June 2011 Dividend Income Update

Hard to believe it’s already been a month since my last dividend income update – summer is really flying by!

Last month I asked if readers were panicked about the stock market.

Some readers, like Jon Evan said “sell in May and go away!”  Jon went on to say that “traditionally markets correct at this time of the year although this spring has seen a more bearish one……hey even Apple has dropped 10% and is still falling.”

You’re right Jon, there are certainly some seasonal stock market trends although I’m no expert at that so I don’t even bother guessing “if this is the year” the seasonal trend will occur or not.

Another dedicated reader, Dividend Mantra said “I’m not panicking about sliding markets either. I’m a net buyer of stocks, so sliding or sideways markets are good news to me. I’m always more excited when my favorite equities are on sale.”

I like what you’re saying Mantra.

Instead of panicking, watching Jim Cramer, BNN panellists or a bevy of other talking heads on TV and following what they say,  I’ve ignored all stock market news that says not to buy equities this summer and instead, I’ve bought more.  The best part of this is, I’m not paying a penny to do so!  (By the way, do they still mint those things – pennies???)

This summer, I’m watching our dividend income grow* regardless of what Mr. Market does by sitting around and doing  nothing.  Well, almost nothing.  My synthetic dividend reinvestment plans (DRIPs) bought more shares in the following companies this month:  CML Healthcare (CLC), Enbridge (ENB), H&R REIT (HR.UN) and Sun Life Financial (SLF).  Next to nothing, I did make an effort to make a small $50 contribution to a company I have a full DRIP with, Fortis.  Add it all up, and we’re on pace to earn just over $4,500 in total income from our Canadian dividend-paying stocks in our unregistered accounts and TFSAs for the 2011 calendar year.  We can’t spend that money now, that money is being reinvested for our future, but I’m starting to feel pretty good about our dividend investing approach to fund part of our retirement income.  (*Don’t be fooled by the graph in this post, our income is growing but different companies pay dividends in different months.)

Where will we be next month?  As long as great Canadian companies continue to pay steady dividends, not to mention rising dividends over the years (like many of them have for 50, 75 or even 100 years) I have a feeling our journey towards some passive retirement income will be quite enjoyable 🙂

What do you think about our dividend investing approach?  Will it work long term through market highs and lows? 

19 Responses to "June 2011 Dividend Income Update"

  1. Awesome post. I really like this type of investment strategy.

    I commend you on what you expect to receive in divvy and distribution income for 2011. $4,500 annualy is a great accomplishment. This is what i love about investing in great companies that have a long history of paying dividends.

    I also have positions in all the stocks you mention and I find when you’re able to get a few monthly distributions in there, it helps on the cash flow side of things. The world would have to fall in shambles for FTS and ENB to miss a dividend play. I’ve mixed my ENB positions with ENF to get that extra bit of distribution. It’s not as great of a play as ENB of course, but it nevertheless provides a good monthly stream IMO.

    Often, after I invest in a large, blue chip Canadian stock, i try not to even look at the fluctuations in share price, for months at a time. For the vast majority of my investments, I am buying for the long-haul.

    Despite the fact that I don’t participate in any DRIP plans because I use my cash flow stream for living expenses & reinvestment into other positions, I can certainly understand your decision to go with DRIPs. I really like the idea of topping up on shares at discounted prices.

    Great stuff…man I love this blog

    1. @TWC,

      Thanks for the compliments on the blog!

      Agreed, the Canadian investment space would have to be an utter mess if Fortis and Enbridge would miss a dividend payment. I love those companies.

      You’ve offered a great tip for investors: “after I invest in a large, blue chip Canadian stock, i try not to even look at the fluctuations in share price, for months at a time. For the vast majority of my investments, I am buying for the long-haul.” To be so confident in your purchase, you don’t care what the price is for months afterwards, says so much about your investment style and belief in your strategy. That is really amazing. Kudos to you; something I can definitely learn from and apply to my own situation!

    1. @Inq,

      Sorry for the delay in responding, I’m usually much more timely. My income dipped in June (from May) since all my dividend-paying stocks don’t pay me monthly. As such, some months, I will have higher income when more companies are “on the hook” to pay out more dividends, and some months, the income will be lower because I’ll have fewer companies paying dividends. Over time though, quarter after quarter when the same companies are paying dividends – the income should rise. It should. I hope. We’ll see. Continue to follow along find out 🙂

  2. Will definitely work through high’s and low’s. One of the most underrated investment strategies is the power of dividends and compounding. Sometimes investors are so caught up in the appreciation of capital, they forget how vital dividends and passive income can be to a portfolio.

    If you think about it, a dividend is a claim on a company’s actual earnings out of cash flow. Price appreciation of a stock is based solely on hype, or a future value of the company that may end or never prove to be true.

    I currently make about 168.83/month gauranteed money in dividends, and it’s a great feeling.

    Nice write up! I look forward to next month’s Dividend Income Update.

    1. @KaeJS,

      Thanks for checking in! The best thing about dividends, they don’t lie. If a company doesn’t have the earnings to pay for them, the company won’t be paying them for long. Great work yourself on the dividend income – well done and keep it up!

  3. I am glad to see you focus on dividend income. The problem with a focus just on the value of your portfolio of stocks is that this value can and will bounce around a lot. If you are investing in dividend paying stocks to live on, it is cash flow that counts in the end. It is cash flow that you live on.

    It is not that I think stock price is unimportant. It just is that you can put too much emphasis on this. You can needlessly stress yourself out when the stock market bounces around. And, the stock market will bounce around.

    1. @Susan,

      Yeah, the focus is on income, not portfolio valuation. I don’t see how values really translate to money in my pocket 🙂 I really don’t mind the market boucing around, it becomes a great opportunity to buy great companies at cheap prices. I love cheap! As always, thanks for your comments. I’ll be checking your latest post this weekend.

  4. Yup, the approach will work through highs and lows, and will be especially useful during lows. As Mantra’s quote said in the article, when net buyers find that their chosen investments are on sale, that’s a good thing.

  5. Thanks for the mention! I think that comment sums up my investment style pretty well.

    Excellent job on the dividend income. I have a long way to go before I catch up to you. I was just reading Passive Income Earner’s post on dividend income and it seems you two are very close to one another. Great jobs and keep it up. It’s highly inspiring to beginners like me!

    Keep up the buying. I know I will.


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