Welcome to my latest dividend income update for 2014. For those of you new to these posts on my site, every month I discuss my approach to investing using dividend paying stocks and Exchange Traded Funds (ETFs) and how reinvesting the dividends and distributions paid are helping me reach financial freedom. You can check out my previous dividend income update here.
Last month, I shared some financial lessons from a few legendary investors on what to do with our money. One of the best brains in the business said to:
- invest for the long-term,
- stay in equities,
- focus on low-costs, and
- seek out a plan to live off dividend income.
Over the last month, I’ve seen a stock that I have a small position in cut their dividend (a first for my portfolio) but I’ve also seen a few companies raise their dividends. Bad news or good news, my investing approach has not changed. I continue to own these companies through thick and thin. I’ve also become more attached to indexed products in recent years for these reasons:
- great diversification,
- transparent holdings,
- no stock selection,
- market-like returns, and
- regular distributions with capital appreciation.
Regardless of what the market does, I’m finding buying and holding established Canadian companies that pay dividends and increasing my position in a couple of indexed products is really paying off, literally. Thanks to a recent TFSA contribution, an account we want to maximize in 2014, I’ve calculated we’re on pace to earn just over $8,000 in dividend income this calendar year from the stocks and ETFs we currently own. That’s far shy of this retirement goal but each month that goal is getting closer.
We’ve got lots of saving to do this spring to reach our 2014 financial goals but we’re getting on track after an expensive holiday season. I’ll have another dividend income update next month – thanks for reading and sharing.
Great job Mark!
Thanks. IPL and PPL continue to be on a tear! 5-year charts are crazy good.
Nice! I’m planning to invest some money as well, but I’m still thinking how to approach this — whether I should just play it safe and wait for the dividends to come, or should I just be pro active and keep trading.
What are you considering specifically? Hard to go wrong with a brand name company for a good price that has paid dividends for generations. Or, buy an index ETF. Are you a trader?
I think you are making great strides, and $8,000 is an enviable number. Since you have most of the money, if I understand it correctly, in tax sheltered accounts, you are taking steps to your goal.
Yes, most of our investments are tax-sheltered accounts, some of this income though is in non-registered accounts. Slowly moving it over to tax-free.
Do you invest in dividend ETFs, or are you referring to growth? I have a combination as well. I hold ETFs and e-series in my TFSA and RRSP which are both small relative to my stock holdings. I guess I am fence sitting.
I used to invest in dividend ETFs, but no longer. Here is why:
In my summary, I am referring to the cash flow from both dividend stocks and ETFs across non-registered and TFSAs.
I’ve learned that buying and holding the top stocks the big ETFs own (such as Canadian banks, telcos, pipelines, etc.) can be a good passive income machine that one day, in another 15 years, I can retire on.
Thanks for the reply. I agree with the comments about dividend ETFs, in general. I just wondered how you generated much cash flow out of ETFs. They grow, but do they produce much cash for you. Perhaps your investment income comes mostly from direct dividends.
Well, the cash flow from the ETFs is small actually. I recall our ETFs in non-reg. and TFSAs probably represent 10% of the passive income portfolio I report on. The RRSPs are different, mostly indexed and mostly U.S. stocks but I don’t report on that since those are investments I eventually need to cash-in.
Thanks for reading Dan.
$8k is fantastic. That’s a large source of totally passive income that you can just keep reinvesting into your compounding snowball. One day that thing will turn into an avalanche. 🙂
Thanks Jason. I’ll be visiting your site this week. Looks like you had another recent buy?
$8k is a really nice chunk of change from your investments. We’re only around $4k over the next 12 months but we’re building it as fast as we can.
Thanks JC! I just left some comments on your site.
Nothing like Buffet reiterating what you’ve already been doing with ETF’s!
I figure he’s worth listening to 🙂
Fantastic effort, income is income, like you say, it’s one step closer to the goal. We’re all on this journey together,it’s fascinating seeing how everyone approaches it.
Thanks. Not even 1/3 to our goal but it’s coming along, I have to be patient and stick with the plan. I enjoy reading about others and their investing approaches as well.
Thats a great big round number.
Thanks, it’s getting there. How are things going with you?
$8k – nicely done! Dividend cuts are always hard to take. I invested in Rogers Sugar a while back and although they didn’t cut their dividend it has been downgraded by a few analysts. It’s a long term hold though so I’m sure it will pick up in the long term