The 50K Report - 2016 Ends. (Q4 FY2016)

Q4 FY2016 (October, November, and December)
Next update: End of Q1FY2017 (January, February, and March)

Investment Goals:

1. Continue adding to higher quality large cap equities.
2. Continue slimming down number of holdings within portfolio.
3. Continue seeking opportunities to broaden portfolio by sector.
4. Focus on stocks that have a DRIP plan.
5. Continue concentrating existing holdings to achieve $1,000 dividend mark (1K Club)
6. $50,000 passive income target. (eg. $1,000,000 at 5% will yield $50,000 per year.)

Developments:

- Calculation of Total Book Value Required: $50,000 / % yield = Book Value (eg. 4.31% = $1,160,092.81)

- Current Target Book Value @ 4.6878%: $1,083,805.9564

- Further stratification of income Goal Posts.

- Ontario Minimum Wage Increase reflected: $11.40.
- Achieved new updated Minimum Wage Goal Post: $17,748

- Record Distribution income $18,891.95

- Reorganised data to breakdown by account type: Non-Registered, RRSP, TFSA, and DPSP (Employer).

- Included Margin Debt. Margin debt was used sporadically over the course of the year to practice for use as a potential long term tool. The intention is to use this in lieu of DRIP; to take advantage of Tax Deduction; and leverage my growing portfolio with manageable debt.

- Goal to become more fluid and not be too attached to my current yield to cost.

- Markets have risen significantly post-November US Election and the US Fed raising their interest rates.

- Got this report out on time.

Distribution Changes:

- Distribution income increased from Q3FY2016's $15,334.55 to $18,891.95. (+$3,557.40 or +23.1985%)
- Doubled BCE Inc adding it to the 1K Club; added more BCE Inc Preferred Shares Series H; added 96 more shares of Scotia Bank to round out position; added more Enbridge Preferred Share Series R, Inter Pipeline Ltd, Telus Corp, Diversified Royalty Corp, iShares TSX Preferred Shares ETF, and TransCanada Corp.

- Distribution increase for Inter Pipeline Ltd, Telus Corp, Allied Properties REIT, and Interrent REIT

- Added CI Financial Corp, Bank of Montreal, Toronto Dominion Bank, and Bristol Myers Squibb Co (BMY).

- BMY was a Put Assignment.

- Included an existing position, StorageVault Canada Inc, but it has an insignificant yield of 1.0862%

- Reduced Manulife Financial.

- Removed Bank of America and Imvescor Restaurant Group Inc.
- Stratification of Goal Posts to emulate increased hours of work.

Progress for Q4 FY2016. (Values represent potential full year cash flow):

Book Value	$409,504.09
Yearly Distribution	$18,891.95
Yield Total	4.61%
Margin Debt	-$38,571.58
Margin Interest	3.45%

Goal Posts:

- Increased stratification to 6 Goal Posts.

- First 3 Goals are related to:

• Minimum Wage of $11.40
• Hours of work per week: 30, 37.5, and 40.
• 37.5 hours reflects my current weekly work hours.

- Final 3 Goals are check points for achieving the mid-30 and 40 thousand dollar range.

Dividend Goal	% Completion	Remaining
$50,000	37.89%	$31,108.05
$45,000	41.98%	$26,108.05
$35,000	53.98%	$16,108.05
$23,712	79.67%	$4,820.05
$22,230	84.98%	$3,338.05
$17,784	106.23%	-$1,107.95

Holdings (Monthly Change):

October

Book Value: $318,837.7550

Yearly Dividend: $15,110.4405

Yield Total: 4.7392%

November

Book Value: $349,770.4735

Yearly Dividend: $16,655.5133

Yield Total: 4.7618%

December

Book Value: $409,504.0898

Yearly Dividend: $18,891.9468

Yield Total: 4.6133%

Upcoming:

• Adding new metrics:
  • I've added to my individual stock investment spreadsheets the total distributions gained over time.
  • Whilst writing up this 50K report thought of how and which metrics would be relevant to provide a snapshot of distribution returns in comparison to the investment.
  • Working on little kinks in the presentation of information:
    • If I sold a portion at a loss the % return from distributions will become larger starting at that period.
    • How to make the spreadsheet more simple to avoid manual manipulation of invidual cells.
• Three metrics for % Returns:
  • % Returned (Overall):
    • Formula: Total Dividends divided by Currently Book Value.
    • Purpose: Takes absolute returns of both historical and latest Book Value. This shows how much the distributions cover existing Book Value.
    • Example (BCE): 17.6291%
  • % Returned (Average Yearly Book Value):
    • Formula: Total Dividends divided by Yearly Average Book Value.
    • Purpose: Smooths out the Overall distribution return by looking at the Average Book Value per Year. This shows how much the distributions cover the Book Value for the entire year.
    • Example (BCE): 32.3046%
  • % Returned (Yearly):
    • Formula: Yearly Dividends divided by Yearly Average Book Value.
    • Purpose: Purely looks at the year's returns. This is a reflection of the stock's average annual yield.
    • Example (BCE): 7.0183%

