October 2023 Dividend Income Update

October 2023 Dividend Income Update

Hey Everyone!

Welcome to a new update: our October 2023 Dividend Income Update.

For those of you new here, including new subscribers, we’ve been on a multi-year journey to increase our dividend income to fund part of our semi-retirement plan. Dividends aren’t everything, that’s for sure, but they can matter to some investors…

More in a bit. 🙂

How do we invest?

As the investing years roll on, this is another good time to remind all readers we maintain a hybrid approach to investing:

  1. We invest in Canadian and U.S. dividend paying stocks – that deliver income.
  2. We invest in low-cost equity ETFs – that deliver a bias of long-term growth. 

You can read more about what we own and why on this page here.

I also maintain some of my favourite low-cost ETFs on this page here – including some personal ownership in some.

Like I mentioned last month, we do not invest in fads like covered call ETFs nor any crypto, as examples. 

We invest in mostly equities, we keep a bit of cash or cash alternative ETFs, and we try and keep debt modest. We believe boring works. In fact, on the boring note: our mortgage should be dead in just 6 months.  

While our approach may not work for everyone, and I’ve always acknowledged that, I do believe dividend investing has a few benefits. These are things that work for us:

  • Dividends are tax-efficient, to a point: dividends are a real source of income and can be tax-efficient if you have no other income. You can learn more about the Dividend Tax Credit here. 
  • Dividends support my investing behaviour: our financial independence / FIWOOT (Financial Independence, Work On Own Terms) path has been almost two decades in the making – so getting income from our portfolio AND getting raises from our portfolio without selling assets is very appealing to us as we consider funding semi-retirement with part-time work.
  • Dividends should reduce any market-timing, knee-jerk reactions: I/we have no idea what the stock market might deliver this week, next month, next year. Consider the post below. I certainly didn’t see seemingly “safe” bonds as part of the dependable/steady 60/40 balanced portfolio get totally hammered in 2022 during the tail end of the pandemic cycle – but it happened! Stock markets can and do correct wildly at times. If you need to sell your stocks or any part of your portfolio for income during wild market calamity, I believe that’s a risk. Instead of being forced to sell assets, I believe dividend payments should enable our semi-retirement plan to minimize the need to sell any assets when the market or particular stocks are priced low. 

How long do stock market corrections last?

What / how much have we invested year to date?

Not very much, just periodically to be honest, beyond TFSA contributions back in January 2023. 

That’s because our mortgage interest rate remains under 1.7% (not a typo), so we’ve been killing the mortgage debt this year – that was one of our major financial goals / priorities in 2023. 

By continuing to make our bi-weekly accelerated mortgage payments, and by making the odd lump sum payment while our debt is cheap, we’re ahead of schedule and on track to have our mortgage dead sometime in March 2024. 

via GIPHY

Instead, most of the higher dividend income this year can be attributed to dividend increases, including some recent annoucements that should juice our dividend income higher next month. As examples, some raises this year:

  • BCE 
  • BEPC 
  • BIPC
  • BMO
  • BNS
  • CM
  • CNQ 
  • CNR 
  • CPX
  • EMA
  • EQB
  • FTS
  • GWO
  • MFC
  • NA
  • RY
  • Telus
  • TRP
  • WCN
  • and more…

Dividends can be helpful and a reminder not all portfolios are created equal!

I never got to meet Jack Bogle, talk to him, ask him about his portfolio; gain any answers about perfect portfolio construction – but I didn’t have to to figure out that:

  • No perfect portfolio exists,
  • Personal finance is personal,
  • Investing in what you know well, what you can stick with, aligned to your tolerance for risk, etc. are good ideas. Even for Jack Bogle.

The founder of Vanguard Group (said Jack Bogle), used to have a rather basic portfolio: 60 percent in a U.S. stock index fund and 40 percent in a U.S. bond index fund. He maintained that allocation for himself for years. In his elder years before he passed, he shifted his strategy: more 50/50 stocks and bonds which is rather conservative.

Fun fact: Jack Bogle was also an active investor at times investing in Bogle Jr’s hedge fund!

Hedge funds aside, some interesting observations about this portfolio allocation over the years:

  • No mention of holding international funds, including Canadian assets. He had a huge bias to U.S. stocks. 
  • Little public mention of cash holdings or cash % of his portfolio.
  • No bias to dividends or capital gains or either really – just total return (which makes sense) – to invest in a manner that holds the collection of U.S. stocks at a very low cost with some U.S. bonds and take such returns accordingly. 

