Welcome to another monthly dividend income update.
The dividend income for February went well and I’m hoping to continue the (slow) income growth in the future months. February was another month of steady income and decent size payments came from Royal Bank and Bank of Montreal.
I love the bank stocks but the recent controversy surrounding TD Bank has me wondering whether they can continue to grow their earnings. Is this it for the big banks? I doubt it, they are all managed well enough that they’ll recover (including TD) but it will take time. Moderate growth would be acceptable in my books with less pressure on quarterly (short term earnings). Every time I go on my bank I feel like I’m being pitched a new product or service I don’t want or need, and I can understand why some people may get themselves into debt trouble in that situation.
February Dividend Income
I received dividend income from the following sources:
- RioCan REIT
- Crescent Point Energy
- Surge Energy
- ETF: iShares Canadian Dividend Aristocrats (CDZ)
- ETF: iShares Select Dividend Index Fund (XDV)
- Cineplex Inc.
- Canoe EIT Income Fund
- Canadian Apartment REIT
- Canadian REIT
- Allied Properties REIT
- Bank of Montreal
- Boardwalk REIT
- National Bank
- Proctor & Gamble
- Royal Bank of Canada
Total dividend income: $1,112.07
Note – some of the dividends received each month are in US currency which is converted at 1:1 for simplicity.
As I mentioned in last month’s update in January I bought shares of CSX on the hopes that their new CEO can turn things around and lower their operating ratio, which measures the efficient of the company (lower is better).
In February I bought shares in Costco. Costco is a company I’ve been watching for a while now. I’m planning on investing more in US dividend companies as I am hoping to have a growing percentage of the monthly dividend income in US dollars.
Costco appeals to me for a few reasons. Aside from being a personal fan of the store I also like how they receive a large percentage of their revenues from the annual membership fee which was recently raised to $60 per year. The renewal rates are high, around 90%, which means the perceived value consumers are getting is worth the annual cost. I also like their strategy related to the dividend – they’ve openly stated how they aim to return money to shareholders when possible and the last two special dividends of $5 and $7 per share proves that.
Stocks I’m Watching
My watchlist has been constant for the last couple months and I may just go ahead and buy instead of waiting for an opportune time. Here’s what I’m currently watching:
- Intact Financial – a name I would like to own as it’s performed quite well and seems to be able to handle any major insurable events (like a wildfire) by simply raising premiums. And of curse the growing dividend is nice too
- CCL Industries – this one has performed very well the past 5 years and has grown through acquisitions. I have no problem buying this in the near future
In last month’s update I wrote about how I will have a slight change in my investing strategy – moving from a registered account (RRSP or TFSA) to non-registered (fully taxable). This is solely because all RRSP and TFSA accounts are maxed out, so now I’ve had to decide what to do with any future cash savings. In the past it’s been easy – put the cash into either the RRSP or TFSA. But since that’s no longer an option (for now) I’ve had to decide between paying down the mortgage and creating a non-registered account.
The mortgage paydown seems appealing but an ‘invest vs. mortgage paydown’ analysis says to invest the money. This is mainly because the mortgage rate is below 2% which means the investment rate of return doesn’t have to be unrealistically high to be justified.
As I’ve said before my investment strategy won’t change – buy and hold for the long term while collecting dividends along the way. That way I won’t have to worry about any possible changes to capital gains taxes in the future, but would have to consider changes to how dividend income is taxed.
Thoughts on my investment strategy?