Welcome to my latest dividend income update. For those of you new to these posts on my site, every month I discuss my approach to investing using dividend paying stocks and how reinvesting the dividends paid from the companies I own are helping me reach financial freedom. You can check out my previous dividend income update here.
Thanks to the month of May, the S&P/TSX index is now in positive territory for the year, returning about 3%. Before that, the market was running rather flat in 2013. As an investor, I don’t worry at all about what the markets do over such a short time frame. Remember volatility can be a friend of yours. It can provide investors opportunities to buy stocks at lower prices although it’s tough to determine when these low prices are. As a long-term investor I’m not worried about volatility in my portfolio since price fluctuations will always occur. I’m focused on the big picture instead, a plan that extends out 10, 20 or more years out.
With that mindset I follow a simple recipe with our Tax Free Savings Accounts (TFSAs); save money, make contributions to it and make a purchase once every few months. I made one buy over the last couple months when I thought the price was right for me in Telus (T). We now have almost enough shares to DRIP this stock which should see the dividends reinvested every quarter to buy more shares automatically, free of charge.
After the tally for May was done, I calculated we’re on pace to earn about $6,940 this year in dividend income from our Canadian companies. That will happen as long as the companies we own keep paying dividends and we continue to reinvest the money paid by them. We continue to be a long ways away from our goal to use dividend income to pay for most of our retirement expenses but every month is a small step forward to that milestone.
I’ll be back with another update next month and in a future post, I’ll answer some frequently asked questions about my dividend income journey. Until that article comes up you can read more about my investing approach here and here.