July 2016 Investment Income

Welcome to my July 2016 investment income report.  This report helps me track all of my investment income from rental properties, dividend stocks, index funds and exchange-traded funds (ETFs).

June 2016 Investment IncomeI was pleased to see that our net worth continued to rise in July, hitting 866k.  The increase in net worth had to do with the strong performance of global stock markets.  This brought the value of our financial assets to an all time high at just over 400k!  This is why I think that it really pays to stay invested and not try to time the market.

I received some good news regarding the new rental property.  One of the existing tenants is moving out as of Aug. 1st (so much for giving 2 months notice!).  Anyway, this is the opportunity that I’ve been waiting for.  Now I can do some repairs and (hopefully) get it rented out at the higher market rate by September 1st.  This will give the monthly rental income a nice boost!

While I was pleased to see our net worth rise this month, I’m even more pleased to see that our monthly investment income continues to stay above the 2k mark.  In my opinion, having a high net worth is great and all, but unless it’s backed up with some solid investment cash flow it’s not really all that impressive.  To my mind, cash-flow is KING!

Monthly Investing Activity

As usual, I’m sticking to the same old investment plan.  I continue to buy up blue-chip Canadian dividend stocks and keep making extra cash purchases in my DRiP account to buy more shares of great dividend-paying companies.  I like to save and invest automatically because it’s a proven strategy for building long term wealth.  In addition to the stock purchases, I’m also investing in low-cost index funds in our retirement accounts.

One of the great things about being a dividend investor is that all of my dividend income is automatically re-invested.  Every month this income buys more shares in my favourite companies that will, in turn, produce even more monthly income for me.  This is how compounding works and is why it’s such a powerful force…what Einstein called the “Eighth Wonder of the World”!

This month, reinvested dividend income bought more shares in Bell Canada (BCE), Telus (T), KP Tissue (KPT), the Bank of Nova Scotia (BNS), TD Bank (TD), TransCanada Corp (TRP), CIBC (CM), and RioCan (REI).

January’s dividend income report made me realize that the majority of my dividend income comes from Canadian banks.  While I love the banks, I recognize the need to diversify a bit more.  So I’m focusing on building up my positions in Telus (T), BCE (BCE) and my pipelines and utilities.  The problem is that these shares are trading at or near all-time highs!  So I haven’t been able to bring myself to pile a lot of money into them just yet.  I’m waiting for a big pullback before I invest any serious amount of money.

Dividend Raises

Emera (EMA) raised its annual dividend by 10% or 19 cents.  I also had Potash Corp (POT) cut its dividend for the second time this year!  Luckily this stock isn’t a large part of my portfolio.  But this does illustrate the need to diversify investment income so that if one source dries up, there’s always another to fall back on.

Monthly Passive Dividend Income

July has been another great month for dividend income.  This month’s dividend income has grown by nearly 12.5% from that of July 2015 ($1,032.25).  As always, a large part of that increase came from investing my own personal savings, while the remainder was due to the regular reinvestment of my dividend income and from companies periodically raising their dividend payout.

Here is the breakdown of the numbers for July:

Dividend Stocks

Bell Canada Enterprises (BCE) – $32.75

Telus (T) – $9.35

KP Tissue Inc. (KPT) – $98.10

RioCan REIT (REI) – $4.26

TransCanada Corporation (TRP) – $18.45

Bank of Nova Scotia (BNS) – $501.39

Canadian Imperial Bank of Commerce (CM) – $27.18

Toronto Dominion Bank – $358.60

TransAlta (TA) – $0.75

ETFs and Mutual Funds

iShares S&P TSX Canadian Preferred Share Index ETF (CPD) – $51.27

iShares S&P TSX Capped REIT Index ETF (XRE) – $40.22

Vanguard Canadian Short-Term Corporate Bond Index ETF (VSC) -$9.86

Vanguard Canadian Short-Term Bond Index ETF (VSB) – $6.34

Total Dividend Income – $1158.52

Options Income – $0

I decided to test out options trading to squeeze a bit more income out of my long term stock holdings.  I’m just learning about options trading so I took a conservative approach and sold some covered calls on my bank stocks.  I didn’t sell any options in July.

Rental Income

All units are rented and the properties are cash flowing.  July’s profit on the rental units was $955.07.  This is after all expenses.  This is the reason that I decided to invest in rental property in the first place.  I expect that in the next few months I’ll be able to increase the rental income by about $200 by fixing up my latest rental purchase.

Total Monthly Rental Income = $955.07

This brings the grand total for our July 2016 Investment income to $2,113.59!

I still can’t believe that our investments are paying us that much income!  After years of saving and investing, I’m finally seeing the fruits of my effort and I’m happy to finally have my money working for me.  If we can have our investments pay us over $2k a month that’s like having somebody bring in an extra monthly paycheque.

