July 2019 Dividend Income Update
“Do not save what is left after spending, but spend what is left after saving.”
“Wall Street makes its money on activity. You make your money on inactivity.”
“The stock market is a device for transferring money from the impatient to the patient.”
– all quotes from, you guessed it, Warren Buffett.
Simple, sage and time-honoured investment advice by someone who knows a thing or two about successful long-term investing.
These are things I try to employ in our investment plan, and so far, I believe that approach is working.
Save first, then spend
This has been our approach for years, and we’ll keep it that way for as long as we can.
On that note, I believe this is a better way to budget.
Although we’ve blown part of our 2019 financial goals to smithereens lately, I do believe we can recover a bit later this year.
By saving first, then spending thereafter, we get our money working for us sooner than later (even if we aren’t perfect all the time).
You make your money on inactivity
I wouldn’t have believed this over a decade ago, but I certainly do now.
The sloth-like energy I expend to stay invested (in my basket of dividend-paying stocks and low-cost U.S. ETFs) is really starting to pay off with this extended bull market run. With subtle check-ins on the portfolio, it seems there is little progress. Looking back years later, it’s motivating and gratifying to see that owning a $1 million investment portfolio (outside any existing workplace pension assets, excluding any of our home equity) may actually occur.
If you want to know what I own and learn about my boring approach to successful investing you can find more details on these pages here:
This is how I built my dividend portfolio.
Check out why I love dividends.
Check out why I’m a huge fan of some ETFs and how many you should own.
The stock market is a device: it transfers money from the impatient to the patient
Akin to the advice above from Mr. Buffett, while I’ve learned there is nothing magical about dividends per se they are very darn good for my wallet.
As we march towards our “magical” passive income goal of earning $30,000 per year from Canadian dividend stocks, inside a few key accounts, I remind myself that dividend income is our money to keep and spend as we please.
With dividends I don’t have to worry if the company I own will put the cash earned to great use – killing debt or making acquisitions or other. As a shareholder of the dividend friendly company, I get some of their earnings to do as I please. I don’t have to sell stock shares unless I want to either.
What are some of my favourite Canadian stocks?
You’ll find some of them here: I’m a big fan of dividend friendly companies like these.
Where are we now?
As at the end of July 2019, we’re on pace to earn more than $19,000 this calendar year from our tax-free and tax-friendly account (TFSAs and non-registered respectively) as long as the companies we own continue to pay dividends at the rates they do. Who knows? We might get a dividend increase or two from our portfolio before the end of December 2019…
Like last month, to increase our dividend income by over $100 over the previous month, I did nothing more than stick to our plan and hold the same (boring) stocks as the previous month, and the previous month before that – reinvesting dividends paid to buy more shares commission-free.
You can read about the pros and cons of dividend reinvestment plans here.
Where will we end up in a few months? I have an estimate in mind based on the chart I use to track our dividend income progress and via this blog I will absolutely keep you posted!
How are your investing plans coming along? Use dividends for income? Use ETF distributions for income?
My previous dividend income update including answers to some reader questions is here.
19K excluding your RRSP account is simply amazing. What’s the ratio between non-registered and TFSA if you don’t mind sharing?
I am approaching $24K including RRSP. $10K is from RRSP so I am at $14K outside.
I have decided my number is $80K – comfortable retirement. And my number is $1,777,777
It’s coming along DE, thanks. I believe it’s close to a 50/50 split but I would need to look at our spreadsheet to confirm. I own a few low-cost U.S. ETFs like VYM in our RRSPs so that brings down the dividend/distribution income a bit but VYM does yield 3% and will provide capital appreciation for decades to come as well (VYM returns are historically close to a very broad market ETF VTI).
Approaching $24k is outstanding and very well done! You have kids (we do not)!!
$80k in retirement (just from dividends) is a crazy high number I think. Anything close to $2 M at age 60 retirement age (just for an example) means you’ll need to spend almost $180,000 per year at age 80 to drawdown your portfolio. Even if that’s inflation adjusted, that’s a withdrawal very, very, very, very few people are going to need – unless they plan to leave a great legacy – which is also fine! 🙂
Continued success to you and thanks for being a fan and supporter – I do appreciate it.
Mark
We just crossed the $80K threshold (dividends & interest) for all the various investment portfolios but mostly RRSPs. This includes a whack of cash we’re sitting on in short term GICs. If the market corrects substantially I can see us investing that but for the time being I’m just going to sit on it. I have decided (I think) to start pulling more funds out of my RRSP starting this year and move them into the non-reg (XIU or ZLB, gotta decide on that soon). I’ll pay the tax, no big deal to me.
