December 2019 Dividend Income Update

December 2019 Dividend Income Update

Welcome to my final dividend income update from the decade that was – this is our December 2019 dividend income update.

To put a bow on our decade of dividend income from key accounts, let’s recap our investing journey, since we take a hybrid-approach to investing.

Approach #1 – we own a number of Canadian dividend paying stocks for income and growth.

Advisors and other investors will continue to tell me that dividends do not matter unto themselves – although they are an important component of total equity returns. Very true. But the reality is dividends will likely always matter to me.

Why?

I hope to “live off dividends” within 5 years. So, until my cash flow from Canadian companies that pay healthy dividends stops growing month after month, I’m probably going to tune any negativity out.

You see, primarily because I’ve stuck to a gameplan I believe in, for a solid decade now, our passive dividend income derived from many Canadian dividend paying stocks is rocketing higher each month, year after year. These updates focus on that progress.

In fact, ignoring month by month let alone year by year updates, when I look back on my decade of DIY investing, I’m rather impressed. My basket of buying and holding boring Canadian dividend paying stocks has provided some beautiful returns even when compared to the S&P/TSX Composite Index, and many top-Canadian ETFs.

ETF Ticker/Account 5-years 10-years Comments
VCE 6.39% n/a This fund doesn’t have a 10-year return history yet.
XIC 6.27% 6.77% XIC owns the entire CDN stock market, largest 230+ stocks.
ZCN 6.25% 6.32% Similar composition as XIC, owns the CDN stock market for MER 0.06%.
XIU 6.54% 6.82% XIU provides holdings to largest, top-60 stocks in Canada, arguably a blue-chip ETF.
MOA Non-Reg. 7% 8.2% Mix of Canadian banks, pipelines and utilities and telcos.  
MOA TFSA 1 7.1% 7.8% As above with REITs.
MOA TFSA 2 6.7% 7.3%

Data extracted from Vanguard, iShares, BMO sites on January 4, 2020 over a few cups of morning coffee and watching World Junior Hockey.

The best benchmark for my portfolio is against XIU. I’ve always been a fan of this ETF for its long-term performance: solid 3% yield and growth. I use XIU as my Canadian benchmark because I tend to own the almost the same top-25 held by this fund, with a few exceptions, in different quantities however.

XIU Summer 2019

XIU from summer 2019.

My secret to these Canadian portfolio returns?

Own the same top stocks the big funds own and reinvest all dividends paid.

That’s my strategy, for a decade, in one sentence.

Approach #2 – we’re owning more units of low-cost U.S. Exchange Traded Funds (ETFs) inside our RRSPs over time. 

In our Canadian economy (that continues to be dominated by a handful of companies in a handful of sectors), I think you can cherry-pick the best stocks to own for income and ignore the rest. See above.

The U.S. market is a totally different beast. So, I believe owning more low-cost U.S. ETF units (over time) inside our RRSP accounts is a great complement to our Canadian dividend income machine. Beyond a few U.S. stocks I own for dividend income, I’m personally a fan of low-cost ETF VYM for steady income and growth but your mileage may vary.

There are other low-cost, great ETFs for your RRSPs outlined in this post here.

With our RRSP assets increasing with U.S. content more and more every year, it is my ultimate goal to have an equal 50/50 equity split between Canadian and U.S. content across our portfolio to enter semi-retirement with (in about 5 years). I’m striving to keep most of our Canadian content inside my non-registered account and our TFSAs. Most if not all of our U.S. content will be inside our RRSPs.

You can read about why I feel that way in this post about tax efficiency here.

A decade to remember

At the start of the 2010s, we were barely on our income investing path. At the end of December 2019 we ended up at this income milestone in three investing accounts:

MOA December 31, 2019 Dividend IncomeIncredible.

Putting this income into new perspective, thanks to a reader suggestion on this site, he equates this dividend income level to earning $2.23 per hour of every single day.

In hindsight, we accomplished this goal by doing a few things really well that anyone else can likely replicate with time on their side:

  1. We owned the same top-stocks the big funds owned in Canada.
  2. We reinvested the dividends paid by the companies we owned, to buy more shares commission-free over time.
  3. We rarely sold anything. In fact, when the Canadian stock market did not cooperate with price returns, we actually bought MORE stocks.
  4. We maxed out contributions to our TFSAs every single year.
  5. We kept doing 1-2-3-4 for a decade.

The future and my lessons learned to you

It has been said some of the most successful approaches to investing are essentially boring. For the last decade of my investing career, I couldn’t agree more.

