Passive Income Update – Nov 2016

Welcome to our monthly passive income update for August 2016. This is part of the scorecard series where we track our dividends and other sources of passive income. We also include changes and updates related to our investments during the month – showing the growth of our dividends going forward.

Passive Income  Update

Passive income for the month of August 2016 was C$534.99. The passive income for the month comprised of US$292.93 and C$142.46 (exchange rate is US$1 = C$1.34).

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Passive income change is -2.20% QoQ and -20.85% YoY for the month. The passive income YTD is $7,670.26, which achieves 85.22% of our annual goal of earning $9K.

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Dividend Raises & Cuts for November 2016

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Dividend growth investing is a popular model followed by the investing community to build assets. Companies which not only pay dividends, but raise them year after year have been shown to perform better overall for investor returns. On the flip side, it is also important to keep an eye on the dividend cuts, which could signal troubling times ahead for a company. This post captures the announcements of changes in dividend amount for the week – both increases and cuts.

Note that only $2B+ (Midcap+) companies are included in this list.

9 Top Dividend Stocks in the Energy Sector after the OPEC Meeting

This is a guest contribution from The Dividend Manager

Energy stocks have seen a lot of volatility over the last two years as the supply of oil increased and the price of oil plummeted. In 2014, the price of a barrel of Crude Oil WTI was over $100. By the beginning of 2015, the price was under $50 per barrel. The final bottom in price occurred earlier this year when crude hit $25 a barrel. The chart below illustrates the downfall of crude oil prices since 2012. While the price has rebounded since the February lows, it has not come close to rebounding to its 2014 price high.

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On November 30th, 2016 the Organization of Petroleum Exporting Countries (OPEC) agreed to cut crude oil production by 1.2 million barrels a day. Currently, production is at a record high, at 33.6 million barrels per day. This will be the first cut in production since 2008, but there is still expected to be a significant surplus in oil supply. This production cut will likely drive up the price of Crude Oil WTI and make many energy companies more profitable.

The news sent many energy stocks soaring.The Energy Select Sector SPDR ETF (NYSE: XLE) jumped over 5% following the news (compared to year-to-date performance of +10%).This bump comes after many of these stocks jumped as part of the “Trump Rally” following the election, and has many energy investors excited about current performance and how the new production may impact oil prices going forward. WIth large tax cuts and decreased regulation on the way in 2017, many of the energy companies listed below should profit from increased economic growth.

The stocks below are the energy stocks that I maintain on our Top 100 Dividend Stocks list. My favorites include Occidental Petroleum, Schlumberger, Total SA ADR, and Valero. While some investors have been spooked by the energy sector in the last two years, there are many intriguing stocks with high dividends & excellent dividend growth prospects now that oil has crossed back above $50 a barrel.

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Outlook for December 2016

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Well, here we are. Plenty to look forward to as we ring in the end of a rollercoaster year. Things still seem to be chugging along nicely as investors are happy about the state of the world economy (even though they shouldnt be). The Fed is almost guaranteed at this point to raise the interest rates by another 25 basis points. In anticipation, we have seen major holders such as sovereigns (such as China, Saudis etc) dumping treasury bills in the market driving up the yield and changing the yield curve. With the increase in yield, we noted a milestone achieved during the month of November — the 10 yr US treasury yield crossed above the S&P 500 yield. Over the past decade, the narrative has been to pay a higher premium and go into riskier assets (i.e., stocks) to generate income…now that the same kind of income can be generated in a less risky asset (i.e., bonds), investors have to question whether they want to own stocks to generate same level of income. It will be interesting to note how the market proceeds, and we are already seeing a slow slide in share prices in some of the stock sectors such as consumer staples, healthcare, REITs, telecommunications etc. As of this writing, $3T (yes, trillion) have already been wiped out from the bond markets due to rising yields — the other markets (stock mkts, currency mkts) will feel the effects of this storm.

Other central bankers seem to be heading the other way as they are more in tune with the problems in their respective economies. The Bank of Canada has in the past given clear indication that the monetary policy could see further easing – potentially a rate cut from the current 0.5% in their October Policy Report.

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2 Recent Buys

A quick update on a couple of recent purchases in my portfolio. Things have been busy, so this post is a couple of weeks late…but better late than never.

Silver Wheaton Corp (SLW.TO) – added 50 shares @ C$28.50…which it turns out I was too early to pull the trigger. I still see tremendous value and will continue nibbling although I am getting close to a full position on this stock. Not much has changed…the business is sound and the fundamentals are fantastic. In addition, the company announced a great quarter earlier this month followed by a dividend increase of 20% (forward yield is just a shade under 1%). You can read about my original SLW purchase here.

Vanguard Emerging Markets Govt Bond ETF (VWOB) – Ive been interested in emerging market bonds for a while (see this post from May 2015) and finally decided to initiate a position. The fund gives me an exposure to emerging market sovereign bond market and pays approx 4.4% in fixed income going forward. This is only a very tiny position of a few hundred dollars for now as I dip my toes and think more about this position before committing more capital.

Disclosure: Full list of holdings can be found here.