Well, it’s been a busy month folks. No major transactions to report but there was lots of work accomplished around the house! Ah well. If I’m not making big financial gains at least some progress is being made elsewhere in my life!
Actually, that’s not entirely true…
Earlier this year, I maxed out my TFSA contribution for 2011. Since mid-April, I now hold three different dividend-paying stocks in my TFSA:
- Sun Life Financial (SLF)
- Husky Energy (HSE)
- H&R Real Estate (HR.UN).
The plan going-forward for my TFSA remains unchanged: transfer Canadian dividend-payers (from unregistered accounts) into my TFSA as contribution room allows me to. This will shelter all dividends paid and keep all dividends re-invested, tax-free.
April 2010 was a great month for the TFSA – I received one (free) share of HSE and SLF thanks to reinvested dividends. Beyond my TFSA, overall, my income update for April 2011 continues to demonstrate the power dividend-investing can provide: a get-wealthy-slowly-but-eventually strategy that will provide some financial security in good markets and in bad. Across our entire portfolio, including my wife’s accounts, we now own a total of 21 different investment products. The majority of these investments (18) are dividend-paying stocks and the rest are three broad-market ETFs held exclusively in our RRSPs: XIU, XBB and VWO:US using a bond-matches-your-age asset allocation.
Based on holdings and values at the end of April 2011, we’re projecting to earn just shy of $4,500 in total income for the entire 2011 calendar year if dividends were paid out in cash. If you’ve been keeping track on my blog, that’s an increase of about $100 from March 2011 and almost $200 more since December 2010. Other than a couple small optional cash purchases of Bank of Nova Scotia and Fortis stock, this increase in income arrived from doing absolutely nothing except resolving ourselves to the power of reinvested dividends – letting our money earn more money.
As much as possible, we continue to reinvest all dividends from stocks and distributions from ETFs to buy more shares of the same either via full DRIPs with stock transfer agents or via synthetic DRIPs with our discount brokerage institution. April 2011 marks my second year as a DRIPper of multiple Canadian dividend-paying stocks, and the process feels great!
Feeling this good reminded me of what Lowell Miller expressed so nicely in his classic: The Single Best Investment:
“Dividends and dividend growth are the real-life signal that a company has the wherewithal to pay you…it is the logical and inevitable result of investing in a company that is actually doing well enough, in the real world, to pay both dividends and to increase them on a regular basis. Dividends are paid from earnings. When a company has reached a certain level of maturity and stability, it begins paying dividends. What you see is what you get. Through the dividend, a company can show you how well it’s doing.”
The simple fact is: success breeds success. I firmly believe my journey owning dividend-paying stocks as part of my overall investment plan will be no exception.
What are you doing to harness the power of compounding in your portfolio? Got any comments for my journey?
Share your thoughts!