April 2024 Dividend Income Update

April 2024 Dividend Income Update

Hey Everyone!

Welcome to our April 2024 dividend income update…and for new subscribers to this site…this is our monthly update to share how we are progressing with our hybrid portfolio that is designed to fund semi-retirement in the coming years:

  1. We invest in a mix of Canadian and U.S. dividend paying stocks – that deliver income (and some growth) into our accounts.
  2. We invest in a few low-cost equity ETFs – that should deliver some long-term price appreciation.

April 2024 Dividend Income Update

To pick-up where I left off a bit from my March 2024 update, I thought I would answer some recent reader questions including highlighting some portfolio performance. 

Mark, thoughts on buying more oil and gas stocks? Are you going to do that?

Well, I have. πŸ™‚

I picked up a bit more TOU (Tourmaline Oil) this past winter and if I can find more money beyond our existing saving priorities for the rest of the year to invest, I would be happy to buy more TOU in particular inside our taxable accounts. (Both our TFSAs and RRSPs are out of contribution room.)

You wrote about buying more XAW over time, isn’t that a conflict when it comes to buying more individual Canadian stocks?

I don’t think so but I appreciate the question!

This is a good time to remind all readers about my/our asset location, including when I buy some individual stocks that I believe are poised for more growth:

  • We tend to own a mix of Canadian and U.S. assets in our RRSPs (x2) and my small LIRA.
  • We tend to focus on Canadian stocks and low-cost ETF XAW inside our TFSAs (x2).
  • We own Canadian stocks in our taxable accounts (x2) including a focus on lower-yielding, higher-growth stocks for tax efficiency since we have employment income.

Here is an example of what we own where although not everything we own is listed below of course, these are more guidelines about our asset location. 

RRSP Assets

TFSA Assets

Taxable Assets

Canadian stocks (CNQ)

U.S. stocks (BLK)

U.S. ETF (QQQ)

Cash-Alternative ETFs (CBIL)

Canadian stocks (RY)

Canadian ETF (XAW)

Canadian stocks (TOU)

In recent weeks, while I’ve added a bit of TOU (since I had the money to do so) for taxable investing.

I will leave our Tax Free Savings Accounts (TFSAs) largely alone for the rest of the year, let any cash accumulate for purchases in late-2024 or early 2025. 

Inside our RRSPs, we’ve turned off all Dividend Reinvestment Plans (DRIPS) inside those accounts and cash is simply accumulating for the rest of the year. 

I can appreciate some folks gravitate to owning just low-cost ETFs in their portfolios (which is great!) but that’s just not how we’ve decided to invest to date.

April 2024 Dividend Income Update – Performance

So far, so good!

It’s worth noting I don’t scrutinize my portfolio performance very much because I have so little control over things.

Why worry about things you cannot control?

I can control my investing behaviour, my asset location (see above) and asset allocation.

I cannot control investing returns, inflation or taxation changes from our government. πŸ™‚

A few weeks ago, I hinted our TSX stock market might be poised for a turnaround in 2024. In recent weeks, that’s playing out and our portfolio is loving it. We’ve reached all-time portfolio highs as of this month. In that article a few weeks ago, portfolio manager Barry Schwartz believed our Canadian oil sands companies were materially undervalued. Yet another reason to buy local in 2024 – so home bias can work well from time-to-time. You can however have too much of a good thing. 

Weekend Reading – Canadian home bias edition

April 2024 Dividend Income Update

With the portfolio remaining on autopilot, there is not much to update this month in terms of higher dividend income – but that did happen after I factored-in the TOU stock purchase along with the TOU dividend increase as well. More importantly, without doing much, the income should move higher next month (for the May 2024 update in a few weeks) because more Canadian stocks that we own just raised their dividend in the last few days:

  • Sun Life (SLF) raised their dividend by 3%.
  • Pembina Pipeline (PPL) increased their dividend also by 3%+.
  • Telus bumped their dividend by a bit and recommitted their “…intention to target ongoing semi-annual dividend increases, with the annual increase in the range of 7 to 10% from 2023 through to the end of 2025.”

