December 2016 Dividend Income Update

A new year brings new beginnings.  It’s also a time to reflect upon the year that was – including our 2016 dividend income.

For those of you new to these posts on my site, every month I discuss our approach to investing focusing on dividend paying stocks.  We believe buying and holding a number of Canadian dividend-paying stocks in our tax-free (thanks TFSA) and non-registered accounts will, over time, provide some steady monthly income for future wants and needs in retirement.

2016 was a heckuva year for the stock market.

Using iShares XIC ETF as a quick proxy for the Canadian stock market, returns were about 21% for the 2016 calendar year – amazing.  For what it’s worth, the Canadian portion of our portfolio was up by the same amount thanks to capital gains and dividends from many of the same companies XIC owns in its top-25 holdings.  These are companies we own directly and have no intention of selling.

As of January 2016, a year ago, our dividend income was about $11,750.  It’s now $1,700 higher.  To be more exact we finished the 2016 calendar year with $13,475 – almost half-way to our passive income goal.

Dividends 2017

We, of course, don’t spend any of that money today.  This is because as much as possible we reinvest the income paid to buy more shares. We’re optimistic if we keep contributing to these accounts over the coming years, and reinvesting dividends along the way, working-days-on-our-own-terms will be much closer.  We hope to reach our $30,000 per year passive income goal by the end of 2023.

Realizing that goal, in addition to other assets, should put us in a decent place for semi-retirement.  Time will tell. Until then, it’s save, invest and reinvest every month and quarter.  We then have fun with what is left over including these goals for 2017.

There is definitely something positive seeing money earned from our investments rolling into our account.  It’s powerful to see more money earned with time.  As a dividend investor I get to focus on the annual income (which is what these posts are about) rather than daily market swings.  It’s a slow and steady journey but one I remain confident in.

A new year with some new beginnings.  The reality is – it’s the same ol’ boring investment plan for us.

In future dividend income updates I’ll answer a few reader questions sent to me recently.  Stay tuned for that information.

Until the next update good luck with your investments in 2017.  Thanks for reading this post about ours.

Do you have any questions about our plan?  What do you make of our plan?  Are you on a similar plan?

26 Responses to "December 2016 Dividend Income Update"

  1. Looking at your graph Mark, I notice a jump in dividend income for 2020 (1.5K/annum to 3.0K/annum). Is that due to increased savings or are we expecting a really good year?

    Reply
    1. Dave: IMO, etf’s hold many more than a few good stocks, they don’t consistently raise the income, there is trading or rebalancing and there is a fee, regardless how small which is charged every year and goes up as your holding grow.

      Reply
    2. ETFs can and do hold poor performers. I have to pay a fee to do so. Also, history has shown me that most of the steady dividend payers in Canada are banks, utilities, telcos, pipelines and REITs – so – why not own what the big funds own?

      I’m a big fan of indexing but with a non-reg. account I also want to take as much taxable advantage as I can with the dividend tax credit.

      Reply
  2. Congratulations on receiving over $13,000 in dividends that is outstanding. I hope one day to reach that number. Keep up the great work and can’t wait to see how you do in 2017.

    Reply
  3. Hi Mark, I am impressed! Great to see that upward tick on your graph! We reached that same 30K goal in our non-registered account about a yr ago and it is tremendous to know we have a good backup to draw from.
    Just curious, is the $13745 all in a non-reg account so you can fully benefit from the div tax credit?

    Reply
    1. Thanks Peter. Geez, what a great goal for you in your non-reg. account!

      This amount is a combination of our non.reg + TFSAs – where we focus on Canadian dividend paying stocks. Once all TFSAs and RRSPs are contributed to, maxed out, we will continue to build our non.reg portfolio – to take full advantage of the DTC.

      We have work to do to max out the other RRSP, wife’s, but that is coming along. We hope both RRSPs will provide another $20k per year (combined) in retirement income, starting around age 55.

      Reply
  4. Dividends on the Prairie · Edit

    Great progress Mark. Love the graph!

    Are you able to differentiate how much of the $1700 annual dividend increase is due to new money that you’ve added? If so, would you be willing to disclose how much new money you’ve added to all the coffers in the last year?

    Do you track/treat all the dividends equally even though they will be taxed at varying rates (registered, TFSA, non-registered) when you do take them as income to pay your fixed costs? I’m struggling with this since in theory a $100 dividend payment from an investment in a TFSA is worth more after-tax than a $100 dividend payment from an RRSP.

    Reply
    1. Thanks for your comments. Always great to get questions. I feel I disclose a heckuva lot on this site so I prefer not to answer how much we invest and exactly where but I can tell you the dividend income growing every year is fairly well split between new money added – i.e., maxed out TFSAs of $11,000 per year will yield ~$400-$500 in new income AND new money thanks to dividend raises from the companies we own. I’ve already had a few dividend increases this year which has been great.

      As for treating all dividends equally – yes from the perspective it’s part of total return but no – from tax perspective. I won’t take any income to pay for any fixed costs/semi-retirement costs until we retire. Money in the RRSP, TFSA and non-reg. stays there for growth. I won’t touch it until I need to and that’s at least 5-10 years away depending on 1) our savings rate and 2) how equities perform.

      Reply

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