TFSA Dividend Income

At first, when I started investing in the stock market a few years ago, it was more about trying it out and see if it works for me. I was more of a trader and didn’t pay too much attention to dividend income.

Admittedly, I wasn’t happy with the results. At times, I earned some profits and at times I barely make even. There was no predictable income streams and it’s a full time job for others monitoring the stock market on a daily basis.

TURNING POINT: Becoming a full time dividend investor

I continue to educate myself on matters regarding financial literacy. In addition, I read books about dividend investing, watched You tube videos, and followed the strategy from the greatest investor of all time Warren Buffett. Finally, I visited personal finance websites, investing forums, and joined their discussion.

In short, I’ve changed my approach and become a full time dividend investor. Above all, as an investor, I continue to evolve and improve my strategy as I go along.

CONSISTENT AND DISCIPLINE LONG-TERM INVESTING!

Generally speaking, I’ve learned to be patient, disciplined, and consistent with my investing strategy which leads to steady return of our investments.

Since 2016, I’ve invested much of my time in studying, researching, and picking dividend growth stocks that I will buy and hold.

Our goal is to live off with our growing passive income through dividends without harvesting the capital.

We both have maxed out  our Tax Free Savings Account (TFSA) for 2020 which is $69,500 each plus any gains earned over the years.

Our TFSA Portfolio only consists of Canadian equities. Beginning of this year we have added new securities to our holdings. 

We keep a watchlist of potential companies that we will partner in the future that meet our criteria.

If you follow my previous post, I am personally not an advocate of Registered Retirement Savings Plan (RRSP). We prefer to hold non-registered accounts after maxing out our TFSA contribution room.

Below is our TFSA monthly dividend income for this year: 

(Updated: October 3, 2020)

 

The effects of COVID 19 pandemic and oil price war early this year led to the temporary closure of many businesses and for some, a permanent one due to the threat of the virus. For all those reasons, this has led to massive job losses around the world and significant losses in companies earnings. No one has been gotten off the hook, even the greatest dividend investor of all time Warren Buffett.

Therefore, in an effort to keep many businesses afloat, some of these companies have decided to reduce or cut their dividends.

As a consequence, you may have noticed a drop in our monthly dividend income in the month of February and also reflected in the month of May. It is disappointing to see that our dividends in our TFSA has dropped significantly again for the month of August. This is partly due to our conscious decision to sell some shares of one of my high yielding dividend stock which I have too much weight on over 20%. September has now showed slow recovery in our TFSA dividend income. Consequently, we are now expecting a steady increase in the next few months provided these companies continue to pay dividends to their shareholders.

In exchange, we started new positions in technology sector and added consumer defensive companies. As a dividend investor, I am disheartened to see that our TFSA dividend income were down compared to last year but this has been an exceptional difficult times and no one has been spared.

DIVERSIFICATION

For all those reasons, as a dividend income investor we decided to part ways with some of the companies that have reduced and cut dividends. On a similar note, we started positions in companies that we considered essentials during this crisis such as utilities, telecom, technology, and consumer staples.

Diversification helps to mitigate any losses to any dividend investors. During market downturn or recession, there are companies that will continue to thrive hence not severely impacted. In fact, some of these companies continue to increase their dividend payout during these times. Here is the link to our updated TFSA Dividend Portfolio.

As countries and governments started to ease restrictions and businesses reopening with the new normal conditions, our economy will hopefully also starts to improve and recover. Therefore, it is crucial for dividend investors to partner solid dividend growth companies.

Similarly, we are confident that with the new additions to our TFSA dividend portfolio, it will continue to provide us increasing dividend income in the coming months and years.

Note: However, past performance does not guarantee future results. Therefore, dividend income may or may not change for the coming months.

2020 TFSA Dividend Income to date: $7,060.68

Jan – $1,053.96

Feb $840.88

Mar – $951.36

Apr – $982.52

May – $517.44

Jun – $744.97

Jul –  $839.48

Aug – $486.06

Sep – $644.01

Oct – 

Nov – 

Dec – 

 

My Final Thoughts

Our goal at the beginning of each year is to maximize our TFSA contribution. Once we achieved that, we continue to invest in US and Canadian dividend stocks in non-registered accounts.

We have reached $10,019.62 of passive income through dividends in 2019 in our TFSA accounts alone. A great milestone to end the decade for us. 

For the purpose of this blog post, I will only update our TFSA dividend income every month and hopefully you will join and follow our journey towards financial independence. 

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PPGal
7 months ago

This inspire me to track my monthly dividends no matter how small it is. I also like receiving monthly dividends (from REIT and ETFs) and consider buying blue chip stocks. Do you also plan to have a portfolio page on which you’ll show the companies you are currently invested in? Freedomthirtyfiveblog.com has one.

PPGal
7 months ago

Will look forward to it. Because the market is down, it’s a bargain to buy stocks but not a good time to sell especially for a retiree.

PPGal
5 months ago

I noticed that your TFSA is earning monthly dividends. From what I observed, most companies hve quarterly dividends. On the other hand REITs and bonds have monthly distribution/interest.

Are there other equities that have monthly dividends which can be a good source of income in retirement?

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