Monday, July 9, 2018

2018 Mid Year Check In

After a week's vacation spent at a cottage in the lovely Lac-aux-Sables region of Quebec, it seems an appropriate time to provide an update on my 2018 financial goal:

Increase forward dividend income by $3000 while achieving a dollar-weighted average organic dividend growth rate of at least 5%.

Through the first six months of the year, I added about $1800 of forward dividend income and my dollar-weighted average organic dividend growth rate was 2.74%.

The forward dividend income amount is misleading for a couple of reasons. The forward dividend income amount is likely overstated by holdings of the Keg Income Fund and A&W Income Fund in both my RRSP and TFSA, given my plan to sell my duplicated holdings in my RRSP later this month so as to avoid any attention from the Canadian tax authorities. Since I plan to use the proceeds to invest in US traded stocks in my RRSP, the forward dividend income will be less given the current exchange rate (~0.76 CAD/USD). The forward dividend income is understated due to the excess amount of cash I'm holding in my unregistered account (saving to bring my Rogers or National Bank position there) and RRSP (no firm plans on what to add at the moment).

The dollar-weighted average organic dividend growth rate is harder to forecast accurately. Since I received 25 raises from my 38 portfolio companies (including three from Realty Income), I know the number of raises during the second half of the year will be less. Plus, there are a number of companies that I don't expect dividend increases from during 2018 (Alaris, Rogers, Riocan, etc.). On the other hand, I do expect some decent sized raises in the second half of the year (Enbridge, McDonalds, Emera, etc.)  and second raises from a couple of my Canadian holdings (Telus, Royal Bank, Bank of Nova Scotia, etc.). I'm also considering adding Algonquin Utilities to one of my accounts, which would boost my dividend growth rate.

Despite the mere five transactions during the first half of the year,my progress toward achieving my 2018 financial goal remains steady. Barring any huge dividend cuts or wholesale changes to my investment philosophy, I'm cautiously optimistic that I'll hit my target.


3 comments:

  1. That's awesome that you added $1,800 to your forward dividend income through the first half of the year. I'm surprised to see that the weighted growth rate is only 2.7% especially with the majority of your companies giving raises. I've been pleasantly surprised to see dividend growth coming in stronger than last year for my own holdings. Are your larger positions the ones that won't be announcing raises and thus the lower weighted growth rate? All the best the 2nd half of the year.

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    1. Hi JC - Hope your summer is going well! The dividend growth rate is tricky to forecast since there are still a lot of zeroes weighing the average down. The fact my portfolio is tilted more toward higher yield, lower growth probably also comes into play. Anyway, we'll see how it plays out in the second half of the year :)

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  2. Adding $1,800 in forward dividend income in half a year is a heck of an achievement! Congratulations! On top of that, 25 raises already. Keep up the great work!

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