June 2024 Dividend Income Update
Hello!
Wow, time and summertime flies!
Welcome to a new monthly dividend income update…sharing June 2024 results today.
For new and established readers, this is our monthly update to share how we are progressing with our hybrid portfolio:
- We invest in a mix of Canadian and a few U.S. dividend paying stocks – that deliver income (and some growth) into our accounts.
- We invest in a few low-cost equity ETFs – that should deliver some long-term price appreciation.
That’s pretty much it…but more to the personal finance story below!
June 2024 Dividend Income Update
As a follow-up to last month’s update, I thought I would answer one follow-up reader question and share some of the emails and comments (no names provided) that relate to their wealth building journey. On that note, I’m always amazed at just how well some DIY investors are doing/have done. Their wealth-building prowess is very, very impressive and remains very inspirational to me. Such folks don’t run a blog, a podcast, nor try to “pump” one investing style over another. Instead, I’ve observed, read, and listened that these successful DIY investors have devised a personalized plan and simply stuck with it over many investing years.
Here is that follow-up question:
Mark, last month you shared that XAW continues to be your largest holding, approaching 10% of your portfolio. What other top-holdings do you have? Thanks for more insights.
Well, again, I don’t share everything on this site for privacy reasons but I can confirm XAW remains my top-holding and has been since about 2021.
Other top-holdings include: RY, TD, FTS, T (Telus), and more recently CNQ after the 2-for-1 stock split earlier this year with some price appreciation. At the time of this post, CNQ is up 10% YTD.
From my previous Top-5 stocks post, BCE has long since disappeared in my top-5 since the share price has dropped quite a bit over the last year and I’ve been buying other stocks over the years – not BCE – reducing any BCE exposure since it only exists in my/our taxable accounts.
A dividend cut for BCE might be coming, potentially as soon as early 2025, so I’ll likely factor in a 50% dividend cut in future monthly income updates just in case…
I’ve owned CNQ for many years and will continue to do so…
Successful DIY investor updates
Successful investors devise a plan and stick with it. That can be with stocks like some of those above or totally different selections, that could be via real estate, or maybe even through entrepreneurial sweat equity. Wealth-building options abound.
Long-time readers of this site will know for our wealth-building journey (that remains in progress) that I have a bias to owning Canadian stocks for income and growth, along with a few U.S. stocks as well, and then using a few ETFs for extra diversification. No changes to that plan.
Other DIY investors have done something similar and while they don’t care to run a hobby project like a blog, a podast, or write books about their investing journey – they are very successful nonetheless. They’ve told me they don’t subscribe to the market noise, expert opinions nor trolling behaviour from others…smart investors seem to develop their investing processes and then mute, block and tune out any other crap about investing.
Instead of mocking others about how they invest, I try to keep a much more positive vibe on this site.
More directly: I simply want you to meet your investing goals however you arrive at them.
Your Money = Your Life = The Behavior Gap concept.
Given personal finance remains so personal, I’m remain inspired by other journeys including those readers, DIY subscribers and visitors to this site, here are just a few examples from many:
We are 100% invested in 12 TSX listed dividend income/growth stocks in an approximate equal book weighting. Our annual dividend income is currently $208,644 and continues to grow. I think it’s pretty safe to say that we will never run out of dough and will most likely leave a nice inheritance to our kids & their families.
And…related to some DIY stocks that some investors own:
Hi Mark: Unless you just bought BN then you should have BAM also. The company was BAM and just split off or spun out the Manager so became BN and the Manager became BAM. This was a quarter of the company and my 12187 shares gave me 3046 shares of the Manager. With a quarter of Brookfield Insurance that gave me an extra 20 shares of the Manager so that is how I ended up with 3066 shares.
Hi Mark: A friend and I were talking in a coffee shop and he asked what stocks I had. I said do you want me to start at the first of the alphabet or the last and then I rhymed them off. He was impressed so here are some.
21000 ENB, 12187 BN, 10000 BCE- TRP- CU each, 8000 T, 6350 TA, 3066 BAM, 2000 NA, TD, RUS, EIF each, 3600 EMA, and 3200 FTS. These are just some. All stocks pay dividends or distributions, some quarterly and some monthly. On 1 June I will get $24909.88 and over $32,000.00 for the month.
