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?