“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!