Dividends Progress


My Dividend Investing Journey

A dividend is simply money that many companies will pay to their stockholders. It’s their way of saying “We’re offering you a piece of our profits because you are a valued shareholder.” It’s one of the simplest and quickest ways for ordinary people to make some extra income. All investors have to do is wait for the steady dividends to roll in periodically; it’s as easy as earning interest. When I got my first job I wanted to start investing early and take advantage of compounding. 😀

From 2009 to 2011 I was heavily focused on buying dividend stocks with high yields like 5% or 6%. But starting from 2012 I changed my strategy and began to invest in dividend growth stocks instead, which are dividend paying companies that may not necessarily have a very high dividend yield, but they do have a long history of increasing their dividend payments, often every year. The best dividend growth stocks are sometimes called Dividend Aristocrats. I plan to keep buying these dividend growth stocks and hold them into my retirement. 🙂

In 2014 alone many companies I own such as TD, Bell, Enbridge, McDonald’s, Qualcomm, and Chevron, have all increased their rate of dividend distributions to shareholders. 😀 I also use DRIP to buy additional shares at discounted prices.

Anyone can invest in dividend stocks. The way I got started in 2009 was by opening up an account with a discount brokerage firm. I went with TD Waterhouse but there are many other brokers out there. I bought 30 shares of Rogers Communication Inc. for $30 each (so that’s $900 + commission.)

Rogers (RCI.B) was paying a dividend of $1.16 per share annually at the time. So each year I received $35 from RCI.B because of my part ownership in the company. That’s a yield of roughly 3.9%. Over the next several months I invested in other companies like RioCan REIT, Suncor, Enbridge and pretty soon I was making over $200 of dividend income per year. As I invested in more companies over time, many of the older stocks I still held on to like Rogers were increasing their dividend payments. In 2014 RCI.B paid out $1.83 per share. My 30 shares now provide me with $55 each year! All I did was hang on to the stock and waited for the annual distributions to increase. You’ve probably realized that phone and cable companies are charging more for their services every year. All that extra money they’re earning has to go somewhere right?. 😉

In my second year of dividend investing I was making over $1,000 a year in dividends. Then the following year I was making $2,500 in annual dividend income due to more savings, compounding, and growing dividend payments from already owned stocks. Dividend investing can take many years before it can start to really pay off, but it’s fun, and the rewards are definitely worth the wait. 🙂 As of December 2016 I’m making $8,000 of passive, dividend income per year from my six figure stock portfolio.

Buying dividend stocks is easy to understand. But choosing the right companies to buy requires a little bit of research. (~_^) You can browse through my articles in the stocks category for ideas, or view my portfolios to see which stocks I like to invest in, but be sure to do your own research too.

  7 Responses to “Dividends Progress”

  1. […] Dividends […]

  2. Not sure if focusing just on dividend stocks when you are young, with a long time horizon to invest is the best idea. A company that pay dividends is a company that says they don’t need or want that money to invest in its own operations, so they’re returning that money to the shareholders instead. A company that doesn’t invest itself is a company that has limited growth potential. When you’re young, it’s probably better to invest in a company that is more likely to grow at 5% a year than return 5% a year in dividends. But again, diversification is key, so don’t ignore non dividend paying stocks.

  3. Very nice progress! I’m currently between your 2010 and 2011 😀
    Cool to see the snowball rolling 🙂

  4. are you able to over two additional metrics during that time period;

    1 – how much your dividend stocks were worth on average, year over year. This would show us if the dividend stocks actual increase in value or if all of their increased value is just paid out in dividends so the share price never increases.

    2. how much your total dividend portfolio was worth (in terms of share) price at the end of each year. This would show us the correlation on the amount of stock you hold vs. how much your dividends increased.

  5. I have a question regarding re-investing dividends. (DRIP’S)

    I invested in a REIT with about $5,500 to start. The share price is about $33.50/share. I get monthly dividends of $8-$19/month. I enrolled in the auto DRIP but my monthly dividend aren’t enough to buy a whole share so the money gets deposited into my account.
    I want to reinvest dividends so I wait a few months until I have enough dividends to buy more shares but I thought about the brokerage fee for placing a trade for 1 share and it’s 4.95.
    If I buy one share for $33.50 with dividends but then pay $4.95 for placing the trade makes my cost average quite a bit lower.
    Does this eliminate any advantage of re-investing dividends? How do you do it?

    • Hi Jeff. You’re right. It’s inefficient to buy 1 unit and pay a transaction fee. In some cases you are allowed partial DRIPs, but usually you’ll need at least one whole unit worth of distributions to DRIP a REIT. What I do is make a large enough initial investment to DRIP at least one unit with an extra 20% margin of safety.

      For example if a stock is trading at $10/share and pays a dividend of $0.05/share every month, then I would need to invest at least $2,000 to receive enough dividends for a whole share to DRIP.

      Initial investment for DRIP = (share price)² ÷ distribution per share.
      = 10²/0.05
      = 2,000

      I use a 20% margin of safety which means I would actually invest $2,400 in this example. This is because if the stock price goes up after I buy it, the dividends would still be enough to DRIP. Very rarely does a stock go up more than 20% during the span of a distribution period. If that ever happens then maybe the stock is overvalued and using a DRIP at that point doesn’t make sense anymore.

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