September 2022 Dividend Income Update

September 2022 Dividend Income Update

Hey Readers,

Welcome to my September 2022 dividend income update.

These are some of my favourite updates I make during the year!

You can check out my previous income post here, where I highlighted a slight change to our portfolio that should be yet another enabler to growing our dividend income stream…

Here are some more reader questions in my inbox for this month’s update.

September 2022 Dividend Income Update

Mark, I read your post last month. That’s a lot of accounts to manage. Do you invest any differently in each of those accounts and if so, how?

Great question. 

You are correct, it’s quite a bit to manage but a good problem to have!

To summarize, here are our accounts and how we generally invest in them:

• x1 – my defined benefit pension (DB) plan from work (about 21 years in at the time of this post). My DB pension is affiliated with some of the largest pension plans in Canada but has a more conservative asset mix, closer to a traditional 60/40 balanced portfolio. If I leave the full-time workforce before age 55, I will be forced with a few decisions including commuting my pension. 

Further Reading: Should I take the commuted value of my pension?

• x1 – my wife’s defined contribution (DC) pension plan from work (also about 20 years contributed). My wife’s DC pension is invested, where possible, in indexed mutual funds in a mix of domestic equities (30%), U.S. and international equities (50%), and a Canadian bond index fund (20%). When she leaves the full-time workforce the value of her DC pension will come with her. 

• x1 – my Locked-In Retirement Account (LIRA). I’ve owned a few different assets inside this account over the last 20+ years but in recent years, I own mostly U.S. stocks, including some tech via a low-cost U.S. ETF.

Further Reading: What is a LIRA, how should you invest in it?

• x2 – RRSPs. We own a mix of Canadian and U.S. dividend stocks, and some low-cost ETFs. 
• x2 – TFSAs. We own mostly Canadian dividend paying stocks, and low-cost ETF XAW.
• x2 – taxable accounts. We own just Canadian dividend paying stocks here.
• x1 – corporation; soon to be corporate investment account TBC. I’m not yet invested inside this account. For now, I’m using this account to build up a bit of a cash wedge approaching semi-retirement. 

Further Reading: How much cash should you keep?

______________

10 accounts. 

A reminder these monthly dividend income updates focus only on our TFSAs and taxable accounts – for a few reasons. Your mileage may vary!

Mark, have you purchased anything new, recently? If so, what?

Happy to share.

As you might recall, I enjoy buying BTSX stocks (stocks that tend to beat the TSX index as a collective).

I also listed these stocks I wanted to buy more of in 2022. 

Mark, I know you’ve written about your semi-retirement drawdown plan a bit with your dividend income streams. Can you recap your logic?

Sure thing!

In this extensive post, about some overlooked retirement income planning considerations, I shared my drawdown method:

“NRT” = Non-registered (N), RRSPs/RRIFs (R), TFSAs (T).

That means non-registered accounts will be spent, re: “live off dividends” as we work part-time; we’ll make slow, strategic RRSP withdrawals and leave TFSA assets “until the end”.

We don’t intend to touch our TFSA assets in any early retirement. Even though I report our growing TFSA income via these monthly updates, the idea is likely to use up non-registered AND RRSP/RRIF asests by our late-70s and early-80s.

I feel keeping our TFSAs “until the end” is also smart for estate planning. 

I also figure if we continue to keep maximizing contributions to the TFSA account (like we have been doing), and letting those assets compound away in our 50s and 60s, it’s not unrealistic that in the coming decades our TFSAs will be earning tens of thousands of dollars per year; money that can be withdrawn tax-free. I won’t be surprised if combined they are not worth about $1 million in our late-70s to start drawing down – and more tax-advantaged at that than any non-registered stocks as well…

Source: Play with the Get Smarter About Money TFSA calculator. Link below. 

Mark, what happens if you reach your goal, at the end of the chart, early? What next?

I don’t know 🙂

Ha, kidding, but honestly our plan is to keep working for the coming years, full-time, and then transition to part-time work if our kind employers will have us. We hope so. We would like to stay with our organization in a part-time capacity for a few reasons but we’ll cross that bridge when we get there 🙂  (I wonder if they are reading this???)

Passionate readers will know it’s always been my plan to be FIWOOT – Financially Independent, Work On Own Terms. Full retirement, not working at all, for any income, never made sense to me before and still doesn’t make sense to me now. Again, your mileage may vary!

September 2022 Dividend Income Update Summary

With some recent purchases listed above, our September 2022 forward dividend income for the year now sits at $28,319. That’s the total dividend income we should earn by the end of December 2022, should no dividends get cut, no dividends get reinvested, and I don’t buy anything else this year inside some of our key wealth-building investment portfolio accounts. 

I do of course hope no dividends get cut or reduced, I will reinvest my dividends earned inside the TFSAs for sure, and I might buy more stocks this year if I can scrounge up the money to do so…while some stocks are badly beaten up. 

To put that income into perspective:

• Almost half of that annual income is tax-free for future retirement spending and fun. 
• Our forward dividend income continues to rise every month thanks to those reinvested dividends inside our TFSAs, thanks to many dividend increases during the year, and the odd, small strategic purchase. 
• A few months back, I predicted we would easily surpass at least $28,000 in forward dividend income earned from our taxable account and TFSAs. Well, this is proof!
• $28,319 in forward annual dividend income translates to earning $2,359.92 per month.
• This income also means we earn just shy of $78 per day. 

Thanks for reading and sharing, and another reminder to please bring forward your comments and questions for any future updates! I always like the engagement!

Mark

Related Reading:

Can you retire using just your TFSA?

Try this free TFSA calculator here.