March 2021 Dividend Income Update
“I look forward to sharing March dividend income updates and beyond with you – good, bad or indifferent!”
I wrote that a year ago. My, how pandemic time flies!
Welcome to my March 2021 dividend income update.
My hybrid investing approach
As regular readers of this site are aware, I take a two-pronged approach to investing, using a mix of stocks and ETFs:
- I’m building up a dividend income stream within my non-registered account and within our TFSAs, investing in mainly Canadian dividend paying stocks, and
- I tend to own some U.S. stocks in my RRSP and LIRA, but over time, my wife and I are owning more low-cost ETF units inside these tax-deferred accounts for diversification and growth.
These updates are and continue to be about that first bullet.
Ideally, should the passive dividend income from our non-registered account and both TFSAs eventually exceed $30,000 per year, our long-term goal, I am confident without any debt my wife and I could semi-retire.
That’s the plan…
Portfolio changes and updates
A number of readers have emailed me since the start of this year to gain a better understanding of exactly what I invest in.
Well, just like I don’t obsess over benchmarking my portfolio nor share detailed net worth updates, for privacy reasons I won’t disclose everything I own in detail. While fun, the internet can be a nasty place so thanks for understanding.
I will however, highlight some of the recent portfolio changes and moves I’ve made over the following year when it comes to my taxable and TFSA accounts (since the pandemic took hold) to improve and simplify my portfolio. You can be the judge of the changes below!
I sold Inter Pipeline (IPL). It can be tough to sell a dividend paying stock you’ve held for years but that’s exactly what I did last year after IPL cut their dividend by 72%. IPL is long-gone from my portfolio. I took the proceeds and invested it in Algonquin Power (AQN) – one of the stocks I said I would buy more of in 2021.
In my non-registered account and inside our TFSAs, we own a few hundred shares of AQN and DRIP a few shares per quarter.
I sold H&R REIT (HR.UN). As the pandemic pushed a wave of office workers to begin working from home in March 2020, HR.UN took the brunt of that change and slashed its dividend in 2020 accordingly. With no end of sight at that time (or now for that matter, for the pandemic to be resolved) I decided to end my position in this company and put some of that money from this REIT into another one: RioCan (REI.UN). I did so because I see RioCan as more diversified and growing its residential operations which should bode well for investors over time. I completed that work in the fall of 2020.
At the time of this post, REI.UN is up about 19% year to date and it should climb higher as vaccinations continue to rollout this year.
As monies permit within my TFSA in 2021 (it is currently maxed out of contribution room), I will add more REI.UN. I’m currently DRIPping one REI.UN share per month.
We bought iShares XAW for the TFSA
I’m far from a perfect investor and so I’m trying to overcome some long-standing bias to Canadian and U.S. dividend paying stocks by investing in companies and countries from around the world. I feel owning iShares XAW is a great fund to help overcome that lack of diversification so we bought a few hundred XAW units for our TFSAs earlier this year.
Quite simply, as a fund of funds, iShares XAW is a simple, low-cost way to own U.S. international, and emerging market stocks.
I’ve long since listed XAW as one of the many great funds to own on my dedicated ETFs page. So, I’m eating my own cooking!
While owning XAW has definitely reduced my forward dividend income stream potential from the TFSAs (XAW historically yields just shy of 2%), our short-term plan doesn’t have us touching any capital inside the TFSAs. So, the more growth, the better.
How close is the goal?
While the $30,000 per year goal from our non-registered account and TFSAs seemed very daunting a decade ago, that target doesn’t seem that far away now. Disciplined savings, low fees and time simply does wonders for your portfolio although I have made a few changes along the way.
With stocks and ETF units DRIPping along nicely, the money invested is growing at a good pace.
With recent Bell Canada (BCE) and TC Energy (TRP) dividend raises recently, that has accelerated our passive income goal. It’s great to report we’re now 72% towards realizing our semi-retirement goal.
In fact, I think we’re on pace to earn close to $22,500 by the end of December 2021 assuming some dividend raises occur, some more compounding occurs and we avoid some dividend cuts like 2020. We shall see!
