November 2018 Dividend Income Update
“I am an advocate of investing in individual, high-quality stocks, provided you can take care to avoid certain pitfalls. Historically, stocks have proven to offer as good as return as any other investment vehicle – and nothing I’ve seen over the past 50 years of investing has shaken my faith in stocks.” – Stephen Jarislowsky, author of The Investment Zoo and Canadian billionaire investor
I first shared those words on my site over six years ago in this dividend income update post.
Back then, I was absolutely thrilled to see the dividends paid and reinvested across our portfolio of Canadian dividend paying stocks – churning out (then) close to $480 that month.
I continued in that post to write:
“As long as dividends aren’t reduced and the companies we own keep paying them, hopefully we’ll surpass $6,000 in dividend income this calendar year. We don’t dare touch this money today, it’s growing every month for our retirement living expenses.”
Times change, some things stay the same.
To borrow another quote from a bank CEO, a company we own that just raised their dividend for the second time this year:
“This year, we continued to make good progress against our strategic objectives.” – Darryl White, CEO, BMO.
Me too Darryl. Sticking to a long-term financial plan can work wonders.
Our financial plan for 2018 was rather simple: continue to kill debt and maximize contributions to our TFSAs.
So far, so good on both.
By employing this simple plan, and simply letting assets purchased inside our TFSAs and in other accounts do all the heavy lifting for us, at the time of this post we’re on pace to earn $17,050 in dividend income this year calendar year excluding RRSP assets. This is a new milestone – over $17K per year. That’s an increase of almost $2,000 more from this time last year.
Sure, any rational investor will tell you a dollar of dividends is equivalent to a one-dollar increase in the price of a stock. However, I believe it’s the discipline of sticking with companies that increase their dividends and the phenomenal compounding power of those reinvested dividends over time that some investors just don’t appreciate. You can see the chart of my long-term multi-year journey here.
Stay tuned for my December dividend income update to wrap up 2018 in a few weeks.
On the subject of wrapping, I hope your holiday plans are coming along too.
Mark
A wise man once told me, be the lender not the borrower… So I am big in RY, TD & NA as well as ENB, TRP, FTS, PPL & IPL.
You and I might have talked to the same person. Own all those stocks and more, likely always will.
Marc, as will I. I have suggested that my kids invest in those same equities and watch the magic of compounding DRIP, grow their investments to a very nice and early retirement!
You bet Walter. I hope my site can help others. If I’m wrong, well, I will write about that too 🙂 I have!
https://www.myownadvisor.ca/some-of-my-best-personal-finance-advice-so-you-dont-have-to-make-the-same-mistakes-i-did/
Thanks for being a fan.
Your right May! ENB is my highest holding and looks like 10% increases in 2020 as well to follow. Just a thought: Why do experienced investors buy ETFs from banks (bank products they sell) and happy with paying 1/2 to 2% in fees? I guess for some – its the cost they feel they need to pay to feel more diversified? I try never to buy products the banks are selling and actually buy the banks because of the products they sell to others.
ENB raised dividend by 10%, from 0.671 to 0.738. It’s a good news for most people here, I guess.
My expected annual investment income reached a $3000 organic growth because of this raise. It’s quite amazing what drips and dividend raises can do.
Wild. I didn’t see 10% coming. WOW.
https://www.enbridge.com/media-center/news
Just added another $100+ per year in dividend income without doing anything. Should be an interesting year with pipelines yielding over 8% next year!!!
As Mike mentioned below 10% also projected in 2020, and I see 5-7% forecast beyond 2020 without issuing more common stock. The’re massively increasing pipe capacity, reducing debt, executing it right it seems, after looking like bums not long ago. Surprised the stock is so unloved. Might take some time for buyers to believe again.
https://web.tmxmoney.com/article.php?newsid=8441301343361995&qm_symbol=ENB
Great job Mark! IMO the TSX has some catching up to do – I am staying away from USA equities at this time.
Congrats Mark! A $2,000 increase yoy is awesome. I’m pretty sure a large percentage of the population isn’t even saving $2,000 per year. Hope to see that amount snowball in coming years : )
Thanks Owen! Me too! Snowball away!
Congrats, Mark. You are doing awesome. I just checked my accounts, with TFSA X2 and taxable, I have only $15K. Maybe I should set my first goal as catching up with you. LOL
Looks like we are heading a bear market. I am holding the rest of my cash for now and hopefully what happens with the market will not change my plan for retirement.
Hard to say what I will invest in, in 2019. I might wait and hold cash as well May. I think the slide has started too.
