Welcome to my latest dividend income update for 2016. For those of you new to these posts on my site, every month I discuss my approach to investing using Canadian dividend paying stocks and Exchange Traded Funds (ETFs), and how reinvesting the dividends and distributions paid from these Canadian holdings are helping us reach financial freedom.
Last month I wrote about looking back, reflecting upon the progress we’ve made. While the overall journey has been rather good the road to (future) financial prosperity has been filled with bumps.
Looking at the glass half-empty…
With this investing approach there is caution, meaning risk I need to remind you about. Over the last few months, the following Canadian stocks have been hit rather hard in my portfolio:
- Crescent Point Energy (CPG) – major dividend cut (maybe a dividend elimination to come).
- Dream REIT (D.UN) – major dividend cut.
- Husky (HSE) – dividend suspended indefinitely.
This makes the idea of “living off dividends and distributions” concerning, to a small degree. Then again, there are some positives to selecting companies that have paid dividends for decades or generations and weathering any current market storm; many of them are likely to increase their dividend the following year, or at some point; so there is a glass half-full perspective.
Looking at the glass half-full…
- Despite Keystone XL dying a slow death, TransCanada (TRP) increased its dividend by 9% recently.
- Canadian National Railway (CNR) announced a 20% dividend hike in January.
- Bell Canada (BCE) increased their dividend by 5% in February.
- Brookfield Renewable Energy Partners (BEP.UN) and Brookfield Infrastructure Partners (BIP.UN) bumped up their dividend this year.
- Manulife (MFC) increased their dividend in February.
- Royal Bank (RY) increased their dividend recently.
- TD Bank (TD) and CIBC (CM) raised their dividend late last month.
- And the list goes on…
With all dividends and distributions paid to buy more Canadian stock shares (and Canadian ETF units) commission-free, even with some recent dividend cuts our forward dividends are now projected to be about $12,150 this calendar year – as long as no further dividend cuts occur (and conversely) and as long as the companies and ETF products we own keep paying us. Investing in a diverse basket of Canadian dividend paying stocks is what I call a get wealthy eventually strategy so we remain patient and stay invested – time in the market is our friend.
I’ll keep you updated where we get later this year as we strive towards this longer-term early retirement goal, a goal we hope is less than 10 years away. Wish us luck and thanks for reading.