Welcome to my latest dividend income update. For those of you new to these posts on my site, every month I discuss my approach to investing focusing on dividend paying stocks and how reinvesting the dividends paid from the Canadian companies we own are helping us reach financial freedom.
Although I’m a fan of low-cost Exchange Traded Funds (ETFs) to diversify my portfolio more going forward, I focus on holding and DRIPping dozens of brand name Canadian companies in our non-registered accounts and Tax Free Savings Accounts (TFSAs).
To recap, here is our simple approach to dividend investing:
- We only buy established companies that have a modest to long history of paying dividends. Many of the stocks we own have paid dividends for over 100 years.
- We reinvest all the dividends paid by these companies so whenever possible, so money that makes money will make retirement money.
- We diversify our stock holdings by buying new companies.
Here is our simple approach to indexing:
- We only buy established indexed Exchange Traded Funds (ETFs). VTI is an example.
- We reinvest all the distributions paid by our ETFs whenever possible.
- As new money is added to our investing accounts, we buy more ETF units a few times during the year.
There’s little else to the story. Investing does not need to be complicated…
About this time last year I reported this about our passive income journey:
“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.”
Thanks to Canadian companies that continue to reward shareholders like myself and give us a raise now and then, we’re on pace to earn almost $11,300 one year later. We are only one-third along our journey to meet this retirement goal but I’m confident with more DRIPping and more saving in 2016, we’ll get there eventually and be able to leave the workforce behind in another decade or so.
Not every investor is comfortable with owning individual companies, I’m not. This is why Exchange Traded Funds (ETFs) that focus on capital appreciation complement the existing dividend stocks we own. Come back in a month (or sooner) and find out where we are.
How are your retirement plans coming along? What are you investing in for cash flow?
Thanks For the reply Mark. My non reg portfolio only has a few dividend stocks in it. Td, Bns, Fts small amount. I have spent the last few years building up the TFSAs to maxed out. Stocks like TD, RY, SLF, PWF, couple of reits, T, Shaw, etc. for both of us. Cpg and HSE are a little concerning like everyone else. Yes, my wife’s Rif from Tangerine Balanced fund to non-Reg but after purchasing a Townhouse and my last new car, the residue of the last house sale will be a reasonable amount and perhaps not really required to form part of our retirement. I am considering the Couch Potato etfs at this time plus some dividend stocks. Xiu or Xic have been considered.
Cheers and thanks again.
I suspect most Canadians, if they are to own individual stocks, own the same dividend stocks…CDN banks, telcos, pipelines, REITs like RioCan etc. Nothing wrong with that Doc, those companies make our country go ’round.
I see CPG, SU, COS, HSE, CNQ, etc. as good “buys” right now. The price of oil will rise eventually and when it does, those stocks returns will come with it.
For extra diversification, XIU and XIC are great products to be a lazy investor. Hard to go wrong there.
Continued good luck on your retirement goal Mark. I retired 14 years ago at 55 with my wife. Indexed and transferable pension and happy with 2 CPP and 2 OAS pensions also. Small RIF starting next year. Picked up a few dividend payers some time ago as well as up to date TFSAs. Just sold the house in a trade down and will have to invest the leftovers smartly.
Reading everything on non reg portfolios. A good blog from you coming on my age groups??
Good to hear from you Doc, it’s been some time!
With a pension, 2xCPP and 2xOAS, I suspect you’re doing well. I don’t know of any blogs in particular about managing a non-reg. portfolio is that’s what you mean, but there are some great CDN stocks and CDN ETFs, like XIU, that are very tax-efficient thanks to the dividend tax credit.
How are you managing your non-reg portfolio? Are you moving RIF assets to non-registered?
All the best,
Graet progress, and nice dividend income, over 11k is great income not working a single min. for them
Thanks for reading and the encouragement. It’s nice to no longer work for that money.
Way to go Mark. Moving the the yardsticks towards the goal line is always good!
Thanks Deane, every month is progress and hopefully we’ll make more in 2016 when more TFSA room opens up.
Well done mate. I can sense the happiness in your writing. I would be too!
The plan is coming along!
That’s very impressive progress Mark. DRIP is great as it allows you to take full advantage of power of compound interest.
Thanks Tawcan…big fan of DRIPping stocks.
Always love to read about dividend income. Great progress and forward earnings for your dividends. On pace to earn well over $11k is an awesome figure and my next long term goal of averaging $1k a month. I’m still a fan of the Canadian banks, TD, BNS and RY.
Canadian banks have been great for sure but it’s always good to diversify. You never know.. This is why we own a number of other Canadian stocks outside the financial sector. How about you? Thanks for the kind words.
Nice going, Mark. Congrats on the progress – thats pretty awesome you managed to increase your FY dividend from 9100 to 11300!
Keep up the great work and thanks for sharing
I’m working on it. Kudos for your progress as well.