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 focusing on dividend paying stocks and how reinvesting the dividends paid from the Canadian companies we own are helping us reach financial freedom.
This month, I’ll provide you with our magic formula for growing our dividend income to over $11,500 per calendar year, since we started our hybrid investing approach – owning dividend paying stocks and index investing.
Magic pill #1 – We buy Canadian blue-chip dividend paying stocks that have a history of paying shareholders for decades.
Magic pill #2 – We reinvest the dividends paid by these companies where possible, as much as possible.
Magic pill #3 – We avoid selling these companies, regardless how far the stock price might fall.
Magic pill #4 – We own many of these companies inside our Tax Free Savings Accounts (TFSAs), some of these companies are non-registered investments. We index invest (more using low-cost ETFs like VTI) in our Registered Retirement Savings Plans (RRSPs).
That’s about it. We haven’t reached our goal yet but we’re 39% of the way there (if you’re keeping track we gained 1% towards our goal within the last month). Sure, there are more details but this is the essence of my super-secret recipe. Please don’t tell anyone.
Step by step you are getting closer to your dividend income goal. Great results from great companies. $12k a year is my long term goal. I’m still a way from that level but I see it in my future. Thanks for sharing.
Yes, month by month, step-by-step, that’s the plan…. Thanks DivHut and good luck on your journey.
$11,500…, near my 2022 target ($12K), awesome income 🙂
“Magic pill #3 – We avoid selling these companies, regardless how far the stock price might fall.”
Something that growth investors cannot fattom 🙂 But investing for the income, especially in these time when volatility and gloom&doom are the kings, is the way.
I personally only sell if there is a part of current valuation of a company that change for the worst AND isn’t a single or short term event.
Well, I admit it’s tough sometimes. For every dividend increase these days there seems to be a decrease. Not everything comes up roses. But I am committed to our plan of being a hybrid investor – reinvest dividends for cash flow and index investing for extra security.
$11,000 is huge especially when you are invested in index where yield is lower than other dividend stocks. Great job Mark!
Thanks BeSmartRich. The RRSP values are not included in that update since I need to withdraw from that account eventually, so I consider that a tax liability. My updates are focused on non-registered and TFSA investments only.
Mark
You have a big inclination towards CU. I think everything should be red right now. Good time to load up stocks for long term. I have a question, I invEstes in HPS.A few days back when I contacted td Waterhouse they said they can’t do synthetic drip on this one. I always thought that synthetic drip is possible on every stock
I don’t own very much CU actually. I think that stock is <1% of our portfolio. I feel when there is “blood on the streets” like with oil and gas stocks now, it’s a good time to buy. It’s not easy, but I’m trying to do that. I can appreciate it’s unconventional thinking.
I’m not familiar with HPS.A. Unfortunately to your question not all stocks can be DRIPped, it may depend on the brokerages rules. Rob Carrick recently wrote about this in the Glove and Mail:
http://www.theglobeandmail.com/globe-investor/inside-the-market/dont-get-caught-by-this-drip-pitfall/article27642485/
“Here’s a comparison of what online brokerage firms offer clients interested in dividend reinvestment plans. Broker DRIPs are run by the brokerage firm on your behalf. If you want to set up your own DRIP, you’ll need to order a share certificate from your broker.”
Canadian Stocks U.S. Stocks Fees Cost of Ordering a Share Certificate*
BMO InvestorLine 632 0 none $50
CIBC Investor’s Edge 639 308 none $50
Credential Direct 690 0 none $50
Desjardins Online Brokerage 319 0 none $50
HSBC InvestDirect 542 265 none $95
National Bank Direct Brokerage 545 271 none $50
Qtrade Investor all eligible stocks available all eligible stocks available none $125
Questrade all eligible stocks available all eligible stocks available none $300
RBC Direct Investing 541 516 none $50
Scotia iTrade all all none $50
TD Direct Investing 1,636 968 none $56.50
Basically, Scotia iTrade and only a few others, offer the most CDN and US DRIPs. TD Direct Investing and RBC Direct Investing lag a bit and don’t DRIP everything. BMO InvestorLine doesn’t allow you to DRIP US stocks at all!
A couple of dividend increases combined with the fall of the C$ helped boost the annual income this past month. Noteworthy, but not that concerning, is that the overall portfolio value is waaay down especially in the past couple of days. The TFSA contribution amount issue also seems to be clarified so one can budget the proper amount for that now.
Good to hear from your Lloyd. Yes, same for me.
My portfolio is down quite a bit but I’m confident it will come back. You have to think this way as a long-term investor.
I’m looking forward to the 2016 TFSA contribution room. It does seems to be clarified. We’re maxed out year to date.
Boy I’m slightly late on my dividend update for November. Need to get to work. 🙂
$11,500 per calendar year is nothing to sneeze at. Pretty solid and the snow ball will only roll faster and get bigger from here on. Keep it up Mark.
It’s coming along. It’s a slow process and I’m impatient sometimes but I see progress. Index investing is also helping given what is happening to O&G stocks lately.