I haven’t published a “recent buy” post in 3 long months. Trust me it feels great to be back in the game and to add passive income to my portfolio.
Today I bought 33 shares of National Bank Canada (NA.to traded on the TSX) at 49,11$ per share. This will add 66$ to my dividend passive income or 0,18$ per day. These shares were added to my tax free saving account so the dividend will compound tax free and I will eventually be able to spend it tax free too.
I love tax free saving accounts and the Canadian government just raised the maximal contribution limit per year from 5,500$ to 10,000$ which is great! I’m going to do all I can to maximize my contribution to this regime every year but I still have a lot of undone contributions to catch up already. I haven’t been a great saver in the past but fortunately enough, missed contributions add up! I can contribute up to 40k to this regime as of now and I still have approximately 40k to catch up in my RRSP too so I’ll probably be able to invest 100% tax free for the next 3 to 5 years! Great!
Dividends per day
You might not remember but my goal is to reach 65$ per day in dividend income, 365 days per year by 2026. (For a matter of simplicity I’m considering US money and Canadian money as having the same value but that’s far from being the case – I’ll just probably end up with more Canadian income to spend in the end).That’s roughly 24,000$ per year in dividend income. I still have a lot of work to do until then since I’m only at 3,11$ per day or 1135$ per year and I don’t know yet if it’s a reasonable goal or not to reach in a 12 years time frame but I’ll at least try. We don’t know what the future is made of. Maybe I’ll become an internet entrepreneur or millionnaire one day… who knows!?
Five years from now I should be mortgage free. This should help me free a lot of extra money to invest. Until then, I’ll do my best to stack between 15k to 30k aside in savings per year. It’s going to take a lot of discipline and the last three months proved me that I could easily be in a situation where saving becomes difficult.
I was not feeling great because of a recent restructuring at my job where I ended up with a job at least and was not laid off (thank God) but a job that I hate… It’s tough to wake up every morning to go to work when you hate your job… but I can’t complain as my situation is much greater than most people on this planet and that’s what I try to keep in perspective right now.
I also had unexpected medical expenses that were not covered by my insurance and felt back into the bad habit or using my credit card for stupid expenses like restaurants and clothes that I should have paid with available money instead of borrowed money. Discipline is sometime hard to keep when you don’t feel 100% yourself.
I’m feeling a little better now but still hate my current job and I hope to be able to move back to do something I like more. This is a great lesson of life though. Even though I had planned everything in my career, I was still at the mercy of the decisions of an obscure unknown accountant or manager… We can’t control everything! I should have saved more during my twenties so that I could have more freedom over my life.
That’s why I have decided to kick my butt hard to force me into buying at least some stocks in april. We’re late in the month but it counts anyways!!! That way I have only been off for two months since I bought shares of TD in january.
This stream of dividend income has been created mainly through new buys from fresh money that I saved and added to my brokerage account over the course of 2014 but also through dividend reinvestment and dividend growth that came from dividend raises that companies are offering to shareholders like me. And in the next couple of days, I expect to get some interesting raises from Exxon, Jean-Coutu and Chevron too. It really feels great to get pay raises for doing nothing at all! You should try! I felt in love with the concept when I received my very first dividend check!
Dividend growth investing takes a lot of patience, rigor and discipline but it’s a very powerful way to get wealthy and to receive truly passive income. I’ve seen it in action over the last three months when, even though I wasn’t active in the community or wasn’t investing either, my dividend checks were still coming in steady as a clock. In fact, over the course of these three months, I received 295,62$ in dividend income!
Okay, I couldn’t live off this amount and I just let it accumulate in my brokerage account for future reinvestment but hey… I did nothing at all and received this income and some dividend raises too! Ahhh I love it!
A word about National Bank
Look, I’m a dividend growth investor, I work and have been working in finance over the past decade but I’m not a financial analyst and english is not my first language either. A lot of folks out there are doing a better job than I at analyzing securities so I’ll let them do what they do better than me.
But I can tell you that National Bank of Canada is one of the greatest bank here in Canada. It’s a chartered bank and it has been incorporated in may 1859. So it’s been there for a while. Over the years, it has become the partner of choice for businesses across Canada. It also offers extensive personal banking services. I actually have been an employee of that bank in the past and I was even owning an admirable amount of shares… that I stupidly sold in 2007 to probably buy some crap… stupid me… oh well!
It currently trades in line with its price/earnings, price/book, price/sales and price/cash flow 5 years average while it’s 4,07% dividend is a little shy above its 5 years average which stands at 3,9% (according to Morningstar).
Over the past 10 years, the dividend growth has been a healthy 9,8% per year on average and if we look at the 5 years (9,1%) and 3 years (10,7%) dividend growth average, we can see the same rate. Not bad!
The dividend has been raised every year for the past 5 years and maintained but not raised during the recent 2008-2010 crisis. Not bad either huh!
Canadian banks are strong and backed by the Canadian government in many ways. So I consider this investment has a medium to low risk investment if kept for an extended period of time which is my intention this time!
Keep investing my friends! We will retire rich! We will retire early!