The 50K Report – Market Volatility (Q1FY2016)

Q1 FY2016 (January, February, and March)

- $50,000 passive income target. (eg. $1,000,000 at 5% will yield $50,000 per year.)
- Calculation of Total Book Value Required: $50,000 / % yield = Book Value (eg. 4.31% = $1,160,092.81)
- Current Target Book Value @ 4.5572%: $1,097,164.925
- Next major update: End of Q2FY2016 (April, May, and June).

Investment Goals:

1. Add to higher quality large cap equities.
2. Looking for opportunities to slim down number of holdings within portfolio.
3. Conversely, looking to broaden portfolio by sector.
4. Focus on stocks that can be DRIP'd.
5. Concentrate existing holdings to achieve $1,000 dividend mark (1K Club)

Distribution Changes:

- Distribution income declined from Q42015's $15,176.50 to Q12016's $14,221.3584.(-$955.1416 or -6.2935%)
- Decrease reflects movements made in reaction to market volatility and in particular crashing oil prices.
- Major reduction occurred March as two separate strikes of BNS Calls were exercised; reducing BNS holdings by 500 shares and $350.
- Achievement of reaching the Minimum Wage Goal is now at 86.47% with $2,373.49 outstanding.
- Noticed increasing TRP dividend was not recorded since Q4 2014.

Progress for Q1 FY2016. (Values represent potential full year cash flow.):

Book Value	$312,057.64
Yearly Div	$14,221.36
Yield Total	4.56%

- 3 goal posts: $17,550 (Approximate Minimum Wage), $25,000 (Half-way), and $50,000.

Dividend Goal	% Completion	Remaining
$50,000	28.44%	$35,778.64
$25,000	56.89%	$10,778.64
$17,550	81.03%	$3,328.64

Holdings:

- Monthly Change:

January

Book Value: $329,129.20

Yearly Dividend: $15,264.9934

Yield Total: 4.637994%

February

Book Value: $339,061.66

Yearly Dividend: $15,978.06372

Yield Total: 4.712436%

March

Book Value: $312,057.64

Yearly Dividend: $14,221.3584

Yield Total: 4.557286%

Updates:

- Reduced: BNS, IPL, T, INN.UN, CAR.UN

- Added: SLF, WFC, MCBC, X, TRP

- Dividend Increased: BCE, GWO, MFC, TRP
- Removed: NA, HSE
- HSE eliminated its dividend

- TRP dividend increased and noticed record was not updated since Q4 2014.

Upcoming:

- I'm working on getting this 50K report in a more timely manner.

- Adding a new report called the 1K Club to show holdings that have crossed over the $1,000 dividend mark.
- Markets have risen since Q1, we'll see how the portfolio has changed by the end of June.

Boring... Slow and Steady Dividend Motivation $BCE

I wanted to get this post up for some time and alluded to dividend investing paying off big time in my other post One Night at the Fairmont Royal York Courtesy of $INN.UN. Since that post my INN.UN position was unloaded as it was a relatively small position, and I needed to shore up my cash levels for more long term purchases. Hopefully, INN.UN will be re-added to my portfolio when the price is right.

Back in December 16, 2008 the Ontario Teachers' Pension Plan discontinued its bid to takeover BCE at $42.75. Unsurprisingly, the stock cratered from 2007's high of around $41.74 to the December 12, 2009 low of $21.23. However, looking in context a few years later with the price now at $59.28, more than doubling, it made plenty of sense to buy into the shares.

A few months after the OTPP cancelled its deal, for some reason, I decided it was time to make a large investment (relative to my net worth back then) of 75 BCE shares at an average price of $24.0697. Perhaps I was seeking dividends and finally raised enough money to make the purchase. A couple days later on May 22, 2009 the stock plunged 4.773% from the opening price on news that OTPP closed out its position in BCE. I happened to take a screenshot at end of day and was very likely relieved to see the price recovering from the day's low of $22.94, $1.06/share loss, to a more palatable closing price of $23.91 with a $0.1597/share loss.

