January 2014 Dividend Income Update

Welcome to my first 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 how reinvesting the dividends paid from the Canadian companies I own are helping me reach financial freedom.   You can check out my previous dividend income update here.

I enjoyed reading this article recently in the Globe and Mail – lessons from legendary investors on what to do with your money.   Here’s how their advice relates to my investing journey with dividend paying stocks, and these updates.

Peter Schiff – best investment advice you ever received?

“I have been given lots of advice over the years—most of it bad. That is why I try to invest for the long term.”

Charles Brandes – what keeps you up at night?

“Nothing, really.  However, after 2008-’09, investors were scared about investing in equities—and it’s still going that way. The institutions used to have 60% in equities, 30% in bonds and 10% somewhere else. Now, they’re down to about 40% in equities. When you look at the long-term rates of return, equities are absolutely the superior place to be. If you’re a fundamental long-term investor, you just keep with equities because they always recover to new highs.”

Jeremy Seigel – What’s the best investing advice you ever got?

“The late Paul Samuelson, who was my PhD thesis adviser at MIT, talked about low-cost indexed investments. That stuck with me, and I was one of the very first people in the Vanguard  S&P 500 Index Fund. Low-cost investing is still the way to go, but I now prefer fundamental indexing, which weights stocks by earnings or dividends instead of by market capitalization.”

Satish Rai – What can a boomer approaching retirement do?

“I have a simple piece of advice for boomers: Live off the dividend income, not capital gains from stocks or bonds. If you need the capital gains, you have to try to time the market when you buy and sell. But if you’re able to sustain your lifestyle with dividend income—plus OAS, CPP and your pension plan—you won’t have to worry about fluctuations in the value of your portfolio.”

So, the best brains in the business say:  invest for the long-term, stay in equities, focus on low-costs and seek out a plan to live off dividend income.  I’m working on it gentlemen.   Thanks to Canadian companies and ETFs that pay regular dividends and distributions we’re projected to earn $7,900 this calendar year.  This was an increase over last month thanks to a new TFSA contribution for 2014 – an account we want to max out.   I could foresee us earning close to $9,000 in dividend income 10 months from now if we continue to save, make smart investments in our TFSA and keep DRIPping the stocks we currently own.  Stay tuned for more updates later this year and thanks for reading.

Got any comments or questions for our dividend income plan?

13 Responses to "January 2014 Dividend Income Update"

  1. I am new to dividend investing , and am trying to learn as much as possible before going ahead and start buying next month (March 2014).

    I am currently consolidating my various accounts at different places to a BMO self directed investorline account, as I am done with ‘financial advisors’ having me buy OK to bad Mutual funds and stocks.

    A few questions:

    1) To earn $7,900 in dividends how much do you have invested ?
    And how much would I have to invest today , to get the almost $8K in dividends ?

    2) What EFT’s and Stocks etc , that you currently own, would you be happy buying at today’s price ?
    3) What is the minimum quantity you would recommend for efficient dripping (and how would I figure that out for myself)?

    I have about $100,000 between my RRSP and TFSA that is currently in cash, (and bad to OK mutual funds / stocks that I will sell) I wish to start over with good investments.

    Thanks in advance

  2. I like the Charles Brandes quote. Unfortunately it looks like many investors didn’t take this advice and freaked out when stocks dropped to start the year. These things happen.

    Nice work on the new income level.

    1. Thanks. I figure we have another 15 years of saving, and we’ll be there. That will put me into my early 50s for an early retirement…if that’s considered early. I want my last full day of work to be age 55 and will work on my own terms after that date. Maybe tending a bar in Costa Rica. 🙂

  3. $7900 in div income is impressive, nice work! I agree with the advice above. I’ve tried timing the market and most of the time it doesn’t work (for me). I’m quite content to buy and hold. Especially FTS – another div increase as you predicted 🙂

    1. Thanks Dan. It’s coming along, but I’m a loooong ways away from being able to retire. I figure I’ll need about $55k per year in 2014 dollars to retire/cover expenses in retirement.

      I’m also very content to buy and hold and hold. I can’t take much credit on the Fortis call. That’s like saying it’s going to snow again in Ottawa this winter 🙂

  4. Impressive projected dividend income. I was only investing within TFSA and RRSPs until about a month ago. I opened a Questrade account and started with $1,000. I realized how much I have to learn about investing, but my goal is to keep learning and start working on investing in dividend paying stocks.

    1. I think you’re making great progress Daisy since I recall you are in your early 20s. I invested in high-priced mutual funds from my late-teens until my early 30s so you’re way ahead of the game about knowing what to invest in, what to avoid (high-priced products).


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