October 2021 Dividend Income Update
Well, hello again!
Another month flies by…I hope you’ve been keeping well.
Over the last few months, I received a few more reader questions about my dividend income journey. So, for this month’s update before the income progress number reveal once again, I thought I would answer those. Read on and I hope you enjoy this latest October 2021 dividend income update in this format.
Mark, you wrote about your love of “TULF” stocks a few months ago. Anything on your radar?
Ha. Not really.
Honestly, I don’t really have too many stocks on my radar right now although many months ago, I highlighted these 5 stocks to buy more of in 2021.
I made a few purchases earlier this year in fact and I will do a reveal in the coming weeks.
Right now, I’m simply in savings mode. I want to have 2022 TFSA contribution room saved up in cash and be ready to deploy that as of January 1, 2022. That’s $12,000. I also want to have some money set aside to make our RRSP contributions with in the spring of 2022 as well. That’s also a small bundle.
So, while I want to invest some money this fall I simply don’t have it. I’m not a huge fan of leverage but I may consider borrowing to invest (a bit) once our mortgage is done.
A recap of Canadian TULF stocks to consider for your portfolio:
- “T” for telecommunication companies (think Bell, Telus and Rogers)
- “U” for utilities (think Fortis, Emera, Algonquin Power, Brookfield Renewable Partners, and others)
- “L” for low-yielding dividend growth stocks with growth potential (think Canadian National Railway, Waste Connections, Nutrien, Metro, Alimentation Couche-Tard, Brookfield Asset Management, and others), and last but not least everyone’s sector favourite in Canada for dividends,
- “F” for financials (you know the names).
Mark, there is a lot of chatter about inflation now and what the Bank of Canada may or may not do (i.e., increase rates) to help curb inflation. Two questions for you:
1. What investments are you considering to fight inflation, and
2. What do you make of the Bank of Canada’s upcoming moves – will they raise rates?
For the first answer, I think there are a few investments I will consider buying more of as rates move higher. Here is a list, in no particular order:
Canadian Banks and Financials. Canadian banks and other financials make up about 20% or so of my overall investment portfolio. You should know I try to keep any one stock to no more than about 5% (give or take) value as part of my portfolio. That “5% rule” is a risk-based rule I’ve developed over time. I answered that particular reader question (and more) on my dedicated FAQs page.
History has shown, time and again, these institutions tend to reward investors/shareholders. More specifically, I think given the built-in diversification that some Canadian banks have, they are poised to fork over some great dividend increases in the coming year (in 2022?) after sitting on piles of cash for so long.
Source: Financial Post – Big-6 War Chest as of summer 2021.
Canadian Telcos. Sticking with “TULF” stocks for total returns, I also believe companies like Bell (BCE) and Telus (T) in particular (let’s ignore Rogers – that family is a mess!) offer both strong current yields and capital gains with time.
Canadian Low-Yield Growth Stocks. Last but certainly not least, consider owning more “L” for low-yielding dividend growth stocks with growth potential. I know I’m happy to own Canadian National Railway (CNR), Waste Connections (WCN), Nutrien (NTR) among others to fit that profile in my portfolio.
What do you make of the Bank of Canada’s upcoming moves – will they raise rates?
The short answer is: “yes”.
Ha. Who knows???
That said, let’s face it friends, rates can’t go much lower. Even if the Bank of Canada starts raising rates with 25 to 50 basis point hikes, it’s going to take years of those increases to even get back to where some “normal” interest rates actually are. If you’re worried about a few 25 to 50 basis point interest rate hikes in 2022, at this point in your debt journey, you simply have too much debt. Those increases are peanuts.
October 2021 Dividend Income Update tally
Part of my investment plan, which has not really changed over the last 11+ investing years and hosting this blog for others to learn from, is to buy and hold and buy more of my favourite Canadian dividend stocks for income and growth. I will do this until I reach my beloved crossover point:
With thanks to dividend income raises from a few companies this year, and hopefully more on the way (looking at you Canadian banks and financials….), we have now surpassed our target of earning over $22,500 this calendar year from the capital invested inside our TFSAs and a non-registered account alone. (For privacy and other reasons, RRSP assets are always excluded from these updates.)
As of this month, I’ve pegged our forward dividend income at $22,781.
To put this income stream into perspective:
- We earn $2.60 per hour of every hour of every day (income/8,760 hours (24 hours x ~365 days)) even in our sleep. Our hourly rate is growing at about $0.02 per month based on compounding alone.
- Part of our portfolio is essentially a job: earning $10.95 per hour assuming I work 40 hours per week and I never get any vacation pay!
For well over a decade now, dividend investing remains at the core of my investment plan. The semi-retirement journey continues…
I welcome your comments on my investing approach, anytime. Thanks for reading.
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