December 2023 Dividend Income Update

December 2023 Dividend Income Update

Wow, quite the investing year. Welcome to my December 2023 dividend income update. 

What an investing year for the most part. 

Amazing, really, since I didnโ€™t see our portfolio gaining such high returns in 2023, coming out of 2022….but maybe I shouldn’t be that surprised!

December 2023 Dividend Income Update

For every terrible investing year (and 2022 was no picnic for most, yours truly included), out comes a year like 2023. 

2023 Returns, S&P 500

With thanks, @charliebilello

And from my recent “Asset Quilt 2023” post, if your investing approach was not just the S&P 500 but more all-world kinda stuff, then these ETFs including some great all-in-one ETFs might have performed very well for you in 2023 after a terrible 2022:

ETF20232022
VEQT (100% equity)16.95%-10.92%
XEQT (100% equity)17.05%-10.93%
ZEQT (100% equity)16.75%-5.25%
HEQT (100% equity22.64%-19.20%
XAW (100% equity ex-Canada)18.16%-11.77%

Of course, I know this was possible, because I’ve been reporting this journey for a very, very long time – much longer than most bloggers, vloggers and YouTubers ๐Ÿ™‚ 

The long-standing investing mantra (before the internet existed!) related to get invested, stay invested and just keep buying assets over time does truly deliver results. You (or I) don’t always see them in the first few months or even within the first few years with investing, since progress seems hardly noticeable and all humans are largely impatient, but things compound.

What becomes hard at first gets easier over time if you stick with things, keep some discipline, develop some habits. 

This is a good time to remind all readers that I don’t post such updates to brag, offer any superior investing approach, nor suggest that how I’m/we’re investing is a recipe that anyone can and should follow.

Hardly. 

I started with little. I had student loans to pay off. I used to have credit card debt in my 20s. I also had hundreds of thousands of mortgage debt too. 

I’ve also made my share of investing mistakes. I’ve purchased stocks and ETFs I probably shouldn’t. However, I’ve become a better investor over time because of those lessons learned, since just like paying high fees to a money manager, repeating investing mistakes can have a negative, compounding impact.

How do we invest?

As the investing years roll on, even though some stock and ETF names have changed in our portfolio, we continue to maintain our hybrid approach to investing some 15 years into running this site as I share our journey with others:

  1. We invest in many Canadian and U.S. stocks โ€“ that deliver income via dividends.
  2. We invest in low-cost equity ETFs โ€“ that should deliver long-term growth. 

You can read more about what we own and why on this page here.

I also maintain some of my favourite low-cost ETFs on this page here.

We invest in mostly equities although we keep a bit of cash and/or cash alternative ETFs.

That’s pretty much it.

December 2023 Dividend Income Update – Financial Independence

We invest the way we do for many reasons, things I will once again cover in 2024 as financial independence draws so very close. 

In the sidebar on my site, I maintain the following for inspiration to myself but also to readers as well, it’s all very true:

“I have a dream to live off dividends and work part-time in the coming years.

We’re now 90% of the way there!”

Our personal finance goals were recently posted for the coming year, and true to the sidebar and that goals post some form of financial independence is very, very near:

FI = portfolio income > expenses.

Ideally, including for us, complete financial independence (โ€œFIโ€) is the amount of wealth needed so you are no longer dependent on any active source of income like a job, a side-hobby or any other income stream. You can rely on the (passive) income generated by your portfolio whether that is stocks, stocks and bonds, real estate, and so on.

Of course, there really is no complete form of “passive income” so don’t let the younger YouTubers and other folks hustling courses fool you – everything takes a bit of work and maintainence but you get my point. ๐Ÿ™‚

Eventually, complete financial independence means you can continue to work for income, as you wish, and simply be transparent about it.

Instead of rushing to FI, we’ve been on a more transitional path: financial independence, work on own terms (FIWOOT).

We enjoy working for our employer and so our FI path has been more about designing a life-work balance; working towards a path to remain in the workforce but in a scaled-back capacity as we get into our 50s. Those years have just recently arrived…

This graphic sums up what we’ve been working towards, including what 2024 might have in store:

Live off dividends

In our very early 50s, complete “retirement” doesn’t make sense now (even though it might make sense years into the future). By staying somewhat busy, working and active in the coming years, on our own terms, we’ll maintain quite a bit of life-work flexibility like our current dividend income provides – we strive for some optionality in our lives – just like taking cash dividends now for income vs. reinvesting any dividends for total returns.

