May 2017 Dividend Income Update
Welcome to my latest dividend income update. For those of you new to these posts on my site, every month I discuss my approach to investing using Canadian dividend paying stocks and Exchange Traded Funds (ETFs), and how reinvesting the dividends paid from these Canadian holdings are helping us reach financial freedom – one month at a time.
The strikeout above was purposeful. I no longer hold any Canadian ETFs in my portfolio. Why?
Well I explained this last month but let’s revisit some other reasons.
- I’ve essentially created my own Canadian dividend ETF
In owning all big Canadian banks, major pipelines, biggest four telecommunication companies, largest utilities and energy conglomerates, and some Real Estate Investment Trusts (REITs) I’ve basically created my own Canadian dividend ETF. Although I’m certainly missing out on many other (smaller) Canadian companies traded on the TSX, I do feel this basket of stocks is modestly diversified in our market to yield long-term gains and weather market downturns alike.
- I’m seeking income and gains from our portfolio
Just like the financial experts I cannot predict the future with any accuracy. So, capital gains in my opinion are hardly guaranteed. While I hope for price appreciation over time (and this should occur over many years of equity investing) the market is in the short term a voting machine – filled with speculation. Instead of relying on just price appreciation I’m striving for more dividend income from our portfolio. Money I can use and not draw down the capital – unless I want to. With dividend growth investing we’re basically building up our “income machine” for future spending years. That income machine is reliable every month – and it’s growing. It’s been nice to see no less than 19 Canadian stocks we own increase their dividends year to date.
Where do we stand?
- We hold 30 Canadian stocks (no ETFs or other funds) inside our TFSAs and non-registered account for growing dividend income. This is what these updates are all about.
- We hold a few U.S. stocks and a couple of U.S.-listed ETFs inside our RRSPs for income, long-term tax deferred growth, and diversification far beyond Canada’s borders. I do not (yet) include this information as part of these updates. I might change my mind at some point!
Thanks to the Canadian companies we own, we’re on pace to earn just over $14,700 in dividend income this calendar year – money we don’t dare touch because it’s earmarked for our financial future. This is a full $2,200 more than this time last year. Our dividend income has increased due to mainly TFSA contributions, investments in companies that reward shareholders via dividends, and yes, those precious dividend increases.
Getting paid (and getting some raises from time to time) for doing nothing but staying invested feels good. Dividend investing provides cold hard cash into our bank account. This is money we will eventually use. I believe this approach is a great complement to assets held inside our RRSPs, some small workplace pensions, and in the next few years a fully paid off home.
What’s your income plan for retirement looking like? Got questions for my approach? Comment away. Thanks for following.