You can see the chart I keep updated below – highlighting actuals for years’ past and our forward dividend income targets including what we might achieve by the end of 2021:
March 2021 dividend income update
As of this month, since I cannot predict the future although I have that year-end target in mind, I’ve calculated without any dividends or distributions reinvested, without any dividend raises or cuts, we should earn roughly $21,503 in forward dividend income this calendar year.
To put that income steam in perspective:
- Using a metric I started here on this site, that continues to gain traction with other bloggers in terms of various hourly rates:
- $21,503 per year in dividends and distributions translates to earning roughly $2.45 per hour of every hour of every day even in my sleep (income/8,760 hours in a year assuming ~365 days).
- That dividend income earned per year could be considered earning the equivalent of earning $10.34 per hour assuming I work a 40-hour work week (income/2,080 hours per year) but then again, maybe higher since some of that income is tax-free (thanks TFSA).
If our goal is to earn $30,000 per year, that will equate to earning $14.42 per hour. Essentially, our non-registered and TFSA accounts will be their own-time job!
I look forward to sharing the next dividend income update with you.
Thanks for reading and sharing. Bring your comments and questions below!
Hi Mark. I just discovered this site!
Short question about investing. Of your top holdings, do you ever sell?
I ask because we’re likely gonna have a delta variant wave in 1 or 2 months. This would drive down stocks prices since they’re quite high alreadiy.
Are you planning to just hold or would you do some selling?
Short answer about investing: I try and buy and hold and when markets dip I buy some more! Been doing that for >15 years. No time to change. 🙂
Thanks for your readership Jason.
$21,000+ per year in dividend income?! That’s amazing!! If I did that I would pay off almost 100% of my yearly expenses.. From dividend income alone and not even counting any capital appreciation or earned income throughout the day. Dividend investing sure is powerful!
Thanks David! Yes, from taxable and tax-free accounts and like you, hoping my dividend income will largely pay for my expenses in semi-retirement in a 3-5 years. The goal is $30k from those accounts per year.
Thanks for the update, Mark! It’s awesome to see your hybrid, long-term approach paying off. Low fees and regular investing over time work wonders. I like the hourly breakdown. I look forward to seeing you hit your $30,000 goal.
Thanks Graham! Yes, slow and steady really but the chart shows time and discipline can pay off!
How are your part-time work and blogging pursuits coming along?
Going well, thanks for asking! I’ve been working less than 20 hours per week for the last year or so now. I work on the blog on days that I’m off. Blog income has been slowly increasing. It’s not a lot of money but it’s moving in the right direction. My hours at work pick up in the summer, so I plan to invest a lot more during the busy season. Overall, I like the balance. I get my fulfillment from blogging and investing, and I pay the bills and save with my job. Enjoy your weekend, Mark!
Good work on the blog. Like I mentioned, I try and visit your site where I can 🙂
Sounds like you have a great balance Graham. Looking for a bit more myself in the coming 4-5 years when I figure I can go part-time. That’s the plan anyhow dividend income willing! ha.
All the best.
Always inspiring to read your dividend income. Thanks for sharing Mark!
We are slowly increasing ours and one change we made last year was a covered call ETFs (QYLD). The monthly and juicy dividend was great, however, when comparing with a total market ETF over the years, the “hit” was necessary.
Stay safe! 🙂
Thanks Gean. I’m a big fan (biased a bit I know) of CDN and U.S. payers (which I know you are owning more of) for my growing income stream AND some low-cost ETFs for extra diversification – to be lazy 🙂
I recall you own ITOT which is very smart. Up 10-11% this year by being lazy yourself!!! Whether you own that, VTI, VOO, IVV, etc. they are all winners as plain vanilla funds. They are designed that way.
The challenge I personally find with covered call ETFs is they don’t work great in a bull market, they are more beneficial in a sideways market. That doesn’t mean you shouldn’t own them but rather they are designed differently and therefore behave differently.
