August 2022 Dividend Income Update
Boom!
What a month! Welcome to my lastest update: my August 2022 dividend income update.
I hope summer has been treating you well…
Then, Now…
Last month, thanks to a backlog of reader questions I finally got to, I shared this update:
You can check out last month’s dividend income update here.
But what a difference a month makes.
What goes down can go lower.
The TSX on the other hand, has held up a bit better thanks to our energy sector weighting.
What does this mean for my/our portfolio?
Nothing – other than continuing to buy more stocks of course!
In my How and When to Withdraw from the RRSP and TFSA post, I highlighted we had the following accounts to consider for semi-retirement drawdown:
- x1 – my defined benefit pension plan from work (about 21 years in at the time of this post).
- x1 – my wife’s defined contribution pension plan from work (also about 20 years contributed).
- x1 – my Locked-In Retirement Account (LIRA).
- x2 – RRSPs.
- x2 – TFSAs.
- x1 – taxable account.
- x1 – corporation; soon to be corporate investment account.
______________
9 accounts.
That’s a lot to consider but I’m slowly working through that.
With TFSAs maxed out since January this year, and RRSP assets also maxed out earlier this year, we just have taxable accounts left to invest in. Not the end of the world but any stretch, but we want to be strategic with these accounts and purchases.
Read on…
Convenience is one reason to have a joint-chequing or savings account with your spouse, and you can open a joint non-registered investment account with your spouse as well. In recent months, we’ve opted for a personal taxable account for my wife to build up her personal dividend income stream in the coming years.
While there are pros and cons of course with having personal vs. joint non-registered investment accounts (we’ll likely merge all non-registered investment assets into one joint account at some point once our taxable income is much lower), we feel this is the best decision at this time.
You might be already aware that RRSPs and TFSAs cannot be joint and must be registered to individual – i.e., to one owner. If a couple has money to invest beyond these registered accounts, one needs to consider personal or joint taxable accounts.
Because we’re years away from any detailed estate planning, I will avoid attribution headaches in our contribution years, for now. From Canada Revenue Agency’s (CRA) point of view, the taxation of jointly held investments is simple: taxes are paid on the investment according to the original contribution ratio to the investment. For personal tax filing reasons, and some investment simplicity for the coming few years, record keeping will be easy: what I contribute vs. what my wife contributes will be clear with separate taxable investment accounts.
In the coming few years, we’ll reconsider that decision – combine my taxable investment account and my wife’s investment account…and make it joint, as we drawdown the assets there.
A joint taxable non-registered investment account will have a couple of key benefits in asset decumulation:
- Easier administration (in semi-retirement) of the assets; as we age and drawdown the account over time.
- Immediate access to funds when one spouse passes away (sadly). Otherwise, an account may be frozen while the executor settles the estate, which typically involves legal, probate and other estate administration costs.
Maybe those are things you have already considered as well??
Here is a good case study below, since not all decisions related to taxable investing are easy:
http://blog.taxresource.ca/wp-content/uploads/2009/09/Joint-Accounts.pdf
What does this have to do with my August 2022 dividend income update?
Well, another account added to the mix but the journey remains the same.
Given these updates focus on our non-registered assets and TFSAs, only, we’ll have another account to add to the mix – and happy to do so!
August 2022 Dividend Income Update Summary
Our August 2022 forward dividend income is now at $27,902.
Yup, we’ve put some money to work this summer and invested more when stocks go down. I’ve purchased more of the 5 stocks I wanted to buy this year and on my radar: more TD and some EQB in particular.
Seems nobody likes Canadian banks anymore!
…
With that forward dividend income update shared, that’s just under $400 more than just last month folks 🙂
Invest on and carry on…
To put that income into perspective:
- Almost half of that annual income is tax-free for future retirement.
- Our forward dividend income continues to rise every month thanks to reinvested dividends inside our TFSAs AND new, strategic purchases a few times per year inside our taxable accounts – until new TFSA and RRSP contribution room opens up in 2023 of course…
- Assuming we stay out of our own investing way (ha!), I anticipate we’ll easily surpass at least $28,000 in dividend income earned from our taxable account and TFSAs (x2) in another month. That includes when any special dividends hit our account soon!
- $27,902 in annual dividend income translates to earning $2,325.17 per month*. A nice base for sure excluding RRSP withdrawals, excluding my small pension, excluding my wife’s small pension and more.
*I need to report that to keep my friend Mr. Dreamer happy and updated since he’s doing some fine new work reporting many blogger dividend income reports. I hope he keeps it up. Very inspirational stuff.
Kudos to all DIY dividend investors – you are killing it!
Coupled with future RRSP withdrawals that will begin in a few years, we’re getting there.
Thanks for reading and sharing, and another reminder to please bring forward your comments and questions for any future updates! I like the engagement. 🙂
Mark
Mark
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.
Another fantastic month. So cool to see you have already exceeded your expectations and over the 2022 goal. That’s awesome.
https://vibrantdreamer.com/combined-canadian-dividend-income-august-2022/ is where I am including yours and everyone else as always (Sorry for the delay as I was traveling, again!)
I love your updates and I was following your travels 🙂 Will Tweet and share for you, for sure.
Mark
I really enjoy your blog. Thanks so much and congratulations on your investing success. One way to keep things straight for tax purposes but still have the benefit and ease of estate planning in investment accounts is to have two joint accounts, one with one partner’s name first and a second with the other partner’s name first. We also had joint bank accounts with each of our respective names appearing first. Our pay cheques went into the account with our name first and any funds transferred to our investment account with the same registration. You may notice that the tax slips appear with only one SIN number and a special code that denotes the account is joint. That helps at tax time too.
