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!
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!