Dividend Income – June 2017

Dividend Income

June is an important month for me, it marks the end of the first half of the year. It’s the time when I take a closer look at my finances and investments, to assess how my year has been so far and to plan for the 2nd half. Historically, June has also always been the most productive month for me every year in terms of dividends.  Barring any unforeseen special dividends, the 6th month of the year is set to retain that title this year. By a big margin.

I raked in RM3,750.74 in dividends for June from a total of eight different companies. Last month’s dividends totaled RM393.79, which as you can tell, is roughly only 10% of June’s dividends.

This is a huge milestone for me. For one, this is the first time my portfolio has crossed the RM3K per month threshold in dividends. Secondly, comparing to last year’s RM2,392.37 in dividends, that’s a 56.8% increase.

The figure for June 2016 was increased from RM1,852.37 (in the previous article) to RM2,392.37 here as I made a minor mistake in forgetting Tune Protect’s dividend of RM540 June last year.

Moving on, we’ll have a look at the companies that contributed to my RM3,750.74 in dividends. And then at my Freedom Fund’s performance.

Sunway REIT

SunREIT Dividend Income June
Sunway REIT Dividend

This Month’s Dividends – RM296.48

Total 2017 Dividends – RM583.85

Dividend Yield – 2.94%

Weight – 6.25% of the Freedom Fund

Malayan Banking Berhad

Maybank Dividend Income June
Maybank Dividend

This Month’s Dividends – RM1,013.76

Total 2017 Dividends – RM1,013.76

Dividend Yield – 3.82%

Weight – 7.83% of the Freedom Fund

Maybank’s DRP

A couple of weeks ago, I participated in Maybank’s Dividend Reinvestment Plan and opted to receive a portion of my dividends in shares instead of cash. This is the result of that. The total RM1,013.76 in dividends includes the share portion of my dividends.

Awesome Returns

Take a look at the dividend yield, that’s 3.82% yield for me – so far! This is only the first of two dividends to be paid out this year, the other being in October. I managed to purchase the bank’s shares when it was spiraling down back in 2016.

Nestle (M) Berhad

Dividend Income June
Nestle Malaysia Dividend

This Month’s Dividends – RM260

Total 2017 Dividends – RM260

Dividend Yield – 1.94%

Weight – 3.95% of the Freedom Fund

Tune Protect

Dividend magic income july 2017
Tune Protect Dividend

This Month’s Dividends – RM561.60

Total 2017 Dividends – RM561.60

Dividend Yield – N/A (Sold)

Weight – N/A (Sold)

Homeritz Corporation Berhad

Dividend magic income july 2017
Homeritz Dividend

This Month’s Dividends – RM244.50

Total 2017 Dividends – RM978.00

Dividend Yield – 6.92%

Weight – 6.25% of the Freedom Fund

Scicom (MSC) Berhad

Dividend magic income july 2017
Scicom (MSC) Dividend

This Month’s Dividends – RM168

Total 2017 Dividends – RM336

Dividend Yield – 1.92%

Weight – 4.71% of the Freedom Fund

Cypark Resources Berhad

Dividend magic income july 2017
Cypark Resources Dividend

This Month’s Dividends – RM426.40

Total 2017 Dividends – RM426.40

Dividend Yield – 2.41%

Weight – 4.66% of the Freedom Fund

AirAsia Berhad

Dividend magic income july 2017
AirAsia Dividend

This Month’s Dividends – RM780

Total 2017 Dividends – RM780

Dividend Yield – 2.65%

Weight – 8.26% of the Freedom Fund

 

The Freedom Fund

The Freedom Fund‘s updated stats are as follows:

Gross Investment: RM295,114.52
Market Value: RM388,720.81
Dividends (2017): RM8,138.90
Cash Available: RM34,000
Capital Gain: 31.72%
IRR: 12.76%

I aim to have at least RM25,000 at all times at the ready to invest in the case of a market correction. Ideally, I’d like to have RM50,000 in in the saddle. Trying to keep myself disciplined and at the same time I’ve been keeping busy adding more stocks to my buy list.

