Our goal is always to maximize the contribution limits of our TFSA beginning of each year. We aim to contribute to the allowable limit the first week of January.
Here are the TFSA contribution limits by year.
- 2009 – $5,000
- 2010 – $5,000
- 2011 – $5,000
- 2012 – $5,000
- 2013 – $5,500
- 2014 – $5,500
- 2015 – $10,000
- 2016 – $5,500
- 2017 – $5,500
- 2018 – $5,500
- 2019 – $6,000
- 2020 – $6,000
- 2021 – $6,000
Total contribution room = $75,500
In January of this year we started new positions to have some diversification in our portfolio. We only invest Canadian dividend stocks, REITs, and Income Trusts in our TFSA Portfolio. A year ago, majority of our holdings were monthly dividend income payers. However, beginning this year we now have a good mix of quarterly and monthly paying dividends. As investors we continue to evolve and constantly improve our strategy.
On the contrary, unlike other investors we don’t participate in an investors program called dividend reinvestment plan (DRIP) as we prepare cash distribution to reinvest in undervalued equities in our holdings.
(Updated: January 5, 2021)
My spouse portfolio is almost identical to mine with a few exceptions to some new securities that she added in the last few months.
(Updated: January 5, 2021))
You may also notice that we have not calculated the market value of our holdings. In my humble opinion, it is irrelevant as it changes all the time and as a dividend investor our goal is to increase passive income over time by buying more shares and reinvesting all cash distributions we received.
However, you should still be able to calculate the market value by multiplying the quantity to the current market price/share and again I am not posting the current price/share as it is not constant.
Meanwhile, I will post an update on our holdings hopefully on a monthly basis reflecting the quantity of each of our equities.
Additionally, you can easily track down our TFSA monthly dividend income which I update every month.
Our ultimate goal is to live off our dividend income without harvesting its capital. Eventually, our pensions and social security benefits will be a huge bonus come retirement age.
In June we sold our holdings with Alaris Royalty Corporation (AD.TO) when they decided to pay their dividends quarterly instead of monthly and started positions with Parkland Corporation (PKI) and Choice Properties REIT (CHP.UN.TO).
Month of July, we decided to sell our positions with BTB.UN REIT when they decided to cut their dividends in April. In addition, we started to partner with Northland Power Incorporated (NPI.TO) which is a robust utility company and are considered essential during these times and Keyera Corporation (KEY.TO). Energy sector is slowly recovering and Keyera is a company with strong financials.
For the month of August, still we were not well diversified. Exchange Income Corporation (EIF) was one industry that I have so much weight on so decided to sell a few shares. Consequently, with the uncertainty of this COVID 19 pandemic and our economy we started new positions with technology sector Enghouse Systems Ltd (ENGH) and Open Text Corporation (OTEX). Obviously, with more people now working from home, these two are among Canada’s best performing dividend tech stocks.
Similarly, I added consumer defensive companies Loblaws (L), Metro Inc (MRU), Power Corporation of Canada (POW) and Algonquin Power and Utilities Corporation (AQN).
Some few additions to our TFSA portfolio for the month of September. My other half started positions with Canadian Tire Corporation Ltd (CTC.A) and Power Corporation of Canada (POW) and I added Keyera Corporation (KEY) and Pembina Pipeline Corporation (PPL). These two latter companies are in the business of natural gas and I don’t think people will stop heating their homes in the next 10-20 years. Currently, these two energy companies are still available at a huge discount and regularly pay monthly dividends.
Admittedly, after so many months of continuing to hold Inter Pipeline (IPL) in our portfolio, October was the month that we decided that we drop our partnership with the company even at a loss. We feel that it will take time for this company to get back to pre pandemic levels and the huge dividend cut was just too big to ignore as a dividend growth investor.
Consequently, the proceeds of the sell made us able to start positions on our watchlists of Canadian dividend growth stocks. These additions may be new to our TFSA portfolio but some of them if not all are already part of our non-registered dividend portfolio.
November has been a quiet month. No new additions to our portfolio and just reinvest our monthly dividends to any of the undervalued securities.
December we saw a continued recovery of our TFSA portfolio. One of the big winners on both of our portfolio is TransAlta Renewables (RNW). It has doubled since the beginning of the year and still has the biggest chunk in our portfolio closed to 15% allocation in each. In our effort to have a balanced portfolio, we decided to sell more than half of (RNW) shares before the end of the year when it reached $22.05 on 30/12/2020.
Today, 05/01/2021 it has reached its 52 week high of $22.81 per share. RNW has been a solid monthly dividend payer for many years. Ordinarily, we would have kept most of the shares. However, the company has not increased their dividend payout since 2018. Therefore, we believed that there are opportunities in other solid dividend growth companies missing in our portfolio. Finally, we used the proceeds of the funds to start positions with these three great dividend growth companies: Bell Inc. (BCE), Magna International Inc. (MG), and Great-Westlifeco Inc. (GWO).
All things considered, we strongly believe that these companies we added have great potential moving forward.
Lastly, our dividend income is not limited to our TFSA only. However, most recently, I also started a live DGI portfolio from my Wealthsimple Trade app which is a zero commission trading platform. For the purposes of this blogpost we are only tracking these two dividend portfolios.
My Final Thoughts
In summary, As dividend growth investors we made mistakes in the past focusing only on a few sectors with higher yield. As a result, we continue to evolve as an investor and aim for a well diversified portfolio. Our TFSA portfolio now consists of sectors in financial services, REITs, utilities, industrials, basic materials, technology, telecom, consumer cyclical, and defensive.
In March, the stock market crashed due to the COVID 19 pandemic which has possibly led us now into a looming recession. This has created chaos and panic leading to the sell off in the market.
However, if you are patient and a long term dividend investor this has created a great opportunity to partner the businesses of solid paying dividend growing companies at a fraction of its price.
I’m curious about taxation of REIT (eg. TNT.UN and BTB.UN) in TFSA. In every purchase, do you have to pay tax right away or at filing of income tax return? I also like REIT but I prefer an ETF REIT like ZRE.
I am not an accountant or tax expert but any investments inside your TFSA portfolio as long as it is a Canadian publicly listed company, CDN REITs included then you won’t have to worry about paying taxes at all. There is nothing to file on your income tax return. An exception is Brookfield Property Partners (BPY.UN) which is traded in TSX and US stock exchange pays US distributions and are subject to withholding taxes even if it’s held in TFSA account. Personally, I don’t invest in ETF or index funds. As an index investor you have limited control. You are… Read more »
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