I want to retire early from the rat race. In fact, my goal is to have enough passive income to quit my day job at or before my 45th birthday. In order to reach my goal, I essentially invest my time and money in income generating assets.
Today, I have bought 70 shares of Liquor store (LIQ.to), adding 75.60$ CAN to my passive income or 0.21$ CAN per day 365 days per year.
I also bought 55 shares of Cominar REIT at 18,93$ CAN per share. This will add 81.18$ CAN to my passive income or 0,22$ CAN per day 365 days per year.
The Company currently operates 246 retail liquor stores in Alberta, British Columbia, Alaska and Kentucky. It was founded in 2004 and headquartered in Edmonton, Canada. It retails wines, beers, and spirits and operates under the Liquor Depot, Liquor Barn, and Wine and Beyond in Alberta; Liquor Depot, Liquor Barn, and Kitsilano Wine Cellar in British Columbia; Brown Jug and Brown Jug Friendly Spirits in Alaska; and Liquor Barn, The Ultimate Party Source, and Liquor Barn Express in Kentucky.
It has paid a dividend every month since november 2004. The dividend growth was interesting between 2004 and 2011 but in 2011 the company shifted from an investment trust to a corporation. Since then, the dividend has been steady at 0,09$ CAN per month, but not growing.
Its current price/book, price/sales, price/cash flow and dividend yield are in line with its 5 years averages (based on Morningstar data). Plus, its current debt/equity ratio is at 0,52 which is good. Over the last 5 years, the company revenue has also increased at a 6,49% rate and they just announced that they opened two new stores in Alaska.
Is Liquor Store a great wide moat stock? The answer is no… But I bought my shares at 13.53$, which means that my yield on cost is 7.98%! Not bad! Is it worth the risk? I think it is and it also fits well into an income investing strategy.
I don’t expect a great dividend growth here though but I would need years and years of dividend growth on a 3% initial dividend investment to get an 8% yield on cost return.
Cominar is a real estate investment trust created in 1998. It owns and manage 497 quality buildings located in Quebec, Ontario and in several other Canadian provinces.
Based on the management declarations:
“Cominar’s main goals are to provide unitholders with growing cash distributions, sustainable on the long-term and payable monthly, and to increase and maximize unit value through integrated management and the sustainable growth of its real estate portfolio.”
I love monthly dividends. I’m used to get a paycheck every two weeks and having to wait from quarter to quarter to get my dividends is sometimes frustrating!
Cominar currently pays a 0,123$ dividend per share on a monthly basis. So, at 18.93$ per share, this means that I will receive a 7.8% yield.
As you can see, Cominar has had a good balance between current yield and dividend growth for a while. But, over the past 5 years, the dividend growth has been non-existent. While a 7.8% dividend growth remains very good, I’d like to see the dividend growth at least sustain inflation.
At current prices, the current P/E, price/book, price/sale and price/cashflow are a lot below its 5 years average. The dividend yield is also more interesting than its 7% 5 years average.
Is Cominar a great dividend growth stock? Nope! But with a 7,8% dividend it can fit in my portfolio.
Since I’m looking at getting a 3,5% current yield and 8% dividend growth in my portfolio, I believe I must find a balance between high yield and low growth and high growth and low yield. These purchases are in the high yield low growth segment and will help me reach my goal.
I have added these shares to my TFSA. Since US dividends aren’t tax efficient in a TFSA, I had to find other tax efficient investments. Canadian REIT and Canadian high dividend payers are more efficient in such accounts. This is a strategy used by www.25000dividends.com and I found his strategy very intelligent.
[author] [author_image timthumb=’on’]http://quityourdayjob101.com/wp-content/uploads/2014/03/ID-10050051.jpg[/author_image] [author_info]Hi, my name is Allan. I’m the masked blogger. Like you I’m a modern slave, prisoner of a 9@5 job in Corporate America. They told us when we were young that we would live in a society of leisure and that technology would permit us to work only a couple of hours per day. But we live in a society of stress and uncertainty. My situation could be a lot worse and I know it. So many humans are suffering on this planet. But a golden cage remains a cage anyway. At least, I have an escape plan. I will retire before 45 years old over my passive income. This is a dream that is so powerful that I will make sure it happens. To build my wealth, I mainly invest in undervalued dividend growth stocks. [/author_info] [/author]
Image courtesy of creativedoxfoto / FreeDigitalPhotos.net