And…
As of Friday, we hit $59,682 in forward dividend income. A big leap came from rebalancing the non-reg portfolio. $60k was my original early retirement goal but I never thought we would get there this quickly. In 2023 I updated the goal to $84k by December 2027. My forecasts suggest we’re on track.
Simply amazing.
June 2024 Dividend Income Update
Last month, we received dividends from the following key companies:
- Brookfield (BN)
- BlackRock (BLK)
- Canadian National Railway (CNR)
- Enbridge (ENB)
- Waste Management (WM)
- iShares ex-Canada ETF (XAW)
- And more…
And, with another small purchase of TOU recently (I hinted I would buy more a few months ago…) and some idle cash added to an interest savings account I’ve added a bit more forward income to the investing pile.
Here is our projected annual dividend income (PADI*) for 2024:
*Recall these PADI updates focus on our RRSPs and taxable accounts based on their size/asset value. This income does not include our TFSAs nor other income sources. Read more about these monthly income updates on my FAQs page and as always, feel free to ask me a question!
To put this monthy income update into perspective:
- That’s averaging about $3,843 per month.
- Since I like to treat part of our portfolio like a job, working for us that never gets any vacation (!), this portfolio job equates to earning about $22.17 per hour (income/40 hours per week x 52 weeks).
- We earn over $126 per day, every day, even in our sleep. (income/8,760 annual hours)
A reminder I share these posts not to brag (hardly) nor to replicate what I am/we are doing. This is how I invest – a mix of stocks and ETFs as a hybrid investor. Your mileage may vary.
But, our hybrid investing path is helping us realize our goals.
My first mention and coining of the term “hybrid investing” was some 12 years ago on this site in this June 2012 Dividend Income Update. I was hopeful (at the time) that I would earn about $6,000 from the portfolio that calendar year. I wrote:
“Including the small addition to my portfolio last month my dividend income increased when compared to May and I’m happy to see I’m on target to earn about $6,000 in dividend income this calendar year.”
Certainly sticking with my plan has surpassed this investing goal from $6,000 to $46,000 and I hope to accomplish more over time.
I continue to remind myself:
“A good investor has the courage to make choices. The stock market is a bit like a zoo. There are all kinds of animals there, from elephants to tigers to snakes to monkeys. You only need a few of the best species to build a good diversified portfolio that will provide sustainable, low-risk, high compound earnings.” – Stephen Jarislowsky, author of The Investment Zoo and Canadian billionaire investor.
I look forward to sharing a new update with you in another month.
All my best in your ongoing financial journey.
Mark
Related Reading:
Great read! I look back and wish that I had possessed the humility to have found your site, and others that I follow, much sooner than I did. While we are on now on a track where I feel confident in our ability to deliver a successful retirement, I recognize I made substantial errors earlier on.
I did cringe a little bit when I saw the word tinkering. LOL. I myself did some tinkering this month where I sold a key dividend payer (MFC) that was approaching doubling since I bought it in the Covid dump of 2020. I sold half our shares to realize a taxable capital gain but thankfully there are previous losses to offset it. This gave us the opportunity to invest in EMA, a company we previously owned in the mid 50s, but sold. It feels good to have improved our diversification.
As we only hold about 17 different stocks, and I view a couple as a bit risky, such as a AQN, I try to limit any one from exceeding 7%, But some are less than 3% and ENB is over 10%.
When ARE recently dropped below $12 It seemed like a great opportunity (not without some considerable risk, but it has worked out so far). I expect good growth here so this is a position I will eventually divest from in favour of better yielders as the price rises. I expect that will be the last of the “tinkering”. In this case, the majority of the position is in registered accounts, so there will be very little in terms of tax consequences.
Today, as my wife and I prepare to embark on three weeks vacation at a rental cottage, I fully admit I’m ready for retirement now, but I need 2-3 more years of patience to get our annual dividend income where it needs to be.
I am so grateful for the lessons that I learned from you, Mark, and also from the regular contributors in the comments section. It has been a great learning experience, which has “paid dividends”!
My sincere thanks to you for keeping the site going and for always encouraging reader participation.
Thanks very much, James.
A few thoughts!
