Welcome to my August 2017 investment income report. This report helps me track all of my investment income from dividend stocks, index funds and exchange-traded funds (ETFs). My goal is to one day be able to live off this income or at least have a significant portion of my living expenses covered by it.
Over the years, I’ve found that when I track my dividend income, it tends to grow. Maybe its because I’m focused on growing those dividends that I’m constantly scheming up ways to make more money (or save more money), so that it can be put to good use by investing it in great dividend paying companies. This approach has served me well and this year my family is on track to earning $13k in passive dividend income.
Think about it. That’s $13k that we don’t have to get up in the morning to work for. We just go on living our lives and all the while, each and every month, we receive cold hard cash in the form of dividends from our investments. Right now we re-invest these dividends to buy more shares in our favourite companies so that the dividend income continues to grow over time. But one day, we will be using that dividend income to finance an early retirement.
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I was pleased to see that our net worth continued to rise in August, coming in at 1.015 Million! Not only did we finally make it to the coveted million-dollar mark, but we managed to stay above it and keep growing our net worth. The markets took a turn for the worse in August, but managed to recover a bit at the end of the month. This brought the value of our financial assets to just over 541k! This is why I think that it really pays to stay invested and not try to time the market.
Net Worth vs Investment Income
There’s no question that hitting the million dollar mark is an important milestone on the road to financial freedom. But like I said before, net worth is great, but unless it’s backed up with some serious cash flow, it doesn’t really mean all that much. After all, my net worth rises and falls primarily due to fluctuations in the stock and real estate markets. For me, what’s really important is that my investments keep paying me cold hard cash each and every month. That’s where my sense of financial security comes from, not whether I can sell something for more than I paid for it last week, or a month ago.
Streams of Passive Income are Key to Financial Independence
The one major thing I learned during the last recession was that, while my net worth may fall, the bulk of my dividend income remains the same. That’s why I think building streams of alternative forms of income, whether it’s from a rental property, dividend stocks or even an online source like starting a blog, is key to achieving financial freedom. Once you start hitting $1k/month, you basically have about half of your monthly expenses paid for by passive investment income. What’s even better is that I’ve found that after a few years, the income really starts to take off.
Benefits of Passive Income
I once read somewhere that millionaires have about 7 different sources of income, which is a big reason why they’re rich. If they lose 1 source it’s not the end of the world for them because the other 6 still provide financial security. On the other hand, the rest of us are almost completely dependent on 1 source: our Jobs!
This is something that I’m working hard to change for my family and is why I invest as much as I can. In these income reports I try to be as transparent as possible to show you where my investment income comes from. These reports simply show my investing approach and what has worked (and sometimes not worked) for me. I’m by no means a financial expert but I am very pleased with my results to date.
I hope these reports inspire all of you to start saving and investing your money for a healthier financial future. Now you may think that you need a lot of money to start investing, but the reality is that you can get started with as little as $25 a month! So what are you waiting for?
How You Can Build Passive Sources of Income
Some of you may be wondering how YOU can start investing and building up streams of passive income. First, just let me say that investing is NOT rocket science, but I DO recommend reading as much as you possibly can. Check out my MUST READ page for some useful articles. You can also see my Top 10 Favorite Personal Finance Books List.
If you’re hell bent and determined to start investing your money in dividend stocks and exchange-traded funds (ETFs) right now, check out my step by step guide on How to Open a Questrade Account. If you’re a bit hesitant to start buying stocks or ETFs through an online discount broker like Questrade, then you may want to try an online bank like Tangerine. They offer a range of accounts (RRSP, TFSA) and a whole menu of Tangerine Investment Funds at reasonable prices.
Now on to my monthly cash flow from investments.
Monthly Investing Activity
I made some big moves this month. First, I sold 200 shares of Suncor Energy (SU). I took my profits and had a plan to get back in when the right opportunity arose. My thoughts were that oil has been in a trading range of $40-$50 for a while now so I’m gonna do something that I typically don’t do: I’m gonna play it. And I did. I recently bought 252 shares of Suncor just in time to catch September’s dividend payment and while oil is getting slaughtered due to the impact of Hurricane Harvey had on Texas oil refineries.
Next, I sold my short term bond holdings and bought 138 shares of Royal Bank (RY). Soon after I bought the shares, guess what??? I got a 4.6% dividend increase!
I also bought more BMO shares in my DRiP account. The RBC and BMO shares will boost my income in the Feb, May, Aug and Nov “off months” by about $130. I’m hoping that by February 2018 I’ll pass the $500 mark.
Other than that, for the most part, 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 monthly 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 Bank of Montreal (BMO), Emera (EMA), and RioCan (REI).
I’ve had a few companies raise their dividend this month which will help my future dividend income reports. Royal Bank (RY) raised its dividend from 0.87 to 0.91 or 4.6%. CIBC raised by 2.4% from 1.27 to 1.30 a quarter. The Bank of Nova Scotia (BNS) raised its quarterly dividend from 0.76 cents/share to 0.79 cents/share or 4%.
These small, incremental increases in dividends may not seem like much but after years of investing in dividend stocks these really do add a lot of extra cash that I reinvest to buy more shares of my favorite companies. The dividend raises I got this month will add over $125 to my annual dividend income alone. Not too bad at all.
These dividend raises also really help my financial assets compound and it’s one of the great things about being a dividend investor. I’m constantly being rewarded with these dividend increases.
August 2017 Investment Income Report
Monthly Passive Dividend Income
August is one of the weaker months for dividend income, but hopefully with the stock purchases outlined above that will change a little for November’s report. This month’s dividend income is a bit lower than it was in August 2016 ($349.08). The reason has to do with ETF payouts and Potash cutting its dividend.
Here is the breakdown of the numbers for August:
Emera (EMA) – $30.28
Bank of Montreal (BMO) – $73.72
Citigroup (C) – $7.92
Procter and Gamble (PG) – $86.51
Potash Corp of Saskatchewan (POT) – $13.63
RioCan Real Estate Investment Trust (REI) – $4.51
Mutual Funds and ETFs
iShares S&P/TSX Canadian Preferred Share Index ETF (CPD) – $53.66
iShares S&P/TSX Capped REIT Index ETF (XRE) – $42.21
Canadian Short-Term Corporate Bond Index ETF (VSC) – $14.32
Canadian Short-Term Bond Index ETF (VSB) – $11.57
Total Monthly Dividend Income = $338.33
It’s great to earn a few hundred bucks from our investments! After years of saving and investing, I’m slowly starting to see the fruits of my effort and I’m happy to finally have my money working for me.
Our new annual passive income goal is $13,000 and we have so far received $7,061.33. So we are 54.3% of the way there. A little more than half way at this point is not great, but I know things will be better the next few months.
Thanks for reading my August 2017 Investment Income report.