Regardless of the market swings, my dividend investing strategy remains. I will continue to look for strong dividend growth stocks. In fact, my dividend income for the year is forecasted to grow higher than my initial estimate. I estimated earning $23,310 for 2019 and I am currently on target to earn $24,150. My estimates usually attempts to take into account new money as well as dividend growth but I have been surprised for the last few years to underestimate the annual dividend income.
My dividend yield is not high with 2.75% but that’s expected since I have low dividend yield stocks with high dividend growth. It is serving me well in the accumulation years. As I switch to a dividend income portfolio in the coming years (over 5 years), I will see my portfolio performance go down in proportion to the dividend income stocks I hold but my dividend income will go up.
The relationship between dividend growth and dividend income is an inverse relationship. Be aware of that.
Since I officially have a retirement timeline, my strategy now is to primarily buy dividend income stocks.
In July, I did the following transactions:
- I dropped CAE and put the funds into Alimentation Couche-Tard.
- I bought more TD Bank to complete a full position.
- I sold Kimberley-Clark and started a position in Cisco.
Kimberly-Clark is a good company. As it happens, my RRSP account is full and I cannot add money. I have to manage with the money in the account. It’s an interesting challenge when you cannot add money. I essentially optimized KMB with CSCO. The angle on Cisco is 5G. 5G, if you don’t know, is going to be a game changer.
A full position for my portfolio is when the stock reaches 5% of my portfolio weight. If it goes above 5.5%, I will consider taking profits.
My August 2019 dividend income is $2,428. It’s the highest month but my months are not balanced. For the curious, I apply a 1 to 1 conversion to my US dividend. I keep it in the same currency as it simply doesn’t do anything to inflate the amount. If I ever travel to the US, I need USD or if I travel to Europe, the Euro is more expensive so I figure that it balances in the long run.
I am going to start showing what the dividend market yield of my portfolio looks like as I transition to a dividend income retirement portfolio.