1. Yes, all investors make mistakes. Even the pros. Nothing is perfect and there is no perfect portfolio. When in doubt, indexing works but that’s also not perfect. 🙂
2. Everyone has their own journey. There are similarities that can exist but nobody has the exact same goalposts in life.
3. Limiting % in individual stocks helps with diversification and risk management. Holding individual stocks will always have, IMO, some winners and some underperformers. Just like an indexed fund. Just the way it goes.
4. I continue to believe it makes sense to always, always, max out registered accounts before taxable accounts. (We continue to practice this ourselves; add to TFSAs every year, then add to RRSPs every year while working.)
5. Finally, the “mental side” and emotional-side of retirement is huge and something I need to work on myself…trying to learn from others who visit, comment, read and engage here since I certainly don’t have all the answers all the time.
I appreciate your detailed comment.
Have a great vacation,
Mark
AQN is dead to me! LOL.
I did not think they were going to double anytime soon but I did not foresee the short term possibility of another dividend cut. I sold out right at the open this morning and managed to get $8/ share. it worked out okay for a 14 month trade. If AQN dips below $7 in the future I will definitely consider reinvesting but that may not happen, and if not, I’ll be okay with it.
Today’s proceeds were used to buy more Telus, which now has an overall 4.69% weighting in the portfolio.
Our go forward divvy income is now sitting at $60.6k. Setting a stretch goal of $65k by year’s end. Might be too ambitious while trying to save for TFSA contributions at the same time, but might as well set a goal!
Ya, my average cost on AQN is about $7 per share. I only have about 0.25% of my portfolio in this and not really worried, this dividend cut has a negligible impact on my overall plan. See my most recent Weekend Reading for my decision! 🙂
Excellent work on the forward dividend income = very impressive!
Mark
Hi Mark. You posted recently about common mistakes investors make – one of them was trying to time the market. I agree that the market is very much like a bunch of animals in the jungle and we have little control. But, recently you posted suggesting the market was currently over-valued. Would it not make sense to invest during the next “market correction / downturn”? Berkshire and Buffet and Munger (god rest his soul) certainly capitalize(d) on the market cycles – buying good companies during market downturns. Even one one of top 20 investing mistakes lists buying high and selling low as a common mistake. Isn’t this a contradiction?
Excellent comment. I will explain.
The U.S. market does seem over-valued. U.S. stocks don’t go up 15% per year (annualized) for years on end without any consequence.
https://www.myownadvisor.ca/weekend-reading-where-do-u-s-stocks-go-from-here/
That said, I keep buying since I have no idea if all-time highs will lead to more all-time highs short-term or long-term. If I could predict the next market correction, well, I would absolutely sit on lots of cash and invest when that correction happened. I simply have no idea when that might occur.
Instead, I try and buy all the time over the course of the year and certainly when markets do correct, I buy again or more if I can afford it.
I don’t tend to sell very often in my portfolio, I prefer to keep buying although I have evidence of what I sell on this site and when.
I hope that helps clarify my position and behaviour – good or bad or indifferent.
Mark
Hi Mark, you’ve achieved excellent results over the years, and I was wondering, what was your goal at the outset of this journey? Did you have a sentence or two that encapsulated the target destination, something that helped you keep your eye on the end point?
Thanks very much, Bob. Kind words.
…really trying to do what I believe is best for us. It’s a journey. I mean that.
I had a few goals many years ago:
1. Get out of debt, own our home.
2. Have a million dollar portfolio beyond my workplace pension, beyond my wife’s pension, etc.
https://www.myownadvisor.ca/financial-independence-update/
“Our multi-decade financial indepdendence path instead has been basically a simple one-two debt reduction and investing punch:
Buy and pay off our home/condo. (Done – we are now mortgage-free).
Invest for income and growth until we don’t have to any longer.
Because of this long-term path, our semi-retirement dreams are very, very close.”
Well, #1 was realized this January 2024.
#2 was surpassed a few years ago in fact and now working on growing/staying with the portfolio for passive income and growth.
I’ve since set a few softer goals/targets:
3. Continue to increase our portfolio income by stayed invested so that,
4. Consider part-time work in the coming year or so.
#3 is happening (all the time) but when it comes to #4 I really haven’t figured it out yet to be honest. I want to continue to work in 2025 and 2026 but at what and how much is the real question to be answered.
