October 2012 Dividend Income Update

I read an article on Investment Executive recently that summarized Bank of Nova Scotia’s global financial literacy strategy.  The strategy is broken down into investment life stages to encourage lifelong financial learning.  I found this article interesting because I’ve been doing some thinking on this very subject, looking at my life stages and where I’m at on this investing continuum.

As an investor who really took charge of his portfolio a few years ago, I get nostalgic on the stages I’ve passed (and struggled through) but also feel optimistic about the one I’m currently in – my asset accumulation years.  Using Scotiabank’s language, I passed the “starter” stage and now into the “building” stage.  What does that mean to me?

Rather than relying on the Canada Pension Plan (CPP) or Old Age Security (OAS) for retirement income, because who knows what the future holds, I’m doing what I can to save now, look after myself and pay myself first, building assets today to provide a modest income stream in the years to come.  My assets are constructed with broad market ETFs that should provide predominantly capital appreciation and some yield and dividend paying stocks from Canada and the US that should provide the opposite.  By leveraging both strategies, I don’t need to pick one strategy over the other to grow my retirement portfolio – they both work because they keep me on a plan I don’t deviate from.

My goal is to earn close to $30,000 per year in tax-efficient and tax-free (thanks TFSA) dividend income.  It’s a lofty goal but you know what…I’m slowly getting there.  At the end of last month, after most of my dividends were reinvested to buy more shares in the companies I already own, I calculated the dividend income for this year should be about $6,220 at the end of December.  This is a healthy increase over this time last year.  I’ve got a great distance to go to reach my passive income goal but each month demonstrates progress.

In my 20s, I was just starting to learn about the world of investing and what it took to achieve financial independence.  In my 30s, I’ve learned much more about myself and solidified my financial plan to get there.  I’ve learned in the end, its total investment returns that matter and more importantly, its real returns that matter (returns earned after inflation).  By leveraging both indexing and dividend investing strategies, I’m taking advantage of both to build my investment portfolio during these asset accumulation years.  I look forward to sharing my November dividend income update in a few more weeks.

What are your retirement goals and dreams?   How is your plan coming along to make it happen?   What do you think of my plan?

17 Responses to "October 2012 Dividend Income Update"

  1. Wow that’s not bad. I don’t have much money invested in dividend producing stocks right now. But I will definitely be moving towards that as I get older. Definitely a nice source of passive income if you’re looking for multiple sources of income.

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  2. So the Dividends you receive in your TFSA are tax free as well. I suppose that is obvious to everyone else, but for some reason I thought otherwise, thanks for writing that so we of the feeble financial minds can know it too!

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    1. Yupper, tax-free capital appreciation but mostly dividends in the TFSA.

      I have tax-efficient dividends using my non-registered brokerage account as well, but hopefully over time, my plan is to maximize both our TFSAs for the next 20 years that should produce a bunch (more) tax-free income I can withdraw at any time. I recall only about $1,800 of our dividend income is tax-free right now but that should grow. 🙂

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  3. Hey, You know mate I’m not complaining I think what you are doing is awesome. I wish I had your knowledge to invest myself but sadly I don’t. I have to rely on the advisors and at that I’m stung just looking at the numbers going down. I’d like to retire happy and have choices in life. Like you we don’t want to rely on Canada to pave the way as there may be no paving going on. Keep up the good work. Mr.CBB

    Reply
    1. Hey, I don’t think I have very much investing knowledge. I’m learning more everyday.

      I guess that’s why I’m DIY all the way….I want to rely on myself for my/our retirement dreams and not someone else making decisions for me. That includes our government 🙂

      Thanks for supporting my investing journey!

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    1. Actually, I turned one off recently, a bank. I have enough holdings in that company and I’d like to buy more in others. If I’m going to count on some dividend income in retirement, I need to be diversified across about 30 Canadian blue-chips, not too top heavy in financials for example. I’d like to balance it out similar to the TSX Composite: 30% financials, 30% energy, 20% materials and the rest telcos and utilities. Everything else I will get State-side.

      How is your portfolio coming along? You’re WAY ahead of me I recall? Thanks for checking in!

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  4. @My Own Advisor
    Sounds like a good plan Mark. We need to become more diversified, we have way too much in Energy!

    October was our best month yet for dividends – almost $2100 (too bad every month can’t be like that)! As of the end of October, we’ve received almost $14K in dividends. The only good thing about the markets being down the past few days is that our DRIPs will buy more shares!

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    1. I have too much financials! I need more energy like CNR and ECA. At some point I guess! Wow, $2,100 in dividends in one month? I suppose you’ll be there in another 5-10 years with the rate you are going. That would be outstanding. You guys should be very proud of your investing acumen!

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  5. Awesome stuff! Congrats on what has been a very successful 2012 for you so far. Must feel great to know that you’re receiving over $500 in passive income now that will continue to grow for the rest of your life.

    Keep up the great work!

    Best wishes.

    Reply

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