Welcome to my final dividend income update for 2015. 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 holdings are helping us reach financial freedom.
For the year that was:
- The S&P/TSX Composite Index ended the year down about 11%. The Canadian part of my portfolio was down almost as much since most of my individual holdings are the same companies held by many of the largest equity ETFs and mutual funds sold in Canada.
- South of the Border, the Dow Jones Industrial Average was rather flat for the year and so was the U.S. side of my portfolio. Overall, not a great year for portfolio growth.
The income side was different however…
We hold some Canadian dividend stocks non-registered because we’ve been very fortunate to max out my TFSA and RRSP in recent years. Even with oil and gas prices tanking, significantly in 2015, along with price corrections by other companies towards the end of last year, we saw this an opportunity to continue reinvesting the dividends paid by companies we own. We figure reinvesting dividends (at cheaper prices) will pay big dividends, literally, later on. With our portfolio value dropping in late-2015, we remained invested, remained patient and simply stayed the investing course. It wasn’t always that way, I used to tinker with my portfolio quite a bit which was a big fat investing mistake among others.
Where did this holding-the-line get us for the end of the 2015 calendar year? Closer to our goal.
Some of the Canadian dividend paying stocks we own cut their dividend in 2015 but many others like these ones increased their dividend. The net result was even though the Canadian market was down double-digits last year our dividend income increased.
There are three big reasons why the income continues to go up year after year even as the market is going sideways or down:
- New money was invested in 2015, into Canadian stocks and ETFs.
- As much as possible, all dividends and distributions paid were reinvested (to buy more shares or ETF units commission-free).
- Dividend increases occurred for many companies we own.
Thanks to Canadian blue-chip stocks that continue to reward shareholders, a few of them for generations on end, our dividend income rose from $9,550 earned at the end of 2014 to about $11,700 last year. Compare that to our December 2013 report card and we’ve made some significant progress over the last couple of years.
Our financial plan tells us to continue diversifying more in 2016, indexing more in our RRSPs to offset some of the risks we’ve been taking by owning individual stocks in other accounts that are part of these updates. Our hope is that in the years to come, our passive income can be derived from a more balanced (say 50/50) blend of stocks and ETFs. As we get older we simply want to take less risks.
Big goals like early retirement through some passive income take time, and so we leave 2015 with some good progress made. I have no idea what 2016 might bring when it comes to our financial plan, plans are always subject to change, yet I remain confident if we continue on our current path; keep a good savings rate, remain invested, reinvest all dividends and distributions, and diversify our equities over time, I’m confident we’ll get to where we want to be.
Got any comments for our passive income goal? What do you make of our investing approach and these updates?
Very nice total for the year and improvement from the prior year. Going forward the Canadian banks are looking ever more compelling. I guess these are the times, when everyone is selling, to add to BNS, TD and RY among other names of course. Thanks for sharing your update and look forward to following your journey in 2016.
Thanks DivHut. I need more US assets but I cannot stomach the FX now. So, I’ll likely invest in CDN banks, utilities, telcos and some energy stocks while these prices are dropping. Same companies as before. Our energy sector is taking a significant beating. If the market drops another 10-20%, and it might, it’s going to take some guts to buy I think.
Great dividend income, and great job.
Keep the snowball rolling
Sharon – Divorcedff
Thanks very much for the encouragement and you’re right, trying to keep the snowball rolling!
Well done Mark. Inspirational to many I’m sure. I know it is for myself.
Thanks Mr. CBB. We’re getting there slowly.
Totally awesome Mark. Thought we would be able to catch up to you this year but we’re still short by a mile! Love this kind of YOY growth.
Well, we were saving Tawcan but I wonder if few dividend increases will occur in 2016. Looks to be a very bad year ahead for CDN stocks. Thanks for the positive reinforcement though and yes, good YOY growth!
Telus & CU increase in Jan
Yes, Telus did, bumped to $0.44 per share which was nice.
It is really great news. Wondering which shares you are watching now.
Well done! You beat me by $200 for the year. You must be a saving machine 🙂
While dividend income will increase on its own, I think you can also agree that staying invested and adding new money goes a long way in creating this income.
Good, that was my goal! Kidding aside, I know we share similar objectives and kudos to you for your great savings rate. The current market is a mess. It will be interesting to see who can hold their dividend payments status quo the longest. Things could be ugly with $20 oil in this country.
Great job Mark.
that’s very impressive mark. at this rate you will enjoy a wonderful retirement!
Thanks Gary. Hopefully the dividends and distributions continue to get paid over the long-term. There are no guarantees with stuff but as you know, I’m keeping some faith with CDN banks, telcos and utility companies for the long-haul. I’ve started to own more ETF units in ETFs like VTI in recent years just in case 🙂
“Thanks to Canadian blue-chip stocks that continue to reward shareholders, a few of them for generations on end, our dividend income rose from $9,550 earned at the end of 2014 to about $11,700 last year”
18.38% Income increase in one year, what more could one ask!
Thanks cannew! I remain invested in the companies we have but I’m also using a few ETFs in other accounts (RRSP) more for extra diversification.