February 2011 Dividend Income Update

In some recent Globe & Mail “Invest Like a Legend” articles, I found both Bob Taterrsall’s and Stephen Jarislowsky’s approaches.  For Tattersall, what I found revealing but maybe not surprising was his no-nonsense approach to equities. The co-founder of the Saxon family of mutual funds and now retired chief investment officer of MacKenzie Investments said he would invest about 75% of his money at home, mainly in Canadian equities. The rest of his investments (25%) would be in “global big-cap stocks that have reasonably good dividend yields: Colgate-Palmolive, PepsiCo and Johnson & Johnson. Then I’d forget about things for five years—that’s the hard part for most people.”  For Jarislowsky, his message about dividend paying stocks was also direct: “I would buy something with a good yield, that raises the dividend every year, has excellent management and is a leader in a stable industry, which operates all over the world.”

Reading these articles reinforced with me, if dividend-paying stocks are part of multi-millionaire Bob Tattersall’s and Stephen Jarislowsky’s investment strategies why shouldn’t they be part of middle-income My Own Advisor’s?  Well, they are and for the last few years the buy-and-never-sell-dividend-paying-stocks-until-they-stop-paying-dividends-strategy seems to be working as part of our retirement plan.

At the end of 2010, excluding holdings in our RRSPs I reported we earned close to $4,300 (for the year) from our Canadian dividend-payers.  It was an excellent start for small investors like us!  In January 2011, we increased this income to about $4,400 for the year.  Last month, our total 2011 dividend income increased a tad more thanks to the following companies who paid us dividends in February:

• Bank of Montreal (BMO)
• Emera (EMA)

Where will we be in March?

Hopefully further ahead because we just got another dividend-payer for our TFSA: Power Financial Corporation (PWF). By owning this dividend stud, we got access to many other companies including 2 big ones in the financial sector, Great-West Life (GWO) and IGM Financial (IGM) that pay consistent dividends. Power Financial is basically a holding company (for a number of companies) who has been a Canadian Dividend Aristocrat and probably will be again.

Will our dividend-investing strategy always work? 

It should because dividends are the real-life signals that a business has the stability to pay you, reward you, for being an owner.  That’s what we want since some passive income is part of our retirement plan.  Nothing is guaranteed though, not even dividends.  Good companies cut dividends (see Manulife), stop dividends or eventually fall altogether.  It’s rare, but it happens.  That’s life.  Yet overall, our selection and growing portfolio of buying and holding steady dividend-payers seems to be working.

I look forward to sharing our March update with you and sharing those details.

Now enough February talk, c’mon spring!!!

What do you think of our dividend-investing strategy?
It is going to work long-term as part of our retirement plan?
Do you think we’re going to fall flat on our faces someday?

Share your thoughts!
My Own Advisor

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