Interesting, and I’m usually one of, if not the most conservative investor here. Bear market now? This is the most talked about and anticipated bear or correction by a long shot, and I’ve invested through 4 or 5 at least now. I haven’t seen one yet even a few have been able to predict. I hear you on being gun shy though. There are many stressers, China/USA trade, tarriffs, Brexit, QE everywhere, Huawei, long in tooth bull etc.
I’ve been buying to stay at my 60% equity weighting rather than have more cash or FI build up. I see it as a benefit having this target and an ISP to help with discipline. I’m also more focused on creating income as a floor, and I’m lousy at market timing. Right or wrong – dunno.
I think we’re pretty close as far as the equity/fixed income ratio goes RB. I just don’t see any reason for an upside to this global situation for now. I was going to just add to current positions but now I’m wembling towards just leaving the cash sit in the existing GICs at 2.8% (and climbing) for now. I’d still likely eventually go into equities but if I can get it cheaper in a few months I’m fine with the wait. If I was transferring in-kind then it wouldn’t really matter.
Fair enough Lloyd. I thought of you and May when I mentioned conservative. I am certain you are doing what you’re comfortable with and are proven very prudent with your assets. If talking TFSA contributions the decision probably isn’t overly consequential when you’re at a happy allocation level with large asset amounts, and I get it with the 2.8%+.
I’m working to avoid predicting upside or downside at this point because I’m usually wrong. If I actually knew I could time it well I’d be making some big bets on overall allocations. Anything I’ve read or experienced is it doesn’t work. I’m trying to take my emotion and my flawed market judgement out of it by sticking to my plan and letting the numbers dictate. Lately with drops in some high quality equities that means I buy a little and actually helps income grow a bit. Bigger drops will take a lot more courage and at some that there may not be enough (courage), and/or I’ll run out of maturing FI while still maintaining a good cash float. That will be okay.
I started retirement nearly 5 yrs ago at only 50% equity (very conservative compared to most and previously always 100%), and let it grow to 60% trimming it back a couple of times along the way. It’s different going the other way now but I see no reason to deviate from plan. (comfortable with allocations, good income floor, good cash wedge, long investment horizon 20+ yrs, etc)
You got the point. There are a few stocks yesterday reached the price I wanted to buy but I didn’t get the courage to pull the trigger.
Kudos to you to be able to stick to your plan.
I am very bad at market timing too, that’s why last year I bought lots of equities (in hundreds of thousands) although everybody said bear market is coming. But right now I feel the entire world is crazy, not only the equity market. Canada arrested Meng and former Canadian diplomat disappeared in China. I don’t know where the world will go and would like to wait a bit to see things settle down a bit.
IMO, no one knows when the bear is coming, as you proved. The US yield curve (best recession predictor) is close but has not inverted yet. Recessions typically 16 months later- right since 1955. Good reading: https://www.moneysense.ca/save/everything-you-need-to-know-about-inverted-yields/
Read the next article too.
I can see how when you’re on the fast track accumulating assets and planning to soon retire its concerning to buy and go underwater. I have enough of that right now myself. Not worried over the long haul. I find it helps to focus on the income generated by high quality assets with growing dividends- like ENB you mentioned below. I also find its very helpful for me to have my comfort asset allocation # and try and stay reasonably close with some written rules around that and other key things in my ISP.
It seems its a time of concern, some is valid, some more noise and overblown. This can often be a time to buy when others are scared and want to sell quality companies. Lots of good CDN stocks are cheap by many measures- emerging mkt levels.
However having said all that I don’t pretend to know what decisions are best for others and don’t suggest that my opinions are right. Maybe waiting is right for you.
G/L
If the companies I am looking at for the TFSAs keep retreating over the next couple of weeks, then I’d certainly be enticed to pull the trigger and pick some up in the new year. I like to think in terms of stuff on sale. Knowing that stuff goes on sale from time to time, I can wait. Not trying so much to time a market as pick stuff up when it is relatively inexpensive and with approaches to 52 week lows, I think it could be a better deal. It’s nice to get additional shares for the same dollar value. If that involves waiting and a bit of patience, I’m down with that.
Ya, I’m tempted to the do the same. The TSX is down what, almost 10% for the year? CDN stocks are getting to be on sale for 2019 TFSA room.
Got it. 100% agree. I think the same way.
