Tag Archives: return of capital

Why I Watch Each Dividend Get Paid to my BMO InvestorLine, CIBC Investor’s Edge and RBC Direct Investing Brokerage Accounts

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I’ve worked with many computer programs over the years and I’ve found errors and bad coding in most of them. I also have a nasty suspicious mind that spots errors in the pricing on meat packages versus the huge posted sign rate and mysterious mistakes appearing in my bank accounts like the one for the safety deposit box I relinquished 4 years previously. All of these mistakes can be fixed if pointed out politely and quickly. So I keep track of each payment of interest, dividends, distributions and return of capital made to my brokerage accounts.

UPDATE: This article is historical, from 2016. I no longer invest with RBC Direct Investing.

What I’ve Found Recently While Watching the Transaction and Activity History for My Brokerage Accounts

Here are three examples of things I’ve discovered by keeping an eye on deposits to my brokerage accounts.

A: New Flyer Industries, NFI, Did Not Pay a Dividend in February 2016 but Why?

Tracking the dividend payments alerted me to a change at New Flyer Industries. Although in all of 2015 and in January of 2016 it paid a tidy monthly dividend, in February 2016 nothing popped into my account.

Did NFI Cancel or Suspend Its 2016 Dividends or Cut Them?

I checked in with BMO InvestorLine via their secure email app. The reply was that NFI had not paid BMO any money to be distributed in trust as dividends nor had BMO received any notification of a pending dividend payment for February.
So I went to the investor Relations section at New Flyer Industries’ website.

New Flyer Industries Switches to Quarterly Dividend for 2016

I scanned the NFI News Releases but only found a reference to the December declaration of the dividend payable in January 2016.

I had to actually open a presentation to investors made in January 2016 to find what I was looking for and it was good news.

NFI is just changing to a quarterly payment schedule from its old method of making a distribution monthly.

Good News! NFI Plans to Increase Its Dividend in 2016

The news was actually better than I’d hoped: New Flyer also plans to increase its dividend by 12.9% starting in April 2016! That will raise the total annual dividend from $0.62CAD to $0.70.

This news will be officially announced in March 2016 by the Board of Directors if all goes to plan.

The record date will likely be March 31, 2016 with the dividend payable on April 15 2016.

The January 2016 payment was the last monthly payment.

So all good news there.

B: Keg Royalties Income Fund Trust Units Paid a Bonus Distribution in January 2016

I was pleasantly surprised to find I had too much money in my account after the Keg, KEG.UN, paid its distributions for January 28 2016. A closer look revealed they had paid the usual monthly distribution plus a second one which was almost as large.
I checked on the internet and discovered that a special distribution was declared on December 15 2015.

Free money. Cool!

C: Bank of Nova Scotia Declares Two Dividend Increases in One Year

I usually know a dividend increase is on its way because I keep an eye on the RedFlagDeals Investing discussion forum where members share news about dividend increases for Canadian companies. However, a few times I’ve been caught off guard when a company decides to increase its dividend twice in one year.

In 2015 BNS did just that. They raised the dividend in April and again in October. While dividend increases are easy to accept, dividend decreases are not. Keeping an eye on my transaction history helps me make sure I’m using the right projected income numbers for our budget. That’s not important right now when I’m just planning for retirement but it will be very important when we actually retire.

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Do you keep a close eye on the transaction or activity history for your brokerage account? Ever notice anything that worried or surprised you? Please share your experiences with a comment.

Trying to Pay for All Our Expenses Using Dividend, Distribution and Return of Capital Income Only

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Each year, I track our expenses as the bills come in and get paid. At the end of the year, I add it all up and start comparing to previous years. I’m curious about my personal rate of inflation. I’m also looking for interesting trends like the long-term drop in the price of natural gas which could lull me into a false sense of security about being able to meet that need in the future. And, recently, I’ve started looking at the numbers to see if it would be possible to pay for our expenses using only the income from our investments such as our dividends, distributions and, in the case of REITs, our return of capital.

What I Found Doing the Review of Our 2014 Expenses

Well, it looks like we have not had any leaking toilets or taps during the first three quarters of 2014. Our water consumption has stayed the same. (We don’t water lawns or gardens in the summer, by the way. Planting perennials that are suited to the climate here has paid off; and I hate grass and prefer it to go dormant so I don’t have to mow it as often.)

We won’t know if we “sprung a leak” since December, though, until the next quarterly bill arrives. (It’s too cold to try to read the meter and I can’t be bothered. You can remind me I stupidly said that if I ever get one of those $1000 water bills….)

The drop in the price of gasoline is too recent to show a big impact on our annual gasoline spending. The price of gas was so high in the early part of the year, though, that we spent about the same as if we’d made a road trip to the Maritimes from Ontario this year, even though we didn’t. Good thing this was the “stay home” year!

We have GOT to do something, almost anything, about our internet bill!

I can continue to ridicule the government when they tell me how they have forced the insurance companies to reduce my home and auto insurance rates. (Although neither rate has gone up much either.)

How Does Our Investment Income Match Up to Our Expenses?

Mark at My Own Advisor was playing this game and reminded me to try a hand.

Simple Bills to Budget For

Ok, we’d have no trouble paying for

  • Water
  • Telephone
  • Internet
  • House insurance
  • Hydro
  • Natural gas and
  • Property taxes

From our investment income.

Car Expenses to Budget For

I separated out our auto-related expenses before starting the game. And I’m glad I did.

Wow! Who knew how fast those add up? (Ok, Mr. Money Mustache does and he talks about it ALL the time.)

The costs include

  • CAA
  • Driver’s licenses
  • License plates
  • Car insurance (why does it cost the same to ensure a ’98 Corolla as a ’12 Camry?)
  • Gasoline
  • Car repairs and maintenance
  • Saving for the next cars

Somewhere down that list is where we ran out of income before we ran out of expenses.

Harder to Estimate Expenses to Budget For

Which is too bad, because the expense list continued with:

  • Dental (no coverage in retirement)
  • Eye care (almost no coverage now or in retirement)
  • Drugs and health (does your doctor tell you the only way to prevent colon cancer is psyllium fibre at $20 a bottle even though you’ve never been constipated in your life?)
  • Food and housekeeping
  • Clothes and dry cleaning
  • Gifts, hobbies, entertainment
  • Charity
  • Pre-saving for home repair and maintenance costs

And probably a few dozen other costs I forgot to include. (I know our overall annual spending so I don’t usually bother to parse it out into categories.)

Yet if we ditched the cars (not literally) we’d be quite a ways down that list. So I guess if we plan to retire early, we may have to plan on reducing our stable of vehicles, or on increasing our retirement income. (There’s no trouble meeting all of these costs if we include CPP, OAS and a few other bits and pieces that we don’t get access to until 65+.)

Anyone want to buy a ’98 Corolla? It comes with a free (partial) can of Tremclad.

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Is your investment income enough to cover your expenses? Or do you expect to have to use the capital? Please share your strategy with a comment.