In Victory Lap Retirement authors Jonathan Chevreau and Mike Drak shared their wisdom by looking into their financial future to see how they will retire and what they will do when they get there. They believed years ago in their book that if you enjoy what you do, and you can continue to work, then plan now so your financial needs are covered sooner than later. You will find joy in doing so since when it comes to work youโ€™ll work because you want to not because you have to.

What has always made sense for us, something to share more about in 2024, since any crossover point provides you with an opportunity for a Victory Lap Lifestyle, one that does not include permanent retirement from all forms of work but options to work and play on your own terms, staying engaged in life when and where you please.

Crossover Point

December 2023 Dividend Income Update

With a new investing year here, it’s now time to look back at what was overall, a very successful investing year. The portfolio was up and more importantly, so was portfolio income needs for semi-retirement. 

Last month, I shared a number of stocks that raised their dividend. Most should do it again in 2024. 

With 2023 now in the books, here is the actual final number:

December 2023 Dividend Income Update

I keep a running tally on my standing Dividends page too.

And finally, just for fun, I’ve also included an estimate about what 2024 might deliver. We’ll see?? 

Thanks very much for reading and I welcome any comments or questions you might have!

Do share how your income journey is coming along too and any plans for 2024. I read everything and I learn from you too. ๐Ÿ™‚

Mark

My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.

14 Responses to "December 2023 Dividend Income Update"

  1. Hi Mark,
    100% equity ETFs are mentioned several times in your report and in the comments. For example VEQT, XAW etc. I have not dabbled much in ETFs, but have starting to, in an effort to simplify our portfolio.

    The ETFS mentioned are Canada based but hold a good % of ex-Canada equities. If these are held in in a Registered account like RRIF, RRSP or TFSA, am I correct that there would be withholding tax on the foreign income that could not be recovered? (as they can in a taxable account).

    In a RRSP or RRIF, the US/Can tax treaty would apply if equivalent US based ETFs or stocks are held and there would be no withholding tax. US$ would be needed to purchase. These be accumulated by selling dual listed stocks on US side or via Norberts gambit. Perhaps not all brokerages allow US$ in registered accounts? BMOIL do.

    I realise some investors may not care about losing ~15% of the often small distributions on these ETFs, but at least that cost should be considered when comparing overall ownership costs, like MERs, swap fees etc. Not easy to find that information though.

    Reply
    1. Thanks, Graham.

      Very astute!

      Yes, all-in-one AA ETFs (Asset Allocation ETFs), the VEQTs, XEQTs, HEQTs, XAWs of the world will have withholding taxes in RRSPs, RRIFs, TFSAs, etc. and those are not recoverable. Tax drag might be about 30 points or 0.30%.

      For taxable accounts, yes, recoverable.

      So, I believe this is a tradeoff…you have simplification but cannot get around FWT (foreign withholding tax) in registered accounts. It’s worth it for me.

      U.S.-listed ETFs do not have any FWT inside RRSP, RRIF, LIRA, LIF but would need to gambit to turn CDN $$ into USD $$ for purchases.

      Always tradeoffs due to taxation and currency exchanges I find.

      Unless you have hundreds of thousands of dollars invested in XAW, (0.30% = $300 per year lost on $100,000 invested) likely not worth the hassle but to your point – yes – “that cost should be considered when comparing overall ownership costs, like MERs, swap fees etc.”.

      100% with you there.

      Mark

      Reply
  2. Just a note to be careful about ending up with too much in the way of dividend payers in your taxable account by time you are into retirement. We are 20 yrs in and have about 1/4 million in unrealized capital gains! All in the usual Banks, Utilities, Telecoms etc. No losers left to offset with.

    Another issue is having too much in way of dividends. We could sell part of the 20% in preferreds we have that don’t have very high gains and replace with growth stock or ETF. However. the pfds do produce good income, so would need equivalent growth.

    Dividend income in our taxable accounts is about $80k after gross up. Add CPP/OAS, $70k min withdrawals from RRIFs, some capital gains, and a good part of the OAS has gone even after income splitting. I guess that is how it is supposed to be, but with some prior planning we could possibly have avoided that. Just a heads up ๐Ÿ™‚

    Reply
    1. Thanks, Graham.

      I’m slowly running out of “losers” but I’ll take my chances over time!

      We’re a long ways away from $80k our our taxable accounts, ~ 1/4 of that.

      You advice is well taken. Appreciated. ๐Ÿ™‚

      Our drawdown plan has us withdrawing from our RRSPs, slowly, in our 50s and 60s whereby very little RRSP/RRIF income is coming in, if any, by our early 70s. The goal would be to spend and/or transfer RRSP/RRIF withdrawals to TFSAs first, then non-reg. over a period of 20 years.

