June 2021 Dividend Income Update
In our prolonged low-interest rate environment, I have every reason to believe that early retirees (or folks working towards it…) like myself should largely ignore fixed income.
This means investors should really learn to live with stocks.
So, in owning more stocks than bonds and by reinvesting my dividends paid today, I hope to ride the returns of many Canadian dividend paying stocks. Via dividends, I will get paid in the process. I will rely on my growing stream of dividend income for any early retirement. That’s the plan – always has been.
Money compounding away
A decade ago now, I wrote about my decision to buy more Enbridge stock.
In those very early posts for this site, I was just hoping to be able to reinvest my dividends paid from this one company in order to buy more shares commission-free. My how things change if you simply let some dividend paying companies do their work…
In this past month alone (June 2021), I received dividend payments from the following key stocks inside my taxable account and from our tax-free (TFSA) accounts, and DRIPped the following shares:
- Canadian Utilities (CU) – DRIPped 1 share
- Enbridge (ENB) – DRIPped 11 shares
- Fortis (FTS) – DRIPped 4 shares
- Great West-Life (GWO) – DRIPped 3 shares
- Manulife (MFC) – DRIPped 2 shares
- RioCan REIT (REI.UN) – DRIPped 1 share
- Smart REIT (SRU.UN).
In fact, when it comes to Enbridge, we now own enough ENB stock such that when dividends are paid – ENB dividends cover our condo utility bills (heating, cooling, gas, and water bills) every month.
These commission-free shares earned above this month ignore the other months I/we get paid from other stocks, including Telus (T) and Algonquin Power (AQN). Both companies announced dividend increases in May 2021. Those increases will only accelerate our dividend income journey using our taxable account and TFSAs for investing.
In the coming months, more dividend income increases can be expected specifically from many Canadian banks. Our big-6 banks are sitting on mountains on cash, ready to be distributed to shareholders by Christmas.
What about your RRSP assets?
A reminder I don’t include any RRSP income in these dividend income reports since a) I’ve always reported it this way and b) RRSP assets are increasingly, mostly, U.S. assets. For sure, there is an income stream to be tallied from RRSP assets owned. I/we hope to leverage that to “live off dividends and distributions” in the coming years as I/we enter semi-retirement.
June 2021 Dividend Income Update
With stocks and ETF units DRIPping along nicely, our money continues to compound away.
Assuming no dividend cuts occur, and dividends continue to compound as they might, we have a great shot at earning $22,500 this calendar year in dividend income, from the capital invested inside our TFSAs and a non-registered account. As of this month, our forward dividend income is at $21,959.
To put that passive income in perspective:
- That’s like earning $2.51 per hour of every hour of every day (income/8,760 hours (24 hours x ~365 days)) even in my sleep.
- Part of my portfolio is essentially it’s own job: earning $10.56 per hour (income/2,080 hours (40 hours x 52 weeks)). Then again, some of that income is 100% tax-free (thanks TFSA).
I share these updates, this way, to demonstrate the power that any committed plan can deliver with time. As always, I look forward to sharing the next update with you and any feedback you have on this one!
You can see some of my stock holdings here. Our long-term goal is to earn $30,000 per year to start semi-retirement with.
These are dozens of articles about low-cost ETF investing and how I invest here.
You can see how other successful investors are using low-cost ETFs or dividend investing (or both) to fulfill their retirement income needs here – there are dozens of essays and case studies to check out!
Check out some great questions asked, and answered by me, on my dedicated FAQs page.
Very inspiring your progress, congrats!
I own none of your dividend contributors for that month but Enbridge is definitively on my watchlist. Amazing economic moat!
All the best
Thanks very much SavyFox – glad to have you following along 🙂
Nice! By what % your dividend income is going up every year? Our dividend income in 2021 supposed to be around 48K + around 16K interest income…. Dividend income is up 9%+ , but interest income willbe down because of depressed interest rate
That’s a good question, I don’t really track it. I can say from the graph here are my final numbers and estimates:
2018 = $17,221 ($2,071+ from 2017 = 13.7% increase)
2019 = $19,558 ($2,337+ from 2018 = 13.6% increase)
2020 = $20,892 ($1,334+ *COVID-19 impacts on dividend increases and cuts = from 2019 = 6.8% increase)
2021 = targeting $22,500 by end of December 2021…? 🙂 Would be ~ 7.7% increase from 2020 if it occurs – re: getting back on track.
