February 2012 Dividend Income Update

Each time I write one of these posts, I reflect upon the positive power that time and sticking with a plan can provide investors.

This month, marks my fourth full year as a dividend investor.  My first dividend-paying stock purchase was Enbridge (ENB).  I owned a position in this company a few months prior to The Great Recession (2008-2009).  In fact, during that period of economic turmoil I did what some financial experts advised investors not to do, I bought stocks, I bought more Enbridge.  While it seemed like a big gamble at the time (my stomach churned as equity markets tanked), I got more shares when many investors were selling it.

Looking back, my decision to invest when markets were tumbling, including Enbridge was a good one.   Enbridge has not only recovered over the last 3 years it has also increased their dividend numerous times and rewarded shareholders with a 2-for-1 stock split in May 2011.

Maybe I just got lucky with Enbridge.  Maybe I haven’t seen enough dividend cuts or companies in my portfolio going under, to make me fearful of dividend-paying stocks and avoid them for good.  Maybe I’m due to get burned at some point.  Time will tell…

What I do know, and many financial experts and authors have written about this, you will not succeed in investing if you trade a lot.  You will succeed if you keep your eyes focused on the future, even with all its unknowns, by making long-term commitments and sticking to a plan.  Although 4 years is not a long time horizon, it’s long enough to see that the power of time and sticking with my dividend-investing plan has had a positive impact on my portfolio value.

With most of my RRSP tied up in broad-market ETFs that follow the equity and bond markets passively, I’ve chosen to invest in dividend-paying stocks in other accounts.  Over the last 4 years, I’ve saved and built a small dividend-portfolio which continues to grow every month thanks to reinvested dividends paid.  Instead of just Enbridge, I now own 20 Canadian dividend-paying stocks.  I also own a handful of U.S. stocks as well.  For the handful of companies whereby dividends are not reinvested, money accumulates and is used to pay down debt, save and buy new companies or save and invest in existing companies.

Over the last few months, I’ve added Manulife Financial (MFC) and Procter & Gamble (PG:US) to my portfolio – two companies I didn’t own in 2011.  Long-term, I’d like to own about 40 Canadian dividend-paying stocks and 10 U.S. dividend-paying stocks that churn out consistent income for daily living expenses.  I’d like to see my investments working hard so I don’t have to someday.  That’s my approach with buying and holding dividend-paying stocks.  The rest of my portfolio will always passively watch the market, so I barely have to look at those broad market ETFs or make any changes to them.

This month, after dividends were paid and dividends reinvested, our dividend income projected for the 2012 calendar year is projected to be $5,400.

I know I won’t succeed if I trade a lot, so I tend to buy and not sell stocks.  I also suspect things won’t always be rosy with the companies I own.  Dividends may get reduced at some point, the companies may take losses from quarter to quarter.  That’s the short-term.  Long-term, I expect my investments to tell a much different story – a tale of significant growth and income because of my long-term commitment to established companies.  I hope I’m right.  

20 Responses to "February 2012 Dividend Income Update"

  1. @My Own Advisor
    This is the problem that there are too many 🙂 You listed a good ones that I was watchng, but I’d add another bunch: CMS, ED, D, UNS, DTE, HE …. all of them yielding above 4% and have their own pros and cons. The queston what to choose?! This is why I was thinking about ETF

  2. @My Own Advisor
    Yes, it interesting question. For example I want some exposure to US utilities . it’s not easy to make a good selection … maybe as an alternative to buy ETF XLU? MER is low 0.19%, yield 3.9%, not bad list of companies…but I don’t like variable dividends every quorter

    1. @gibor,

      I’m not a fan of variable dividends either. I like steady dividends 🙂

      I too, want some exposure to U.S. utilities. I have been leaning towards DUK, SO, EXC or ED.

      Not sure which one, but based on dividend histories, hard to go wrong with any of them I think. Thoughts?

  3. Very nice income MOA,

    If I ever develop a dividend stream, I think it will be through an ETF in order for me not to spend time worrying about a company in particular. I’d love for you to write a post about the pros and cos of dividend investing stocks vs ETF.


  4. Good job on joining the $5G’s club. I also hold PG (241) as well as ENB (310), my latest purchase was 200 shares of BIN this week at $20.84, hoping to add another 200 if the market pulls back and BIN scuttles below $20. My own dividend income for this year currently stands at $9,879. I’m looking forward to two milestones, one, reaching the 5 digit income club as well as the 4 digit per month income club…..always something to look forward to!



    1. Thanks! I’m trying!

      I don’t own enough PG to DRIP yet, but someday, that’s my plan. I also own JNJ, ABT, KO and a few other U.S. blue-chips.

      Almost $10 K for dividend income? That’s excellent! I too, hope to buy more BIN. Excellent business model that will never get old. If it goes below $20, we’ll both be buying!

      I hope you continue to check in with my blog so we can talk stocks.

      All the best in your investing journey.

    1. Thanks Poor Student. Yes, we made about $5,200 in dividend income in 2011, and we’re on pace to earn $5,401 in 2012, if we don’t buy any more companies, no companies increase their dividends and the companies we own always pay dividends at their current rate.

      Hopefully $6,000 will be hit later this year. 🙂

    1. Hi John,

      I WISH we were getting $2,700 in dividend income a month! Maybe in another 15 years!

      I try and target my yield around 4%, with established companies that have paid dividends for decades.

      Are you a dividend investor? How long have you been investing?

  5. Great stuff man! Keep it up.

    Nice decision on adding PG to your portfolio. That’s a global juggernaut with products that the great majority of the global population uses every day. I’d definitely like to have more PG in my portfolio.

    50 stocks churning out dividends for you to live on sounds like a big, beautiful dream. I wish you the best on getting there.

    Best wishes!

    1. Thanks Mantra, I’m trying!

      That’s part of the reason why I blog, I enjoy informing folks about my investing decisions, good or bad. Maybe some people wouldn’t buy PG at $63 (like I did), maybe others would.

      I often wonder if my investing journey, I’ll flat on my face, you know, buying and holding stocks.

      50 stocks churning out dividends is definitely a big dream…maybe I am dreaming?


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