      In our 70s, income will consist of mainly:

      1. taxable dividends/capital gains +
      2. my small workplace pension +
      3. government benefits = x2 CPP + x2 OAS.

      We will use x2 TFSAs for any extras as needed; treated like a large-ish emergency fund.

      To your point, if OAS is gone or you incur a big dent in OAS income then you have a great tax problem to solve but I know what you mean and you could have smoothed out RRSP/RRIF withdrawals sooner potentially. Again, you sound like you’re in a phenomenal place.
      Mark

      Reply
  3. We had $104,520.35 in dividends, distributions and interest in 2023. Nice to break six figures. Portfolio of ETFs returned 16.6% xirr. VTI lead the pack followed by VUN, XAW, VEQT, VGRO and back of the pack XIC and VDY.

    Reply
    1. That. Is. Impressive. My goodness. Are you retired, Chris or still working?

      Those are some great low-cost ETFs. Big fan of XAW here, own a bunch. Have you considered consolidating some of those ETFs? Quite a bit of overlap between VEQT and VGRO in particulr.

      I love XAW for ex-Canada investing since I’ve largely unbundled XIU to own individual Canadian stocks.

      Kudos!!
      Mark

      Reply
      1. Thanks Mark. I love what I do, have amazing flexibility and no plans to retire until our kids are launched and I can start travelling more. Iโ€™m aware of the benefits of the all in one ETFs and VEQT is quickly becoming our largest holding. Some accounts only hold one ETF like VGRO in my wifeโ€™s spousal RSP. TFSAโ€™s are 90% VEQT with some XAW to drop Canadian allocation. Seven figure RSP holds a few more but I am working towards consolidation for simplicity. Non reg accounts a mix of long term holdings and Corporate account is 100% VDY.

        Reply
        1. Excellent, very smart on the corporate account too. Having a seven-figure RRSP is going to set you up extremely well for any retirement when it happens. You’re set…

          I have yet to invest in my corporate account but will consider something later on in 2024. All cash now, basically a cash wedge/emergency fund. RRSPs maxed here, TFSAs maxed here for us and likely doing some taxable investing in 2024 if we have enough money to do so!

          Continued success to you, you’re well on your way to some generational wealth to be passed on.

          (I hope to catch up to you at some point, if I can!!) ๐Ÿ™‚

          Have a great weekend,
          Mark

          Reply
  4. Hi Mark,

    I was looking at your graph and was trying to look at my current situation and compare.
    I’m currently at about your 2009 levels. I do have a ten year time horizon and looked at the 2019 figures and interestingly enough, it is where I would like to be in ten years (i.e., 15k to 30k in dividends).

    My question is, in the subsequent years between 2009 and 2019, was this growth solely organic or were other funds added annually? If the latter is the case, are you able to give an idea of what % of your portfolio value I should be investing in order to see that 15k-30k growth in ten years?

    Thanks.

    Reply
    1. Great stuff, Vinny. Just. Keep. Investing. ๐Ÿ™‚

      The graph is largely the result of the following:
      1. Maxed out RRSP contributions over the years, both RRSPs are “full”.
      2. Periodic investing in the taxable account, a few $k per year if I can, some years I could not…not enough money to invest…after the TFSAs are also “full” each January (I don’t report that now).
      3. Reinvested dividends or distributions.

      That’s pretty much it when it comes to that particular chart. Doing those 3 things and remaining invested in what I own, long-term, over time should even grow the results/chart over time even if I don’t do #1 and #2 in retirement since #3 will still occur in some cases.

      Keep me posted on your journey, always great to hear from others.
      Mark

      Reply
    2. Vinny, if you have your starting point (15,000 in dividends) you can create your own spreadsheet to project your future income. In the next column add the amount of increased dividends if re-invested. (ie 15K x 4%) then add another column for dividend increases, (15K x 3%) Then add these 3 amounts to the next row and repeat. 15,000 +600+450=16,050. Then you can also add an amount of additional money you can add to the portfolio each year. This can help you with your planning of what to expect with different amounts added each year.
      These are conservative projections, my portfolio currently pays over 5% in dividends.

      Reply
  5. Hi Mark,

    First of all Happy New Year to you and your family!!

    Great achievement on your dividend journey!!

    I noticed that you have BrookField stocks – like BIP/BEP/BAM. DO you prefer one over the other to do you own all of them?

    Thanks

    Reply
    1. Thanks, Raj – coming along! Thanks for the kind words.
      I like BIPC, BEPC and have owned them for many, many years. I would also consider adding BN depending on the account, i.e., RRSP, TFSA room, etc.
      Any investing plans for 2024 for you?
      Cheers!

      Reply

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