Welcome to my latest dividend income update for 2014. For those of you new to these posts on my site, every month I discuss my approach to investing using dividend paying stocks and how reinvesting the dividends paid from the Canadian companies I own are helping me reach financial freedom. You can check out my previous dividend income update here.
My plan is rather simple, almost downright boring, executed this way over the last 6+ years: I invest in many established Canadian companies with no intention of selling them and I reinvest the dividends paid by these companies every month or quarter to buy more shares commission-free.
Over the last month I noticed a few stocks we own raised their dividends effectively providing us an income raise without doing anything. This is always a nice bonus. Regardless of what the market does I’m finding buying and holding established Canadian companies that pay dividends and increasing my position in a couple of indexed products using Exchange Traded Funds (ETFs) is paying off, literally. At the end of last month, I’ve calculated we’re on pace to earn about $9,100 in dividend income this calendar year from the stocks and ETFs we own, as long as the companies we own continue to pay dividends at the same rate. This is our long-term passive income goal for retirement, about 14 years away. We don’t dare touch this income – almost everything is reinvested each month for the next month.
My investing strategy for the rest of the year is to continue to save money where we can and likely invest these savings into more indexed products. I’m not as diversified outside Canada as I should be so I’m considering increasing my U.S. and international exposure later this year and throughout 2015. The main problem I see with this plan: U.S. equity markets in particular seem rather pricy now so maybe just saving some money where possible and waiting for a market correction is a better approach. The challenge with this is, I have no idea when that correction is coming. Do you? Besides, we have these financial goals to complete as well. Hopefully a stock market correction will occur sometime over the next few months to cooperate with my plan.
I’ll have another dividend income update next month. Thanks for reading and sharing.