My Own Advisor

“Know what you own, and know why you own it.” – Peter Lynch, American business icon.

A new year brings new opportunities.  Opportunities to reflect but also plan forward.  In that sense, I’ve taken a few weeks to review my dividend stock portfolio to better understand what I own and why I own it.  What is the outcome of my review?

I think I’m in good shape.

I own companies that have been paying dividends for over 100 years.  I own companies that demonstrate an ability to increase their dividends over time, even when the stock market is sideways or just plain chaotic.  Is my portfolio perfect?  No, there are some risks associated with some of my holdings and I need to monitor them.  Is my dividend stock portfolio set-up for increasing income this year?  Absolutely.

For retirement expenses and to fight inflation down the road, I believe steady income and more importantly rising income is the key.  Retirement expert Daryl Diamond thinks so as well and recently eluded to the beauty of sustainable income in retirement in a recent Globe and Mail article, saying:

“You don’t have to get up and see what the stock market is doing in the morning because it’s not based on the value of your account.”

In that article, there was an option presented to readers to use monthly income funds available by the hundreds (if not thousands) from the mutual fund and exchange-traded worlds to establish your income machine.  These funds typically hold a mix of dividend stocks, government, corporate and high-yield bonds and, sometimes, preferred shares.  While this approach might work for some, I prefer to own any companies in these big mutual funds or ETFs outright where I can.  This way, in my taxable account, I can take advantage of the Canadian dividend tax credit to be more tax-efficient.  If I want to own different companies or low cost funds that distribute interest income, dividends, return of capital and capital gains I can use my TFSA for that.

So, where does this leave me?

After last month’s portfolio review, I decided to change, well, nothing.  In January, I let the dividends come in and they were reinvested as per usual.  Rather boring actually.  Yet boring is working quite nicely since I’m up about $100 over December’s dividend income update.

Since a new year allows me to look ahead, I’ve forecasted my dividend income by the end of this calendar year will be close to $7,500.  That’s a long ways from my ultimate goal but that goal is getting closer every month I stick to my plan.

I look forward to another year of sharing my portfolio updates with you.

How is your income portfolio coming along for retirement?  Are you in retirement, and using a dividend income portfolio to help fund your retirement?

Thanks for reading and sharing this article.