October 2019 Dividend Income Update
Welcome to my latest dividend income update for 2019.
With my October dividend income update, that’s a sign we’re getting closer to year end! Hard to believe really…
For those of you new to these posts on my site, for a few years now, every month I discuss our approach to investing using Canadian dividend paying stocks and how that approach is helping us realize financial independence.
To recap our investing journey in the nutshell, we take a hybrid-approach to investing.
- Approach #1 – we own a number of Canadian dividend paying stocks for income and growth.These updates focus on that progress and the performance of our TFSAs and non-registered accounts to support any semi-retirement dreams.
- Approach #2 – we’re owning more units of low-cost U.S. Exchange Traded Funds (ETFs) inside our RRSPs over time.I believe owning more U.S. ETF units (over time) is a great complement to our Canadian dividend income machine…
Financial Independence (FI) is getting closer…
Dedicated readers will know I’m not a huge fan of the Retire Early (RE) part of the #FIRE movement but I am a huge advocate of (and diligent investor striving towards) FI.
In this detailed post here, I outlined with a fellow blogger why striving for financial independence might be a much more worthy goal for GenX or GenY than any retirement. You can be the judge!
Back to our saving and investing goals, I continue to believe earning ~$30,000 per year from our Canadian dividend paying stocks should cover most of our basic expenses, for life.
Ottawa, Canada is an expensive city to live in (compared to other parts of the country (Toronto $$$ and Vancouver $$$$$ excluded)), so based on this choice so we’ll need a decent retirement portfolio to cover the following (in 2019 dollars):
- food/groceries, basic household supplies = $8,000 per year or $667/mo.
- condo utilities (heat, hydro, water, internet, cell phone bills) = upwards of $6,000 per year or $500/mo.
- condo property taxes in Ottawa = $6,000 per year or $500/mo.
- condo fees = $6,000 per year or $500/mo.
That’s $26,000 per year without any auto expenses or healthcare expenses.
Throw in some car expenses from time to time (our car is paid off) and then a healthcare plan when our workplace benefits end and it doesn’t take much to need $30,000 per year after-tax to live where we do.
Get your tax-free money!
Thankfully, to help us with our semi-retirement dreams my wife and I have long understood the powerful merits behind our Tax Free Savings Accounts. So should you!
We’ve essentially considered our TFSAs as another retirement account from Day 1 – and because we have, via owning some of my favourite Canadian dividend paying stocks inside this account, we’re accelerating our path to earning our $30,000 per year goal. Much of that income will be tax-free!
Later this year, we’re projecting our tax-free (i.e., TFSAs) and tax-efficient investing (non-registered account) might yield close to $19,300 this calendar year. That’s a $50+ increase from just a few weeks ago. It’s a solid $2,200+ more from this time last year. Beyond TFSA contributions, that’s money earned simply from letting our dividends flow in and become automatically reinvested commission-free.
Not all roses when it comes to dividend income
While this has been a nice year of growth, I’m actually a bit disappointed.
The Canadian portion of our portfolio is up about 20% this year which means it’s costing me more in dividends to reinvest in more shares that I own.
I would be interested in your take on this comment: it would be great to see a 10% or even 20% market correction soon.
Buying stocks on sale always seems like more fun.
Thanks for reading and sharing this update, and do let me know what questions you have about saving, investing, Canadian stocks, low-cost ETFs or anything else on your financial mind. I probably have a post about it or I could consider writing a new one! I would be happen to answer and share what I know.
I’m putting a higher priority on my personal wellness of late. Some of these wellness benefits even escaped a financial classic that sold millions of copies – The Millionaire Next Door.
A fellow blogger asked me a number of questions about my income investing strategy. So, I answered them of course – right here.