February 2020 Dividend Income Update
Welcome to my latest dividend income update for 2020.
Whoa…quite the recent market calamity right friends??
Thankfully though, this update covers February dividend income. Before the drama!
For those of you new to these posts on my site, for almost a decade now, every month I discuss our approach to investing using Canadian dividend paying stocks and the cash flow we earn from a few key accounts:
- My non-registered account.
- Our TFSAs (mine, my wife’s).
To recap, we are hybrid investors. What does that mean?
- Approach #1 – we own a number of Canadian dividend paying stocks for income and growth. This is what these dividend income reports are all about – those stocks in my non-registered account and our TFSAs.
At last count, we own 24 different stocks inside my non-registered account and within our Tax Free Savings Accounts (TFSAs). We own dividend payers because we believe buying and holding such companies will deliver some steady monthly income for future wants and needs in retirement. Again, that’s what these monthly income updates are all about!
- Approach #2 – we’re owning more units of low-cost U.S. Exchange Traded Funds (ETFs) inside our RRSPs over time. We believe in doing so this will provide more diversification beyond Canada’s borders. Yes, I do own and will continue to own U.S. stocks like AT&T, Verizon, Procter & Gamble, and Johnson & Johnson inside my RRSP – I DRIP all of them every quarter. While I love my U.S. stocks I will however be buying more ETF units that invest in the U.S. market over time.
For the non-registered account and the TFSAs, beyond the dividend raises from Bell Canada (BCE) and Suncor (SU) last month, we got some juicy dividend hikes from Great-West Life, TD Bank, TC Energy and CIBC.
Those raises helped the dividend income. Big time.
February 2020 Update
Thanks those dividend increases above, reinvesting dividends paid, we’re on pace to earn $20,600 in dividend income from three accounts this year.
To put that income into perspective:
- That’s like making $2.35 for every hour of every single day even in my sleep.
- That income, when we decide to get the dividends in cash vs. reinvesting dividends like we do now (because we never actually see this money today) should pay for our Ottawa condo property taxes for life ($6,000 per year in 2020 dollars).
- That income, beyond our property taxes, will also cover our condo utilities such as heating, cooling, water and electricity costs for life (about $1,200 per year in 2020 dollars).
- And that income will pay for more and more…
But Mark – “dividends don’t matter!”
Yeah, I’ve heard that before.
In theory, a corporation should only seek to distribute after-tax cash to shareholders when it has exhausted all capital expenditures that meet its required rate of return.
Jason Pereira recently wrote that refrain.
But instead of harping about why dividends don’t matter, because they do matter, just like capital gains matter, share buybacks matter, paying down significant amounts of debt to increase shareholder value matter – maybe we should change the conversation.
- help investors stay invested,
- enable investor confidence to buy lower when markets correct, and just as importantly,
- grow over time to deliver a tangible income stream to spend at some point.
I can speak to this last bullet since these updates are all about that. See the chart. It’s very real.
In the end, dividends are just one factor or element in your overall portfolio or income plan. They are not everything and they are not magical. They are not any unicorn-like source of tax-efficient income. But they are a growing pile of income for me.
I look forward to sharing March dividend income updates and beyond with you – good, bad or indifferent!
Do you dividends or distributions matter to you? Why or why not?
Keep up the good work Mark!
Executive Vice President
Thanks Jannine 🙂
Have you ever looked at Brookfield Property Partners BPY … at today’s shareprice of $19.60 the dividend is 8.54% it seems like a no brainer and it is Brookfield … Am I missing something here?
I own a bit Herb! I have owned a bit of BPY for many years now but I suspect a dividend cut might occur if the yield remains north of 7% for many quarters.
The perfect stocks would be those that provide high growth and aristocratic dividends. Hell, this is very tough to find these diamonds!!. I am still searching for those stocks. This is why sometimes I have to sacrifice dividend income and choose high growth stocks.
Keep up the good work Mark. We are so grateful to you for sharing your knowledge and wisdom.
We will see if I stick to my guns Ken. Doing OK so far but not easy!!
Way to go, Mark! As a retiree, I don’t panic when my RRSP dips in these turbulent times because, as you pointed out, my dividends have a way of growing every year. Even during the financial crisis, my dividends grew, but a lot more slowly than normal. I am lucky enough to have a small defined benefit pension, so I am even able to reinvest a bit every year, while living a nice lifestyle. Dividend growth investing is great and has helped me to recover from some disastrous investment advice when I was younger. . . . before the internet was easily accessible, if you or your readers are old enough to remember that far back.