Wow. I remember you also have a great pension, also some income from your harvest. You have a great retirement there, Lloyd. Congratulations.
My husband crossed the line of $30K annual investment income for his RRSP and TFSA. I think he is ready to retire but he does not agree.
$30k per year in dividends and distributions just from TFSA and RRSP (and no other assets) is very, very good!
Very nice job Lloyd. Let alone your other income and assets. Impressive. Live it up!
That seems like a decent idea to me to increase the deregistering of what is obviously a lot of assets. Figuring out what to do with them is a great problem.
Thx RB and May.
“Live it up!”
lol…ya, I’m way to boring and fuddy duddy to live anything up. My idea of a good time is sitting out in the field doing my composting thing.
https://www.facebook.com/photo.php?fbid=2396774983939359&set=pcb.2396777173939140&type=3&theater
That’s great 🙂
That’s awesome Lloyd. Love the lawn chair and sun umbrella! Ys, I’m a little boring and fuddy duddy too.
BTW, I was thinking of you some when I was out running 22.5k this morning! You can count half as yours!
“You can count half as yours!”
lol…Can I count that as calories burned on My Fitness Pal record? You guys shamed me into losing some weight and getting the BP down where it should be. I’ve lost 40 pounds since last Sept, I’d like to shed about 15 or so more. Having said that, running anywhere would likely kill me, just riding the bike ten miles or so is about all I can handle.
That’s outstanding Lloyd. Going for a 10km walk this am (grocery shopping on foot) and a 10km bike ride later today!
Any way you want to count it. My GPS said 1354 calories burned in that run.
Geez, that’s some fantastic news you’ve dropped your BP down along with a good amount of weight and more to come. Didn’t know I was a positive influence. I’ve dropped about 7 lbs in last 4 weeks or so, but I’m fairly light to start with. Probably will get down another 3 lbs before my key event Oct 13, and we leave for the Mediteranean 2 days later. You’d like the name Valley Harvest Marathon. (Annapolis Valley which is a beautiful agricultural area and on Bay of Fundy.) Two more races before then. Can’t wait!!
Thanks and all the best to you.
Sounds like great activity Mark. Have a fun day.
XIU or ZLB or both are great products for your non-reg. Lloyd. Just luck on the transition!!
“or both”
hmmmm…very interesting…Why couldn’t I just do both. With my penchant for indecision, do both and save the angst.
Correct. No more inner battle 🙂 Put 50% in each and sleep easy and earn 2-3% yield and long-term gains. Happy investing!
Funny enough. I was thinking it and then you wrote it Mark.
Don’t worry about spending. I should reach that amount in early 50’s and then we can do Renos, add a vacation place/investment and travel in premium economy or business class. And I can change cars if I want which I have never really done much … A cruise I looked at in Europe for 2 is $18,000.
It’s not hard to spend 🙂
Jeepers. With $1.7 M invested (pension included I assume) by early 50s – and no debt – you will be set and so will your family 🙂 Kudos!
DE, it’s a great number with kids out of house. I hope I had kids younger then I would be claim ready to retire already.
That’s awesome Mark! Great to see your progress towards your $30,000 goal.
What I find amazing is what that $19,000 will do when it’s reinvested. At a 4-5% dividend rate that $19,000 would create almost another $1,000 in dividends next year! Compounding is amazing (to me anyway!)
You bet Owen. As long as the companies we own keep paying their dividends, even without any increases or new money, another $1k should be coming this time next year. I will keep you posted via this site!
Mark: “I remind myself that dividend income is our money to keep and spend as we please”. Add to that, by sticking with quality DG companies, you’d have been at the same point, coming to $19k, without ever looking at or worrying about the market value or price of your holdings.
Good work.
Thanks cannew. Thinking we might hit $19.5k this year (in December 2019) with no new money added, just reinvested dividends and dividend increases. I will let you and others know via the blog!
Luv those quotes by the master- Mr. Buffet. And incredible amount of wisdom. Too bad he and Charlie can’t live forever.
Mark, congratulations. That’s a great number and you’re making steady progress. Boring is good!
My guesses: I think you can expect ’19 increases from
EMA on or about Nov 1 .5875 >.6125
BCE .7925>.83
RY 1.02>1.05
BMO 1.00>1.03
Telus .5625 >.575
You may have others I haven’t thought about or didn’t know you hold.
I thought BCE hikes dividend once a year only? This year already increased in February.
All big fives banks other than TD, plus NA should hikes dividend one more time this year?
Also FTS and ENB.
Sunlife and Manulife both in November?
These are the major ones remaining for year 19 I am expecting.
Good catch on a few other May. Yes on FTS, CM, BNS. Think you’re right on BCE. Also IPL for me.
