November 2019 Dividend Income Update
Welcome to my latest dividend income update – where I share our monthly passive income progress report from investing inside our non-registered account and Tax Free Savings Accounts (TFSAs).
People keep asking me: why dividends Mark? People remind me dividends don’t really matter. The only thing that really matters is total return.
Yes, indexers, total return is very important. I get it.
But so are behaviours associated with investing. That is, my investing approach. Sticking to an investing plan I believe in. A plan that helps me focus. A plan that inspires me to save more because I see shiny stocks I want to buy.
For my readership, here are some key reasons (and reminders) about why I invest in Canadian dividend paying stocks.
- The income received from our Canadian companies we own is very real. Its tangible income I can reinvest or simply keep in my bank account as cash and invest whenever I please.
- I can count on many of my Canadian companies to increase their dividends over time. In fact, I have no less than two dozen dividend increases in my portfolio so far this year. In the coming weeks, I won’t be surprised if I get a few more (from Fortis (FTS) and National Bank (NA) in particular).
- I control the portfolio turnover, not a fund manager I have to pay money to. In fact, I’ve built my own no-cost Canadian dividend ETF in recent years by holding all the big names directly that are held in the same big ETFs and mutual funds. This is a big reason I don’t own any Canadian dividend ETFs.
Those are just some of the reasons I/we own dividend paying stocks inside our non-registered account and TFSAs – and we’ll continue to do so.
Hindsight always offers a dose of 20/20 vision. In particular, for this month’s update, I thought it would be interesting to see what I said many months ago and see what I invested in.
I wrote about 3 utility stocks I wanted to buy this year back in February. I ended up pulling the trigger and buying a bunch of Algonquin Power (AQN) on February 21 at about $14.55 per share. I’m glad I did.
Not only did I receive a dividend increase from AQN earlier this year (10% in May) but the share price at the time of this post is over $18. That’s a conservative return of almost 25% in 10 months.
I wrote about 3 REITs on my buy list in May this year. I went ahead a few days later and bought some CAR.UN (Canadian Apartment REIT). Another lucky call? No idea since I can’t predict the future and I don’t really care! At the time of my CAR.UN purchase the price was under $49 per share. CAR.UN is now trading over $55 per share. In just six short months, the stock has gained 13% and with urbanization on the rise throughout Canada I anticipate CAR.UN will be going much higher over time.
Again, lucky? Maybe. Focused on dividend paying companies in my portfolio that pour income into my account? Absolutely.
Thanks to dividend paying companies like these, including others that tend to increase their dividends with time, our ability to live off dividends is becoming very real. Maybe in the coming years my wife and I can work part-time at our current employer. We think that would be ideal if they’ll have us in that capacity…
This time last year, we anticipated just north of $17,000 in 2018 calendar year dividend income. By maxing out contributions to our Tax Free Savings Accounts earlier this year, and sticking to our boring-dividends-matter-to-me plan, we’re on pace to earn almost $19,400 in another few weeks.
We will earn $19,400 in 2019? I have no idea. Company decisions regarding their dividends policies are out of my control.
However I do firmly believe that shareholder friendly companies usually remain shareholder friendly, and as long as those companies we own continue to fork out dividends like they do (let alone increase them from time to time), I suspect we’ll have a very, very, good chance of realizing our passive income goals.
One more dividend income update for 2019 planned. I can’t wait to see where we get as January 2020 TFSA contribution room approaches with another $6,000 in room per account to contribute to.
What are your income plans now or in your financial future? Do dividends matter to you?