Welcome to my latest dividend income update.
For those of you new to these posts on my site, every month I discuss our approach to investing focusing on Canadian dividend paying stocks. We believe buying and holding a number of Canadian dividend-paying stocks in our tax-free (thanks TFSA) and non-registered accounts will, over time, provide some steady monthly income for future wants and needs in retirement.
This month I’ll share my latest dividend income update and answer another reader question.
Hi, maybe you have covered this before but could you go over how you keep track of your investments and dividends to end up with your progress graph and your percentage and dollar estimates? I’m not a spreadsheet or tech kind of girl and this stuff baffles me 🙂 Thanks!
Thanks for your question.
For these updates, I keep the math rather simple. I keep a simple spreadsheet alive to track the following:
- Asset owned
- Dividend or distribution payment date
- Units owned
- Payment amount
- Payment frequency
You can find this spreadsheet along with other tracking tools and calculators on my Helpful Sites page.
I then calculate my estimated, forward dividends based on units owned, payment amount and payment frequency.
The graph is rather straightforward as well. At the end of every calendar year I tally our dividend income earned for the year and plot that over time (each calendar year). For example:
- At the end of 2014 our dividend income was $9,550.
- At the end of 2015 it was $11,750.
- Last year it was $13,475.
We’re optimistic if we keep maxing out our TFSAs every year going forward, investing in blue chip Canadian stocks, reinvesting dividends paid from such companies, and…with any money left over we invest inside our non-registered accounts, we might come close to reaching $15,000 later this year. This would be exactly halfway to our passive income goal for an early retirement.
Last month was kind again to our Canadian stock portfolio. Companies like Power Financial and TD Bank hiked their dividends by over 5% and 9% respectively. I’m hopeful more dividend increases are coming our way in April, but I never count on those. We’ll take what our companies provide including long-term capital gains.
This makes our investment plan rather boring – but also very profitable in recent years. We don’t trade, we don’t chase hot stocks and we don’t panic or sell what we own on a moment of bad news. We buy, we hold, we collect dividends and we reinvest dividends every month and quarter for future income. So far, so good.
I’ll have another update for you next month. Thanks for reading our journey.
How are you investing for retirement? Do you own some individual stocks like we do? Do you own ETFs or other funds? Please tell me you don’t invest in high-priced mutual funds…!
The chart says it all really. Slow and steady is the name of the game. If we get a bear market, you will reach your goals much faster. I think that you have very conservative assumptions – per my calculations, $15K in dividend income that is reinvested should double on its own in 10 – 12 years ( without adding any new money)
I also like to focus on my forward income on an annual basis.. It is easier to step back and look at the big picture that way.
However, it is also helpful to look at the expense equation.
I’m quite conservative with my investment style, but you’re right, that $15k should double every 10-15 years without me adding more money. I will however do that because I want to work on my own terms at age 50.
Thanks for your comment!
I totally understand you. On a side note, a few years ago I hated my job, which was driving me to really go into FIRE mode. Then I found another job that I hated less, and then I found another one that was much better. As a result, I no longer want to just retire at all costs. Or perhaps, my increased level of dividend income/net worth has made me care less 😉
No job hating here just that I’m very much looking forward to being financially free. I’m optimistic if we can keep saving and investing at our current rate (and the market returns about 6% or so during this time) we’ll hit these goals at age 50 (7 years):
$30k in dividends (age 50) + part-time work (50s) + RRSP income (50s and 60s) + pensions (60s) + government benefits (age 60+) will be “enough” for us.
You will be in a much more diversified situation than us… We won’t be eligible for government benefits for something like 30 years from now.. Income streams will be Dividends (taxable + tax deferred), some sort of work, and some interest income. There is some possibility for rental income down the road, but that may be decades from now 😉
On the other hand, many have found that the less they need a job, the more enjoyable it may start to be…
Well, we’re not eligible for some government benefits until at least 20 years from now. So income streams like dividends (taxable + tax-deferred) + self-made dividends (via capital gains) + workplace pensions will need to do.
I continue to believe the key for us is to have dividends pay for the majority of our basic living expenses ($30k per year). If that can be done then that opens up a world of good options – money making money so we don’t have to.
Just curious but since you use ETFs do you track the overall return of your portfolio? This is something that Garth Turner rags on a lot, a balanced (60% risky/40% safe 25% Maple) and he says it averages 6%. I’m only asking because if you goal is to live off of pure dividends than your yield seems really low. It’s also one of the reasons why I decided against ETFs in favour of blue chip CDN stocks
I do. I benchmarked my portfolio here:
Over the last 5-years, my CDN stock portfolio has returned about 12%.
My U.S. and international-side of my portfolio has returned about 13%.
To be honest, I don’t worry about portfolio performance very much. Most of the Canadian stocks I own are in XIU, but in different amounts/weights. So I basically have XIU-like returns but a tilt towards more yield. I own the same top U.S. stocks as VTI, VYM, and HDV does. So, I get market-like returns there as well.
Thanks and that’s very impressive returns!
I use QTrade.ca, they offer over 60 free ETFs. I have 25 different ETFs in TFSA, RSP & an unsheltered Canadian Cash account. I buy ones that give me monthly dividend payouts, except for a few with quarterly payouts. Short term bond funds (corporate & government) i keep in RSP or TFSA, as they pay interest. Most of my dividends are in the Cdn Cash account so i can benefit from dividend tax credit. I buy & hold primarily (because I am lazy) , although I will sell if ETF screams up in value. Then i put in a rebuy order foe when the stock eventually floats back down. 3 years now & i am earning 4.5 to 7% without even trying. I buy many different types of funds, Canadian, USA & global. Because ETFs hold 30 to 50 different stocks in each one I am super diversified.
I’ve heard good things from QTrade. 25 ETFs inside your TFSA + RRSP + non-registered account does seem excessive though. You might wish to review that because there is likely a great deal of overlap in your portfolio and you could increase your returns by reducing redundancy and fees. But in any event, we have 3 ETFs (ones like XIU and VYM). I’m confident those will provide capital gains over time and “cash for life” churning out 3%+ yield for the foreseeable future.
Thanks for reading.
Half way in $$ but more than half way in time. it took you 9 years to get here and it’s only going to take you 6 years to make the rest. Power of compounding!
I hope so None – that’s the plan. Cheers man.
Good advice and helpful links Mark.
I use the Google Portfolio Manager feature at https://www.google.ca/finance. It actually does everything automatically including dividends additions to accounts.
By comparison my discount broker’s (TD Direct Investing) tools are cumbersome and difficult to find on their web site.
I’ve tried Google Finance in the past. Good feature. I prefer my own spreadsheets, that way, I can keep my customized data. Thanks for sharing Marko – you’ve got a great handle on things.