Many indexers revere Jack Bogle, as they should – Bogle helped transform the world of investing for retail investors as we know it. But make no mistake, he was hardly as “diversified” as much as today’s advisors or money managers would likely do with your portfolio. Something to consider as you tailor your own path…

Weekend Reading – Does diversification really matter?

October 2023 Dividend Income Update

Almost, almost….:) – irrespective of the stock market churning, we try and ignore that and stick to our plan:

  1. Becoming mortgage free,
  2. Staying investing (watching dividends roll in), and
  3. Keeping a growing, healthy cash wedge for any semi-retirement contingencies.

Doing these things should open up some lifestyle choices in the coming year or so. 

Well, time for our Projected Annual Dividend Income (PADI) update:

October 2023 Dividend Income Update

Image/Source: Pexels, Jean Frenna.

Some notes:

  • We just crossed the $43k barrier! 
  • A reminder this is income from our taxable accounts (x2) and RRSPs (x2) – income we expect to earn this year assuming no dividends get cut and/or no additional dividend increases occur and/or I/we don’t buy anything else for the rest of the year. 🙂  Again, honestly, I probably can’t afford to buy much more this year since we’re saving up for January 2024 TFSA contribution room to be ready in 6 weeks… 
  • Another reminder we don’t include any TFSAs (x2) in this tally since we won’t be touching those assets for potentially another 20-25 years. 

Established readers will also remember we do a few things to support this income inching higher each month:

  1. We remain invested. 
  2. We invest new cash when we have it, including into the TFSA in a few weeks. 
  3. We try and avoid selling stocks where possible even if a dividend cut occurs to avoid tinkering with the portfolio, although I did sell off some AQN earlier this year but I retained some as well.

October 2023 portfolio changes

One small purchase: a bit more TOU (Tourmaline) priced in the mid-60s. That’s it. 

Between now and the end of 2023, I also expect a small dividend increase from TD Bank (TD) in particular. 

Looking much further ahead, I can foresee some special dividends from some Canadian oil and gas stocks coming our way too…like CNQ and TOU by May or June 2024. We’ll see??!!

Thanks very much for reading and I welcome any comments or questions you might have!

Do share how your income journey is coming along too. We all started somewhere. 

Mark

My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.

8 Responses to "October 2023 Dividend Income Update"

  1. AQN NYSE is in my RRSP account to avoid the land transfer taxes. It’s a little over 3.5% of the portfolio so it isn’t much. I continue to DRIP on the dividends in the hope that eventually the share price will rise enough that I’d be able to sell. Otherwise it a loss. Not much of a loss but a loss. There really is something to selling stock as soon as a dividend cut is done. Seems to be a pretty good indicator
    -Christophe

    Reply
  2. I feel AQN is just a waste of money -> losing money in my portfolio. They still haven’t found a CEO after close to a year. Have to wonder about their management. Only reason I still have AQN is I don’t want to take the loss -> probably pride. What are your thoughts Mark?

    Reply
    1. Ya, I have some AQN in taxable only…and it’s <0.50% of my total portfolio. I’ll continue to own it there to offset any capital gains eventually. Not worried and it will come back a bit over time but if you’re looking for gains likely to move on elsewhere.

      Mark

      Reply
    1. Thanks, MikeyP! Hopefully a bit higher (??) in November and December to round out the year! Recent raises via CNQ and SLF in November will help!

      Cheers.
      Mark

      Reply
  3. Hi Mark. I’m a new subscriber and am really enjoying your posts. Your list of dividend opportunities aligns with a lot of what’s in my portfolio. Congrats on your mortgage target – I adopted the same strategy and have been mortgage free for 10 years. All that additional money then went into retirement savings and we’ve more than doubled our investments and have almost met our retirement goal. It works!
    Be sure to celebrate that mortgage milestone next spring!

    Reply
    1. Thanks very much, Tim – glad you are following along!

      Ya, the mortgage should be dead in another 6 months based on current payment plan. Then, we’ll be paying off a car potentially for a few months – we are trying to buy our next car outright as much as we can. Likely an EV for any urban travel.

      Then, since little to no debt, our plan is to scale back from full-time work if possible and start working part-time in our 50s. This way, more life-work balance and not the other way around. 🙂

      Happy to discuss more!
      Mark

      Reply

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