June 2022 Dividend Income Update
Hey folks!
Welcome to my June 2022 dividend income update – I hope you’re having a great summer…
In case you missed it, last month, I posted this income update about the dividends vs. total returns debate that seems to rage on.
Given some additional questions in my inbox of late, I thought I would spend part of this new monthly dividend income update answering those questions.
Read on and enjoy, questions in bold font and my answers follow!
June 2022 Dividend Income Update Q&A
Mark, when do you think you’ll reach your $30,000 per year income goal? Seems you’re way ahead of schedule!?
Ha. Thanks. 🙂
Well, if all goes well in the coming year or so with investing inside our TFSAs and inside our taxable account then I suspect we’ll reach our goal sometime in early to mid-2023 should the following occur:
a) all dividends continue to be reinvested,
b) I/we obtain a few more dividend increases between now and next summer, and
c) assuming we max out our contributions to our *2023 TFSA accounts in January (*in the process of saving for those this summer and fall!)
Mark, I believe benchmarking your portfolio is very sensible and it seems you’ve done well over time with your DIY portfolio to keep up and/or beat the Canadian stock market index. Do you attribute some of your success to buying and holding those Beat the TSX stocks? Luck?
(Reference: Benchmarking my portfolio – June 2022 update)
In a word: “yes”, on the BTSX stocks but maybe some luck, I dunno.
The future is always a very cloudy place!
You can read up on the Beat the TSX (BTSX) stocks to own and related articles here.
In fact, Matt Poyner from one of my favourite sites (Dividend Strategy) recently highlighted some mid-year success for the 2022 class of BTSX stocks. The results are rather telling…
I believe buying and holding many of the BTSX stocks works for two (2) key reasons and those reasons can work for you as well!
- BTSX stocks are established, blue-chip companies with significant cash flow. Recall dividends can’t be faked for long, so companies that generate lots of cash can afford to pay/reward their shareholders via dividends. These companies tend to have an established history of not only paying dividends but increasing dividends year after year.
- BTSX stocks are purchased at good prices – higher yields. Since dividend yield is calculated as the dividends earned per year/current stock price, as the stock price declines, dividend yield increases. So, higher dividend yield can signal prices for these blue chip stocks are down – which means it’s a good time to buy more of them.
Worse case, if you’re not a fan or just plain queasy of buying and holding individual stocks then you can always own some of my Top Canadian Dividend ETFs for income.
When will you sell your stocks as part of your portfolio drawdown plan?
Not for some time!
In fact, during semi-retirement (as we work part-time) we hope to “live off dividends” and distributions per se from our portfolio for about 5 years or so. After that time has passed, the early years of semi-retirement if you will, we’ll consider spending the capital from our portfolio and stop working entirely.
I know you never post any net worth updates, but how much income do you think your entire portfolio could generate? $40k per year? $50k per year? More?
Humm, I know the answer but I won’t post that for privacy reasons, so thanks for respecting that.
I will say however that we have modest RRSPs balances beyond our goal to earn $30,000 per year in taxable and tax-free dividend income.
In addition to our RRSP accounts (one each), my wife and I are also very fortunate to have x1 defined benefit pension plan (mine) and x1 defined contribution pension plan (hers), with about 20 years “in the bank” for each as well.
I have an idea what the commuted value of my pension might be.
I know exactly what my wife’s DC pension balance is.
So, all told, when I factor-in the sum of all our personal accounts, plus total estimated pension values, I can say hitting our $30,000 per year dividend income goal plus becoming debt-free (in a few years) should give us some great financial options including part-time work with little long-term financial worry.
I would encourage you to read this post below, about how and when to withdraw from your RRSP and TFSA, if you haven’t already done so since I would consider tax efficiency a priority for any income-oriented semi-retirement drawdown plan!
June 2022 Dividend Income Update Summary
Readers, keep your questions coming since I enjoy trying to keep up to every email, every comment and every interaction on Twitter with me as well.
Our June 2022 forward dividend income is now $27,212.
To put that income into perspective:
- Almost half of that annual income is tax-free. We will not pay tax on income when we decide to withdraw monies from our TFSAs.
- Our forward dividend income continues to rise every month thanks to compounding power alone.
- $27,212 in annual dividend income translates to earning $74.55 per day from part of our portfolio, doing nothing at all.
- We are just shy of $3,000 per year from our long-term goal or 91% of the way there towards this particular financial goal 🙂
Thanks for reading and sharing, and a reminder to please bring forward your comments and questions for any future updates!
All my best,
Mark
Mark
My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.
Investing is different for everyone, I get that. And you are doing well with your plan. But when reading about the BTSX stocks history, we can see that it beats the ETF’s by a long shot over time. For any beginner that is unsure of himself or his investing, the BTSX stocks is the way to start. ETF’s just give you the market averages. The point about using ETF’s as a Diversification Strategy is very over rated. It is a good option when all people have experience with is mutual funds, but your still paying someone else to do something that is so easy to do yourself. Start small, buy BTSX stocks, learn, and build confidence. Keep it simple.
You have a lot of good advice on your site. But when you need to write something every week to generate clicks, it dilutes the quality of the advice.
Thanks for that feedback DivInvestor. I will reduce the clicks in the posts over time, but I do want to reference previous messages/posts as well. I can always put those extra reading articles at the end. (Believe me, other bloggers are far worse than my site for links….) 🙂
I think for most beginners, in Canada, they would be wise to really own two ETFs:
1. XIU
2. XAW for everything else or VXC as they wish, etc. for ex-Canada and own U.S. stocks.
Max out TFSAs, RRSPs, in that order, and keep doing that.
Over time, the beginner investor can migrate to owning individual stocks as they wish. The reality is, your savings rate is key as you know. The more you save, invest, the more you can overcome any mediocre investing decisions.
Ideally, buy BTSX stocks and a few others from various industries and don’t deviate. Keep some cash. Retire early as you wish.
Cheers,
Mark
BTSX stocks were the pathway for me to rehabilitate the errs of my ways from the past.
I haven’t really been able to follow it too closely as I want to avoid selling holdings due to triggering capital gains. I round it out with a couple of other stocks, but I agree that it is a simple system – easy to follow and a very strong, proven track record.
You are right. There is so much information out there for new investors to get confused. You must be diversified, you must be in the US, you must be in Emerging markets, you must have cash, etc. Look at what is happening now? If your in ETF’s your portfolio is way down. That can lead to panic and selling at the wrong time. For new, and young investors the best way is to start with a proven system like the BTSX. TFSA and RRSP accounts for sure, but let’s not confuse investing with accounts. I agree with your statement. “I want to avoid selling holdings due to triggering capital gains. I round it out with a couple of other stocks, but I agree that it is a simple system – easy to follow and a very strong, proven track record.”
Buy one BTSX company to start in your TFSA, and then next year you buy another one, and then another one. And while you wait for the market to come back you’re getting paid dividends.
“Buy one BTSX company to start in your TFSA, and then next year you buy another one, and then another one. And while you wait for the market to come back you’re getting paid dividends.”
Yup. A great process! Smart.
Mark
Awesome 🙂
Not much else to say!
Way to go Mark!! Markets are behaving favourably towards helping your future goals!
Ha. Thanks! Getting there… :)))
Mark
Looking good Mark.
You should have a very comfortable retirement some time in the future.
RICARDO
I hope so, thanks very much for some motivation!