May 2020 Dividend Income Update

May 2020 Dividend Income Update

Save. Invest. Wait.

Do it again.

I know you want investing to be exciting but that’s not my get wealthy eventually plan.

I don’t think any trading should be in your plan either.

Regular readers of this site will know we continue to take a two-pronged (hybrid) approach to investing:

Approach #1 – we own a number of Canadian dividend paying stocks for income and growth.

We own these stocks inside our non-registered account and within our Tax Free Savings Accounts (TFSAs). These income updates focus on that.

Approach #2 – we own a number of U.S. dividend paying stocks for income and growth AND we’re owning more units of low-cost U.S. Exchange Traded Funds (ETFs) inside our RRSPs over time.

One of my favourite U.S. ETFs is VYM. We’ve owned that fund for almost 10-years now and have no intention of selling it – in fact – we reinvest the ETF distributions every quarter to buy more ETF units commission-free.

VYM June 2020

We own U.S. assets because we believe investing in companies beyond Canada’s borders will provide us with some much needed U.S. and multinational diversification. 

Back to VYM, we’re likely to start spending VYM distributions in about five years as part of our semi-retirement plan.

May 2020 Update

In recent months since COVID-19 changed everything, I’ve incurred a few dividend cuts and those were reported in this previous income update here.

While dividend cuts are not fun to endure as a dividend investor, they can be sign of responsible management action to support long-term shareholders. After all, total returns matter.

While I’m down from where I really want to be at this point in the calendar year, you’ll see I’ve actually returned to where I started. Without any new money added since January we’ve returned to those levels thanks to reinvested dividends and a few dividend increases from:

  • Algonquin Power (AQN).
  • CIBC (CM).
  • Great-West Life (GWO).
  • Manulife (MFC).
  • Royal Bank (RY).
  • TC Energy (TRP).
  • TD Bank (TD).
  • Bell Canada (BCE).

May 2020 Dividend Income Update

To put that passive income in perspective:

  • That’s like earning $2.32 per hour of every hour of every day ($20,300/8,760 hours (24 hours x ~365 days)) even in my sleep.
  • In terms of an hourly wage:
    • It’s the equivalent of earning $9.76 per hour assuming I work a 40-hour work week ($20,300/2,080 hours (40 hours x 52 weeks)). Then again, some of that income is 100% tax-free (thanks TFSA).

Will more stocks cut their dividend?

Probably.

I’m banking on it.

But given I firmly believe in the companies I invest in, long-term, it won’t stop me from running dozens of my dividend reinvestment plans (DRIPs) that deliver more stock shares, commission-free, every month and quarter. At last count, across the entire portfolio, we’re earning over 600+ shares per year thanks to DRIPs!!

(For the record, I continue to own both IPL and SU in my portfolio. I’m also DRIPping at least one share of each every quarter.)

Stay tuned to my blog to find out the next set of results after June dividends are paid.

Further reading:

You can see some of my stock holdings here.

These are dozens of articles about low-cost ETF investing here.

My name is Mark Seed and I'm the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, we're inching closer to our ultimate goal - owning a 7-figure investment portfolio for semi-retirement. We're almost there! Subscribe, join the journey to learn how I'm getting there and how you can get there too! Follow my on Twitter @myownadvisor.

7 Responses to "May 2020 Dividend Income Update"

  1. Hey Mark,

    I know it sucks in the short-term but astute investing should produce good long-term results even in the worst of times. Humankind is good at overcoming global obstacles.

    My algorithmic model originally forecasted about $6400 in dividend in 2020 dividends on Jan 1, and now that same model after accounting for current events is showing $6100 in 2020 dividends. I wrote about this in detail on my blog just a little while ago.

    In terms of collecting dividends in my sleep, I’m at $0.58 compared to your $2.32 🙂

    DG Capital

    Reply
    1. Very good work DG and it does take time to get things snowballing. I’ve been at the blog for 10 years and a DIY investor for approaching 12. Hard to believe how time flies but gotta have the long-term view!

      Keep up the good work!
      Mark

      Reply
  2. $2.32 an hour is pretty impressive and that number will only continue to go up the more you DRIP.

    We have a few dividend paying stocks in our portfolio and our plan has always been to DRIP them as well. The extra shares can really add up over time.

    Like you our portfolio also seems to be back to January numbers now. Obviously we would like it to be higher, but are glad it’s not lower. Only time will tell where is goes from here in the second half of 2020.

    Reply
    1. Thanks Maria. I suppose if I include my RRSP/our RRSP accounts it’s much higher but I know if I realize my dividend income goal via only taxable and TFSAs we will choose when and how much we want to work. That’s always been the goal. I will need to wait until 2021 to max out the TFSAs again. Saving now.

      How are your rentals coming along? I recall you own a bundle of them right? 🙂

      Thanks for the social media tweets on your latest money motto post. That was good. Will put in my Weekend Reading for sure!

      Stay well and in touch often,
      Mark

      Reply

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