I believe dividend investing is the easiest and simplest way for the average person to start generating a passive income. It really doesn’t require much money to get started either. If you are new to investing, I think dividend stocks are a great way to start. Hopefully the stock appreciates in value, meanwhile the company gives you money for holding their stock. That first time you see money get deposited into your account without you doing anything, its a wonderful feeling. This is my current dividend portfolio, to give you a general idea of what stocks others hold.
What Is A Dividend – A dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits. When a corporation earns a profit or surplus, the corporation is able to re-invest the profit in the business and pay a proportion of the profit as a dividend to shareholders. (Source – Wikipedia)
The power of the dividend stock price appreciation combined with Dividend Reinvestment (aka Drip Program) and finally dividend raises can create a massive pile of cash for retirement in the future.
Who do We Purchase Stocks With?
We buy and sell stocks with questrade. Their fees are some of the lowest in Canada and 0 commissions on etf purchases.
My portfolio is strictly for entertainment. While I hold these stocks , they may not be a good buy at the moment. Things change and prices are always fluctuating. Do your own research before you make any purchases. I can’t be held for responsible for any losses you may incur.
Here’s a list of the current Dividend Companies we own in our Registered accounts.
- M = Monthly Dividend
- JAJO = January, April, July, October Dividend
- FMAN = February, May, August, November Dividend
- MJSD = March, June, September, December Dividend
Note – I try my best to update this monthly but may not be exact with current yields.
If you are curious to see what kind of income our portfolio creates, feel free to check out our past dividend incomes.
The stock market is full of different sectors. Which ones will do better in the future? No one really knows, so its a great idea to stay diversified. This is my current portfolio weighing by sector. (Updated November 22,2018)
- Utilities – 16.9%
- Financial Services – 14.9%
- Real Estate – 12%
- Energy -10.9%
- Technology – 10%
- Consumer Defensive 9.7%
- Health Care – 7.2%
- Consumer Cyclical – 7.2%
- Industrial – 6.7%
- Communication Services 4.5%
- Basic Materials 0%
While our basic materials sector is the lowest, we do own a bunch of physical precious metals. For a couple years after we became debt free I used to be a metal “stacker” before learning about dividends. Precious metals return on investment isn’t good but we keep our physical position as a insurance on the markets and further diversification.
Looking back, I wish I didn’t go through this stage. If I would of started a dividend portfolio back then, we would be a lot further along in our financial journey. Stocks were cheaper at that time, but I had the mentality that things were going to get a lot worse.
If I have one word of advice. Get rid of that negative mindset, it truly doesn’t benefit you at all and no one likes to hear you complaining about everything. I used to be that guy and while that time period was good, Gold and Silver has 0 cash flow… Zero! It’s all about that cash flow.
Current Global Diversification of our Dividend Portfolio
- 63% – Canadian Equities
- 36.3% – US Equities
- 1% – Cash
- 0% – International Market
This is horrible and needs some work. I would eventually like 40% Canadian, 40% US, 20% International. The Tfsa is a fantastic account for Canadian’s which I want to max out first. Generally speaking you want to be all Canadian investments in the tfsa to ensure the best tax efficiency and simplicity.
Plan of Action
Since I have started investing in stocks it has been pretty clear how much better the U.S stock market performs than the Canadian Market. Obviously the tax reforms Trump has created has helped the American business’s but the dividend history of some U.S. companies is incredible.
Once the Canadian Dollar rebounds a bit, (its currently worth 75 cents usd) I will be trying to buy a lot more U.S stocks, to help diversify our dividend portfolio.
For instance, stocks like Proctor and Gamble with over 60 years of dividend increases definitely help you sleep better at night.They have went through wars, recessions etc and kept on increasing that dividend! Those are the companies that will cut their dividend as a last ditch effort to fix their books. It will take a long time to get that kind of reputation again. Dividend Kings!
I plan on getting a international etf soon to get more international exposure without the need to research those stocks. I currently only hold one etf in our portfolio, but they are a fantastic way to diversify your portfolio with really low costs. Warren Buffett himself, says the average retail investor should invest in great etf funds.
I really do believe building a great dividend portfolio is quite easy. With the internet now, any information you want is a search away. You can find out anything about a company. There are even sheets out there with the best Canadian and U.S dividend paying stocks.
In addition, online banking makes buying and selling stocks so simple these days. I couldn’t imagine it 20 years ago. Open a brokerage account somewhere and you can start your dividend portfolio with only a couple hundred bucks.
The longer I invest, the more I realize not to chase high yields. Buying dividend Aristocrats and Kings, seems like a solid way to go!
What do you think of our current portfolio? Would you sell any of these positions and why?