You are doing VERY well on your FIRE journey and looking forward to connecting with you more (that “other site” has some great news coming your way)!
Stay well yourself!
I’d agree with you, Mark. We’ve got excited at the beginning for the higher yield, but later realized it wasn’t the best option in our case. And we’re looking forward to reading more about the other site 🙂
As other readers mentioned before, your site has been extremely valuable on our journey – thank you very much. We’re grateful and excited for what you + wife in the years ahead WOOT 🙂
Very kind words Gean and congrats on your journey thus far – you’re doing all the work!! 🙂
I’m a new subscriber. Thanks for sharing, it’s inspiring. I’ve read and followed a lot of financial advices from different blogs but I like your hybrid approach that investing in eft and stocks pay dividend.
I read almost your old posts and realized that I’ve made a few mistakes. Now I’m fixing it to follow your advice. I started investing 3 years ago with rrsp, tfsa, lira and non-registered account. I have a few questions if you can give me a hint.
1. I’ve invested in LIRA and RRSP about $100,000 but I have less than10 years to retire. So should should I continue to contribute to rrsp or invest in non-registered account?
2. My non-register account money is in USD. I bought only eft i.e VOO, QQQ. Should I convert it into Canadian currency and invest in Can. stocks or leave it as is ?
3. I just bought few stocks AP.UN.TO, what do you think about this and is it good to hold in rrsp?
I know that you don’t give advice but if you could refer to other posts or give me hints would be great. Thank you so much for giving us so much FREE inf. and advice. Keep it up. I’m your fan from now:))
Thanks for your kind words and subscribing – feel free to share the site with others!
I can’t offer direct advice of course for many reasons, but I can offer a take on what I think about:
1. First, not in your question I know, but I prefer to max out contributions to all registered accounts first (e.g., TFSA, then RRSP, then non-registered).
2. With 10 years to go to retirement (like me too!) I think these are the key questions you should ask yourself:
a) Where can I invest the most money so it can grow?
b) Where can I invest my money in the most tax-efficient way?
Usually, the answers to a) and b) for a higher income earner are 1) the TFSA, max out first, then 2) max out RRSP. If you are a higher income earner (say > $80-$90K) then you can likely make contributions to your TFSA AND RRSP.
That approach, maxing out TFSA and then maxing our RRSP, has worked well for me over time….
3. With non-registered USD investing, that is fine, just know all non-registered USD investing and any capital gains must be reported at tax time. I personally like VOO and QQQ (I own QQQ) but I keep most of my U.S. stocks and ETFs in my RRSP to avoid any withholding taxes.
4. Regarding your recent stocks, I personally like holding my REITs inside tax-free (TFSA) and tax-deferred (RRSP, RRIF, LIRA, etc.) accounts because I don’t have to worry about the return of capital, interest, distributions, etc. calculations in a taxable account. It’s not wrong to put REITs inside taxable but I avoid too much financial tracking where I can.
Hope that starts more reading and insights for you!
Thank you very much for your prompt reply. I really appreciate it. I’ll share your site with my friends as your site shares a lot of practical financial advice.
1. I actually maxed out TFSA and recently use Wealthsimple that allows me to rearrange my portfolio. I got to know your blog late so I made a mistake to hold vfv and qqc in TFSA:)). I gradually sell these to buy Can. stocks to reduce a tax withholding. However, it’s also hard to let them go as these efts have high returns over years.
2. Investing in US currency tends to have higher returns. So, I keep quite a large amount US but now I realize its implication. Is it a good idea to convert US into Canadian to avoid tax complication later. What do you think? Thank you. Kim
Thanks for the share!
Again, not advice 🙂 – but CDN listed funds like VYV are very good holds generally speaking. VFV mimics the S&P 500 so not surprised it has done well and should long term. The TFSA or RRSP for VFV is smart.
QQC is essentially like my QQQ but in CDN $$. Sure, some withholding but you don’t have to deal with currency conversions to buy QQQ in USD $$.
There are always tradeoffs! If both VFV and QQC have done well, don’t be overly anxious to sell for withholding tax reasons. Just a consideration.