These gains are predominantly from TFSA contributions and reinvested dividends. Very little taxable investing or new money beyond that.
Mark I noticed you said you dripped 1 share of CU. According to CU web site it states:
“The Canadian Utilities Dividend Reinvestment Plan (DRIP) allows eligible Class A and Class B share owners of Canadian Utilities to reinvest all or a portion of their dividends in additional Class A shares. Effective January 10, 2019, Canadian Utilities’ DRIP was suspended.”
I confirmed this with BMO Investorline. My CU shares are in my RRIF. Not sure if or why that would make a difference. Any thoughts?
The challenge with DRIPs is that even though the company and transfer agent may stop all dividend reinvestment plans at the transfer agent level, depending on the brokerage, they may honour the DRIP and reinvest dividends for you at the brokerage-level.
So, some brokerages like RY, TD, Questrade, etc. may offer the DRIP even though it is suspended by the transfer agent.
Another example is ENB.
Again, some brokerages allow you to DRIP those ENB shares inside taxable, TFSA, RRSP, RRIF, etc. even though the transfer agent has suspended the DRIP.
It’s messy I know!
Hope that helps,
Thanks Mark , that’s helpful. I’m actually shocked that a company and a transfer agent can stop a dividend reinvestment plan and yet a brokerage can continue doing so. Does that mean a brokerage can start DRIPing shares for a company that has never had a DRIP? Interesting
I look at it this way too Ron – many fund/ETFs don’t have DRIP programs with transfer agents yet you can reinvest dividends and distributions of those funds/ETFs with your brokerage account.
I know RBC in particular keeps a list on their site – what you can and cannot DRIP when it comes to publicly-traded stocks.
It is interesting though isn’t it?? All very messy for any investor to understand and I don’t get all the reasons myself.
Great progress Mark!!
Different in retirement here with decummulating vs accumulating = less drips.
Own 4 of 7 on your list. 2 drip. FTS (5), ENB (6) but would be 18 if I wasn’t taking some cash to pay daddy to live!!
My largest stock holding = about half of your biggies % mentioned.
Yes, I could see that, re: less DRIPs. I suspect in the coming years I will turn off all DRIP taps except my TFSAs – keep those reinvested dividends humming along. I didn’t expect TD or BLK to be close to 6% total. Just happened!
TFSA’s here drip, CDN stocks in my LIF drip, RRSPs, unregistered drips off. For me also has something to do with holdings size/allocations etc. Ha, growth is good if you’re okay with exposure amount!
Yes, I’m OK for now but I do need to think about potentially, maybe, possibly, trimming some assets in the coming years if some winners continue to run. Beyond VTI or QQQ or XAW, I hope to keep only individual stocks to 5% max. of value.
Do you think that’s still a decent guardrail for me? Sometimes my biases get in the way of good decisions 🙂
There are 2 trains of thought there. Some say let winners run and others develop guidelines and if so should follow.
Often the thinking has to do with opinions on diversification or “deworseification”. I may be a bit of an outlier because I think its good to own some amount of assets you don’t want to have at a given time. ie bonds (now) Personally I think 5% is enough and there are other stocks (up to 5%) or broad etfs ( added to stocks = up to your desired geographical % goal) worthy of investing more in, but that’s a very individual choice. If you stay more strict then having a % trigger where it makes financial sense to re-balance is a good idea. ie 6-7-8% etc. If not let ’em run.
Ya, I think 5% is enough albeit I’m OK with the risk of letting a few winners run. A good example I don’t own sadly is SHOP. It has taken off and I would have likely sold a bit on the way up but let the rest of it ride.
Certainly a challenge when you have ~30 CDN and U.S. stocks like I have to ensure you have some decent diversification.
Pretty easy to avoid owning just VTI, XIU and maybe XAW as your basket of ETFs.
OR just owning VEQT or XEQT – even better.
Am I making the case for indexing? 🙂
Yes, you are, LOL.
I am trying to have some indexing for a while, didn’t get to it. I am kind of hesitating to invest in index when I thought it’s overall overvalued. For now, more comfortable in invest in individual stocks which I think relatively fair valued.