Any guidance? Open to it!
Mark
“Any guidance?”
Well, we’ve just passed our 4th retirement anniversary, and only now do I feel that I’m in a place where I’m comfortable drawing down our funds. So, if you can establish a clear idea of how you will go about doing that before you retire, that’s going to help with the transition. For me, the key thought process changes I had to go through included: getting comfortable selling equity, accepting that I’m giving up potential significant gains in favour of being in a position to ride out five years of a 2008-style crash, and deciding not to have a multi-million dollar portfolio when I/we die.
Of course, having a bucket list ready is highly recommended too.
Bob
I appreciate that, Bob. 🙂
Based on 2024 spending, to the dollar, and income expected from our portfolio in 2025 – we’re getting a very real picture of things which has always been our plan before semi-retirement.
To your points:
1. I’m not “quite there yet” with getting comfortable selling any equity – perhaps in another couple of years?? All withdrawals will be via cash/cash equivalents in the coming years.
2. Ya, preparing myself with cash/cash equivalents for 12-18 months for sure but not sure if we will have enough to ride out five years of spending.
I hear ya, life is short! re: not have a multi-million dollar portfolio when I/we die = not our plan either!
I appreciate your comments,
Mark
Re your point #2. Because you’ll have a good income from dividends (perhaps reduced a little in a prolonged recession), the cash wedge/fixed income is just a top-up.
The amount needed to cover us for five years is calculated as follows:
Five Years Spending – (Any Work Pension Income + Dividends and Interest + Any Government Pensions + Other Income)
NOTES
– I downrate the Dividends and Interest by 10%.
– Government Pensions include CPP and OAS. You don’t have to be drawing these to include them in your calculation; you just include the amount you could receive if you needed it. If you’re age 56, you could include up to one year of CPP in your calculation. The money will be there if you need it, and it might be better to start CPP and/or OAS early rather than sell equities at -50%.
– The minimum target size of the cash wedge reduces monthly once your in-range of being able to start any work pensions, CPP, and OAS. Our minimum cash wedge amount is currently dropping by $600 a month. By April next year it will be dropping by $2,600 a month.
– Our five-year’s of coverage consists of 2.5 years cash/GICs, and 2.5 years of bonds.
My goal is to have the five years fully covered, but not a penny more than necessary. So, as the amount required reduces, I cash in the bonds/GICs and either withdraw the funds per the plan, or reinvest in equities.
This is very interesting and I haven’t seen it so clearly articulated like this before. Until now I’ve always thought of the cash wedge as “too much cash doing nothing” but I could see myself take the approach you described Bob – thanks a lot for this!
When I do the calc for us, five years still seems like too much, but this is definitely going to make me re-think how much cash (or cash-like) we keep.
Great stuff. The cash wedge has a few purposes but mainly, IMO, to avoid sequence of returns risks.
I’m adding to my cash wedge/cash cushion in 2024 for 2025 but also buying some equities here and there as well.
Mark
James, you’re welcome.
I know what you mean about holding too much cash. To keep our cash wedge to a minimum, I include all the cash we have sitting around in the calculation, including our emergency fund, cash for current expenses, accumulated but not withdrawn dividends, and any other savings, minus our grandkids’ piggy banks! If you are comfortable with cutting back on your spending during very bad markets, you can adjust your cash wedge accordingly.
The cash wedge is our “break glass in case of emergency”. I hope we never need it, but if we do, it will be sufficient to get us through without crashing our retirement. Establishing and appropriately sizing our cash wedge has had a significant positive impact on our peace of mind. For others, being 100% in equities is fine, but that’s simply not me.
Great stuff!!
Mark
Ya, I will be 1. “living off dividends” from taxable accounts (x2) + 2. making RRSP withdrawals (x2 accounts) in semi-retirement + 3. working part-time = income sources. The sum of 1+2+3 = income > expenses. That’s the thinking anyhow.
Related to #2, the biggest wildcard for me/us is ensuring there is enough cash/cash equivlents ready for not only RRSP withdrawals at least a year in advance but also for any buffer in a market downturn. I don’t have 5-years’ worth of fixed income or related assets right now.
