Weekend Reading – More Dividends Edition March 2024

Weekend Reading – More Dividends Edition March 2024

Hey Everyone!

Welcome to a new Weekend Reading – sharing the more dividends edition March 2024.

First up, a few recent posts:

I updated this post on TFSA investing, thanks to a recent reader question:

Should I transfer stocks into my TFSA?

I highlighted the stock market remains a tough place to beat the index but that may or may not be your investing objective anyhow.

It probably isn’t as you get older.

It probably shouldn’t be all along…

Weekend Reading – The stock market is easy to beat

Indexed funds are great, I own a few and have done so for many, many years but an index itself doesn’t have any costs, so an index fund will almost always lag the benchmark a little bit.

I digress…

Weekend Reading – More Dividends Edition March 2024

We all know by now that dividends are part of total returns, they aren’t the be-all and end-all. 

So why do I care and report some of my/our dividend income?

Because I enjoy it. ๐Ÿ™‚

via GIPHY

Kidding aside, I share because dividends are part of total returns those dividends and rising dividends are helping us realize our financial objectives.

In a few more months, I hope to share some personal news related to our semi-retirement plans but that will need to wait…

Back to the present, in February 2024 alone, here are just some of the companies that raised dividends in our portfolio:

  • Bell (BCE).
  • Brookfield (i.e., BEPC, BIPC, BN).
  • Canadian Natural Resources (CNQ, including a pending 2-for-1 stock split).
  • Manulife (MFC).
  • Walmart (WMT, including a recently completed 3-for-1 stock split).

Weekend Reading - More Dividends Edition March 2024

Image with thanks: https://stock.walmart.com/stock-information/dividend-history/full-dividend-history/

I’m confident the combination of higher dividend income and the hope for capital gains/growth over time will absolutely fund some of our lifestyle needs and wants long before any other retirement income streams kick in…I’m simply too young to take those income streams otherwise!

I stick to my hybrid approach (owning a mix of stocks and low-cost ETFs) because I/we see the results, the process is working: our plan is the most important plan of them all but I also know of, hear of and learn from others that have successfully navigated semi-retirement or retirement long before me doing the exact – same – thing.

Financial Freedom Target Age 50

Image source: Behavior Gap.

From savvy DIY investors that have been there, done that before me, Joe and I took some time to capture those lessons learned over at Cashflows & Portfolios this week.

We learned from others:

  • Growth is great, yes, needed, but tangible income and growing income is vital for cashflow managment, 
  • Government benefits are important but they should not be the cornerstone of any successful retirement income plan, and
  • Risk management is key to financial success, including no debt where possible when you enter retirement.

I’ve also learned that, in some cases due to ever growing income, you’ll have a “tax problem” to navigate in retirement.

Yes, investing in individual stocks does have risks but you can reduce those risks by owning a basket of stocks and sticking with your plan over time. So much so that in some cases, that stock pile will grow into an income producing beast.

There are lots of ways to invest. 

Just a few recent examples from readers and the DIY investing community:

“You can see that the portfolio generates $74k in dividends. Add in OAS and CPP and most people would be off to the races and never have to sell anything, worry about drawdown strategies, etc.”

and…

“Despite having 40% FI in portfolio and holding mostly Canadian dividend payers for 20 years, our overall portfolio has more than doubled with growth exceeding the inflation rate. Being debt free and somewhat frugal helped. When possible, looking to only buy fixed income with greater real yield than the inflation rate also helped (Preferreds sometimes were substituted for Bonds/GICs and of course, those too are dividend payers).”

and…

“Hi Mark: Yes you can still live off dividends as I have for the last 32 years.”

These are just recent snippets highlighting the multiple ways to be financially successful.

I have hundreds more examples in the comments section of this site amongst my ~ 37,648 comments…

All told folks, the ability to define a holistic risk-based plan, including investing as part of it will likely do wonders for your financial wellness.

