December 2021 Dividend Income Update
Wow, what a year.
Welcome to my December 2021 dividend income update.
What an investing year.
Amazing, really, since I didn’t see my portfolio gaining about 30% overall in 2021. But it happened.
Our taxable account was up just over 32% thanks to some of these returns below. Thanks to Nelson @uproarcapital for doing some recent math:
Our TFSAs were up about 30% in 2021 thanks to holding a mix of bank stocks and telecommunications stocks.
Our RRSP holdings actually dragged us down in 2021, given the U.S. total stock market (as measured by VTI ETF that I own) only gained 26% this year. Only.
And I did essentially nothing this year beyond sitting on my hands.
I avoided trading. I didn’t own (nor do I own) any pot stocks. I don’t own gold. I don’t own any crypto. I don’t own any disruptive ARK funds managed by famous money manager Cathie Wood. Heck, I don’t even own any bonds.
Further Reading: Why would anyone own bonds right now??
December 2021 Dividend Income Update
Last month, thanks to some reader questions, I highlighted why dividends matter to me in addition to holding some low-cost ETFs for growth in my portfolio:
- Income is good! That means, while I strive to achieve strong total returns, as an investor I can’t help but feel and invest in a way that gives me comfort: dividend investing delivers tangible, usable, real income from my portfolio. I will be using the income generated from my portfolio to help fund semi-retirement expenses (ideally in a few years).
- I like the optionality that dividends provide. You see, in a perfect world, all businesses would allocate capital in a way to perfectly maximize the return on that capital. This would be done so reinvested money would go back into the business in way that pays off immensely for the shareholder (by increasing returns over time AND by continually reducing the company’s tax burden). But you should know by now we don’t live in a perfect world. This means shareholders have over time demanded a dividend – for the purposes of “optionality”. Shareholders like optionality – and dividends provide that optionality – to give investors the choice to increase or decrease their exposure to the business. Reinvested dividends therefore, take advantage of that optionality, to increase exposure. Dividends taken as cash, do not.
At the end of the day…I enjoy seeing dividends “flow” into my accounts without buying or selling shares. That tangible money income machine helps me stick to a plan I believe in.
With a number of dividend increases at the end of 2021 now fully accounted for in my forward dividend income projections, I am happy to report we earned $24,997 in 2021 in dividend income, from the capital invested inside our TFSAs and a non-registered accounts.
(RRSP assets are always ignored in these monthly dividend income updates, for privacy and other reasons. You can find more answers from readers on my FAQs page here.)
To put that juicy dividend income stream into perspective:
- We earn $2.85 per hour of every hour of every day (income/8,760 hours (24 hours x ~365 days)) even in our sleep.
- Part of our portfolio is essentially a job – earning almost minimum wage.
- Almost 50% of this income is tax-free. Meaning, we earn about $1,000 per month in tax-free income from our portfolio.
For well over a decade now, dividend investing remains at the core of my investment plan. I must say, I enjoy getting paid to be an investor. 2022 will be no different.
New Year – New Targets!
With a new year upon us, and with a 2021 target now surpassed and in the books, it’s time to update this outdated chart I showcased in 2021:
Here is the new chart and target for the end of 2022 and beyond!
December 2021 Dividend Income Update summary
For new investors out there, a reminder this income stream has taken years to build. It has been a slow yet steady path.
For all investors out there, a reminder building this income stream should offer a comfortable retirement years down the road. On that note, I look forward to seeing what new highs the portfolio can hopefully deliver in 2022 as financial independence and work on own terms #FIWOOT draws very near.
Happy 2022 to you and your family.