Whether you choose to cherry-pick a bit from our Canadian economy, or buy and hold low-cost ETFs like these that own assets around the world, or a bit of both – the results are becoming very clear to me:

The more time in the market you maintain, the less money you pay in money management fees, the less you tinker with your portfolio, the more money you will undoubtedly have.

I look forward to what the next decade may bring in terms of growing dividend income, including sharing that progress with you.  

Got questions about my investing approach? Want to learn how to invest in low-cost ETFs or dividend paying stocks? Ask away.

Mark

My name is Mark Seed and I'm the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, we're very close to realizing two major money goals: owning a 7-figure+ investment portfolio along with no debt to start semi-retirement with. Find out how we did it, what's next, and what you can learn from me to tailor your own financial independence path. Subscribe and join the newsletter! Follow me on Twitter @myownadvisor.

41 Responses to "December 2019 Dividend Income Update"

    1. I know a few investors, seasoned ones at that, that use VDY Emily. I wouldn’t do anything with investing you’re unsure about!

      All the best,
      Mark

      Reply
  1. I love Canada, OK? But to only invest in one country that represents less than 2% of the world economy. Is that really a sane strategy? Why not invest in the US or a global portfolio. Canada is nice but it isn’t really significant on a world scale. I’m US but I still have a global portfolio, even the US with a huge economy isn’t diversified enough to put all my eggs in one basket. Canada far less so. What’s your reasoning on not being globally diversified?

    Reply
    1. Very good points. To clarify, while Canada’s economy has and continues to hover around 2-3% of the global economy, it has done better than a “global” portfolio in recent years.

      Take VXUS, arguably a “darling” picked by many advisors. The returns have been under 6% for the last 5-years and <5% since the fund inception since 2011.
      https://investor.vanguard.com/etf/profile/performance/vxus

      Compare that with the returns I put in my table and you’ll see even XIU comes out far ahead.

      Will that be the future, I don’t know…but I am diversifying away from Canada over time.

      Also, the companies I own in Canada are rather diversified beyond our borders, a growing portion of their revenue is coming from other markets. So, by owning some Canadian stocks are you are getting some built-in diversification.

      Eventually, I would like a 50/50 split of Canada & U.S. (with international) stocks. I’m slowly getting there…

      Thanks for your curiosity!
      Mark

      Reply
    2. Steveark,
      Agree that global diversification is important. When I semi retired I looked at how each of my income sources were globally diversified and discovered that about 42% came from investments outside of Canada. Example: CPP is 85% invested outside of Canada, my pension about 40%. I believe we have more global diversification then we realize. It’s an interesting exercise. I have all my personal investments inside Canada for simplicity but if you hold any Canadian Bank you automatically get some US exposure and maybe some International. I don’t have to think about exchange rates or tax treaties and I like to think I’m supporting Canadian business development..

      Reply
  2. “I love it when a plan comes together!” – Colonel John “Hannibal” Smith from that 80’s TV hit, the A Team. Ok I’m dating myself.
    “Dividends will likely always matter to me.” – Mark Seed from that awesome blog, My Own Advisor.
    Couldn’t agree more. Congratulations. Can you see the light? That’s exciting.

    Reply
    1. Old enough to remember the A-team my friend! Very exciting to see the portfolio income grow with time, very/highly motivating to stick to my plan!!

      With TFSA contribution room now done for 2020, a new dividend income milestone has been crossed. Next report due out in a few weeks!

      Reply
  3. I was just trying to Google this MOA REIT and MOA ETF . Both had some great returns and I would consider adding them to my ETF portfolio. Boy do I need some more coffee.

    Reply
  4. ‘morning Mark….have you ever been tempted to sell something that has what seems to be a ridiculous jump? I’m watching PPL this morning and I am so tempted to sell half and buy it back later.

    Reply
    1. Tempted, yes, but I usually let my winners “run” now. I just figure the less I tinker with the stocks the better. I really should just buy and hold and hold. I’ve lost out on a couple of big, long-term gains because I thought at one point or another a certain dividend paying stock was better than the other. Turns out I didn’t know a thing about the future….

      Mark

      Reply
      1. I sort of watch for a market overreaction and if certain parameters are met I’ll consider selling and re-buying. After I posted that, I went outside to clean the driveways and by the time I got back in, PPL had gone from $51ish back to 50ish so I missed it. No harm no foul but I could have picked up an extra 20 shares for nothing.

        Reply
        1. I did exactly that with both $PPL and $IPL In recent months to redeploy the capital, however I’d been buying both since ~$10-$12 and they’d become too large a weighting. Though I almost bought $PPL yesterday down $0.60. I always really funds into other Div payers. We Enjoy the articles Mark and congrats on developing, working and believing in your plan, great success and sage advice. Can’t wait to see the growth you achieve in 2029!