Combined with a well-thought out plan, when you avoid people that charge you a lot of money to manage your money, there are just too many examples, case studies, evidence from those who have successfully “made it” to suggest you cannot follow in their footsteps as well.

What is a Financial Plan and what should it cover?

Weekend Reading – More Dividends Edition March 2024…

Whether you are counting dividends or rental cheques or capital gains or all three of these things, I hope your financial path is as successful as my friends Gean and Kristine who in just a few short years, got their balance of income and growth together, launched a YouTube channel AND just realized Financial Independence!

Congrats!!!

I enjoy watching these real-life stories unfold. 

From one of my favourite sites/podcasts/knowledge areas:

“Consistent progress compounds.” – Farnam Street. @farnamstreet

From Nelson at Canadian Dividend Investing: “Yes, you should pay off the mortgage.”

Congrats to Bob Lai at Tawcan for the whopping income haul for January 2024: over $7,000. He also fixed his fridge recently too. 

Congrats to Brian at Labour To Leisure – making more money in his sleep:

“We started with an amazing January bringing in dividends/distributions of $694. Thatโ€™s a YOY increase of 59%.”

Incredible story…the long-term ownership in Berkshire stock now pays for medical school tuition, for life.

David Gottesman invested in Berkshire Hathaway in 1968 and held on and never stopped…His wife still has about $11.7B of the stock; the stock is up some ~30,000x in these 56 years. His wife just donated $1B to the Einstein College of Medicine to make tuition free pretty much in perpetuity. 

In a lesson related to just, keep, buying, Ben Carlson highlighted what happens if you invested right before the major 2008 financial crisis?

“There are crashes, bear markets, and corrections on occasion.

There are periods of time when the stock market more or less goes nowhere.

And there are rip-roaring bull markets.

Shake it up, put it all together, and this is the experience you get when investing in the stock market over longer time frames.

The historical 9-10% annual return in the stock market isnโ€™t simply made up of the good stuff. Those results include some pretty gnarly periods of volatility.”

From Visual Capitalist, wild stat:

“Overall, the top 10% richest own more than the bottom 90% combined, with $95 trillion in wealth.” – @VisualCap

Distribution of Wealth

I’ll be back next week with a new dividend income update. 

Have a great weekend,

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.

15 Responses to "Weekend Reading – More Dividends Edition March 2024"

  1. Hi Mark,
    In the above video featuring your friends Gean and Kristine and their other videos on dividend payouts that they have received, they feature a couple of ETF dividend stocks that provided them significant dividend payouts. One of them is HDIV ($877/monthly and $9,400/annual) and the other is HYLD ($600/month and $6,900/annual – lower than HDIV because they sold some). In researching these ETFs, they have a really high MER of 2.39 and 2.42. What your thoughts on investing in these ETFs?

    Thanks for your insight.

    Reply
      1. Your strategy is what my gut is telling me. I just transferred investments managed by a financial planner to my self-directed plan due to high MER fees which were lower than mentioned above. So why would I pay the MER fees for these two ETFs. Thanks for the explanation of covered calls because I did not have an understanding of them.

        Thanks again for your insight!

        Reply
        1. Yup, no idea why you would pay a financial advisor unless you have a very complex tax situation to manage and/or you’re not in the right mindset to manage your own money…given so many financial advisors and planners advocate for owning just one or a couple of low-cost ETFs to own these days.

          ๐Ÿ™‚

          Happy to support and share what I know and do.
          Mark

          Reply
  2. We are in approximately the same situation as Mike. One thing that struck me reading some of the comments and looking at our own portfolio, is that in Canada, many of the best companies pay substantial dividends yet at same time have had substantial growth. No real need to decide on dividends vs. growth for pre-retirement accumulation!

