Welcome to my first dividend income update for 2015. For those of you new to these posts on my site, every month I discuss my approach to investing using dividend paying stocks and low-cost Exchange Traded Funds (ETFs) and how reinvesting the dividends and distributions paid from these investments is helping me reach financial freedom.
Where has the time gone?
Hard to believe but it was almost seven years ago when I decided to start my first full dividend reinvestment plan (DRIP) with Enbridge. Among other reasons I chose Enbridge (ENB) for my first dividend paying stock after coming home from work one day, getting the mail, and opening my monthly invoice from them. That fat bill payment got me thinking…
If we’re paying Enbridge this much every month, I wonder how many other people are?
Why don’t I become an owner of what we consume?
I wonder how much money this company makes?
A few short months after opening that fat bill I was up and running with my Enbridge dividend reinvestment plan (DRIP). Since those days I’ve rinsed and repeated that cycle for many Canadian dividend paying stocks. Today, I no longer use stock transfer agents to run full DRIPs but I do continue to reinvest all dividends paid every quarter using synthetic DRIPs, from Enbridge, and more than a dozen other companies that are expected to provide cash flow for our future selves.
Taking some advice…
This month I also reflected on something that Satish Rai said about this time last year in a Globe and Mail article. Satish mentioned this when asked what a boomer approaching retirement should 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.”
Satish Rai was the Chief Investment Officer of TD Asset Management. My understanding is he retired last month, maybe to live off dividend income, who knows.
I’m not a boomer, far from it, but I have embraced this advice. The best brains in the financial industry usually provide the following advice to all investors: invest for the long-term, keep your costs low-costs and diversify. I’m working on that again this year. Thanks to Canadian companies and ETFs that pay regular dividends and distributions, money that can be reinvested commission-free, we’re on pace to earn just shy of $10,500 by this December if we keep up our reinvesting habits. This is a milestone moment for us. I hope we can go above and beyond that barrier if a) we can save more but more than likely b) if we see more dividend increases throughout 2015. That’s the upside. The downside is we need to avoid holding companies that deliver any major dividend cuts. On that note the future is always cloudy. That makes thinking long-term, keeping costs low and diversifying more across companies, sectors and countries paramount as part of our plan.
Realizing this income goal in 2015 will put us about 1/3 of the way towards our passive income retirement goal so there is a dim light at the end of the investing tunnel. I hope we can get there this year and I encourage you to come back every month for the updates on the journey. Thanks for reading.
Got any comments or questions for our passive income retirement plan using individual stocks and ETFs?
First of all Satish Rai probably earns 500k+ a year in dividends so its easy for him to say even if the dividend is cut in half.
Secondly for everyone else, be careful if you are buying ETFS especially Canadian ones, it is prone to sector problems and the biggest one is yet to come, (the banks). You’ve seen it already with Nortel in the tech boom, Riim a few years ago, and then precious metals now oil, the index is crap and prone to huge mistakes vs even costly managed funds. Watch what happens when you’re beloved Canadian banks start to shit the bed in the next 20 years, hint it will probably go hand in hand with housing, consumer debt issues, and and increased scrutiny on investment fees.
I would agree Eric the Canadian economy largely runs on two sectors: financial and energy. This is why diversification makes sense. Also, I figure if the Canadian banks and energy economy goes under in Canada there will be bigger problems than no dividends. I hope it never happens but you never know.
Congrats! BUT it looks like I may do better this year 🙂 I finally caught up.
It’s a nice amount but really consistency and prioritizing investing makes it happen.
Geez!! You must really be saving!! Good on you. I will see what I can do to keep pace with you. Maybe I’m losing ground because I am indexing more? 🙂
Congratulations on your milestone Mark. Achieving over 10k in passive dividend income is no easy feat when you’re getting 3-4 cents on every dollar invested. Of course the dividend raises certainly help! I think you’ve got a solid long term strategy and I wish you all the best in executing it.
It’s coming along and more dividend raises in 2015 will help! Fingers crossed. Thanks for the encouragement and reading and sharing, it is appreciated.
Huge congrats for your milestone of $10,000 dividend income. As always I am inspired by you and other great minded investors. Keep being frugal and be rich slowly. I got some catchup to do Haha.
We live it up now and then but it’s a balanced approach, but so far, so good. Thanks for the support.
“If we’re paying Enbridge this much every month, I wonder how many other people are?
Why don’t I become an owner of what we consume?
I wonder how much money this company makes?”
I wished I asked myself those same questions earlier, but nevertheless better late than never. Congrats on the milestone MOA.
Same…I wish I thought the way I do about many things now, in my 20s. Live and learn 🙂 Thanks for the support.
Congratulations Mark you’ve done very well for yourself.
The plan is coming along Mr. CBB for retirement, thanks!
I tend to gravitate towards ETFs, like IVV and IVW. Slightly smaller dividend, but higher potential for growth. The dividends last year were over $6K, so hopefully they will get even better.
No cost at Fidelity for these trades. Keep building, keep saving!
Nothing wrong with ETFs, they can be a great low-cost way to invest. Thanks for your comment.
Congrats Mark! That would be pretty freakin awesome if you get to $10,500 by the end of the year. Ive been looking at ENB and need to get on that gravy train 🙂
It’s a goal but so is killing debt. Portfolio returns are out of my control and I’ve learned the only thing I can control are my investment costs and savings rate. Thanks for the encouragement R2R.
Mark, congrats on the dividend income milestone, you’re well on your way to some heft monthly dividend income!
Thanks Dan. Hopefully the income can be a big portion of our retirement expenses, 2/3 more to go!
Congrats on being on pace to cross five figures in dividend income this year. You’re killing it, bud. Keep up the great work!
We’re trying! Thanks for the support to FI.
Congrats on $10,500 in dividend income. You will surprised how fast the next $10k arrives.
Geez, I hope you are correct about the next major milestone!
Great job MOA. Congratulations on your success. That’s awesome. 1 / 3 way there is a relief. Now it’ll be easier now with a bit of a snowball effect. However, that doesn’t mean it’s time to kick back and relax. Thank you for sharing this journey with us. Take care.
Thanks for your comment and encouragement. The future is always uncertain and we’ll continue to save and reinvest dividends accordingly.
Wow $10,500 in annual dividend would be HUGE! Very glad to see that Satish Rai also agrees with dividend investing. 🙂
Thanks Tawcan! 1/3 of our goal is complete. We’re getting there!
I think you should start posting how much each stock has paid you in dividends, etc and which stocks/etf you own. Thanks, nice website. I get all excited about the dividend update, then I get nothing, no info :(.
I appreciate your comment Alex, but I share a bunch online and I’m not quite ready to expose everything. Thanks for respecting that.