The TOU tally alone pushed our Projected Annual Dividend Income (PADI) incrementally higher:

April 2024 Dividend Income Update

To put this monthy income update into perspective:

  • That’s averaging about $3,766 per month.
  • Since I like to treat part of our portfolio like a job, working for us that never gets any vacation (!), this portfolio job equates to earning about $21.73 per hour (40 hours per week x 52 weeks).
  • We earn about $5.16 per hour of every hour of every day (income/8,760 annual hours) even in our sleep. 

A reminder I share these posts not to brag (hardly) nor to replicate what I am/we are doing. I know of folks that are just starting out on their investing journey in stocks; investors that simply want to own ETFs and no individual stocks at all, and still others that have been investing this way for decades – the latter group in some cases is now earning double what I am per year in their 50s and 60s. Everyone is on a different financial path. That’s A-OK. We all start somewhere to define our own. 

I am also sharing our income journey as one way to construct an income and growth-oriented hybrid portfolio – an approach we will leverage as we consider working on our own terms in the coming years. 

Another reminder this is our forecasted annual income until the end of December 2024, mostly from taxable investing and from our RRSPs. It excludes all TFSAs. This income stream should remain intact assuming no dividends or distributions get cut and/or no additional dividend or distribution increases occur – but May should push things higher as I already noted.

And finally, this projected annual income also means I don’t invest anything for the rest of the year but we’ll see…I like buying stuff. πŸ™‚ 

Thanks for your readership and continue to keep the questions and comments coming my way. 

Happy to answer. I keep a few FAQs here too!

I hope you’ve had a great investing year to date and your portfolio is at all-time highs as well.

Mark

Further Reading:

Very recently, The Globe and Mail (subscription) highlighted a number of Canadian stocks poised for a rebound. 

“The outperform rated names on the GARP list are, in alphabetical order, Altagas Ltd., ARC Resources Ltd., Brookfield Corp., B2Gold Corp., CAE Inc., Canadian Apartment Properties REIT, Celestica Inc., Canadian Natural Resources Ltd., Canadian National Railway Co., Cenovus Energy Inc., Canadian Western Bank, BRP Inc., Emera Inc., EQB Inc., Evertz Technologies Ltd., Finning International Inc., CGI Inc., Manulife Financial Corp., Magna International Inc., National Bank of Canada, New Gold Inc., Nutrien Ltd., OceanaGold Corp., Restaurant Brands International Inc., Rogers Communications Inc., Royal Bank of Canada, Saputo Inc., Sun Life Financial Inc., Stantec Inc., Telus Corp., Tourmaline Oil Corp. and TC Energy Corp.”

Food for investing thought!

My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.

21 Responses to "April 2024 Dividend Income Update"

  1. Awesome update Mark, I was happy to see the PPL and T raises. Not a huge impact for us but I like the forward vision for T and as I look to further diversify our holdings I might consider deploying more into T.

    Reply
    1. Yes, nice to see those 3 key raises in my portfolio and will perform/make the tally for May now that they have occured and report that in a few weeks!

      Continued success on your income plan!
      Mark

      Reply
  2. Thanks for the detailed response – more reading to do!

    I wonder if it’s better to get the money out of the RRSP and then keep it in a HISA even though interest isn’t tax favourably for non-reg accounts. Any money I earn in the RRSP will be considered income (100% taxable at my personal rate) and. the interest outside the RRSP is also treated as income – so no real difference from what I can see. WS has a high interest cash account from 4-5% depending on your AUM. It’s CDIC insured so seems like the safest and easiest bet. If I don’t need the cash, then I can also accumulate more dividend paying stocks or XAW in the non-reg to minimize the tax impact.

    Reply
    1. Yup, re: RRSP withdrawals are definitely income.

      I know some folks that are keeping a bit of money in ISAs/higher-interest savings accounts in taxable just because that’s better than idle cash and helps grow any emergency fund in a taxable.

      Then, I know some folks that are using ISAs/MMFs in RRSPs/RRIFs so you can earn more $$ vs. idle cash there.

      CDIC insured is a good thing.

      The benefit of keeping some cash/cash equivalents in RRSP/RRIF as I see it is because when you withdraw that money, you’re not touching stocks, ETFs, etc. that could be down in price.