With a small pension, you’re likely “golden” JR.
I remember the days before the internet. I had an Atari 🙂
That is impressive Mark! I’m @ $1.34 per hour myself:)
Divs matter to me for a number of reasons:
– Relying on valuation and share price is, as we are seeing now, quite risky
– Valuation often does not align with business fundamentals Divs typically do a better job
– Actual money now is better than virtual money tomorrow
– Income (growth) is more predictable vs cap gains
– Trust I don’t have to explain the power of compounding
That said there is nothing wrong with Growth, Angel or even Bitcoin investing but none of these should be considered for ones retirement.
Agreed Ben. I have no problem with capital gains only approach for some, it just doesn’t work for me. I would rather see/calculate the tangible $$$ my portfolio can deliver including ETF distributions vs. rely on low-yield and totally return approach where everything is falling 10% per day it seems.
I like the “optionality” that dividends can provide. Some advisors don’t agree with me but I really don’t care 🙂
I’ve been watching your progress for a while and it’s truly inspiring. Like you, I have focused on dividend-paying companies inside my TFSA and RRSP. As well as ETFs. The current state of the market is an opportunity to buy more at a great discount. Stay invested and keep up the great work. Thanks Mark.
I hope to buy some MSFT, ITOT ETF or maybe some U.S. stocks like MDT healthcare giant with this correction. Not sure yet. I’m thinking about more VYM as well. Really trying to stick to my guns and buy more USD $$ assets over time.
I keep DRIPping CDN stocks every month and quarter now.
Any buy plans for you?
You’ve got a great plan, Mark. Stick to your guns. I’ve purchased a few US dividends, including T, DIS, and IBM, but have been primarily focused on Canadian ETF including VCE and VLB. And VRE to have real estate in the mix. I’ve been thankful for the bond ETF recently! DRIPping everything I can. Looking forward to your next update!
You must be thankful for your bond ETF. That or lots of cash in times like these…
DRIPping 30 stocks here. No intention of changing my approach. Save a bit of cash for RRSP and likely invest some soon. MSFT, ITOT or other U.S. assets are on my list.
Do you have a plan in place if 1 or more of your holdings loses an excess amount of share price and cuts their dividend? If so what is that plan.
I wish I did.
I’m sure the odd stock might eventually cut their dividends in my portfolio but I can’t see dozens doing that. If so, good thing is, I’m still working – I figure I have 5-10 years before I even consider full-on retirement. I don’t need dividend income now at all to live from.
All that to say, not too worried right now.
Not a dividend investor for this reason. But this will be a good test for you. If a handful of stocks lose major value and chop dividends you’ll be in a position where you can change them out for better aristocrat style dividend payers. But when you’re retired you can’t exactly do that without taking a major haircut on your income. This next 6-12 months should give you some great data on if this style of investing is sustainable. I hope you’ll be very honest with your readers on if you change any of your holdings.
I stick to the index, been buying an inverse as a hedge on this way down and it’s doing great. All extra cash will be in by -30% if we get there and if we dip past -40% i’ll max my line of credits. If we go into full collapse…well i wont really need to pay those back…when we come out the other side i expect to be up triple digits by the time the market gets back to near even.
Not a strategy for everyone though.
Oxy cut its dividend for the first time in 30 years. It happens all the time, people just don’t notice it until it happens to them. There are dozens of other examples (NT, SNC, etc etc). Dividned investing as a strategy works great until it doesn’t.
You’re right B. There will be absolutely dividend paying stocks that will likely cut their dividends for the health of the company. Which ones, I don’t know, but I would think oil and gas companies for sure.
This is a very, very good test for me.
Actually, I’m looking forward to seeing how I react and deal with this. It’s an excellent real time case study for me to learn. I will be writing a post about that, this weekend I think.
I’m pretty honest on this site. I don’t inflate the portfolio nor lie about what I own. It’s banks, pipelines, telcos, utilities and infrastructure companies mainly in Canada. Mostly U.S. healthcare stocks in the U.S. U.S. low cost ETFs and index invest everything else.
Other than DRIPping my 30 stocks with lower prices, just trying to pay down debt and invest in my USD $$ RRSP. Very boring but that’s good during these times!
Mark, we’ll have to compare notes in a month or two, as I have only 10 company stocks to your 30. I’m betting none of mine will cut their dividend and more likely my income will be higher than today.