“Investing in US currency tends to have higher returns.” It does, maybe a bit, since currency hedging based on my experiences and learnings tend to be imprecise. That said, again, I wouldn’t sell the farm just because of some minor withholding tax issues. Best to have a plan and tax efficiency is just one consideration as part of that plan.
I can only speak for me/us but it is my intention to continue owning U.S. stocks and ETFs in my RRSP for the coming years. I’ll deal with the USD > CDN $$ “problems” later in semi-retirement when I need the dividend and distribution income to live from 🙂
Thanks Mark. Your sharing increases my confidence in creating my profile:)). I also need to read again your old posts. Stay safe and healthy. Kim
Please do – ask questions at will!
I love reading stories like this
My journey to $1M RRSP started 25 years ago
BTW my wife just updated her calendar and based on time in leu of plus banking some holidays last day of work is Dec 22 next year or 1 year and 8 months. Not that we’re counting or anything LOL
Great to hear from you Rob.
Just sent you an email 🙂
Having $1M in an RRSP is incredible. Thanks for sharing!
Yeah it was quite interesting, what I did notice is he hasn’t really given anythought to taxation – given that he’s got 15 years to go till retirement he’s going to be looking at a pretty serrious tax hit 1 million compounded over 15 years!
He is for sure. Then again, a tax problem in retirement is a great problem to have!
He can retire early. TRUE Fire. Maybe Dec 22 next year. LOL.
Congratulations. You are doing very well and your story sets a great example for consistent savings and indexing investment which is what I will teach my kids to do.
I understand the desire for dividend paying stocks as a way to fund retirement but I would still view the investment decision to be to pick the investment that will give the best return over the time of ownership. Tax does play a role. Dividend paying stocks offer a lower tax rate when income is lower. As tax rate increases capital gains will provide a lower tax cost then dividends. If you have fully maxed out RRSP and TFSA and we are talking about unprotected investments from a tax perspective long term growth stocks would likely be a better choice in an unsheltered portfolio. This would especially apply if your current income is substantially greater then what it will be in retirement. At an income level of $100k for 2021 tax rate on a cap gain is 21.7% vs 25.4 for an eligible dividend(Rates based on Ontario).
The other factor to consider when over 65 in an unsheltered portfolio is an eligible dividend will be grossed up on a tax return. Currently this is at 38% so your $30,000 dividend does represent $41,400 of taxable income. This does become relevant as your income increases. OAS is roughly $7k and max CPP today would be around $14k. The clawback starts these days around $76k so you still have some room before a clawback happens. Forced RIF withdrawls will also be an impact.
So all of this just to say is tax can take a bite out of your plans so be careful.
Indeed, great points Brent. I’m gravitating to CDN stocks that pay little to no dividends in my taxable account for the reasons you highlighted.
“Tax does play a role” – for sure.
We are fortunate to have maxed out x2 TFSAs and X2 RRSPs so the only home now is taxable.
To your great points about the OAS clawback, my goal is to earn just enough to avoid it. 🙂 That’s the plan anyhow!
Congratulations, Mark. Fantastic. Not much left to reach your goal 🙂
Very kind and coming along!! How are you investing these days?
Awesome. I made a list. It is a long list. Mix of stocks and ETFs. Stocks are all Canadians. ETFs for international including the US. I am also buying some of ETFs with up to 33% Covered Call Options for the high yield. Still 67% exposure to the growth so not too bad. Most of these ETFs are very low volume so a bit tricky. Need to always set a price and not Market order. A bit of work till I get things up and running. GICs are maturing and I am moving more cash from savings into trading.
Seems smart to move from GICs to investing, assuming you’re not using that GIC money for anything near-term?
Great work 🙂
True 🙂 Thanks and Nope. Emergency fund is separated from GICs.
Maybe you want to consider REIT ETF for your REITS ?
Does anyone like ZWC, ZWU ?
REITs are a great consideration for higher rates. I happen to own a few beyond REI.UN for sure.
Is that your plan Don – thoughts?
