November 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 our approach to investing focusing on Canadian dividend paying stocks. We believe buying and holding a number of Canadian dividend-paying stocks in our tax-free (thanks TFSA) and non-registered accounts will, over time, provide some steady monthly income for future wants and needs in retirement.
This post is better late than never…an update for last month late this month…but heck, whatever!
Last time I shared an update, I mentioned about 20 Canadian stocks in our portfolio, year-to-date, increased their dividends in 2017. Well, the good news kept rolling in last month. Sun Life increased their dividend for the second time this year as did Telus.
Thanks to more cash flow flowing from these companies to shareholders like me, we’ve now assured ourselves of earning just over $15,100 this calendar year from Canadian dividend paying stocks held in our tax-free (TFSA) and non-registered accounts. Again after many, many years of diligent saving and investing – to put that income in perspective – we believe that income could pay for the following (if we wanted it to):
- Our home property taxes throughout 2018 (nearing $350 per month, estimated $4,200 per year in 2018)
- All home utilities next year (heat, hydro, water, internet, other; between $600-$650 per month, upwards of $7,800 per year)
- And more…
I say if we wanted it to because I anticipate using every penny of our dividend income earned from our non-registered account in 2018 for debt repayment. We’re looking at moving in 2019. An option for us is selling non-registered assets to pay down any debt associated with a newer home or a move but I will incur some modest capital gains to do so – which I wish to avoid. We will assess how much our debt load is in another few months and decide if we can pay it down aggressively (or off) over the next 18-24 months; minimizing any borrowing costs.
Stay tuned for my next dividend income update wrapping up 2017 in a few weeks. Speaking of wrapping, I hope your plans for the holidays are coming together too!
I don’t hate debt, but I would hate to sell my stocks, inherit capital gains and pay taxes to pay off my debt. I will continue to carry my debts as long as it’s still cheap and I am earning more in dividend income than my interest cost.
With that being said, interest rates have been creeping up and I am keeping a close eye on it for the next two years or so. If interest rates continues to climb, I will start to slowly rebalance my portfolio and pay off debt.
That’s kinda how we feel Leo. If debt becomes an issue, we’ll sell assets and kill our debt. Otherwise, let the money make money.
Merry Christmas Lloyd West St Paul’s I’ve been watching that area for a while it’s going to become as popular as east St. Paul’s the low gravity sewer line is not far away will bring up land values have a happy new year sir ??
Some very nice houses and properties in that R.M. All the best to you and yours.
Love reading your updates!
Just wondering, do you take your dividends as cash out and put into another account or or do you continue to buy more shares?
Thanks in advance and Merry Christmas!
I used to DRIP everything I could but now I only DRIP my stocks inside the TFSA and RRSP; not non-reg account.
I did that for a few reasons… Now, all stocks that pay dividends inside my non-reg. account I use that money for other things – pay down mortgage, use it to max out TFSAs every year, use it to enjoy life and take a trip – other things.
Thanks for the kind words and happy holidays to you as well!
Thanks a ” ‘Million” Mark ?!!
Mark – You are doing great! Keep it going! Merry Christmas :). 2018 is going to see the TSX hit new highs! If NAFTA settles – then I can see the TSX going up double digits! (with a small pull back – here and there)
Thanks Mike! Onwards and upwards!? 🙂
Merry Christmas Mark I have been following your post they are very educational to me and my wife we also bought a building lot on the outskirts of Winnipeg trying to decide a lot of things to go over have a happy new year sir ??
All the best Philip and thanks for being a fan!
“outskirts of Winnipeg”
Hi Phillip….may I ask where? I’m up near Stonewall.
I won’t be offended if you’d rather not say.
Why mention only TFSA and non-registered accounts for Canadian dividend paying stocks? My wife and I have been using these in our RIF accounts for years. They almost cover all our monthly withdrawals (target is about 4%). As you know, in the last several years, our accounts are growing with the TSX…bonus!!
It’s always the way I’ve been reporting this Paul, good or bad, so I’m sticking with it 🙂
You’re right, there is more dividend and distribution income if I include our RRSPs. However, I hope we can reach $30k from TFSAs and non-reg. eventually. With the RRSPs still growing I’m pretty confident that is “enough money” to retire on given other assets.
Quick question. The path you’re taking with your TFSA is the dividend one. Is there any concern that you’ll have missed out on market growth when you retire? I might be missing something but what would be the difference in picking growth stocks (or index etfs) and then the day you retire to convert your entire TFSA (which will probably be worth quite a bit more) to dividend paying stocks/etfs. You would get the passive income you’re looking for at that point. To make things more complicated what if you kept the stocks/etfs and just trimmed shares for your income…
I think you a bit confused about the composition of the TSX with respect to the index vs dividend payers. For the TSX, dividend paying stocks make up a good portion of the index; sort the TSX by market cap and see what ones at the top don’t pay dividends. You can expect the companies MOA owns, e.g. finanicals, utilities, pipelines, telecom to be a large part of the index. Probably underrepresented in mining and energy producers, but those are feast and famine stocks in any case.
Brett – I agree with you! But that also could depend on age – and how much one has to invest. Also keep in mind some Div payers also provide growth. I keep my Div payers in my non-reg act (with a balance of growth stocks too – until i age and hit full retirement) and growth stocks in my tfsa – and will convert the tfsa to div payers when i am older. I like balance – so that i get both Gains and Divs.
But most important – is that people should focus more on their tfsa. Grow it with growth stocks / options etc – so that you can increase the $$$ in your tfsa. (no tax)
Correct, TFSA = dividend growth stocks from Canada.
“Is there any concern that you’ll have missed out on market growth when you retire?” Meaning Brett, I won’t get the same performance/returns with my stocks?
A bit. Then again, my returns in my TFSA have been about 9% over the last five years. Right inline with my benchmark XIU. I do own as another reader pointed out all big financials, all big utilities, all major pipelines, and the biggest 3 telecoms – which are a big part of the index – so indirectly I’ve created my own dividend ETF and I’ve avoided the duds in recent years (oil and gas stocks).
You’re not missing anything…I do risk under-performance by investing directly in stocks vs. a broader, lower-cost ETF like XIU or other. So far, so good though.