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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My divs have now exceeded the total 2020 divs and still two months to go. Looks good.
Sadly in Jan i have to withdraw some of the monies partially for my own needs like the $6K for the TFSA. But that is not too bad of a problem. Will be interesting in APR to see if my OAS gets hit or not.
Also of interest are my cost of living expenditures. I am up over last year but that is because I changed out the HVAC system. The old one was a piece of crap and did not work well at all. It was warranted 10yrs and they were in every year. So it crapped out again this past year, warranty expired, and rather than throw money at it I took the dive and changed it out. So far so good. Will be interesting to see electricity costs (thermopump) compared to the prior year.
Also because of CV-19 expenses are down overall. 2018/2019 were more expensive than the past two years as we were travelling then. However even in those two years I had not exceeded my pre-retirement budget that I had mapped out. These past two years have shown that we can easily survive with what we have at present from the government programmes. Still buy what I want so things are honky dory.
Starting to build non-registered portfolio this past year. Not much but I am now pulling approx $100mth and next year should be over $200mth. And extra $2.5 to spend.
Hopefully travelling will open up next year and can get to enjoy travelling again.
Take care, Stay healthy
Beem there with the HVAC – a necessary evil really 🙂
Yes, smart to start building a small non-reg. with tax efficient CDN stocks – just offers a bit of flex if you need another income stream in my book. You’re doing well Ricardo, seems like a bit of extra cashflow for you!!
Stay well, you too!
Very interesting post! My only comment would be to keep out of Rogers – Edward Rogers currently controls 97% of the voting shares (thank you Globe and Mail). All the other investors money (including mine) would most likely be Class B non-voting shares. I don’t trust anyone with that much power over my money. I have now reallocated into Bell and Telus…
I’m watching my dividend payments grow but they are a small fraction of yours, Mark. However, I have a lot of Montreal real estate in my portfolio, which is doing particularly well at the moment!
Ya, I used to own Rogers years ago….5+ but then I realized more about the family dynamics, dual class-shares, etc. Kinda a mess. I guess we are seeing that play out now. So, I own the two big CDN telcos (BCE and Telus) and VZ in the U.S. That’s it.
You gotta start somewhere Chris. Did you see my chart in 2008? 🙂
These things take time to incubate. You will get there. Almost a given if you stay the course.
Not sure if it’s in your area of expertise but could you comment on the current interest rates at banks and Credit unions. My Credit union pays a very small 0.1 percent on my accounts. I have a fair amount of money in the various accounts and I would like to make at least a little more.I am a very linear thinker so each pay I put aside money for car insurance,home insurance, property taxes, vacation etc.
Happy discuss more on the site Terry. Are you looking for better rates? My brother-site did a review recently and I have a partnership with EQ bank you can use as well!
Deals with EQ bank:
Or, looking for a more detailed post?
Dividend income. How much do you have invested to produce an income of 22K?
My goal is to produce half of what we need to live on in retirement, about 2 years off.
Are you DRIP your dividends now?
A lot 🙂 Kidding aside Chris, I’ve been maxing out my TFSA for years since inception so it takes time…and discipline. I won’t kid you.
At today’s prices, it would take plenty to earn $22K per year.
I do DRIP all my stocks for the most part. The reason: money that makes money can make more money.
I think dividends to cover half of your retirement needs is still an outstanding goal.
To get $22,500 in dividends you would need $530,000 in quality stocks. That is a current yield of 4.25%. I have a sample portfolio with the following stock. All are in my portfolio.
TELUS Corporation (XTSE:T)
BANK OF MONTREAL (XTSE:BMO)
THE BANK OF NOVA SCOTIA (XTSE:BNS)
BCE Inc (XTSE:BCE)
Fortis Inc. (XTSE:FTS)
NATIONAL BANK OF CANADA (XTSE:NA)
THE TORONTO-DOMINION BANK (XTSE:TD)
CANADIAN IMPERIAL BANK OF COMMERCE (XTSE:CM)
CAPITAL POWER CORPORATION (XTSE:CPX)
EMERA INCORPORATED (XTSE:EMA)
Enbridge Inc. (XTSE:ENB)
ROYAL BANK OF CANADA (XTSE:RY)
TC Energy Corporation (XTSE:TRP)
POWER CORPORATION OF CANADA (XTSE:POW)
That’s a very nice list DivInvestor – my list is similar 🙂
You are the king of acronyms! Congrats on the steady increase.
FIWOOT for the win! 🙂
Enjoyed the TFSA only retirement breakdown on Cashflows & portfolios from the weekend read. With that one and with your own future plan, it seems that they stick to the 4% rule or primarily only dividend draws. Do you think as you get even older, say over 70 you will get even more aggressive with spending capital. Basically following the die with “near zero” plan.
Absolutely I plan to have a “die broke” plan but the challenge is, as you know, when? 🙂
I don’t like the 4% rule as you know maybe, too rigid and makes no sense when everytihng in your life is not a straight-line.
I will stick to dividend draws in the early years to fight longevity risk and while I work part-time. Then, in my 50s, likely the portfolio should cover expenses. That plan anyhow.
Keep the adventure pics coming.
Congratulations, Mark. There is still Telus and Enbridge should raise the dividend before year-end, you will be so much ahead by then.
It’s unbelievable how much grocery price has been up.
Thanks May! Yes, Telus and ENB (both about 3-4% of my portfolio each?) still potentially have small raises this year. I suspect it will be a small 3-5% bump for each. That’s still good for me and all I need to keep pace with inflation.
Wild on grocery prices. Have they changed your spending habits?
Not yet. Grocery bill is not a big percentage of our expenses, so far we are still OK. Eating has been always the one thing I am not frugal about. I always want the best food on our table.