          Reply
          1. Boy, I hope some good things Brett!! Thanks for those kind words.

            Yes, it will be interesting to see what $PPL does over time with any changes to our O&G sector, but I do love the toll-road nature of pipelines!

            Reply
  5. Great progress Mark many congrats lover the 2.23$ every hour.That’s like one free Timmy donut per hour 😀 more or less.

    your copy paste approach on XIU is such a no brainer for newbie like me.I hope they don’t start hiding the ETF funds at some point.

    I read on CNBC that there is approval on certain ETFs which will not show their holdings.

    Reply
    1. Well, things have worked out for me in the past but you never know with the future right? I think ultimately sticking to a plan you believe in, regardless if that’s GICs, or stocks, or ETFs or other and reviewing that approach, ensuring it is meeting your goals, is really the key here.

      Thanks for being a fan and the kind words.

      I didn’t hear that from CNBC? (I don’t believe everything I hear on TV anyhow!)
      Mark

      Reply
  6. Incredible stuff Mark and excellent progress. $2.23 per hour is pretty awesome I have to say.

    We ended up hitting our 2019 dividend income goal as we received over $23,000 in dividend income. Very happy about that.

    Reply
  7. Mark
    First of all thanks for the extra ordinary work and sharing the details with us. It is really appreciated.
    I am thinking of starting on this journey although I am late, way too late. In my 50s now. Future, sometimes, looks scary.
    I have two questions for you:
    A. If you were to start buying divi stocks today, will you buy every month or will you buy in one go and not bother with dollar cost averaging AND market ups and downs?
    B. How do I see how many units of each dividend paying stock you hold and what is approx. price? (I am worried that your prices will bring tears to my eyes but gotta start with what I can)
    Thanks again

    Reply
    1. Thanks for the kind words Comet!

      Q1. If you were to start buying divi stocks today, will you buy every month or will you buy in one go and not bother with dollar cost averaging AND market ups and downs?

      A1. Certainly nothing I say or write on this site should be taken as direct advice but I know for my portfolio, I don’t buy stocks every month. I tend to invest when I have enough money to keep my transaction costs <0.5%. So, that’s waiting until I have a few thousand to invest. Largely, I invest where I can in “one go” but I have also bought the same stock over time to build a position. I’m doing that now with CNR actually; buying 20-30 shares at a time every year or so.

      Q2. How do I see how many units of each dividend paying stock you hold and what is approx. price? (I am worried that your prices will bring tears to my eyes but gotta start with what I can).
      A2. I don’t share those details since I already put so much of my financial life for others on display. I can say I’ve held many of these stocks on this page for the better part of a decade. I own a few hundred shares of each. I own more shares every month thanks to “DRIPs”.
      https://www.myownadvisor.ca/dividends/

      https://www.myownadvisor.ca/drips/

      Happy to help where I can and hope you keep reading and tell others to do the same!
      Mark

      Reply
  8. Very impressed by your success! Many years of investing in a diversified portfolio has had success and failure but now retired and in my 70’s. I need a fee only finanicial planner to direct my investments as I approach my 80’s. Any recommendations?

    Reply
    1. I’ve been in touch with a few fee-only planners in recent years via my site. Feel free to check out:
      https://www.planeasy.ca/who-we-are/

      Ask Owen about rates and tell him Mark from My Own Advisor sent you….and

      Steve from Money Coaches Canada has done some good work as well:
      https://moneycoachescanada.ca/about/steve-bridge/

      Ask Steve about his rates, and tell him Mark sent you as well.

      They should be able to spend some time consulting a bit and providing some recommendations on their approach with you.

      Hope that helps!
      Mark

      Reply
  9. Hello Mark
    I am a new subscriber, I was attracted to your site, by the title and by you being an Ottawa resident with some other common interests as myself, (Sens – 67’s – Golf – Wine etc)

    Reply
  10. Hi Mark. Just joined your site as I am working at building a portfolio along the same idea as you are and welcome any insights I can get. Thanks for all your work and I look forward to your next post.

    Reply
    1. Thanks Blaine! Great to have you. I hope to continue sharing elements of my portfolio over time and how that dividend stock portfolio continues (hopefully) to churn out more income for semi-retirement around age 50. All the best!

      Reply
    1. Great question Rick.

      Check out my Deals page. Questrade offers commission-free ETFs for sure. I recall Scotia iTrade does as well. Wealthsimple is a robo-advisor that offers that as well. I will try to link to an article for you this weekend.

      Thanks for the kind words.

      Reply

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