Focusing on investment income definitely helps a lot. It’s still not a very good feeling to see the total return is negative. So I try hard to buy when I feel the stocks I wanted to buy is at good value. I have bought NA, TD, ZDI and BPY.UN at dip recently and they are all underwater now. I am aiming for long term so I still sleep tight. But I am kind of wondering that I should have waited more patiently.
I am not that much in rush also because right now cash gets interest not too bad and I don’t need the investment income yet. Meanwhile, I might miss some fine opportunities to buy stocks on sale too. Just like I was hesitating to add to my BCE position or not, and now BCE increased a lot already.
In long run, I guess it does not make that much difference. Just difficult to conquer my own fear and greedy I guess. After all, I am still pretty new to the game. Need more time in the market to become a more mature and calm investor I assume.
And herein lies the challenge we all face…as investors…”Just difficult to conquer my own fear and greedy I guess.”
As long as those stocks paid dividends, you should not worry too much. Watch the price(s) fall. The bear market is here. If anything, worse case, hold those stocks and buy more broad market indexed ETFs. The way, all boats rise when the market comes back.
I think the bear market is upon us. Time to stash some cash for purchases. Things are going down…
“The bear market is here, the bear market is upon us”
YTD TSX is off 8.92%
Re Bear (20% below last 2 mth high) we’re down now about ~7%. We’re trending bearish but we’ve got ~13% more to get into that territory. Will we get there? Yes. When? People have been saying it for many years now. At some point they’ll be right! Will we go much lower or will we trend higher before that happens? Who really knows?
Your crystal ball is more clear than mine!!
Nah, just a guess really….lower we go in 2019. I could be wrong and likely am!
I kinda thought that! And you might be right.
I don’t know and no guess here…but I’m liking the prices we’re entering into. Have another buy list ready. LOL
Getting mine organized. Utilities like AQN and EMA and CPX are interesting to me. I’ve got enough financials but geez…tempting!
Best value on the utilities seems largely gone IMO. When volatility started they seemed to shine. I was hoping to get some more myself.
Do you have enough pipes- ENB, TRP, IPL seem good value now. Financial yes, banks, insurance.
I am also very tempted with banks, but I am already overweight with them.
I also hope I bought more utilities when they were down.
When utilities were at their lowest I was at my equity limit so didn’t buy more.
I’m back at my limit right now but would like to buy more banks that I’m still underweight in.
Decisions decisions…
I remember you have bought TD and BMO recently.
Talking about market timing, I have bought quite some utilities since last year, most of them at high price. Then I bought more when they were down, but I was more cautious and didn’t buy enough.
Long term I think utilities should be safer than banks? Just checked, I have 22% financials, 12% utilities. Maybe should buy more utilities. The other problem is that with CND low, I am not willing to change to USD to buy US stocks. But choices in Canadian market are so limited.
also bought CM, BNS (biggest bnk position).
utilities might hold up a bit better in downturn but likely offer less growth upside
Very true on utilities. Just that I don’t want to be more than 30-40% financials. So maybe a bit of both. Really, there are only about 30-40 stocks to own in Canada for consistent dividend growth. It’s a very small pond.
Noticed some big utility moves today ???
I get it on the financials. I’m close to where I probably should be. Read a couple of Globe bank stories today-concerns on overextended debt that may hurt banks within next 3yrs & changes to regs on tier 1capital (we’re already exceedling though)
Amazing progress! We are having a neck to neck race with my dividend income at around $19,000
What’s your take on buying US stocks for your dividend portfolio with the current USD value?
I hold 50% of my portfolio in the US and generally see more growth and bigger dividend growth across the US blue-chip stocks.
Yes, we are….geez….I better catch up!!
I’m torn Dividend Earner. On the one hand, with our CDN $$ low vs. USD $$, I think it’s bad. On the other hand, I feel I will be holding my stocks and ETFs, e.g., VYM for many years to come so now is likely better than 5 years from now.
I need to invest my TFSA $$ in 3 weeks. Ask me after that once I have some money built up in 2019 for the RRSP to invest in U.S. stocks.
You?
Eventually, I would like to own 50% USD $$ and U.S. stock content in my portfolio. That’s the plan.
https://www.myownadvisor.ca/cash-wedge-opening-investment-taps/
“I need to invest my TFSA $$ in 3 weeks.”
Why? I’m seriously considering waiting, or at least not committing the funds to any specific investment.
Well, I like to get my money working for me usually as soon as I can. We’ll see!
just awesome Mark!
Such a huge improvement in income over that time period. congrats.
curious why you dont list the companies that pay you?
Would you consider listing your top 3 payers like tawcan does?