I don’t invest in any covered call ETFs myself but I know folks enjoy that. I figure if you’re bullish per se might as well just own the stocks directly for long-term growth.
There is an ETF called REIT that has several REITs and about a 4% dividend
That was to what I was referring.
Perhaps diversification rather than select REITs ?
Ah, sorry Don, now I understand. I thought you were talking about REITs in general.
I recall there is a great REIT called RIT as well. I haven’t looked into REIT ETF itself. I am familiar with VRE, ZRE, XRE and a few others though.
Thank you for sharing and it’s so inspiring! Just one quick question, the future dividend income of $30,000 will have its value eroded by the inflation. Has this been accounted for and how the calculation has been done if so?
Great question. I figure Harry that dividend increases and/or capital gains should take care of some inflation.
I don’t intend on selling lots of assets/stocks en mass in semi-retirement so the combination of dividend growth/increases with all these stocks + capital gains should be enough (I hope?) to fight some level of inflation. I’ve estimated that inflation will be in the range of at least 2-3% long-term (5+ years) and as high as 4-5% for some shorter-term periods of <5 years. The combination of dividend increases and gains should match that 5% if it occurs. I own some inflationary protection assets for that reason. REITs are one of them.
Again, time will tell right?
How are you managing your portfolio to fight inflation?
Thank you Mark for your quick response!
My question was rather on how you show the numbers wrt inflation, ie whether all values are in today’s dollars. When I read your dividend amounts, in my mind they are in nominal values and not inflation adjusted ones. Thus the $30k on Jan 1, 2026 will be worth around $27,175 in today’s dollars (at the beginning of 2021, at 2% inflation rate). Decades apart, the difference will be huge. Unless, all your numbers in the graph are inflation adjusted already.
The chart is actual dollars (years past) and now current, project dollars in the green 2021 bar. In the chart for 2022, 2023+, I have assumed I will continue to invest and reinvest dividends at roughly the same rate. That may or may not occur, so these are estimated targets in future dollars. I should be earning $30,000 per year, in 2026, in 2026 dollars but we’ll see!
Another great month for you. I guess banks might begin to raise dividends before the end of year, then you will exceed your goal for sure.
I am still holding both IPL and HR.UN. Very hard for me to sell them. Admire your courage. Fortunately, both positions are quite small for our portfolio.
I was buying AQN a lot recently. Right now holding a bunch of utilities, lots of AQN, EMA and FTS.
Thanks very much May. Yes, it took courage and I sold my very small positions in HR.UN and IPL last year. I struggled because I figured both might rebound in 2021 (and have a bit). IPL is up to what, $18 now, and I got out at $14. Then again, AQN and REI.UN were down in 2020 and have rebounded so it’s a bit of a wash for me.
In looking at my pipelines, I have enough in ENB and TRP.
Yes, banks and lifecos are expected to raise dividends closer to calendar year end. I wouldn’t be surprised if all big-6 banks + SLF + GWO + MFC don’t all hand out “special dividends” just before Christmas time 2021. We’ll see!
I like utilities quite a bit. Very stable and we need electricity last time I checked 🙂 So, I continue to own a bunch of AQN, EMA, FTS, CU and others like Brookfield. AQN continues to be on my buy list. Hard to ignore the bond-like dividend income at 3.5-4.0% yield and dividend increases every single year.
Thanks for your comment!
I sold both of those here not long ago. I moved on my losers and on to better opportunities…hopefully. Iirc 18.10 Ipl and 14.70 hr
Really interesting to see you repositioning to a greater extent into REI.UN, Mark. I’m still holding the shares I bought back in 2009, but I was disappointed when they slashed their payout. Still kicking off over $20 per month, at least, in my portfolio.
I always love the “hourly breakdowns”. It really puts passive income in perspective when you think of how much you’re actually bringing in every hour of the day, no matter what!
Ya Ryan, I have no idea if my bet for REI.UN will pay off long term. Obviously, I hope so. I own other REITs and have been buying more slowly over time. I wonder if I will get burned again?!
