for a higher increase from Rogers, but 5% is still decent.

The other increase was from IBM which announced an 18% increase in April. They will be increasing the quarterly dividend from $1.10 to $1.30 with the June 10th dividend payment. I was happily surprised by this increase as it was higher than expected. I took it as a sign that management believe that they are starting to turn the ship around. When I first bought IBM they were going through some troubles which had caused the share price to drop. I took it as an opportunity to buy a great company with the expectation that their troubles would  continue for some time, but that they would eventually figure it out. It looks like they could be figuring it out earlier than I expected. Time will tell, but in the meantime I’m happy to collect a significantly higher dividend.

Now let’s get into the dividend income breakdown:

September, October & November 2014 dividend income

During this period there was no dividend income because I sold all my stocks for the condo down payment. I did start investing again, but the dividend payments didn’t kick in until December 2014.

September Line of Credit Interest – $0.00

October Line of Credit Interest – $0.00

November Line of Credit Interest – $80.18

December 2014 dividend income

December Canadian Dividend Income

  • None

Total December Canadian Dividend Income – $0.00

December US Dividend Income

Total December US Dividend Income – $134.30

Line of Credit Interest – $103.82

January 2015 dividend income

January Canadian Dividend Income

Total January Canadian Dividend Income – $257.25

January US Dividend Income

  • None

Total January US Dividend Income – $0.00

Line of Credit Interest – $171.22

February 2015 dividend income

No dividends received in the month.

Line of Credit Interest – $155.32

March 2015 dividend income

March Canadian Dividend Income

Total March Canadian Dividend Income – $155.40

March US Dividend Income

Total March US Dividend Income – $134.30

Line of Credit Interest – $144.78

April 2015 dividend income

April Canadian Dividend Income

Total April Canadian Dividend Income – $264.00

April US Dividend Income

  • None

Total April US Dividend Income – $0.00

Line of Credit Interest – $164.31

A new chart

I’ll be updating the chart on the dividend income page to include the line of credit interest. It will look something like the chart at the beginning of this article. For the most up to date chart check the dividend income page. To see a list of the companies currently in my portfolio check out my portfolio page.

 

What do you think of my progress so far?

4 comments to September 2014 to April 2015 Dividend Income Update

  • RICARDO

    Great work on getting other money to make dividends.
    As long as you can 1) pay the interest and 2) pay down some fo the principle (preferably every month) then you are well on your way to getting a “free” salary.
    I personally run a HELOC for investment purposes and as it is a non-registered account I keep it all Canadian so there are no US tax issues. Plus I find that the Can equities generally pay a bit more than the US equities. And that does make a difference when you are paying the interest and principle. And another plus, at least on the physco side, is I don’t have to worry which way the dollar is going, up or down.
    I actually try to max out my HELOC investment as the more I am invested then the more dividends I get and therefore the faster the principle gets paid down. As long as no one cuts dividends and the interest rate does not go up then I am ahead of the game. I have a bit of slack in the HELOC right now as I find the market is close to top levels presently so I am holding some powder in reserve
    So far this year, 4 months dividends <$7K – interest <$1.3K

  • John

    great website….I’m a great fan of dividend investing, especially with Canadian dividend growers where you get preferential tax treatment. Having said that, I’d love to invest in US dividend growers where there is a wider selection of great stocks to choose from….

    BUT I hesitate because of their tax treatment. US dividends would be treated as foreign income and you get hit hard at tax time (not to mention the exchange rate). Is this a reason not to invest in US stocks or am I missing something else that may make it worthwhile to do so. Thanks!

  • RICARDO

    @John
    It is something to keep in mind if and when you buy a US stock.
    Usually, but not always, if you hold a US based stock in your RRSP you will not be taxed. If you hold it in a TFSA or a non-registered account you WILL be taxed. This may or may not be recoverable, I have not bothered to look in to it.
    One other thing to keep in mind when purchasing US equities is the exchange rate. Right now anyone who bought a US equity @ $0.78 is probably losing money even if they are getting dividends. One of the reasons I am staying away from US stocks right now is because of the exchange rate fluctuation.

    RICARDO

  • Aki

    Thank you for sharing it

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