Might be wrong decision. Well, as long as I meet my investment target, I think all is good. I don’t compare myself with any benchmarks anyway. This year I have already achieved my target and still half year to go. Who knows, maybe the market will crash and all the gains will be gone. In any case, just hope my dividends income will stay stable.
The thing with indexing is, today’s price is the best price available. Sure, you can wait out the value of VTI, QQQ, XAW, etc. but we can’t predict what the future holds. So, today’s price of entry is the best price until the next price coming along.
I prefer a blend of active management (my stocks) and passive (those ETFs I listed above) since the latter provides some growth that I really don’t have to worry about. I too, hope my dividends from ~ 30 stocks overall will remain stable and grow year-over-year. That’s the plan! 🙂
With 30 stocks how to find time to do the ‘homework’ on each company? (Listen to conf calls, read ‘research reports’ etc?)
I wonder if that’s too many?
What if in retirement you dropped it to 15 good quality names (forget the etf’s)? There’s nothing wrong w > 5% in a single name. Maybe a better consideration would be that no one name is > 10% of annual dividend income, so that if anyone cuts (like you mentioned IPL last year) that would be more than offset by div incr from TRP, FTS, T, BMO, RY etc? Just a thought. All the best to you, Jim
Not much research at all now, to be honest Jim. To your point, I don’t feel I have to research TRP, FTS, Telus, etc. Own big-6 banks and let them ride, among others.
I am working on simplifying the portfolio over time. Less stocks, and a higher blend of VTI, QQQ, and such. I will keep you posted!
Another great month for you, congrats.
I have also dripped quite a few shares of ENB in June. Less than before though as I have adjusted my portfolio a little bit now I don’t hold any ENB in my TFSA anymore. Now I have lots of ENB shares in my taxable account. Tax leaking while we are still working. That’s the problem with my getting ready to retire but not retired yet, LOL.
Thanks May. Good on you to get ready to retire. It’s going to take me some time to wrap my head around the semi-retirement concept after then some 25+ years of working full-time!
I feel like I’m the only guy who doesn’t hold/like Enbridge (at least not long term).
I shouldn’t say I don’t own it, because it’s probably a large holding of my RBC dividend income fund…hah
Those mountains of cash for the banks make me really want to grab a whackload of bank stocks….but I still kind of feel like a crash has to be coming at some point soon – and like the idea of sitting on 20% cash….
I wonder if a special dividend will be announced for any of the big banks – or just big increases (or both).
You might be right Jordan, a major correction could very well occur. Lots of all-time highs floating around and things could very well come crashing down. Keep cautious. Keep some cash for sure. I am including saving for 2022 TFSA room now 🙂
No special or major dividend increases, but I’ve read a few articles that many big banks could raise their dividend by 10-15% this fall. We’ll see if it really happens!!
Excellent job Mark and so nice to see your progress and continued success! I don’t own any MFC (I have positions in Intact , GWO & SLF) but thinking about initiating a position as it looks relatively cheap at these levels. Great work and congrats once again!
Thanks very much J.P.!
Dripping 11 shares of Enbridge is pretty amazing! We dripped a lot of Enbridge last month too. 🙂
Can’t wait for the CDN bank dividend hike.
Ha, indeed. Great stuff Bob.
Looks like another solid month of dividends Mark. 🙂 That’s amazing how Enbridge is practically subsidizing all your utility costs, lol. Going from almost 2 shares to 11 shares via DRIP shows a lot of progress. I like the stock as well. ENB is one of my largest holdings, followed by TD.
With all the cash the Canadian banks have I think it’s time for them to increase distributions to shareholders. Maybe we’ll see dividend hikes before the end of the year? Fingers crossed.
Good to hear from you my friend. Yes, I can see dividend hikes from CDN banks coming in another quarter or so. Stay tuned. Just a hunch!
Likely 10% or so by all big-5 and maybe closer to 15% from a couple of them….another guess 🙂
TD is major part of my portfolio. Approaching 6% overall along with BLK.
I hope that banks will increase dividend this year…. I hold all “big 6” + some small financial like FN and FC …. the biggest positions in CM and TD
I think you will get your wish!!
“That’s a 17-per-cent boost to the dividend, and it only lifts the payout ratio to the low end of National Bank’s target range.”
I would say 10-12% from all big-6 is likely on average. We’ll see. Just a guess!