Welcome to another dividend income update. 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 some Exchange Traded Funds (ETFs) to help reach financial freedom. There is more to my portfolio beyond these investments but this is a big part of it. You can check out my previous dividend income update here.
Last month, I wrote about my simple approach to dividend investing:
- I only buy established companies that have a history of paying dividends.
- I reinvest the dividends paid by these companies whenever possible to make my portfolio grow faster.
- I buy ETFs for extra diversification.
- I diversify my stock holdings across companies and sectors.
I now own about 30 Canadian dividend paying stocks.
My plan is simple but not foolproof because my behaviour gets in the way every few months. I’m fighting this behaviour by (to borrow a title from a recent MoneySense magazine article) training my investing brain. This training includes:
- Automating my investment decisions as much as possible (via dividend reinvestment).
- Avoiding recency bias (by making long-term investment decisions – buying only stocks with established dividend histories).
- Accepting market ambiguity (stay with investments regardless of market highs and lows).
There is more to training my investing brain but this work at the mental gym is helping. I’ve been pleased with my Canadian portfolio of dividend-growing banks, utilities, pipelines and more over the last few years but I know at any moment equity markets can change, bad company news will be reported and some sectors of our economy will be in a rut. I need to be patient. With more mental training, and thanks to Canadian companies (and Exchange Traded Funds (ETFs)) that pay regular dividends and distributions we’re on pace to earn $8,325 this calendar year in passive income. Good investment decisions supported by good long-term behaviours should be our path to financial freedom in another 15 years or so as long as the mortgage is gone. That’s the plan. I’ll keep you updated.
How is your financial plan coming along? Are you investing and paying off some fat mortgage debt like we are? Investing only? Stop by and add a comment.