Attaining over $200 a month thanks to TransAlta Renewables (RNW)

TransAlta Renewables

On December 23rd, I added 110 shares of TransAlta Renewables Inc. (TSE: RNW) to The Dividend Beginner’s portfolio. This time around I paid $14.15 per share, whereas I first invested in RNW in May for $12.32 a share.

Renewable energy in Canada has a good deal of tax subsidies and with energy becoming more expensive again, it will be worth it to continue investing in these technologies. I like TransAlta Renewables as it does this, and stands under a more mature parent company, TransAlta Corporation where it receives many drop-downs. In essence, it could be classified as a yieldco at this point, just like my previous investment in Enbridge Income Fund Holdings.

Yield on cost lowered to 6.69%

TransAlta Renewables pays a very generous annual dividend of $0.87996. With my most recent lot purchased at $14.15, I snagged the shares at a yield of 6.22%, paid out monthly. When I purchased my first lot of shares, the yield was 7.14%.

Now, with a total cost basis of $3,418.40, I own 260 shares of RNW generating a total of $228.79 in annual dividend income. My new yield on cost is now calculated as 6.69%.

Dividend Income upgraded by 4.07%

My new investment in TransAlta Renewables Inc. adds $96.80 to my annual dividend income, or $8.07 per month. RNW has increased their dividend consecutively for 2 years, since their IPO / split from TransAlta Inc (TSE: TA). They also have plans to increase the dividend by 6% to 7% in 2017/2018 with their South Hedland project coming online.

Before Net Increase After
Annual Dividend Income $2,375.48 $96.80 $ 2,472.28
Monthly Dividend Income $197.96 $8.07 $206.02
Percentage Increase +4.07%

Dividend Income now above $200 a month!

Some of you may have noticed from the above table, or the title of the article, The Dividend Beginner portfolio now generates, all on it’s own, an average of over $200 a month! I’m happy to have made it this far in 2016 and am looking forward to hitting that $300 mark in 2017. Gaining $100 a month per year at the start of an investment portfolio seems like a pretty good way to go. It’s aggressive and will allow for very steady compounding as I’m able to reinvest even more rapidly as the number increases.

Thanks to everyone who’s been following me on this journey!

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