May 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 recent portfolio additions too!
For everyone involved, I will also share a few answers to some recent reader questions.
Read on!
How much is enough?
Mark, I read your last dividend income update with great interest. Link here. In that post, you highlighted that a crossover point is ideal – to realize true financial independence. You’re not planning for that. Aren’t you worried with prolonged higher inflation and so many future unknowns you might outlive your money (if you don’t have your portfolio earning more than your expenses)? Thoughts? Am I the one being too conservative? I would like your reply. Thank you.
Reference: the financial independence, retire early (FIRE) crossover point. Your mileage may vary.
Thanks for your question!
You know, maybe there is a risk. Well, there is absolutely a risk!
But I feel there is a bigger, lifestyle risk, by not seeking out work on our own terms and trying to live our balanced lifestyle – something we’ve been working towards for almost 20 years now.
The entire #FIWOOT journey has always made sense to us. Your mileage could vary.
Like I mentioned last month, I figure once your portfolio delivers most of your retirement income needs (excluding our future CPP and OAS benefits), then it’s OK to take a small leap of faith – not work full-time too much longer unless that is your plan.
On the subject of higher inflation, I have written about my approach numerous times on that.
Here is how I was investing for higher inflation over a year ago before interest rates moved up:
In fact, you can retire even during periods of higher inflation using this approach (with ample retirement savings of course) as a guide:
When it comes to being conservative, with money, I could likely improve. 🙂
I mean, part of the reason why I gravitate to dividend paying stocks in Canada is because I like seeing the income flow-in from the stocks we hold in our portfolio, without doing anything. Besides, there are likely only 30-40 stocks to consider owning in Canada for dividend income. Otherwise, index invest.
My DIY investing approach is actually very passive.
The process is: I own stocks, I get paid for owning these stocks, I can redeploy or reinvest the money as I please. Also via this process, in the not too distant future, I can spend money as I please without selling stock shares or ETF units. This appeals to me for now.
But over the years this slight bias to dividend investing and investing conservatism in general has also had a performance downside – lack of risk taking. For example, I don’t own many tech stocks in our portfolio. The U.S. market is full of them. As such, over the last 10 years or so, I have missed out on some HUGE gains with the likes of Amazon, Apple, Microsoft, and other tech companies rising high in price. Sure, I own a small amount of low-cost ETF QQQ as a tech stock proxy but sometimes there is actual FOMO (Fear Of Missing Out) in playing the woulda, coulda, shoulda with some stocks or assets.
QQQ has done rather well in recent years and I will continue to own it. (More on that below.)
My basket of Canadian DIY stocks continues to Beat the TSX (BTSX) over time because I happen to own many BTSX stocks every year when making more/new portfolio purchases.
But I do confess I have missed out on some major U.S. tech gains with my approach due to a lack of risk taking on my part. So, while staying boring works well with investing I would be foolish not to acknowledge some opportunity costs.
Mark, for years, I’ve followed your site and because of that, I dumped my financial advisor. I’m happy I did and I’ve never looked back. I’m more conserative than you so I took your considerations to heart and bought low-cost ETF XIU instead of building my own stock portfolio. I’m very happy with the results. I get income and growth from XIU, just as you said I would.
I also own a bit of your low-cost XAW as well, for ex-Canada investing. I also keep some cash as dry-powder! I am considering owning QQQ since you’ve mentioned you own that.
My question is: can you share some of the U.S. stocks that you own? You don’t really mention much on your Dividends page beyond a couple of U.S. stocks and it would be nice to know what you own and why. Thanks for considering this since I know you’re a bit private with your investing decisions and don’t share everything publicly for privacy reasons. Thank you.
Thanks for your question, and correct!
I don’t disclose everything, all the time, in one place on my site for a few reasons but I do try and share what I am comfortable with to help others of course or allow others to learn from my DIY investing mistakes! 🙂
I fully appreciate the desire to avoid any individual stock selection. With an indexed fund you own all the stocks: the good, some bad or indifferent.