End.

Concluding this post, total dividends for the year stands at RM8,138.90. The Freedom Fund’s dividend yield comes in at 2.76%.

Same time June last year, my total half-year dividends were only RM5,933.18. That’s a nice 37.18% increase in dividends for me y-o-y. Moving forward, I expect to break the RM10,000 in dividends mark in September.

My goal set earlier this year in my Review of 2016 was RM15,000 in dividends for 2017. It’ll be tight and achieving that goal would ultimately depend on increases in dividends from my holdings.

I’ve seen an increase in readers having started investing this year! Please do write in and let me know how you’re doing. Even if you’ve started small, don’t forget to keep track of your investments. Thank you for reading!

I’m finally on Instagram! Follow me hERE or look for me on Instagram @dividendmagic

Investing is Simple – Get Started!

You want Financial Freedom? Save, Invest and Start Early.

There are countless ways to getting rich here in Malaysia. For the average and majority of Malaysians, I urge you all not to get caught up in the many get-rich-quick shortcuts out there. Instead, opt for the long winding but proven path of hard work, savings and consistent diligent investing.

The crucial and key thing is to get started and get started early . It’s best to save and begin investing at an early age. You should even start saving and investing on behalf of your kids the moment they’re born to give them an edge in this dog eat dog world. And trust me, saving as little as RM100 a month for your children the day they’re born will help them start off with about RM50K in their accounts on their 18th birthday. If I had RM50K to start with, I’m sure my portfolio would be much much bigger now. Start early!

Yes, saving money isn’t fun. Investing in boring index funds and the stock market for the long term isn’t sexy. And yes, it takes years, decades even, to build wealth this way. But trust me, it’ll all be well worth your while when you realize you have enough passive income to sustain your lifestyle.

One advantage I had was learning about the importance of investing at an early age. I was fascinated with the concept of passive income during my university days and started learning how to value stocks. I read tons of books on investments and decided at an early age to embrace frugality and diligent investment. I devoured and poured through books on investing and personal finance. Every day I checked the share prices of stocks I was watching in the newspaper. I loved it!

Investing isn’t just for the Rich

Because I’ve been asked this a thousand times over, I’d like to emphasize – Investing is simple and you can start with ANY amount. The crucial part is just to GET STARTED!

I’m 28 this year with a portfolio (my Freedom Fund) of RM300,000 in stocks. I started out with just over RM10K saved up from my university days. Too many people around me have put off their finances because they claim not to know a thing about investing. The most important step for you to take is to get started. Save up, pick a stock you can understand and invest in it. It doesn’t matter if you have a million dollars or only RM1,000. Just get started.

Dividend Magic - Investing is not for the rich

Investing Analogy

Here’s an analogy on investing I love.

Let’s say you are a farmer, you buy a little baby calf for RM2,000. It eats a lot of grass and over time grows into this big, beautiful, strong cow that’s now worth RM10,000. On a nice Sunday morning, you walk your cow down to the farmer’s market in town, and you sell it for RM10,000. Boom, a RM8,000 profit (and you didn’t even have to pay for the grass). This is your capital gain. Now, the period before you sold off your cow, your cow produced milk which you consume and sold off to your neighbors. This is your dividends.

  1. Your cow – Stocks (Asset)
  2. Your milk – Dividends (Cash flow)

Investing is really that simple, and you can start with any amount of money.

Now, lets take it to another level. You could’ve kept that RM2,000 you had at the beginning in your savings account. Over 20 years based on the 3% interest rate banks are paying now, your RM2,000 is now worth RM3,612.22.

