January 2011 Dividend Income Update
“One of the misconceptions about dividends is that they are immune from any kind of safe withdrawal rate discussion. This is not the case.”
“In theory, I believe that individual dividend stock investing could be a winner against indexes. But in practice, the vast majority of sophisticated investors will be pounded, over their lifetime, by a basket of broad stock market indexes.”
Well said gents!
So if I agree with them, index investing is a proven winning long-term method then why am I focusing on dividend investing instead of an all-indexed approach?
This active approach is working for me.
Last month, I reported we made about $4,300 in dividend income for the 2010 calendar year. This month, we increased our dividend income to about $4,400 from our unregistered stocks. That’s an increase of $100 over one month thanks to being a partner in the following blue-chip businesses that paid us in January:
• Bell (BCE)
• Bank of Nova Scotia (BNS)
• CIBC (CM)
• TransAlta (TA)
• TransCanada Pipeline (TRP)
I don’t feel for a second I can beat the market by consistently picking and timing my purchases. Actually, I don’t time my purchases at all so I have no hope in consistently beating the market with dividend stocks long-term. What I’m striving for, is some passive income from these blue-chippers that should reward us in good markets and in bad, slow but growing tax-advantaged income over time. Constantly picking stocks or chasing story stocks long-term is a loser’s game, I’ve learned that. So, for part of my retirement strategy I’m going to be content buying and holding some established (some would say boring) companies that pay dividends; small payments here and there.
I’m a huge fan and user index investing; simply way too much evidence not to follow it. However, I firmly believe my dividend investing strategy is an excellent compliment to everything else in my financial toolbox, a tool I might add that seems to work well thus far.
Stay tuned to see where I’m at in February!
My Own Advisor