Welcome to another monthly dividend income update. It’s a new year which means more money to invest, thanks to the annual TFSA contribution room.
2017 started off well for dividend income – as I mentioned last month, there were some dividend increases from Canadian Utilities, ATCO and Enbridge. Surge Energy also announced a 15% increase in dividends as well, so I’m hoping 2017 will see even more dividend income than I expected.
I’ve mentioned before that I’m a fan of dividend increases because it means more money in my pocket for doing nothing. So long as the dividend is sustainable and the company is well managed, I am a fan of annual dividend increases.
The Dow is now above 20,000 and the market seems to be making steady gains every week. I have no idea if/when it will drop, but I’ve set some cash aside just in case it does.
Over the past couple months it seems like there have been quite a few dividend increases to celebrate. Although not all in January, here are a few recent ones:
- CIBC announced a 2.4% dividend increase
- Royal Bank of Canada announced a 5% dividend increase
- CCL Industries announced a 15% dividend increase
Even though I haven’t pulled the trigger on CCL yet I’m happy to see they are profitable enough to afford another hefty dividend increase, and I look forward to more of those in the future.
January 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 Nova Scotia
- Boardwalk REIT
- Bell (BCE)
- ATCO Ltd
- First Capital Realty
- TD Bank
Total dividend income: $1,086.20
Note – some of the dividends received each month are in US currency which is converted at 1:1 for simplicity.
In January I bought shares in CSX Corp. The operating ratio shows how efficient the railroad is and the lower the ratio, the more efficient it is run. Compared to other railroads in North America, CSX has some room for improvement. Their operating ratio for Q4 2016 was 67%, which is quite high compared to CP Rail (56%).
This is where Hunter Harrison comes in. He has a proven track record of cutting costs and increasing efficiencies at every company he has worked for; assuming Harrison signs on to work for CSX, I’m hoping they are able to benefit from his experience and lower costs accordingly. Either way – I see CSX as a way to increase my transportation holdings and also start to earn more US dividends.
Stocks I’m Watching
It’s been a bit frustrating lately sitting on the sidelines waiting for a buying opportunity to come up. It seems like lately the market is going nowhere but up. A small correction would be nice so that I can start investing more money into companies I don’t already own. Here’s what I’m watching:
- Costco – I’ve been watching this one for a while, and will definitely own it in the future
- CCL Industries – I’ve also been watching this for a while, and look forward to a buying opportunity soon
It’s also worth noting that this past month brought about a slight change in how I set aside my money for investing. Just recently I’ve been able to max out both the RRSP and TFSA accounts (all of them – both mine and my wife’s accounts) which happened earlier than I expected. It’s a good problem to have, and now I have to decide what to do next.
My investment strategy won’t change, but how I allocate money will now start to change. In the past I made monthly contributions towards my RRSP account but now with it being maxed out the money I used to contribute will have to go elsewhere.
Should I start a taxable account? Or put the money on the mortgage? I happened to mention this at my bank earlier and they offered a home equity line of credit (HELOC). I laughed at first, since more debt is not something I’d be interested in. But it was more appealing than I thought at first – any amortization I want, a rate of around 2.20%, absolutely no appraisal/legal fees and no prepayment penalties. The idea is that I’d borrow money at 2.20% and then earn (taxable) dividends at around 4.5%. I don’t think the timing is right for a HELOC right now given how high the markets are, but something I’ll consider for the future.
What would you do with extra cash – invest in a taxable investment account or pay down a mortgage?