March 2023 Dividend Income Update

March 2023 Dividend Income Update

Hey Everyone!

Welcome to a new monthly dividend income update…

New readers to this site will learn more about my hybrid approach to investing through these updates. Long-standing subscribers will also learn about some portfolio additions too!

Read on and enjoy!

Time flies, but my approach stays the same…

Funny and interesting to look back at years of writing and blogging. 

This month, I looked back at what I wrote in March 2013, a fond 10 years ago on this site.

In that post, I found my hybrid approach to investing was alive and well then too: investing in many Canadian and U.S. stocks for dividend growth while being mindful to index invest beyond Canadian and U.S. borders.

I had plans to pay off my/our mortgage and live debt-free by around age 50. 

I already owned some Enbridge stock (my first dividend paying stock I purchased) among others, with the expectation to buy more stocks over time.

I also commented on the merits of the Tax Free Savings Account (TFSA) for income investing, the ability to earn thousands of dollars of tax-free income, eventually. I mentioned if I/we invested wisely, I predicted we should have:

“…an increasing pipeline of retirement income coming thanks to profitable blue-chip companies like banks, telcoms, energy producers, Real Estate Investment Trusts (REITs) and retailers.”

Thanks to the TFSA, a good portion of this retirement income will eventually be tax-free.

March 2023 Dividend Income Update

Since 2013:

1. We’ve maxed out contributions to those aforementioned TFSAs every single year.
2. We’ve maxed out our Registered Retirement Savings Plans (RRSPs) to date as well. 
3. We’ve done a bit of taxable investing, although not a lot, since 1. and 2. take priority in that order.
4. We’ve moved, paid down debt, and continue to march towards financial freedom by slaying the mortgage dragon. 

The journey is far from complete but we are getting very close to realizing some major financial milestones:

• With every passing month, our TFSA dividend income moves automatically higher thanks to reinvested dividends and distributions from the assets we own. We’re now averaging over $1,000 per month in tax-free income (that is not even included in these updates – more on that below.)
• With maxed out RRSP accounts; assets churning out dividends and low-yielding distributions we believe we have the opportunity to “live off dividends and distributions” in the coming years as we work part-time. From a recent Ottawa Share Club meeting slide deck:

• With diligent mortgage payments over the years (although we could kill the mortgage tomorrow if we wanted to, with taxable assets, but choose not to), at 1.69% our mortgage obligation could be finally done within the next 12 months. 

While debates rage on, our approach stays the same…

So many things in the personal finance and investing community can be polarizing to some people:

Do you invest or pay down your mortgage?

Do you max out your TFSA vs. RRSP first?

Do you invest for income or growth/capital gains?

And the list goes on.

Instead of being all this or all that on any subject above, I think you need to find out what works for you and move forward accordingly.

In a chapter of The Psychology of Money, author Morgan Housel reminded readers that it’s OK to be different and better still, it’s more than OK to remain different as long as you have a plan:

“…few things matter more with money than understanding your own time horizon and not being persuaded by the actions and behaviors of people playing different games than you are. The main thing I can recommend is going out of your way to identify what game you’re playing.”

Indeed.

March 2023 Dividend Income Update Summary

At the start of 2023, I made some changes to how I/we report (part of) our portfolio income. 

1. I removed all/any TFSA income from these updates. This is because our semi-retirement drawdown plan has us avoiding any early TFSA withdrawals. We will withdraw income/assets from our RRSPs and taxable accounts over many years before tapping tax-free income. That’s our thinking for many reasons. 

2. Based on #1, I will include taxable investment income and projected RRSP income in these updates. Meaning, if our plan is to “live off dividends” from taxable accounts and slowly drawdown the RRSP assets, well, it’s helpful for you the reader to know what I’m dealing with and why in pretty much real-time.

Here is our updated Projected Annual Dividend Income (PADI) to report for March 2023:

Here is our chart:

To put this new monthy update into perspective:

• That’s averaging $3,399 per month or about $112 per day
• I’m forecasting about a 6-7% year-over-year income increase between 2022 and 2023 (which may be conservative, we will see!) 
• We don’t intend to invest any money inside our taxable accounts at all, this year. We are focused instead on maxing out our TFSAs (first, like we do every year (now done)) and then maxing out our RRSP contributions very soon. After that, our plan is to save for 2024 TFSA contributions later this year and be ready to roll for new TFSA contribution room available to us as of January 2024. This is directly aligned to our previously posted 2023 financial goals. We’ll also travel a bit this year as well and we’re saving some funds for that in advance.  

The bump from last month can be attributed to a few companies that paid us higher dividends and I/we made a small purchase of CNQ stock when it was trading at just over $69. CNQ is up 10%+ since that purchase date at the time of this post. 

I look forward to sharing my next update for April including any new transactions!

Mark

Related Reading:

My February 2023 Dividend Income Update.

This is my standing Dividend page whereby I list some of my stocks and why I own them, including ones that Beat the TSX.

How much do you need to retire on $6,000 per month at age 50?

PADI Notes:

1. “End 2022” – actual income earned. 
2. “PADI Update” – this is our Projected Annual Dividend Income (PADI) for the year assuming no dividends are cut, no dividends are reinvested, and no new purchases are made inside these accounts.
3. “2023 Forecast” – assumes some dividend increases may occur and/or some new purchases are made this year, inside the RRSP in particular. 
4. I/we report U.S. $ income and Canadian $ income at par (1:1) for simplicity even though it’s not perfectly accurate let alone there are future taxation implications associated with taxable investing and RRSP withdrawals. Your mileage may vary. 

Mark