Always cool to see in my opinion
keep it up
Thanks man. Yes, I’ve been basically sticking to the same boring plan for years. It’s slow and steady that wins the race I think – whether that’s a basket of stocks or low-cost ETFs. Save, invest, reinvest dividends and/or distributions and repeat. Don’t trade. Don’t buy penny stocks. Don’t buy Bitcoin. The list goes on.
I will release my top-3 or 5 holdings in a post. Good idea.
For now, you can see what I own in Canada and U.S. here:
https://www.myownadvisor.ca/dividends/
Hi Mark. Congratulations. I have a similar investment strategy as you but I’ve been doing it for much longer – since early 90’s – and I can tell you it works for me very well. After much thought I have decided to convert my RRSP to a RRIF. I will receive enough cash from my dividends to meet the annual withdrawal requirements and avoid selling any of the stocks/ETFs themselves – hopefully for a good long time.
Hey, new blog. Just checking it out but the first thing that popped out was that I agree with the assessment of us late-boomers. Almost unfair to lump us in with the older boomers in some cases.
Great to hear from you Marie. Geez, I haven’t seen you or your son (Robb) in a few years now. I continue to follow Boomer & Echo – seems you still have a HUGE following. Well done and very happy for you both.
Yes, I recall you working at a major big bank and learned to own the company, not the products over time 🙂
I think you’re smart to convert some or all of your RRSP into your RRIF before age X? (I would never ask a woman that question!!!) since you can defer CPP and OAS for as long as you possibly can (as you know) and maximize inflation-protected benefits.
Best wishes to you and Robb and family this holiday season. Stay in touch.
Mark
Thanks Mark. Just to let you know, I’m no longer associated with Boomer & Echo. Robb and I parted ways – not too amicably, I’m afraid – several months ago. I thought I’d try my hand at my own Boomer blog http://www.boomerclub.ca
My plan so far is to take CPP at age 66 (from My Service Canada figures, this seems to be the best for survivorship benefits) and I will take OAS at age 70.
I wish you and your family all the best for the holidays and the New Year.
Marie
Very sorry to hear than Marie. I was not aware.
Seems like a good call on your CPP and OAS for higher benefits.
All the best and I will try and check out your new site 🙂
Mark
Thanks, Mark. I enjoy reading your posts.
Holy Mackinaw Marie I’m so sorry to read this. You, Robb and Mark have been my bouncing off rocks for years. I hope everything turns amicable after a cooling off period. I too will be checking out your new blog. All the best Marie.
Thanks Gary. I welcome you aboard. I’ve missed hearing from you and my other previous followers who I’ve come to see as long-distance friends over the years.
All the best to you and your family this holiday season and in the New Year.
Because you have well thought out goals, a solid plan to meet them and consistent disciplined execution you’re in a fantastic position overall. Great job.Huge progress since that older link.
Good luck in 2019!
Ya, boring dividend investor here. Guilty. Red wine #2 coming up!
Wow $17,500 is huge considering you aren’t including RRSP. I think we’ll hit over $18,000 for this yesr but we’re including RRSP.
Correct, no RRSP(s). Just TFSAs (x2 with my wife) and my taxable account. You’re younger and you have kids man. You’re doing incredibly well.
Mark
i can’t believe how well you are doing mark; $17,050. WITHOUT your RRSP. you will be enjoying a fantastic retirement!!!
Yupper Gary. All true. TFSAs x2 and my taxable. RRSPs would be close to double I guess? I dunno. I mean, I keep track but the major goal is $30K with TFSAs and taxable. After that goal is realized, I know we’ll be able to stop full-time work and work part-time and run the blog, freelance, other. I figure the $30K per year (in dividend income with dividend increases over time) will cover:
-property taxes in the condo for life
-condo fees for life
-utility bills for life
-groceries for life
-healthcare (dental, etc.) for life
We’ll have RRSP withdrawals in our 50s and 60s.
We’ll have pensions, CPP + OAS in our 60s and 70s to cover longevity risk.
At least that’s the plan Gary. Onwards and upwards. Thanks for being a fan.
Mark
‘morning Mark. Is that “Dividends” page new? I don’t recall seeing it and I just went through it three times (I’m slow this morning). I have to say that is one of the best articles I’ve read.
Always been there actually but I’m linking to it more to show more details about my approach and why I believe it’s working for us.
I’m also linking to my ETFs page and Indexing page as well for the same reason so folks get an appreciation for the total package.
‘K, probably my CRS kicking in. In any event, well done on the update.
Can’t Remember $hit? LOL.