You are correct in that I don’t disclose all U.S. stocks in my portfolio but I will share some stocks inside my RRSP on this occasion.
Here are the stocks in my own RRSP (not my wife’s) as per current state relative to portfolio weights I’ve maintained for a few years now:
- a mix of BLK, BEP/BEPC and BIP/BECP along with JNJ, PG and NEE.
I’ve compared my returns for the last 8-years or so with largely a buy-and-hold approach against XIU (Canada) and QQQ (U.S. tech) for quick fun:
Source: Portfolio Visualizer
(Notes: Blue Portfolio 1 – XIU; Orange Portfolio 2 – my portfolio; Red Portfolio 3 – QQQ. You can see if I went all-in with QQQ (orange) I would have done much better!?)
Ah, the future…
Again, none of these stocks or ETFs are recommendations for purchase.
Rather, I buy and hold some individual stocks from the U.S., mostly defensive plays, along with low-cost ETFs since I feel I get the best of both worlds: income today, growing income tomorrow to deploy as I please and broad-market ETFs that deliver higher equity returns to help us meet our investing objectives.
Beyond these stocks or QQQ inside my RRSP, another reminder I’ve also gravitated to owning more indexed ETFs like XAW inside my TFSA over time: to capture lazy growth inside that account. At the time of this update, XAW is up 8%+ for the year. Pretty good for staying boring. Things can always change…
May 2023 Dividend Income Update
Well, time for the Projected Annual Dividend Income (PADI) update:
And…
Keen readers will notice a massive $600+ jump in just one month from April 2023.
We haven’t done much but that also won’t happen every month!
I bought a bit of TD Bank recently but otherwise the dividend income is higher thanks to some key dividend raises in May:
- Telus (T)
- Pembina Pipeline (PPL)
- Bank of Montreal (BMO)
- Bank of Nova Scotia (BNS)
- CIBC (CM)
- Royal Bank (RY).
To put this new monthy update into perspective:
- That’s averaging $3,476 per month – getting closer to covering most basic expenses every month such as paying for food, shelter and transportation.
- A reminder we don’t intend to invest any money inside our taxable accounts at all, this year. We simply don’t have enough to go around… Our plan is to save for 2024 TFSA contributions starting this summer and hopefully be ready to roll when new TFSA contribution room opens us as of January 2024. This saving work remains directly aligned to our 2023 financial goals.
I look forward to sharing more updates next month.
Mark
Related Reading:
With diligent, multi-decade savings for retirement, I believe many Canadians can build a decent retirement nest egg using low-cost ETFs. I was only happy to share my thoughts as part of the Best ETFs for 2023 with my peers and colleagues at MoneySense here.
This is the answer to how much do you need to retire on $5,000 per month until age 95.
How much do you need if you want to spend more in retirement: what does it take to retire on $6,000 per month?
Mark
My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.
Hey Mark there is nothing wrong with boring when it comes to investing for the long term. My stock portfolio is about as boring as they come. As long as the asset has a long history of paying increased dividends, I’m interested. I heard you on Kanwai’s Sarai’s podcast, you did a great job, thanks for sharing!
Very kind, Jim – thanks for that!
Yes, boring and sticking with a good plan seems very wise for wealth-building!
All the best,
Mark
Hi Mark: I do have some Canadian bank stocks. As mentioned before I have TD and NA which split in ’14 and BNS. Yes some I have had for years such as CU and TA. I also accumulated 1000 of T when it was called British Columbia Telephone. I also bought BCE when it was Bell Canada and amalgamated into BCE in ’83. I never started to buy ENB until ’92 and slowly accumulated it and it has split 3x. I had 800 shares of Great Lakes Power and the shares split which gave me 1600 and then it was taken over by Brascan and I received 1448 shares and since it has split 5x and spun off their platform companies. Most companies were bought in the $15.00- $30.00 range. As mentioned I had to start small because I wasn’t making a ton at work. Now the dividends provide a nice cushion. Time and patience is all it takes and investing in the right companies.
