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.
For this month’s update, I thought I’d revisit some contributions made to Dividend Reference by a number of dividend investors, including yours truly. Here are some of my favourite dividend investing tips/messages from the list of 101 Dividend Investing Tips (besides #16 of course):
“Start investing early in life. If you are not already investing, start now! The earlier in life you or your children start investing the better. Time does magically powerful things when it comes to compounding.”
“Invest consistently. Live on less than you make each month so that you have money available to invest. All the research shows that the best time to invest is yesterday and the next best time is now.”
“Stop looking at your portfolio on a daily basis; daily market fluctuations are part of the game. Don’t let the noise distract you away from your investment plan.”
“Manage your own investments instead of overpaying for a so called expert. Who is more interested in your investment success more than yourself?”
“Time is a more important factor than the rate of return when building wealth. A 10% annual return over a 20 year period generates more wealth than a 20% return over 10 years. You can’t control what kind of returns your investments will make, but you do have control over when you invest. So the earlier you start the better.”
“Don’t change your investing habits because of glum news articles or shouty stock market gurus.”
“A good portfolio is like a garden. It takes maintenance, time and attention to detail, but ultimately should grow by itself. It should not take continuous work, but occasional pruning. A well understood and well balanced portfolio can be a piece of beauty.”
“Reinvest the dividends. Unless you need the income, you should always automatically reinvest dividends. I say this for two reasons: one, doing so essentially allows an investor to dollar cost average into his portfolio over the long term; two, the result of compounding reinvested dividends over a long period is a much higher return than relying merely on price return.”
“I’ve learned that indifference, patience, and consistency are the main ingredients for success in dividend investing. It’s really not much more complicated than that.”
Regarding the last quote, these updates are a reminder to me to stay the course we’ve set out on and do nothing except 1) reinvest dividends paid every month and quarter and 2) and add new money to buy more stocks when we can afford it. That’s basically it.
As a consequence of doing 1) and 2) it means our passive income is slowly rising each month to help fund our retirement. Our ultimate goal is to create our own mini-Canadian index: use the sector breakdown of the TSX Composite Index and own roughly 35% financials, 20% energy 12% materials and some industrials and telecommunications companies in our Canadian portfolio. As of this month, we’re projected to earn nearly $11,450 this calendar year from the ~ 30 Canadian stocks we own.
We haven’t reached our goal yet but we’re 38% of the way there. Time in the market has been our friend. We hope for more of the same going forward.
Any comments on our strategy? What motivates you to leave the workforce on your own terms?
I finally got around to revamping my spreadsheet on the investments (TFSAs & RRSPs) to include the stuff we have DRIPped as income as well. Including all interest, cash dividends and drips we are up to just shy of 55K/year. Surprised me, I didn’t think it was that high. As a side note, the overall value of the portfolios are waaay down this week but the income generated has not fallen. Works for me.
That’s what I’m finding as well Lloyd. Market goes down, I get paid. Market goes up, I get paid. I like the idea of living off dividends and distributions for that reason, including the income from ETFs. I know folks don’t agree with this mindset but it’s folks like yourself that I draw inspiration from. $55k per year is outstanding. I hope I get there someday.
Reinvesting dividends and buying more stocks when I have new savings is how I’m growing my portfolio too. It’s 2 simple rules, but very effective over time. What year did you start investing in dividend paying stocks? I’ve been at this since around 2009. I’m making $7K a year in dividends now, which is about 30% of what I need to retire on today.
My very first dividend stock was Enbridge. I started buying that in late 2008, so I started about seven years ago as well. I slowly converted all my mutual funds to dividend paying stocks and equity ETFs. That process was complete in 2010. Thanks for reading and sharing Liquid.
Well, I live my this mantra, “Invest consistently.” Small amounts, large amounts, just be consistent and don’t freak out when the market tanks. Nibble, nibble, nibble on stocks “forever.” Your dividend income projection is quite impressive. My next long term goal, though way out a bit, is to average $1k/month in income. Might take me a few more years but one step at a time, from averaging $100/month to next stop…. $1k/month. Thanks for sharing some great quotes!
I feel the same DivHut, investing regardless of using stocks or ETFs, just investing in equities in general, is a get wealthy eventually strategy. Like bricks on a house, building the foundation one brick at a time. Thanks for reading and sharing.