But we are thinking which car to drive. We have insured only one car since the pandemic. Winter is coming and it would be safer to drive the SUV. Driving EV is much cheaper though. If gas price goes up again, maybe the money saved on gas can already pay the insurance.
We hope to buy an EV in the coming years. Likely our next car will at least be a hybrid model. It was newer technology 10 years ago when we bought our car and now we’re more comfortable with the EV and/or hybrid decision moving forward. Just so much better for our planet that is dying. Sad but true.
Great work Mark.
I’m seeing some rise here too.
Are you buying anything now?
Last buys were close to 2 mths ago, smaller amounts. RY, BEP.un (RRSP), TRP, CNQ, AQN (unregistered &LIF)
I am a bit over my target weighting and struggle at these prices. Early in the New Year I will mostly be moving in kind stocks/etf out of 2x rrsp’s, lif to top tfsa’s, unregistered. Don’t expect much if any buying.
Nothing bought of late. Savings mode. Will be looking at more AQN in a few months along with XAW in TFSA. Assuming AQN stays low.
Will add more WCN as well in taxable I think in 2022.
Once RRSP room opens up in 2022, spring, I will add more QQQ me thinks. Very boring!!
QQQ is on my radar for sure. But I believe its whats going to get hit hardest whenever this long awaited correction happens.
That’s my thinking too but VTI is almost a tech-index now, just that QQQ has more of them. I dunno. Is QQQ overvalued? Is tech overvalued and over-bought? They’ve been saying this for years…..I didn’t believe the experts then and I don’t know. They don’t know. 🙂
They’re both overvalued now. But what do I know?
Invest when you have $$ to do so is my motto, beyond keeping your cash wedge/cash slush fund intact of course. I wish I new the answers 🙂
Once Jan. 2022 is here, I’m buying 🙂
Smart for your stage when you are still accumulating and have more years ahead, and comfortable with that. As you know I am more into protection mode and just keeping some steady income rolling, although sometimes its tempting to beef it up with more equity.
73.5/26.5 now. Over my target, but that’s 12 years avg spending in FI…….. Really only need 7yrs to get us to OAS/CPP @ 70 very safely. Too many choices. LOL
Yes, assuming you get to age 70 without major calamity in the stock markets you’ll be MORE than fine.
Hard to believe, in a pandemic full-year, markets are up 25% in Canada. Bonkers.
Simply not worried whatever happens!
Pretty much sliding along on plan.
Wow, you are very safe there. I hardly have any FI other than the FI part of our group RRSPs. Right now I am relying on dividends income. I am hoping dividends will grow to be enough to cover all the expenses, basic and discretionary, when we finally retire.
Yes, we could live on my wife’s current pension if need be, in a market meltdown and not wanting to touch assets.
In 2 years the pension bridge is lost and we may start OAS for her to offset much of that.
Dividends, distributions exceed our avg retirement spend from assets so with FI we’re probably playing it very safe.
“Yes, we could live on my wife’s current pension if need be, in a market meltdown and not wanting to touch assets.”
Incredible margin of safety. But you won’t need it. When some bank stocks increase their dividends by 10-15% in another 3-4 months, you’ll have enough to buy another fun red machine if you want in cash 🙂
Safe is good. Peace of mind and sleeping tight is the most important thing in retirement.
Well put May! 🙂
Thank you May.
That’s a great goal to have enough income from investments to have all expenses and discretionary covered. Keep up the incredible progress. So fast!
I know. It’s faster than I expected. Income increases certainly helped. We are the kind of people who don’t spend more when earning more. The pandemic also helped. Nowhere to go and I stopped shopping too. The extra money can only go to investment.
Well done. You’ve come a long way. I remember back when you were having a harder time pulling the trigger on buying stock, and had some more FI.
Yeah, it took me a while to be finally fully invested. Also took me a while to buy stocks when it is not really cheap in my taxable account. Had this bad habit always trying to time the market and always failing. I am certainly much comfortable now with investment. But maybe it’s just an illusion because the market is pretty good for the past few years. We will see what happened when the market crashed. Hopefully, at least I will not sell on the floor.
Get it on the timing thing. ditto. Just buy as reasonable as possible for quality and the long term hold with dividend growth income as back stop.
Same on this stratospheric market. A reason for me keeping a little more FI than needed. Won’t need to sell equities in bad times and “might” be able to buy in a bit lower.
Interested in following your journey. Best!
LOL. I am sure you have more bank stocks than I do! I think we’ll get raises closer to 20-25% maybe taking 2 quarters.
And no I won’t replace the red machine. It’s mint and still worth what I paid 11 years ago. Rare. Could never justify spending what it takes to replace with new now. Bank raises would pay for the floor mats. LOL Crazy.
Congrats on such a steady growing dividend income. Any plans for next year 6K TFSA? Individual stocks or ETF?
Thanks very much.
Gosh, I really don’t know yet 🙂
Thinkng more XAW though to reduce my dependence on just CDN stocks for income – although it’s getting juicy that dividend income!!
I bought some ABBV when it was on dip. So far looks like a good buy. ABBV will be in my buy and hold portfolio.
Your Income chart really tells the story, and answers all those questions about risings costs, and inflation. It’s not the specific stocks which make the difference, but how you invest. Invest to maximize your income, by selecting the best DG stocks and buying them at a reasonable price, and the solution is all but guaranteed.
Anyone wishing to see an actual example, visit my blog and my October WS Investment.
Will be over to take a look Henry 🙂
Yes, the income chart is coming along! Thanks for the ongoing encouragement.
Remind me of your blog deets.