Welcome to my first dividend income update for 2016. For those of you new to these posts on my site, every month I discuss my approach to investing using Canadian dividend paying stocks and Exchange Traded Funds (ETFs), and how reinvesting the dividends and distributions paid from these Canadian holdings are helping us reach financial freedom.
It’s easy to be pleased with the progress we’ve made over the last few years, getting our financial act together, largely thanks to a good (an improved) savings rate:
Prior to 2008, I wasn’t focused on dividends or ETFs or much of anything related to our portfolio. The Great Recession was definitely a rude wake-up call and time to re-evaluate things. I started this blog in earnest early in 2010 and I’ve been using it ever since to chronicle our saving and investing ways to financial freedom.
- In 2010 we began the transition out of (costly) big bank mutual funds and into lower-cost, Exchange Traded Funds. That transition was completed later that year.
- In 2011 we continued contributions to TFSAs and RRSPs, along with paying down our fat mortgage debt. We also invested using full Dividend Reinvestment Plans (DRIPs) in some companies like Bank of Nova Scotia and Fortis.
- In 2012 we successfully maxed out our TFSAs and took a balanced approach to our financial goals, saving for a great trip to take in early 2013.
- In February 2013 we returned from that trip, Costa Rica, after two weeks of learning to surf, visiting beautiful rainforests, hiking and drinking Imperial beer on the warm, vast, gorgeous beaches in Santa Teresa. I want to go back…
- By the end of 2014 I learned to appreciate the merits of indexing more, and started to embrace this approach as part of our investment composition in registered accounts. We also started saving for home renovations to be undertaken in 2015 as well as another overseas trip, to Scotland for two weeks.
- 2015 was a big year for us, with lots of moving parts financially. We renewed our mortgage at a rock-bottom rate thanks to our star mortgage broker, we took the aforementioned trip to Scotland, we completed the ensuite bathroom renovation we wanted (and needed) and we recently set new goals for this financial year.
I have no idea what 2016 will bring, hopefully health and wellness first and foremost. I do know on the financial front keeping a modest savings rate this year should lead to good financial outcomes. I also know that having some money left over to enjoy is important to us, very important.
Based on our chart, should new capital be invested largely as planned, I don’t give in to buying new, shiny toys I don’t need, and as long as dividends and distributions are reinvested to buy more shares and ETF units commission-free, I think we have a shot of reaching some of these passive income milestones in the years to come. This month, we’re at just over $12,000 and by the end of this year I’m optimistic we could hit $14,000.
I’ll keep you updated where we get to later this year. Thanks for reading and sharing.
What do you make of our financial plan? Do you have a similar financial plan in place?