“A good investor has the courage to make choices. The stock market is a bit like a zoo. There are all kinds of animals there, from elephants to tigers to snakes to monkeys. You only need a few of the best species to build a good diversified portfolio that will provide sustainable, low-risk, high compound earnings.” – Stephen Jarislowsky, author of The Investment Zoo and octogenarian Canadian billionaire investor.
I’ve used this quote in a blogpost before and reflecting upon the 2012 year in the markets I think Stephen’s words were especially true.
At times during the 2012 calendar year, I witnessed a couple of my holdings fall and stay below my purchase price. Although I was worried at time, I didn’t panic and sell those holdings when the market beat up these stocks. I also saw many of my holdings appreciate well over 10% including the reinvested dividends last year. I held on to my winners. Instead of trading, I kept my portfolio intact and added new positions where it made sense, positions aligned with my financial plan – buying and holding established Canadian dividend paying stocks for income and cash flow.
Although no dividend portfolio is perfect, I firmly believe a diverse basket of Canadian dividend paying stocks can be an excellent way to invest, especially when you can reinvest the dividends paid to make the money work for you.
It was not a defined financial goal in 2012 but I was hoping to surpass $6,000 in dividend income. With only a few new purchases during the year, I surpassed that objective by a long shot. Thanks to sticking to my plan, I managed to earn $6,402 in dividend income in 2012. Over 2011, a larger portion of this income is tax-free thanks to the TFSA. You can see my progress year by year below:
As time goes by, I’m focused on a long-term goal that will hopefully see us generate close to $30,000 per year in dividend income in another 15 years to help with retirement expenses. As long as dividends are not reduced and the companies we own keep paying them, I think this goal is going to happen. We don’t dare touch this money today because it’s growing for retirement, but like watching our mortgage come down it is inspiring to see this other part of our financial plan taking shape. I still invest in indexed products for a chunk of my portfolio but that’s another, easier story to report on and I’ll do that later this year.
Thanks for following my dividend income journey in 2012 and I look forward to sharing more updates in 2013. Happy investing to all of you!
@My Own Advisor
Ok, so you almost doubled your dividend income over the past 3 years. That is pretty impressive. Even if you get 6% dividend growth, you dividends will double to $13,000 by 2025. Add in reinvested dividends, and any funds you contribute on a regular basis, and I am more than confident that you will hit your goal.
Hey DGI,
Thanks for stopping by. I think investing a few thousand every year into dividend paying stocks, we’ll hit our goal by 2025. I can’t wait for that. With a paid off mortgage at that time, we’ll seriously consider retirement around age 50-55.
This is awesome dividend growth. What do you think of my lazy method of keeping these stocks through thick and thin and never trading? Here’s a link to Norm’s article, which I mentioned on my comment to you (at my site): http://www.theglobeandmail.com/globe-investor/investment-ideas/strategy-lab/value-investing/advice-to-the-lazy-investor-be-even-lazier/article6837273/
I think you’ll find it interesting that having zero turnover could be the best strategy of all. My investment club, for example, has done well over the past ten years with very little turnover. Perhaps, with no trading at all, it would have done even better.
Cheers,
Andrew
Thanks Andrew, the dividend growth is coming along!
I like the G&M article, makes sense. Zero turnover might very well be the best strategy of all, as long as the companies always pay dividends and will always give capital appreciation.
I intend to buy and hold many of my stocks for decades…so Andrew, you might have a good test case here 🙂
I just realized you have quite a few canadian stocks that are held. The commonwealth countries must pay high dividends!
Absolutely…a bunch of Canadian stocks pay great dividends 🙂
Congratulations, my own adviser! That’s great progress. We just hit $25k in dividends last year, we’re shooting for $50kyr in 5 years. It’s great to set some aggressive goals and drive towards them. I think in my case, I was lucky enough to discover dividend growth investing in my mid 20s. 10 years of application makes a big impact. Plus Australian stocks are my base and they pay great dividends! I will be coming back here to check your progress.
integrator
Thanks!
As for you, $25 K in dividends per year? WOW. Great work.
I hope to be at $30 K in another 10-15 years. I look forward to your comments and talking about stocks with you from Australia!
Very attractive numbers, and an equally inspiring post. Great job!!
Thanks! I’m trying!
I like the dividend trend. Good luck in 2013. It would be great to generate $30,000 in dividend payment. That’s like a part time job.
