Dividend Income – April 2015

Dividend IncomeMy strategy appears to have paid off so far and I am not just talking about Dividend Investing. I am referring to my portfolio allocation and my international diversification. While the theory is that you should invest in all countries, I personally choose to invest only in Canada and the US. My international diversification comes from conglomerates that operate in the rest of the world. Take Coca-Cola (NYSE:KO), Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Johnson & Johnson (NYSE:JNJ) for example,  they have a lot of international revenues and will do a better job than me in those countries. They will have teams that will focus on increasing revenue and profit margin by understanding the ways of the countries where they choose to be established.

Dividend Income

My April 2015 dividend income is at $760.11. The dividend increases are starting to be announced as we go through all the earnings from the first quarter. It won’t create much of an increase though. As I have said many times, the biggest driver for my dividend growth is my savings. The more I can invest, the bigger the dividends will be in the future. I was pretty happy to hear about the increase in contribution room for the TFSA. I just have to keep focusing on saving to invest.

So far this year I have been able to invest $16,520. It has come a long way as when I look back to 2010, I was only able to invest $5,858. I have also made a change this year where I put less on the mortgage and invest more. The reason is that my current track record in investing performance is far better than the mortgage interest I am paying. For the longest time, I was accelerating my mortgage payments to get it to a manageable level to protect myself from layoffs. I got the point where I am comfortable with the mortgage amount regardless of my income. I can now supercharge my investing and have my money work for me.

Dividend Income - April 2015

My biggest performers are:

  • CNR (NYSE:CNI, TSX:CNR) with 72.58%. Driven by stock appreciation. This is a rock star stock.
  • MSFT (NASDAQ:MSFT) with 75.51%. Driven by stock appreciation. When many forgot about them, I bought at a great price.
  • ENF (TSX:ENF) with 74.46%. Driven by stock appreciation but it also DRIPs every month. This is really a side investment in Enbridge (NYSE:ENB, TSX:ENB) with monthly income.

To assess the performance of a stock, I do the following and be aware that it does not follow accounting practices for taxes. The initial invested amount is what I consider my cost. Any dividends re-invested is considered free of charge. The reason for that is that I received the dividend and purchased additional shares at no cost. In a tax free account, I don’t even have to worry about the ACB. For comparison perspective, I use this concept for non-registered stocks but I track the ACB for tax purposes. The total value is then equal to the shares I initially purchased plus the DRIP shares times the current value of the stock. For simplicity, I am not factoring currency exchange in the performance. I assess the performance in their currency. As a not, AT&T actually performs quite well when DRIPs are included due to its high yield event though the stock doesn’t appreciate much over time. You get good performance with a defensive stock.

What it does is show me how hard my initial investment is working from 2 perspectives:

When you think about it, a dividend is a profit that is taken out of the company. I cannot ignore that profit in the performance of my individual stocks. For simplicity, I am only tracking the DRIP shares and not all the dividend received. The overall dividends will get included in the account performance as opposed to the individual stock performance. I came up with this way as I can truly see the performance of my money at work. Otherwise, most software out there are primarily focused on proper tax accounting (that’s what the software are for …) and I would end up with a growing cost.

DISCLOSURE: Please note that I may have a position in one or many of the holdings listed. For a complete list of my holdings, please see my Dividend Portfolio.

DISCLAIMER: Please note that this blog post represents my opinion and not an advice/recommendation. I am not a financial adviser, I am not qualified to give financial advice. Before you buy any stocks/funds consult with a qualified financial planner. Make your investment decisions at your own risk – see my full disclaimer for more details.

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