March 2022 Dividend Income Update
Where does the time go?
Already three full months gone – poof! – into 2022.
Welcome to my March 2022 Dividend Income Update.
What are my monthly dividend income updates all about?
Last month in my February dividend income update, I answered a handful of reader questions on that.
This month, my update will be more subdued as I work on more answers to reader questions including a future case study. I look forward to publishing that case study soon!
2022 market turmoil
- I’m not spending anything from my portfolio right now. So, because I don’t need the money I know the best way to ride out any market volatility is to stay invested.
- Despite a downward start to the year for the U.S. market, my overall portfolio is doing just fine as I approrach more all-time highs.
- I know some market volatility is absolutely normal and downright healthy. What is not normal is watching tech stocks and other sectors fly higher in any uninterrupted fashion over time. Corrections (of 10% or more) can and should happen. People tricked into believing that stocks can only go up will get burned eventually if they don’t have any common knowledge of market history. This means early 2022 market turmoil is healthy and hardly anything of significance to be worried about.
When it comes to our investing plan to ride out market volatility:
1. When our dividends and distributions are paid, they are reinvested. This can trigger more income to be generated in future months. Revinesting dividends and distributions also curbs my enthusiasm – I don’t have to think about what to invest my money in because this decison-making is already done for me!
2. I contribute to my/our TFSAs first, striving to maximize contributions to this account for us every year. That’s usually about $12,000 invested each January (both TFSA accounts are once again maxed out of contribution room). Putting that money to work sooner than later is generally smart when you consider the advantages of lump-sum investing over dollar-cost averaging.
3. We contribute to our RRSPs after the TFSA is maxed out. Tax-deferred investing (via the RRSP) is still an excellent way to build wealth after tax-free investing is done every year.
4. We aim to keep a healthy (and growing amount of cash) we call a cash wedge in place – as we work towards some semi-retirement dreams…
March 2022 Dividend Income Update summary
With stocks and ETF units DRIPping along nicely, our money is always working.
As of this month, we are anticipating we might earn $26,061 in forward dividend income for the calendar year ending 2022 from some of our investments.
(For those keeping score at home, that’s approaching $5,000 more than this time last year….!)
Reference: March 2021 Dividend Income Update.
To put that income more into perspective:
- Almost half of that annual income is tax-free. Yes, all true. We will not pay tax on that income when we decide to withdraw monies from our TFSAs.
- Our forward dividend income is rising by about $50-$100 per month thanks to compounding power alone. Like I mentioned above, when dividend and ETF distributions are paid, that money is reinvested, moving the bar higher next month. We just stay invested. That’s it. Something to keep in mind for your investing plan.
- $26,061 in annual income translates to earning roughly $2.98 per hour of every hour of every day in my sleep. That $3 per hour payment might not sound like much, but that translates to earning about $71 per day from part of our portfolio; again, about 50% of that income is tax-free.
If our goal is to earn $30,000 per year in the coming years, compounding alone might just do the trick!
I look forward to sharing the next dividend income update with you.
Thanks for reading and sharing. Bring your comments and questions for any future updates!
What stocks do I invest in? I’ve owned stocks that tend to Beat the TSX (BTSX) for well over a decade now. You can too!
Do you aspire to retire at age 55?
If so, how much do you need to spend $4,000 per month for decades on end?
How might your portfolio stand up to higher inflation over time?
You can always find many (many more!) retirement case studies on my site via this page here.