I hope so for you cannew! I suspect IPL will cut dividends this summer for sure, if not sooner, as might a couple of other stocks. Otherwise, I should be pretty good. I will keep you posted of course!
I find your blog very interesting, Thank you for sharing your thoughts and success with the rest of the world.
I think that the chart is missing the total value of your contribution (deposits / initial value of investments) on a yearly basis, which would paint a more accurate picture of the actual return.
Keep up the good work.
Good point, always good to know what I have invested right?
Well, for 2020 and 2019, I can honestly say all this growth year-over-year is due to DRIPping and maxing out our TFSAs. So, in the last couple of years, we have invested $24k. ($12k in 2019, another $12k in Jan. 2020).
I don’t have any plans to make any other non-reg. or TFSA investments until 2021.
Thanks for sharing again. I was referring to the value of the investment portfolio (at purchase price not current price we all know you’re doing good 🙂 ). Why it’s important – the chart doesn’t tell the whole story. Is your strategy generating dividends of $10k with a 100K or 1B investment? These numbers are bogus of course, just making a point.
Not a great week to be invested in the markets, that’s for sure.
The yield on my portfolio for Feb. was…(before the drama) about 4.2% so that should give you a bit of an idea.
Crazy weeks really. I’ve never seen anything like it with 12% sells offs in a day.
Nice one Mark Congrats.
I bought SU/ENB on the dip and TD at 69 but its not 58.I thought I had a good deal :),
My question how do you track the dividend income / RoR etc , what software do you use, have you covered all this in any of the articles ? I tried to ran a search but couldn’t find any on your blog.
I don’t use any software at this time. Just a spreadsheet. I have a small example of what I have used and modified here – first link:
“the portfolio value going down is not fun but as long as the income stream does not change much, that’s a psychological benefit to stay the course.”
Stay calm, breathe….
Mark, thanks for your calming post!
Welcome 🙂 All the best, ride the wave!
“help investors stay invested,
enable investor confidence to buy lower when markets correct, and just as importantly,
grow over time to deliver a tangible income stream to spend at some point.”
As I read this a great sense of calm came over me. Well said Mark!
I think it’s important to diversify the cash flow if you can and not rely just on one form.
Holdings dropped 20+% but dividends are growing – love it.
Yupper. Portfolio is down almost 20%, tens of thousands “gone” but I’m not selling and in buying mode in the coming months.
I mean really, what can you do?
Who cares what others feel about dividends? If one invest for and watches their income growth, as you do, you’ll notice that the income never seems to stop growing, even if your Income chart showed your accumulated income monthly. Those who concentrate on capital gains just saw the value of their holdings drop by at least 20%. It might recover but they’ll still be worried it might drop again.
Great stuff cannew. Are you buying any more of your key holdings? Did you see the Twitter comment from another investor?
They own banks, utilities, railroads and pipelines = 12 stocks.
“Only 12 stocks that’s it. That’s all I believe is needed to be low risk and consistently and slowly build income.”
Fully invested, only sold two holdings in Dec to gift. Saw the twitter and his post. Hard not to like his choices as that’s all I own.
I figured as much!
My dividends per hour is/are $0.82. Great way to track. I just calculated my defined contribution pension and it is $0.25 per hour.
These would be great numbers if I was 40 and not 50.
Ha. We can only do what we can do.
It took me a few decades to get to $2.35 per hour!
It will climb higher each month thanks to dividend raises and/or reinvested dividends or both. Going to stick with that plan for the coming years.
If you do the same, even with ETF distributions, that will happen to you as well.
congrats! gotta love seeing that income rise.
Of course dividends matter. cashflow is key. If I was just a growth stock investor, I probably would of sold off. Dividends keep me invested as the cashflow keeps coming, so why stress? Plus it makes buying easier at this time too.
keep it up
That’s how I see it. Cashflow is key. I will need it and want it in a few years.
Sure, the portfolio value going down is not fun but as long as the income stream does not change much, that’s a psychological benefit to stay the course.
We’ll see what happens with some oil and gas stocks and pipelines I own. The way I see it, we like our natural gas (ENB and TRP) and as long as we drive some cars and like plastics (SU) we should need that too.
Great work, Mark. Keep up the great work. Onwards & upwards
Nicely done Mark! $2.35 for every hour is a great earning rate. Pretty soon you’ll be getting $3 for every hour. 🙂
Geez, I hope so!!