August 2022 Dividend Income Update

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:

1. x1 – my defined benefit pension plan from work (about 21 years in at the time of this post).
2. x1 – my wife’s defined contribution pension plan from work (also about 20 years contributed).
3. x1 – my Locked-In Retirement Account (LIRA).
4. x2 – RRSPs.
5. x2 – TFSAs.
6. x1 – taxable account.
7. x1 – corporation; soon to be corporate investment account.

______________

9 accounts. 

That’s a lot to consider but I’m slowly working through that. 

How and when to withdraw from RRSP and TFSA

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:

1. Easier administration (in semi-retirement) of the assets; as we age and drawdown the account over time.
2. 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

And from RBC:

https://ca.rbcwealthmanagement.com/documents/634020/2239538/The+Navigator+-+Joint+Ownership+Accounts+Key+Considerations.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