In my Financial Independence Budget, I absolutely have government pensions (CPP and OAS) in my calculations but I won’t be tapping them for another 14 years… age 65 at min.
https://www.myownadvisor.ca/financial-independence-budget/
Ideally, when it comes to RRSPs and our RRSP withdrawals, if dividends and distributions paid in one year can fund the following year of RRSP withdrawals – that is perfect. Then, on top of that, I keep another 1-2 years’ worth of RRSP withdrawals in cash/cash equivalents at the ready just in case. If/when dividends and distributions paid inside RRSPs (x2) can fund most of my RRSP withdrawals, then I figure that’s a pretty good start in my early 50s.
Over time, after the first few years of semi-retirement, I can start selling equities once I get used to things, our budget, etc.
e.g., say RRSPs (x2) worth $500k combined. In another year or so, I could sell $15k of equities per year = 3% withdrawal rate in any year moving forward in retirement and not worry too much about running out.
Slowly, I would ramp up my RRSP withdrawal rate from 3% to 3.5% in a few years, to 4% after 5 years, to 4.5% after 10 years, etc.
I like your goal: “…coverage consists of 2.5 years cash/GICs, and 2.5 years of bonds.” That seems very safe to avoid multiple years of bad stock market years and avoiding touching any equities in the process.
Mark
Great job. Excellent progress. Love the message about developing your own investing process, ignoring all the noise, blocking, muting, etc all other crap and mocking. You’re a proof in progress its working.
Very much appreciated and I enjoy engaging with financial role models like yourself, and many other commenters, readers on this site since they have essentially “been there, done that” by honing what works for them, and sticking with it with minimal tinkering. I always find that very impressive but equally a playbook to follow. 🙂
Mark
Thanks for the kind comments.
I’d say you’re more than home free on the highway to financial independence. Anyone paying attention to your blog can see why.
Cheers
Ha, thanks, keep ya posted – the journey continues!
Mark
Hi Mark,
As always an amazing read with lots to digest, and so generously free.
A follow up question that I struggle for some time. I have some USD which I would like to investing without converting to CAD, to avoid currency exchange and other fees. At the same time, I would like to legally avoid the need for reporting to US tax authorities and stay Canadian focused. If I buy the USD-currency ETFs on the Canadian stock market, that follow American indexes – such as XUU.U (total US market) or HXQ.U (Horizons Nasdaq in TSX in USD), are those considered Canadian holdings or American holdings ? My accountant was not sure. Thanks!
Thanks, Ron! I try my best.
When it comes to USD investing, personally, not tax advice, I try and keep all USD assets inside my registered accounts first (i.e., RRSP, LIRA, etc. and then if needed/desired, inside the TFSA) since I don’t need to worry about that as any wealth grows.
When it comes to T1135 reporting, that applies to taxable accounts – if that is the root of your question.
“Does specified foreign property held in registered plans, such as registered retirement savings plans (RRSPs) or tax-free saving accounts (TFSAs), have to be reported on Form T1135? Specified foreign property held in an RRSP or a TFSA is excluded from Form T1135 reporting requirements.”
Source – link removed, Canada.ca changed their links/content.
If you own Canadian-listed assets that trade in USD $$ (e.g., XUU.U, HXQ.U) then you should be fine. My understanding is a Canadian-listed ETF does not need to worry about foreign income reporting.
If you owned US-listed ETFs in your taxable account, then the answer might be different.
https://www.myownadvisor.ca/note-to-cra-foreign-income-reporting-doesnt-need-to-be-a-foreign-concept/
https://www.blackrock.com/ca/investors/en/resources/faqs/distributions-and-tax
Not tax advice, I hope this was helpful. Definitely seek out any second-opinion from a tax accountant and/or you can call CRA directly to confirm….but going Canadian-ETF focused is smart to simplify any tax-reporting requirements overall.
Mark
Nice work Mark! I’m working on about $8400 for the year. Will pay property tax, insurance utilities etc most months- now I need to work on food and fun.
Fo you have BIP? I think for them in a TFSA, BIPC is better for tax treatment?
Ya, I have BIPC but the corporation (BIPC) is fine for TFSA, RRSP, etc. but was also made to ensure all CDN dividends are tax eligible.
https://bip.brookfield.com/bipc/stock-dividends/tax-information
Congrats, Geoff, the snowball is starting for you!
Mark