Thanks for the comment about the hourly rate. It makes a difference for sure this investing stuff 🙂
Great retrospective of March Mark! Impressive chart ?☺️? I follow you since my financial awaking in 2016, you were and still are a reference in DIY finance in Canada. If I refer to it to your chart for my TFSA + Non registered, I’m not even at “2009” ???♂️ I know that I need to save more & invest more ! Keep up the good work ! ???
Ha. Thanks very much. It’s a long journey and get wealthy eventually plan. It will happen for you in time. Thanks for following along and very much appreciated all the social media interaction. Stay in touch!
Nicely done Mark! We’ve been buying more XAW as well. I guess we think alike. 🙂
Yes, we do! Ha. Thanks Bob.
Great job Mark.
I like the 24/7 and the 40hr wk wage calculations.
Only thing I bought recently was a little more bitcoin. LOL
Of course you did 🙂
LOL. When are you joining the crowd? hahaha
Not yet. I have more real stocks and companies to buy first like BlackRock!
Probably a wise choice.
I have 2 different funds now, and a very small amount with shakepay in a cold wallet. For a non tech like me it took some ciphering to figure out and become a shaker- haha, but the blockchain technology is very cool.
Might buy a little more xgro with quite a bit of FI coming due this year.
Smart call on the XGRO. I like that fund along with VGRO and HGRO. I own the latter in my LIRA.
Time will tell. Fits with my overall plan.
I sold my ipl this winter on the take over news. Put the money in tpz 51% owned by tou. Also sold hr.un. Added nhf.un did well with the first version of northview. 100% return of capital box52
Northview REIT (NVU.UN) seems good – it seems to have recovered well from the pandemic includes some multi-family and commercial I recall.
Anything else on your buy list Robert?
I went to check out the REIT (NVU.UN.) and Wealthsimple says its “delisted” or “inactive” – what does this mean and will it return to being listed again? I am just newly started at this, and a bit timid. At least I started with a small amount in a TFSA last May – just needed to get my feet wet. I am slowly purchasing more when I can. I missed the “buy in” when things tanked back in March last year(because it was so colossal I was afraid it wouldn’t recover). So I picked some of the Canadian Banks and some Energy and BCE – the dividend paying stocks, on the ride up, plus a few ETFs like XAW, VBAL and XIU. Wish I had contributed more!! I don’t know if we will ever see a drop like we had in March of last year again soon, so I guess its good to just keep purchasing? I have a leaning to want to wait for a correction but I think its wise to just keep collecting. I haven’t started any DRIPS as I don’t make enough in dividends yet. I just lump the dividends in with what I invest and purchase when I can. The account ROI for the year fluctuates between 16 to 18% – it changes daily! The banks recovered nicely. Do you think they will continue to go up? Some are valued more now than pre-pandemic times – ie BMO. What accounts for their spike?
I read your blog regularly, and again, so grateful to you and your readers for sharing what you all do! Let me know what’s happened with this REIT. Best, Amanda
Thanks for following along Amanda. I try and reply to every comment 🙂
I really don’t know. I don’t think NVU REIT is “delisted'”? A quick search though and I found this….updated:
“Northview’s distribution reinvestment plan was not applicable for this stub distribution. As a result of the Transaction closing, Northview’s units will cease to be traded on the Toronto Stock Exchange as of November 3, 2020.”
Off the TSX and therefore “delisted”.
You will see in my latest update Amanda, I remain very boring with my approach and own the same list of top-stocks that XIU owns. Banks, pipelines, telcos, railroads, etc. The approach continues to work for me over time since I try and remain invested through thick and thin.
I would hope everything goes up post-pandemic but you never know. Dividends as part of total return, are never guaranteed in the short-term but long-term, wealth building via stocks (whether they pay dividends or not) generally happens over decades of staying invested. History says so 🙂
All the best,
Thanks for the update, Mark. I’m a big fan of XAW as well and have it as a core position in my RRSP and TFSA. Really enjoy your blog!
Awesome John! Buying anything lately?