OR, you can invest RM2,000 in the stock market. The KLSE index rose from 838 to close at 1813 on 29th November 2013 from 4 years ago for a total gain of 116%. On average, the compounded annual growth (CAGR) each year is 11%. Historically the markets around the world earn about 10% per annum, so here’s how much RM2,000 might be worth over 20 years, compounded at 10% per annum – RM13,455.00. (Note, this is the simplest illustration and example I could come up with, of course, many other factors come into play when one invests.)

Now compare investing to saving. Which one of these looks like the option to build wealth? Right, investing.

Mutual Funds and their Damned Fees

You’ve probably heard of investments like mutual funds, target date funds, or index funds. You might even own some of them. All of these funds have fees (also called the expense ratio), and if you’re smart you can save money on them.

Dividend Magic - Mutual Fund & Unit Trust Fees

Mutual funds are the worst (especially in Malaysia) because they rarely beat the market and usually have the highest fees, the average in Malaysia is a whopping 3%, I’ve seen some as high as 5%. These might all seem like insignificant numbers, so why does it even matter? It matters. Here, I’ll do some calculations to show you.

Let’s say you invest RM10,000 and earn 7% over 50 years.

0.0% fee: RM10,000 grows to RM294,570
1.0% fee: RM10,000 grows to RM184,202, and you lose RM110,369 in fees
2.0% fee: RM10,000 grows to RM114,674, and you lose RM179,896 in fees
3.0% fee: RM10,000 grows to RM71,066.83, and you lose RM223,503 in fees

I cannot emphasize how fees can kill your investments. I hope the above illustration will get through to my fellow investors out there. With a 2% fee, you’re essentially losing more than 50% of your investment to fees alone. What’s even worse is that the above example assumes you’re earning a 7% return p.a., what if you’re losing money? The funds still collect the fees from you! Isn’t that outrageous?

By investing in your own portfolio of shares, it means more money for you, less for the fund houses. Also to note are low cost Index Funds from companies like Vanguard that serve to mimic the market. The day that they come to Malaysia is the day I’ll dump most if not all of my savings into them.

(I understand some of you may be mutual fund agents and investors here so if you disagree, please do provide me your reasons for it. Don’t just send me hate messages and emails.)

Hacking inflation

Dividend Magic - Inflation

People love to get really worked up about inflation. Here’s what I think about it.

The best savings accounts earn about 1-3%. These accounts are great to stash money for an emergency, or to save a down payment for a house. The best Fixed Deposits (which you can only get if you deposit about RM10,000 and above for a few years) usually earn just less than 4%.

With Malaysia’s official inflation rate averaging roughly 3% (we all know it is much higher, I reckon its close to 4.5%), keeping money in a savings account or FD are both bad for building wealth because they don’t even keep up with inflation.

However, I always recommend keeping roughly 6 months of your take home pay in FDs as your emergency fund. The rest should be invested.

Going from RM0 to RM1,000,000

I want to show you something. Assume you’re 25 right now, and by age 50 you want RM1 million. To accomplish this goal, assisted by a conservative 7% return p.a., you need to save and invest just RM1,235.24 a month. Think about what happens when you increase this amount as you progress in your career. RM1 million isn’t a far fetched dream, it’s actually very much attainable and we should in fact aim higher.

The key takeaway from all this? If you really want to build wealth, you need to start investing right now. The longer you put it off the harder it becomes. And for you people whose time is not on your side, you should start investing too, it is never too late. More importantly instill this lesson in your children and future generations.

GET STARTED!

If you find the above makes sense and you’re ready to start investing, I suggest taking a look at – A Guide to Stock Investment in Malaysia

If you’re interested in the stocks I invest in, you may find a full list of them in my portfolio – The Freedom Fund.

Again, be sure to read up and understand the company you’re planning to invest in. Keep it simple and consistent, and invest for the long term. Remember, start early and start now.

“The best time to plant a tree was 20 years ago. The second best time is now.” 

I’ll see you in 30 years.

Dividend Magic - Invest - "The best time to plant a tree was 20 years ago. The second best time is now."