      XAW in non-reg. has some recoverable foreign withholding tax but I prefer not to own anything there to avoid all these complications but that doesn’t mean it won’t work for you! πŸ™‚

      I only own CDN dividend stocks in non-reg. and likely will for the foreseeable future.

      https://www.blackrock.com/ca/individual/en/literature/brochure/withholding-tax-reference-guide-en-ca.pdf

      Hope that BlackRock link helps?
      Mark

      Reply
      1. Yep the link works!

        If I end up doing an RRSP meltdown over the next 10+ years, the money needs to keep working for me outside of the RRSP. Not sure I want 100% Canadian dividend paying stocks there although many investors do this. It’s the question of home country bias. πŸ™‚

        The tax system doesn’t make it easy, that’s for sure! I need an accounting and financial planner certification to do this right. Hahaha

        Reply
        1. Same. As we make RRSP withdrawals, over many years before CPP and OAS kick-in, we’ll keep all non-reg. assets intact as we “live off dividends” from taxable(s), hopefully a few thousand per month to cover things like condo fees, property taxes, utility bills and other expenses every month without touching the portfolio.

          Our tax system is a complete mess and could be simplified beyond belief is an understatement from me!

          Keep me posted on your decisions!
          Mark

          Reply
  3. Lloyd (64, retired at 55) · Edit

    Could just be me but I am sensing a relaxation in your attitude and replies Mark. I know I went through this as well. Used to agonize over a few points of interest/yield/growth/inflation to the point where I was driving myself crazy. Now I am adopting the attitude that “close” is good enough.

    And as an example of the benefit of having an “emergency fund”. Our whole water system in the house (rural) is now 30 years old. Recently I’ve noticed a change in the operation of a discharge pump (overheating and extra noise). Called a plumber today to get it looked after and he almost fainted when I told him how old the system was. Decided I’d be tempting the wrath of the whatever high atop the thing by just patching the system. So hopefully by this time tomorrow I’ll be $14K poorer but with a top of the line system right from the well to the septic field. That is what the fund is for and I will lose no sleep over this.

    Reply
    1. Thanks, Lloyd.

      Ya, I’ve/we’ve simplied the portfolio over time, the mortgage is dead, and we’re slowing making progress on our cash position which is great. All good things which help calm the nerves. πŸ™‚ Close enough is great.

      Sorry to hear about the water system … but water is essential and likely money well spent to avoid the headaches and stress for your rural home. You have saved the money and that’s what emergency funds are for even though it stings at the time!

      Mark

      Reply
      1. Lloyd (64, retired at 55) · Edit

        “water is essential and likely money well spent to avoid the headaches and stress”

        Absolutely! I don’t know how long we will be able to stay in this house, but I do not want *any* headaches or stress with the essentials. And after 30 years, I don’t believe the old stuff owes me anything. πŸ™‚

        Reply
        1. Heck no, you’ve done very well with that system for 30 years.
          When we used to live on a small plot of land, our water pump was 25 years old and still running fine. We left that place in June 2019.
          We did replace a number of infrastructure things before we left/while we lived there: added a second sump pump, installed a generator, bought new HRV, etc. Not cheap but such is life. πŸ™‚
          Mark

          Reply
  4. Is XAW tax favourable in your TFSA? I have some US ETFs in my TFSA but it leans Canadian stocks because of the withholding tax. Funny thing is the US has done so well so I have more growth in my RRSP than TFSA which isn’t great when it’s time to cash out. I would have preferred (mostly) tax free growth in my TFSA but hindsight is 20/20.

    Reply
    1. Not really, re: XAW in TFSA.

      Recall that U.S. listed ETFs or Canadian ETFs holding U.S. assets in a “wrapper” structure are still subject to a 15% foreign withholding tax (FWT) on dividends.

      Since the FWT implications are the same I prefer Canadian-listed ETFs that hold U.S.-listed U.S. equity ETFs in my TFSA to avoid currency conversion headaches.

      To your point, I like a bit of growth in the TFSA since I won’t be touching that account for potentially 20 more years.

      Generally speaking, MERs under 0.25% are great and don’t bother me. Simplicity is good as I get older in many ways. The 22-25bp MER is noise for the price of simplicity including other all-in-one ETFs like XEQT, ZEQT, HEQT, etc.