That portfolio value is bonkers, Ronald. Phenomenal. I mean, the market value is the following, if correct:
-ENB = 21,000 shares = > $1 M
-BN USD $ = 12,187 shares = ~ $400k
-BAM USD $ = 3,066 shares = ~ $98k
-BCE = 9,700 shares = ~ > $590k
And on and and on….
I figured you owned some bank stocks, like NA, others have asked me 🙂
I’m trying my best to catch up to you…LOL.
Mark
Hi Mark: As mentioned I wasn’t making a ton of money at work so I had to start small. One of my winners was CTA which I bought for $20.00 (25) and sold for $62 5/8. I say 25 because that is all I could afford at the time. I would buy 25 of one stock and then 25 of another. Soon I had enough were I could buy 50 shares and then 100 shares. That is how I accumulated multiple shares. Like I say small at first and watch the shares accumulate. Soon 100 is not enough and I am buying 200 shares. Now I buy in lots of 1000 shares. Over 54 years you can accumulate a lot. That is not to say that I’ve not had losers because I have but that is part of the learning process and the winners out number the losers.
Hi Mark: A small addition to your message. I had BAM but it was reclassified back in December. My 12187 shares of BAM became shares of BN and a quarter plus 20 shares became BAM so now I have both. Brookfield is the company which keeps on giving.
Indeed. I happen to own a bunch of BIPC and BEPC, at least for me. >500 shares in each.
Should I own BN or BAM too? 🙂
Mark
Hi Mark: As you always say it depends. BN is the parent company and holds everything but pays a small dividend ($.07 per quarter) while BAM is the Manager and pays ($.32 per quarter). Overall BN controls over $825 BIL. of AUM. Not as much as Blackrock but a fair size non the same. The reason for the small dividend is so it will have more money to grow the business. As mentioned BAM became BN and spun off the Manager which became BAM. It took me a while to rework my book but I finally got it figured out.
Yes, good stuff!
Hi Mark: My top stocks are ENB (21000), BN (12187), BAM (3066), BCE (9700), TRP (8950), T(8000), CU(10000) FTS(3200), TA(6350), EMA(3600). One stock I really lucked out on was NA. I bought it with a base cost of $10875.72 and in ’14 it split in two and now it is over $90.00 again. These are a few of the stocks that keep raising their dividends.
Wow… that is impressive.
I only have a few companies >1,000 shares each (e.g., Telus, BCE, FTS, etc.)
Amazing Ronald, really.
Mark
A few folks asked me, Ronald, after they read these amounts (and their minds were blown…) – is there a reason why you have these stocks as your highest positions vs. Canadian banks or other stocks?
Likely your longest holding periods too, with stock splits?
Other reasons?
Thanks again. 🙂
Mark
Hi Mark: Your dividend list is fine but you only get part of it this year. BNS and Telus x 2 and Pembina Pipelines x 3. Next year you will start with the full new dividend. Mark as long as yo keep on investing your dividends will keep on growing. If you retire and feel you don’t have the money to do it than just invest as much as you can as every little bit adds up. There should be no need to make withdrawals. As dad used to say when he bought a new car that the stock market paid for it. It wasn’t long before he had made the money back.
Let’s hope so, Ronald. Just trying to do my best!
What are your top-5 or top-10 holdings?
Mark
Maybe it’s my memory fading but isn’t your actual and forecast numbers based on calendar years and the update is a 12 month going forward estimate? I seem to recall having this conversation with you way way back and you clarified how you were tracking this. Of course this was before you switched to the current account tracking.
Having said that, it might have been a conversation with someone else. 🙂
LOL, no, it was with me. Good question, always welcome them here. I report this more clearly I hope in that this is my projected annual dividend income (PADI) = by the end of December 2023, this should be the income assuming I:
a. don’t invest more
b. don’t reinvest/DRIP more
c. dividends are not cut OR
d. dividends do not increase at all.
🙂
Hope that helps?
Mark