Our new annual passive income goal is $18,000 and we have so far received $10,176.12.  So we are already 57% of the way there.

Both the dividend portfolio and our rental properties are adding a considerable amount to the monthly investment cash flow.  We manage to get roughly $1,000 / month from both sources.  Hopefully I can increase this amount further.

Photo by sscreations/FreeDigitalPhotos.net

August 2016 Net Worth Update $866,565

Here is my August 2016 net worth update.  As I’ve said before, I like to track my family’s progress through monthly net worth updates.  To calculate our net worth, I add up all of our household assets and subtract any outstanding liabilities (ie. debt owing).  The result is simply a snapshot of what my family is worth at a particular moment in time and does not give any of the relevant details as to how or why we reached that point.  For that kind of information, please refer to our dividend income and monthly highlights section.

June 2016 net worth updateIn a previous post, I laid out a variety of financial goals for 2016.  My focus for the year however, will be on achieving 3 major goals.  First, we want to pay down the HELOC as quickly as possible.  This debt is a drag on our financial plan so it is the big priority for this year.  I’m happy to report that we finally paid this off!

Secondly, we want our net worth to hit $800,000 by the end of the year.  I’m happy to report that we achieved this already.  I’m going to have to revise the Net Worth goal upwards.

Finally, we still want to aggressively pay off our mortgage so that we can be mortgage-free in 10 years or less.  To this end, we plan to pay off at least an extra $10k this year in the form of lump sum payments.  We need to get on this ASAP.

Assets: $1,563,263.61 (+1%) 

Home: $846,000 (0%)

A few years ago we purchased our “final” family home where we expect to be for at least the next 30 years.  In June we received the latest property assessment and the assessed value has increased to $846k!

Rental Properties: $290,000 (0%)

In 2015, we purchased our first rental property and have since added a second.

Cash: $2,231.10

As a matter of habit, I rarely keep a lot of cash on hand in a savings account.  The reason being is that at today’s record low interest rates I’d rather put the money toward paying off my mortgage faster or invest it.  That said, I do keep some cash on hand in my investment accounts in case any market opportunities arise.

Non-Registered Investment Accounts: $43,619.34 (+6.4%)

Our non-registered investment accounts include DRIP accounts with Computershare and Canadian Stock Transfer, a discount brokerage account and a work savings plan.  For the most part, in these accounts, I prefer to hold Canadian companies that pay eligible dividends.  The decrease in this account is a result of moving non-registered stocks into our TFSAs.

TFSA: $96,327.96 (+4.2%)

In the TFSA I like to hold growth assets, such as low-cost ETFs, TD e-series index funds or Canadian dividend paying stocks.

Retirement: $244,130.37 (+4.11%)

Our retirement accounts consist of RRSPs, a small locked-in retirement account (LIRA) from a previous employer and a company defined contribution pension plan.  The RRSPs and LIRA hold low-cost TD e-series index funds and other low-cost ETFs, while the company pension plan is invested in a low-cost target date fund.

RESP: $13,954.84 (+7.2%)

In the RESP we hold low-cost TD e-series index funds.  We contribute the annual amount of $2,500 so we can get the 20% match from the government.  Our strategy for contributing is to use the money we receive each month from the universal child care tax credit and make up the difference at the beginning of each year.  This ensures that we receive the maximum government contribution of $500.

Other: $27,000 

Under the “other” category, I include an extensive coin and paper money collection.  For years I collected rare gold and silver Canadian coins and Canadian paper money.  The collection has a face value of $10,000 so I conservatively estimate the collection’s worth at around $27,000.  For the purpose of my net worth calculations, I’ve been keeping this number constant versus increasing it over time because (a) coins and paper currency can be difficult to accurately appraise as they are subject to changing market trends and (b) can become illiquid if you can’t find a buyer for them.

Liabilities: -$696,698.07

The only debt we now carry that is not tax deductible is the mortgage on our primary residence.  This is a priority to pay off so we can get out of debt!

Mortgage: -$455,840.09 @ 2.89%

Paying down our mortgage will be a high priority for 2016 and we expect to be mortgage-free in less than 10 years.

Rental Property 1 Mortgage: -106,382.61 @2.62%

Rental Property 2 Mortgage: -103,651.26 @2.54%

We added mortgage debt with our rental properties.  The mortgage interest is tax deductible so we won’t prioritize paying off these mortgages.

HELOC: -30,824.11 @ 3.35%

I used the HELOC for a downpayment on a rental property.  The interest is tax deductible so I’m fine with carrying this debt for a while.

Image Credit: Image courtesy of hywards/FreeDigitalPhotos.net