      I think one can get too obsessed with location of holdings and types of holdings. Efficiency is good to a point IMO.

      The U.S. market has done VERY well but for how much longer I wonder? My QQQ is up 143% in the last 5-years alone. I wish it was more of my portfolio but I certainly could not have predicted that!

      Are you going to drawdown your RRSP first, I assume, along with corp. assets over time? That’s our plan.
      Mark

      Reply
      1. Yep, I’ll be honest — I haven’t done the tax advantaged option of US $ funds because I found the conversion and Norbert’s Gambit to be a pain. I’m sure I’m losing money here but I guess I can live with that. Instead of XAW (which is definitely easy), I have US ETFs (<.25 MER) and an EAFE ETF (.22 MER), buying depending on when the price is down in one and not the other and keeping it balanced the way I want. I'm considering getting XAW as I add to my TFSA so that I can be more lazy with the balancing and purchasing.

        I am still trying to figure out my withdrawal strategy – it's definitely complicated for me for many reasons. πŸ™‚

        Reply
        1. Yup, converting CDN <> USD is a pain. Although I have done the Gambit I’ve largely decided unless I really, really need to do a large currency conversion just to buy a low-cost Canadian ETF and run with that = XAW. That XAW fund with some U.S. asset location ~ 60% is up a tidy 12% YTD.

          I continue to own a few CDN stocks in my TFSA for income and growth (e.g., RY) but I also own more XAW than ever and likely to buy more XAW in both TFSAs ($14k worth) in 2025 when my contribution room opens up.

          Our withdrawals strategy will be NRT (a bit of (N) non-reg. dividends/”live off dividends” + (R) RRSP withdrawals first). We’ll leave the (T) TFSAs alone until the end. That’s our current thinking.

          πŸ™‚

          Mark

          Reply
  5. Love your journey, Mark.

    Is there a reason why you let your cash accumulate to the end of the year as your dividends are paid? I have been doing monthly purchases of “what’s on sale” rather than letting my cash sit. I realize that makes for smaller individual amounts of stock, but I believe that my money is working for me.

    Reply
    1. Thanks very much, Dave.

      No major reason, other than we might need cash from RRSPs x2 in 2025 (as part of withdrawals). We’ll see. It won’t be all idle cash for sure. I’ll put most into a low-cost cash ETF or no-load MMF (money market fund) so the cash makes 4%-4.5% or so interest re: money working for me too.

      Sorry I didn’t explain that better!

      How is your investing coming along?
      Mark

      Reply
      1. How do you decide which low cost cash ETF or no load MMF? I guess I need to tackle this next once I stop reinvesting my RRSP dividends so the money isn’t dormant before I pull it out.

        Reply
        1. I did some research on those and found a few MMF via my brokerage.

          RBC, TD, Scotia, etc. all have some. You have to dig a bit and ask. Good to earn 4% vs. idle cash. So, my idea is, my cash is earning 4%-4.5% now before I take it out via RRSP withdrawals.

          There are also interest savings accounts (ISAs) you can own in a registered (RRSP) account.

          https://www.highinterestsavings.ca/forum/general-comparisons/brokerage-investment-savings-accounts/page-23/

          A few forums discuss these…I should do a post on it. πŸ™‚

          From one site: “The lowest rate for an investment savings account (ISA) across all the major banks is currently 4.05%. They’re CDIC insured up to 100k per account. There are typically no commissions, MER’s, and early-redemption fees.”
          (Current to the time of this post…)

          Examples:
          – BMO High Interest Savings Account (BMT104) CAD 4.35%

          – Equitable High Interest Savings Account, Series A (EQB1000) CAD 4.20%

          – Home Trust High Interest Savings Account, Class A (HOM100) 4.20%

          – Manulife Bank Investment Savings Account (MIP510) CAD 4.20%

          – B2B Bank HIIA, Series A (BTB100) CAD 4.05%

          – NBI Altamira CashPerformer Account, Series A (NBC100) CAD 4.05%

          – RBC Investment Savings Account, Series A (RBF2010) CAD 4.05%

          – CIBC Renaissance High Interest Savings Account, Series A (ATL5000) CAD 4.05%

          – TD Investment Savings Account, Series A (TDB8150) CAD 4.05%

          Reply

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