Welcome to my Weekly Recap December 15th Edition where I discuss some of the key events of the past week and provide an update on what I’m doing with my finances.
Investing Update
Well stocks continue to fall as we enter full blown correction mode. If you’ve been sitting on the sidelines I think now is the time to at least dip your feet in and do some buying.
Stocks have taken a real beating this past month as there’s been widespread selling. Some investors are getting margin calls while others are taking advantage of the correction to do some tax-loss selling.
What does it all mean? Well, at least for me, it means that there are some pretty good deals right now on the stock market; especially when it comes to blue chip dividend stocks. Of course this market correction may have some downside left in it, but I’m not worried about buying now. In fact I recently added 53 shares of Bank of Montreal as they hit a 52-week low this week. Here are the yields on the Big 5 Canadian Banks ranked highest to lowest:
CIBC (CM) – 5.06%
Scotiabank (BNS) – 4.75%
Bank of Montreal – 4.34%
Royal Bank (RY) – 4.15%
TD Bank (TD) – 3.84%
Now I’ve bought a shit ton of BNS already so I’m trying to buy some of the others. I’m actually thinking about adding 50 shares of CM too as the yield is above 5%.
Overall, while there’s always potential for further downside, I think there’s a pretty good chance that some positive news could reverse the downtrend and give stocks a nice bounce. Certainly any easing in the US-China trade war would help, as well as slowing the pace of future interest rate hikes.
There are plenty of reasons for pessimism right now and I’ve mentioned these a million times here on this blog, but things are getting a bit overdone in my humble opinion. It’s usually when things are at their worst that a market turn around happens. So I’m buying as much as I can and I’m not alone. I saw that Mr. Buffett has been buying some US bank stocks.
Investors are fearful right now. Maybe it’s time to get greedy!
Growing My Passive Income
Building passive income takes time but it’s worth it. The additional BMO shares will boost the quarterly income by $53 as the company recently increased its dividend to $1/quarter.
I also got a dividend increase from Enbridge (ENB). The company raised its dividend by 10% so that means another $25/quarter.
My target for dividend income this year is $14k and, to date, I’ve received $12,273.39. I’ve reached 88% of my goal. December is typically a very good month for dividend income as my index funds pay out. So it looks like I’ll achieve this goal! That averages to about $1,200 a month that I don’t have to work for.
Soon I’ll be taking a look at the projected income for next year to help establish my new target income goal. I look at how much money I plan to invest, what income the portfolio already generates, the effect of reinvesting that income, and I try to project the effect of dividend increases. All of that will give me a number that I’ll try to beat.
Generally speaking, I try to increase my dividend income by about 15% or 20% a year, so I’ll likely set 16k-17k as my goal. My assumption is that for every $1 of dividend income I need to invest $25. So my expected yield is 4%. But with many quality dividend stocks yielding nearly 5%, I only need to invest $20 to get a $1 in dividend income. That’s why these market corrections are a good thing for people who want to build passive investment income.
Basement Reno Update
Well it’s officially over. The Basement Reno that has consumed nearly all of my time this Fall is done. The baseboard was installed and painted. I’ll be publishing a before/after post soon…mainly for my own interest so stay tuned. Here are some pics:
Have a great weekend and thanks for reading my Weekly Recap December 15th Edition.