    For example, we presently have ~20 common stocks in our taxable accounts. Sixteen have Total Returns over 20 years that beat XIU (TSX60). Some quite handily. ๐Ÿ™‚

    Those 16 are: CM, BMO, CNQ, EMA, EIF, FTS, RY, REI.UN, TD, BCE, GWO, NA, RUS, T, CNR, CP.
    Other four were only marginally lower (BNS, TRP, POW, CU).

    Reply
    1. Well done.

      I suspect many DIY investors, who decide to own CDN stocks, hold very similar holdings albeit with a few exceptions here and there.

      Traditionally, although not in recent years, dividends + growth from banks, telcos and lifecos and definitely the railoards. I own most of those companies you mentioned too. ๐Ÿ™‚

      CU is a bit of laggard IMO, I prefer to own CPX vs. CU.
      Mark

      Reply
      1. I have a sell in on CU at $32 which would be at a loss. If I look at 5 and 10 yr Total Returns, BNS, REI, TRP and maybe BCE &T should go too! But they all have large capital gains so hard to pull the plug on them! Yield still mostly better than GICs ๐Ÿ˜‰

        Recent thought, is no longer to worry about high capital gains accumulating in taxable accounts. The heirs will eventually have to pay the taxes, but they will also get the TFSA holdings tax free which should be more than enough to cover the CG taxes ๐Ÿ™‚ Only downside is managing the portfolio as we age. It would be easier if it was all in one or two ETFs. But not going there!

        Reply
        1. Same re: capital gains in taxable account. Bring them on! ๐Ÿ™‚

          I look forward to sharing my next dividend income update with you and other passionate DIY investors next week.

          Mark

          Reply
        2. Graham – one thing I’ve recently looked into (for other reasons) is creating a charitable trust. One of the neat things I learned about these accounts is that you can transfer stocks in-kind from your non-registered account – and the beauty? It has a 0% capital gain inclusion rate! So you get a donation tax receipt for the FMV of your holdings and you’re not on the hook for any capital gains tax! You then can direct the trust with your future donations – who they go to and at what frequency. The important thing is you get the tax credit when you make the donation to the trust (eg. for a high income year where you’re trying to reduce taxes) – vs. getting it in the year that the trust makes the donation to the charity. Disclaimer applies – I am not an accountant, tax expert, or financial planner so seek your own professional advice if you intend to do anything. I’m merely a member of this DIY investor community offering up something that I found beneficial – and hope that others may as well.

          Reply
          1. I at one time looked into that. I don’t recall why, but I decided it was not something I wanted or needed to do at our income level.

            It is possible to donate shares directly to a charity from taxable account and eliminate the CG tax. https://www.grantthornton.ca/globalassets/1.-member-firms/canada/insights/pdfs/tax-alert—charitable-giving-pdf_2.pdf

            I recall in past, donating shares held in a RRIF . I forget the details, but this is what G&M says: “If you plan ahead, you can avoid the withholding taxes on RRSP or RRIF assets that youโ€™re donating to charity by transferring the funds directly to the charity. Speak to your financial institution about this.”

            Because we still do our own investing and tax returns, I tend to try and keep things simple, so not using any of these tax efficient donation methods!

            Reply
  3. Hello Mark; Thank you for your work on this site.We have been retired for almost 20 years now. Sticking to a strong personal financial plan that amply meets our needs and allows us to be generous to our children/ grandchildren has given us great pleasure and satisfaction. We still own the first equity we purchased almost 40 years ago ( BNS). The growth of capital and dividend income has been truly remarkable. Other similar type quality equities were added as we went along as funds were available. At the moment, we are trimming some positions with large capital gains and paying some taxes as we go along. We are also drawing down our RRIF accounts. Building and having a substantial margin of income safety and no debt has been very helpful to our financial safety and well being. We are very grateful. Take care. Mike

    Reply
    1. Mike, true inspiration for folks like me still accumulating assets for the next couple of years. I can only hope I’m in your position in the coming decades. ๐Ÿ™‚

      Thanks for your kind words and comments.
      Mark

      Reply

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