May 2012 Dividend Income Update
“I am an advocate of investing in individual, high-quality stocks, provided you can take care to avoid certain pitfalls. Historically, stocks have proven to offer as good as return as any other investment vehicle – and nothing I’ve seen over the past 50 years of investing has shaken my faith in stocks.” – Stephen Jarislowsky, author of The Investment Zoo and octogenarian Canadian billionaire investor.
Maybe I’m a follower but I see tons of wisdom in Stephen’s words.
At last count, I own 23 Canadian companies that pay me dividends every month or every quarter. I also own 8 U.S. dividend paying stocks. These companies are an excellent complement to my passive indexing approach in my RRSP. It’s taken me years to build up this stock portfolio, and it will take many more years to get my portfolio to the point where it’s nicely diversified however I feel I’m on a good path. I’m almost at the point with many of my holdings…I don’t care to look at them very often. While I cannot go completely to sleep at the proverbial switch with my investments (and you shouldn’t either), I find little reason to panic for the majority of my holdings when earnings fall short for a quarter, for a few quarters or the stock price drops 10% or more. The reality is, businesses must continually reinvent themselves and sometimes those inventions fall short of expectations.
As time goes by, I’m focused on a long-term goal that will hopefully see us generate close to $30,000 per year in dividend income in another 15-20 years because I stuck to a plan that works.
This past month, after dividends were paid and reinvested in many cases, our portfolio of Canadian dividend paying stocks churned out close to $480, some of it tax-free (in our TFSAs). As long as dividends aren’t reduced and the companies we own keep paying them, hopefully we’ll surpass $6,000 in dividend income this calendar year. We don’t dare touch this money today, it’s growing every month for our retirement living expenses.
A few companies on my watch list are more shares in Progressive Waste Solutions (BIN), more Rogers (RCI.B) and a new position in Royal Bank (RY). I hope the stock market drops a bit more over the summer. That way, I can get all these companies for cheaper prices. As an investor, are you hoping for the same thing?