Don’t own MFC or SLF.
My guesses: I think you can expect ’19 increases from
Geez, I hope you’re right on these!
EMA on or about Nov 1 .5875 >.6125
BCE .7925>.83
RY 1.02>1.05
BMO 1.00>1.03
Telus .5625 >.575
I own the top 3 lifecos (MFC, SLF, GWO); DRIPping all of them. I have full confidence FTS should increase in the fall (own that too); DRIPping a few shares of that as well.
Happy to see Telus increase again as well, if they do! Their guidance says they should.
Hope so too! I think all but BCE. I got carried away with that one. Am expecting 8 more stock divvy increases in ’19-probably 3-4% avg or so.
FTS is in the bank. No way they’ll stop the streak and their payout ratios are back to improving. .45> .475?
I own GWO. Owned MFC many years ago. Have sister and friends working there. My drips are limited. You folks on the accumulating side can do lots of that. I need to eat from the income…..and burning lots of calories lately!
Also Telus, of course. Telus now is a big position in my portfolio.
@May: I have a friend who just turned 96 and the only stock he owns is Telus. He has just over 10,000 shares and uses the dividends as his mad money.
Don’t ever feel worried about a good stock which keeps paying and growing your income.
that is incredible! his future looks very bright. ((:
One can’t discuss dividend hikes without talking about dividend cuts as well. Going back a while but I seem to remember that Manulife cut it’s dividend after it ran into problems. Same with Potash, I actually bought it with the idea of trading it for a tidy profit. It was, at one point, up nearly $15 a share but living abroad I forgot about it and it dropped back down. Ended up breaking even. It was around that time I was about to make a huge bet on Pennngrowth Energy, buying something crazy like 30 grand worth of shares but Dividend Ninja emailed me and talked me out of it. Thankfully he did as it’s gone from 9 dollars when I was looking at it to something like 30 cents now. This doesn’t take away from dividend growth investing. It’s how I invest but you can’t buy a stock and ignore it.
Good point. Often overlooked. Altagas cut their dividend by almost 60% shortly after I acquired some. One might want to do some calculations to see what various dividend cuts might do their income stream. Can you still get by with a 20% (pick a number) cut across the board? Couple that with the associated drop in share prices? Food for thought.
I think a few experiences like that make you a better investor. I’m much more cautious about chasing yield now. And the cool thing is, in spite a few bad stocks, I’m way ahead of where I was before a few years back.
I’m retired and my wife is now T minus 3 years and 6 months and counting!
“experiences like that make you a better investor. ”
lol…not really. I still basically use the dartboard technique. Having said that, I love these 300 down days….it makes the DRIPs look more efficient (now if the darn market just stays down!). 😉
Happy to see another 800 point over the next couple of days. It won’t change what I invest in one bit. Bring it for cheaper prices on my DRIPs!
I calculated that if my RY stock in particular, just a random pick, went to $0 (as in no dividends, no capital gains – basically got wiped off the earth tomorrow) my dividend income would only be down 1.5%.
If companies like RY get wiped out, there are bigger problems going on in our country and around the world.
I believe there would be a zero percent chance of that happening. I’m speaking more along the lines of a massive pull back in economies around the world. Normally I’d not even consider such a thing but there is *nothing* normal in the world today. I can’t see dividends being maintained in a massive global recession and I fear there are a substantial number of folks that would not be able to withstand widespread dividend cuts combined with a major pullback in stock prices. Again, I’d not be too concerned in a normal world. I’m just seeing a major absence of normal in the world.
Oh I agree Lloyd. This is where some capital gains could be sold and/or you keep a decent cash wedge as well. Maybe the markets are finally turning? I don’t see the end of the stock world though.
The massive pullback could happen for sure. Who knows. We’re all just waiting and seeing and watching. My goal is not to change my approach even for a 20-30%, or even a 40% pullback. Stay invested in my equities and build cash at the same time.
That’s fair. I owned MFC during and after the dividend cut. I still own it and probably will. I owned TransAlta and glad I sold it.
https://www.myownadvisor.ca/now-transalta/
If you’re going to be a stock picker, not everything will be a winner over time.
EMA announced their dividends on July 5th. It will be $0.5875 per common share.
Thanks. I am talking about the annual dividend hike they announced last year at the time of Q2 report.
For year 2017 though, they announced it in September. So maybe this year it will also be September.
Congrats on another great month.
I am waiting for EMA dividend hike. They didn’t announce it in their conference call script, weird.
This month already got dividend hike from KEY and ITP. Small position but I am still happy to take them.
Congrats on the other dividend hikes.
I hope you are correct about EMA. The stock is rolling this year. Getting expensive to DRIP!