Thanks Joe. I hope to keep up with you in 2013 🙂
Congrats on an awesome year of dividend income! I know I’d love to be at that point. It’ll probably be 2 more years for me to get there, but I’ve only been pursuing DG investing for 1 year so far. The plan for 2013 is to receive $2750 or more in DG/option income. I’m sure you’ll get way past that $30k mark with another 15 years to go. Here’s to a great 2013!
Thanks JC! I hope I get WAY past the $30 K goal too 🙂 Here’s to a great 2013 for you as well.
Hey Mark, Well you can’t complain about the past year with that dividend income. Do you post your figures so we can see what you are putting in and the ROI? When you say self-directed what do you mean? We have an advisor who handles our TFSA although I have a boat load of room in my TFSA. I hope I can learn more about investing this year as I’ll have some money I’d like to invest now that the mortgage will be gone. I just need to learn what to do and how to go about buying as I have no idea. Mr.CBB
That’s a great harvest MOA. Since making significant passive income with dividends is a long term process, it is always reassuring to see that other dividend investors are actually reaping the seeds they sow many years ago. Since I decided to take the dividend path only some years ago, my yearly total is not that much but I’m working to make it bigger. By the way, the TFSA is such a great wealth creating tool (NO TAX!!!). I just wish we could put US dividend stocks in it without paying the 15% withholding tax. Cheers! TDE
Great job Mark! Looks like you beat your goal for 2012 by a landslide! Our dividends were a couple of hundred bucks short of $16K for 2012 (but I’ll take it!).
Uh, wow, $16 K in dividends is great work for someone not retired! At least not yet 🙂 Thanks for the comment and the inspiration to close the gap with you!
Very nice, Mark.
$6400 a year is very impressive. I have a few losers who decreased in value AND haven’t increased dividends in years so I may be pruning the dead weight later this year to buy something better.
Keep up the good work, buddy!
Thanks Steve. It’s getting there…month by month. I recall you are doing very well yourself; same plan. I look forward to your next update.
That is frankly inspirational! I love seeing how your dividend income has nearly doubled in 3 years. I just started investing on my own (outside my employer-sponsored pension plan) a few months into 2011 and already at the end of Nov 2012 I had garnered over $500 in dividends by investing in these type of solid blue-chip Canadian stocks. Seeing your growth charts definitely makes me want to keep going and save more aggressively to invest more.
Thanks Dee! I’m come a good ways in 5 years, but I’ve got many years to go to reach my goal.
I’m biased I know, but investing is some solid blue-chip companies for dividends and cash flow makes sense to me. Regardless what the market does, even if the market tanks, I will always get paid. Otherwise, I index everything else to guarantee market-returns.
Heck, seeing my growth chart keeps me going! Glad you liked it and I hope you keep following along.
Getting to $30K a year sounds like a big dividend goal at this point but I’m sure you can reach it over time with your current rate of growth. I’m about where you were at in 2011, lol. The TFSA is a big help, especially this year with the extra $500 contribution limit.
I hope so Liquid, I’m going to do my best to make it while paying down our fat 6-figure mortgage debt. The TFSA is a HUGE help…any extra contributions I’ll take 🙂
Good job, Mark! Your dividend income grew by nearly 23% year-over-year. Do you project out how long it will take you to reach your $30k dividend income target?
I’m at about $2,200 a year in dividend income, so I’ve got a ways to go to catch up!
Thanks Echo. Over a few years, I can definitely see the upward trend.
If I keep my contributions to the TFSA and unregistered going as they are, probably about 10-15 years. If I didn’t make any contributions, using the Rule of 72, I hope this part of my portfolio doubles every 7 years (aggressive thinking I know). That puts the value at about $25 K in 14 or 15 years.
I fully intend to make a few new purchases every year though.
$2,200 is great stuff, and you have many priorities in your house, so kudos to you.
Thanks for the article – I decided in November to leave my “professional” advisor when I realized how much he was getting in fees for two 30 minute phone calls a year where I just said “Yes, keep doing it.”
I’ve been following you since then, and have a ‘noob question. I moved my investment accounts over to a discount broker (Credential as I already had a small account with them), but left my TFSA at ING until now – you mentioned using your TFSA to invest in dividend stocks…where do you do that? A discount broker? THrough your bank? THanks!
Depending on what you do Janine, DIY investing can take some work. With indexing, there is very little work, maybe 1 hour per year.
With dividend stocks, more time and research is required, not to mention, more risk! Just a disclaimer.
Thanks for following along, I hope you enjoy the articles.
ING has a decent TFSA for folks. I personally think TFSAs over time will be a better retirement account than a RRSP. For this reason, I prefer to use a self-directed TFSA.
Happy Investing in 2013!