Thanks, LJ. I’ve thought about that. Since I’ve had my taxable account for years, almost decades, we’ll consider updating them with that approach when the time comes: one with one partner’s name first and a second with the other partner’s name first. If we don’t sell any assets, we should be fine to update but I’ll double-check the tax consequences – there could be minor ones to navigate.
How you are investing these days?
Mark
Here’s what my wife & I did on the joint vs individual non-reg accounts and why we did it.
My wife was stay at home (as an aside, did lots of volunteering) so she had no income. I made sure to put more into her spousal RRSP than my RRSP while I was working. When I retired in 2013, I made a loan to her at the 1% prescribed rate and she opened her own non-reg account. I already had mine since way back.
My wife paid off the loan (along with the ongoing interest) within 4.5 years using her spousal RRSP withdrawals. So since early 2018, we have each had our own independent non-reg account. I really like it this way as the book-keeping is very simple and we have the flexibility to withdraw and/or re-invest dividends independently in each account. I made an effort to use more dough from my non-reg for expenses as I have the larger CPP. This has actually led to her now having a larger valued non-reg account and she generates 30% more non-reg dividend income than I do.
It really has worked out amazingly well for many reasons but especially for tax planning.
Ciao
Don
Don, amazing.
My thoughts as well = reading my mind: “we have each had our own independent non-reg account. I really like it this way as the book-keeping is very simple and we have the flexibility to withdraw and/or re-invest dividends independently in each account.”
From a tax perspective, it seems wise and for book-keeping as well. At least in early retirement. 🙂
Thanks very much for your experiences, grateful!
Mark
This is an interesting article that looks at the tax implications of transferring investments from an individual to a joint account.
https://www.moneysense.ca/save/taxes/tax-joint-investment-account/
Thanks Bruce, I found that as well and things to consider.
Do you have a taxable account? If so, how do you manage it?
Cheers,
Mark
Hi Mark,
We opened a taxable account in my wife’s name 15 years ago.
About 4 years ago we opened a joint taxable account. Holdings in each similar (ie CN Rail, AQN, bank stocks).
I asked our account at that time if we should merge the two accounts and he said it could be done but there would be tax/accounting and record keeping challenges. So, we keep them separate and new monies only go in the joint account.
Great insights, Bruce. I figured that would be the case as well, with joint taxable investing account. I figure as we drawdown the capital in those accounts over time and spend the money, having a joint account will be less of an issue for us. I will consider having a joint taxable investment account in retirement, as needed, for estate planning purposes but it is my hope that I will only have TFSAs left in my 80s and 90s to deal with 🙂
Those are good stocks IMO: CNR, AQN, banks. I own them all too!
Mark
Great article . Dividends are the way to go even in today’s market dividends still payout . I’m about 2 years away from full retirement but feel comfortable that dividends will still pay and my capital will continue growing with growing dividends . Good luck everyone !
Thanks Jeff, keep me posted on your progress. Hopefully <2 years away from semi-retirement here. 🙂
Mark,
Appreciate the update and keep it rolling. My wife and I have a joint non-registered account but with little (initial) record keeping we have had to split the dividend income 50/50. Since she has a great pension and I do not, not sure that was a prudent approach. With pension splitting, we were able to mitigate the tax impact. We now also have our own accounts as well, helps to direct income and gains more accuratly. Make sense?
Great stuff Mark!
That’s good insight, Rob. Thanks for that. I think as we wind down the non-reg(s) / taxable accounts, we’ll consider merging for estate planning and I can also be strategic with capital gains and losses as well.
I’m not sure there is a perfect answer but alas, will just keep investing anyhow!
I hope summer is treating you well and nice to hear from you.
Mark
Fantastic progress. Nice problem- need to open another account to put more money into!
Take care and best wishes.
LOL. Yes, well, it’s just starting. Long way to go to fill-up.
Thoughts on the approach? Single/individual first then go joint as needed – in coming years as we slowly wind them down?
Mark
That seems sensible. We’ve always been joint, so I don’t have any experience on individual and converting, but not thinking that’s any tax issue. I’m sure you’ve researched.
Fair enough! Thanks 🙂
As you know in future years income splitting becomes more important. So how and where, and how much all those income sources fit together is the puzzle. We’re structured so far to get it all nearly 50/50 now, for better efficiency, and I’m pretty sure same well into the future.
Makes sense, thanks Deane. As soon as we start drawing down various assets/living off some dividends and distributions, I have no doubt I will strategize more but I won’t know until I get there. Just too hard to predict a few years out but your 50/50 balance sounds great.
Mark
Good work Mark: Your income from these accounts are up 10.09% since the end of Dec 2021, with four months to go. With your income growth increasing by over 10% each year, compounding excelerates.
Ha, thanks Henry. I’m trying 🙂
What do you make of the new account? Joint eventually? Good or bad idea my friend?
Mark
Personally I always liked the joint account, it does required that the holdings be recorded separately, so if there is a sale, the buyer claims gain/loss, but dividend can be split.
Yes, I think that works well in asset accumulation years, no? Separate taxable investment accounts? Just seems cleaner!
Excellent progress Mark. So close to $28K a year. 😄 It takes discipline to max out a TFSA at the beginning of the year. Well done. 🙂 I think Canadian banks will do very well over the next 5 to 10 years.
Let’s hope, Liquid! Some rising rates should help. Delicate balance with people defaulting though too.
Saving now for 2023 TFSA room, almost ready to rock and roll for January 1.
Continued investing success back to you.
Mark