July 2023 Dividend Income Update
Welcome to a new monthly dividend income update.
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How it started…
Based on some recent reader emails and questions, I thought it would be interesting to briefly trace back a few saving and investing milestones as part of this July 2023 dividend income update….
Years ago, we had this annual income goal – one that I keep posted on this page for reader reference:
It was earning $30,000 per year from taxable and TFSA accounts.
Fast forward into 2023, we’re investing beyond that milestone for semi-retirement.
Backing up though, that number was chosen because for many, many years, that number/that income per year, without any debt to start semi-retirement with, would cover most of our basic expenses from our taxable accounts and TFSAs to help “live off dividends” in semi-retirement as we work part-time / scale back over the coming years from full-time work.
That means income from our portfolio would cover basic expenses like food, shelter and taxes.
Well, we have long since surpassed that income goal inside those accounts but probably more relevant, I’ve changed how we report any monthly dividend income updates on this site in 2023 to align with our portfolio drawdown plans – to provide more clarity. My main goal in sharing our portfolio drawdown idea is that it helps you plan ahead as well…
With higher inflation of late, looking back, $30,000 per year as a couple is not too much money to live from. Living in Ottawa is not cheap, even though we walk and bike pretty much everywhere.
Yes, $30k per year will still cover our food (<$1,000 per month), shelter (condo fees and utilities) and property taxes every year, yet there is not much leftover to afford other items from this table!
Getting back to our drawdown plan this is largely what we intend to do:
- Work and earn part-time income in the coming years.
- Live off dividends from taxable accounts.
- Make slow, methodical RRSP withdrawals.
…to summarize our drawdown order is starting to look like this:
“NRT” = Non-Registered (N) then RRSPs (R) then TFSAs (T) as the last account(s) standing.
How it’s going…
With our drawdown plan largely in place, the desire to realize financial freedom also includes debt management.
Years ago, like many homeowners, we also had mortgage rates in the range of 6-7% (as in today) but thanks to a multi-decade debt management plan we’ve been chipping away at slaying the mortgage beast. With our current fixed rate at just 1.69%, we only have 8-9 months to go at the time of this post before we are mortgage-free.
As we approach working more on our own terms in the coming years, without debt, we figure the following income approach will serve us well:
Key Retirement Income Sources: NRT Drawdown
Age / Income Notes
Full-time work / part-time work
Desire to work part-time as we get older; debt-free spring 2024
Non-registered (N) x2
“Live off dividends” from accounts in our 50s and 60s
RRSPs (R) x2
Make slow, strategic, RRSP withdrawals in our 50s and 60s as needed
TFSAs (T) x2
Let TFSAs compound until our 70s, slow withdrawals in our 70s+
DC workplace pension > LIF age 55
N/A – Too young
DC pension plan turned into LIF at age 55, withdrawals age 55+
DB workplace pension age 65
DB pension plan kicks-in, pension income age 65+
OAS starts age 65+
CPP starts age 65+, or, we might delay CPP income to age 70 – TBD
Cash Wedge / Cash Savings*
Essentially an emergency fund for the coming decades, if ever needed
*Most of our cash savings will be held in a higher-interest savings account and inside my small corporation – for now.
July 2023 Dividend Income Update
Well, time for our Projected Annual Dividend Income (PADI) update, from the ‘N” and “R” accounts:
Here are just some of the companies that paid us dividends in July 2023:
- Canadian Natural Resources (CNQ)
- Bell Canada (BCE)
- Whitecap Resources (WCP)
To put this new monthy update into perspective:
- That’s averaging $3,510 per month.
- A reminder this is our projected income for the year, from taxable investing (“N”) and our RRSPs (“R”) – assuming no dividends get cut and/or no additional dividend increases occur and/or I don’t buy anything for the rest of the year with cash accumulating from dividend or distribution payments. 🙂 We believe dividend payments will be higher in our portfolio over time though… in the coming months since a few companies we own have not increased their dividends yet in 2023 (e.g., TD Bank, Fortis, among others).
- Another reminder we don’t intend to invest any money inside our taxable accounts for the rest of the year. We are currently saving for 2024 TFSA contributions to be made in early January 2024. We are likely to buy more low-cost ETF XAW inside our TFSAs once again.
Here is where things could be going in 2024:
July 2023 portfolio changes
As I wrap this post, keen readers will notice that our income this month is only slightly higher than June 2023.
That’s because we received no dividend increases in July (unlike previous months).
That said, I also want to share I decided to buy more CBIL in our registered accounts instead of keeping idle cash, which only increased our projected annual income by an incremental amount.
You can read some of the reasons why I believe owning cash alternative ETFs like *CBIL is smart over idel cash here:
*Your mileage may vary.
I believe with more dividend increases to come in August and in the latter months of 2023, assuming no dividend cuts occur, we’ll see our projected dividend income trending higher.
Thanks very much for reading and I welcome any comments or questions you might have!