The dividend record date was June 15 and paying out $0.3850/quarter, which yielded me a wonderful 6.398%. As an added bonus the next dividend grew to $0.4050, an increase of 5.1948%, and yielding 6.7304%. A 5.19% increase in my income within a few months is always welcome. Even better, since owning it for the last 7 years there have been a total of 11 dividend increases. The last dividend paid of $0.6825 represents a total dividend increase of 77.2727% or an annualized 6.4393%!

Declaration date	Record date	Payment date	Amount of dividend	% Increase
2009-05-06	2009-06-15	2009-07-15	$0.3850
2009-08-05	2009-09-15	2009-10-15	$0.4050	5.19481%
2009-11-11	2009-12-15	2010-01-15	$0.4050
2010-02-03	2010-03-15	2010-04-15	$0.4350	7.40741%
2010-05-05	2010-06-15	2010-07-15	$0.4350
2010-08-04	2010-09-15	2010-10-15	$0.4575	5.17241%
2010-12-09	2010-12-15	2011-01-15	$0.4575
2011-02-09	2011-03-15	2011-04-15	$0.4925	7.65027%
2011-05-11	2011-06-15	2011-07-15	$0.5175	5.07614%
2011-08-03	2011-09-15	2011-10-15	$0.5175
2011-11-02	2011-12-15	2012-01-15	$0.5175
2012-02-08	2012-03-15	2012-04-15	$0.5425	4.83092%
2012-05-03	2012-06-15	2012-07-15	$0.5425
2012-08-07	2012-09-14	2012-10-15	$0.5675	4.60829%
2012-10-31	2012-12-14	2013-01-15	$0.5675
2013-02-06	2013-03-15	2013-04-15	$0.5825	2.64317%
2013-05-08	2013-06-14	2013-07-15	$0.5825
2013-08-07	2013-09-16	2013-10-15	$0.5825
2013-11-06	2013-12-16	2014-01-15	$0.5825
2014-02-05	2014-03-14	2014-04-15	$0.6175	6.00858%
2014-05-05	2014-06-16	2014-07-15	$0.6175
2014-08-06	2014-09-15	2014-10-15	$0.6175
2014-11-05	2014-12-15	2015-01-15	$0.6175
2015-02-04	2015-03-16	2015-04-15	$0.6500	5.26316%
2015-04-29	2015-06-15	2015-07-15	$0.6500
2015-08-05	2015-09-15	2015-10-15	$0.6500
2015-11-04	2015-12-15	2016-01-15	$0.6500
2016-02-03	2016-03-15	2016-04-15	$0.6825	5.00000%

I added more shares since that the initial purchase both from a synthetic Dividend Reinvestment Plan through my broker and additional purchases from the market. As a result the average cost has increased my yield has changed with the purchases. Looking at the original investment of 75 shares, by now they would have been yielding 11.342% and paying out $51.1875/quarter.

One rough final metric I like to use is my "Years to Freedom". This is roughly the number of years before the investment at the current dividend will pay off for itself by returning the principle paid. Everything afterwards starts generating funds in excess. The original investment's principle and dividend would have paid off in 15.63 years and with the current dividend that has now reduced to 8.82 years. Since the start the 75 shares have returned $1,149.5625 in dividends and the original principle $1,805.2275 leaving a deficit of $655.665. Based on the 75 shares' current quarterly return of $51.1875 then I've got about 13 quarters/3.2022 years to go.

While there is always a risk of a company cutting their dividend this risk is reduced (not eliminated) by purchasing quality companies with a track record of dividend increases. Hopefully, you can see the power of having patience and increasing dividends. There are many other examples of companies like BCE raising their dividend overtime and this increasing dividend is the basis of some long term dividend investment strategies.

The 50K Report - Getting income up to speed (Q3 FY2015)

Q3 FY2015 (July, August, and September)

- Income portfolio began in 2008.

- $50,000 passive income target.

- $1,000,000 at 5% will yield $50,000 per year.

- Calculation of Total Book Value Required: $50,000 / % yield = Book Value (eg. 4.31% = $1,160,092.81)

- Next major update: End of Q4 FY2015 (October, November, and December).

- Shift focus towards quality and large caps.

- Here's how it has been coming along as of Q3 FY2015. (Values represent potential full year cash flow.):



- September 30, 2015 Totals (All accounts):

	Book Value		Year Div
Total	$262,529.033006		$11,321.854040
		Yield Total	4.312610%

- 3 goal posts: $17,160 (Approximate Minimum Wage), $25,000 (Half-way), and $50,000.

Dividend Goal	% Completion	Remaining
$50,000	22.643708%	$38,678.15
$25,000	45.287416%	$13,678.15
$17,160	65.978170%	$5,838.15