Dividend Income: February 2021

Dividend Earner

Dividend Earner

Updated on

3 min read Affiliate Disclosure

Nothing happened in February for my portfolio and still no TFSA contributions either.

Do not read anything into it, it’s just how it’s turning out this year for budgeting. While I do find the market overvalued considering the low interest rate environment and the lack of normal economy, I am not one to time the markets.

I would have normally invested the TFSA contribution early in January but not this year.

Stock Trades

No trades. The only action on my portfolio are DRIP shares.

Boring is good.

Portfolio Management

It appears that we are brainwashed to diversify across sectors by the financial industry and publication. From holding fixed income and equities to spreading our equity across sectors.

The reality is that all of the diversification communicated by the financial industry helps investors manage their EMOTIONS. The idea is that when one sector is out of favour, another sector could carry the load.

What does that mean? It means the financial industry is very busy managing your downside more than managing your upside. Back in 2009 when I started blogging and taking care of my finances, my initial approach was to balance the sectors but I realized after a while that it did not make sense.

I started shifting the ratios to match my holdings because I was happy with my holdings. Now I don’t pay attention to the sector allocation but I do pay attention to my industry allocation but not religiously.

Have a look at my holdings per country, you’ll see which industry I favour on which side of the border.

Building a portfolio is like building a pyramid. Try to break down your holdings in layers like a foundation, a structure and then the fancy finish. As you go up the pyramid, you should have higher returns.

Sector Diversification February 2021
Industry Allocation February 2021
wdt_ID Dividend No Growth < 6% Growth > 6% Growth > 10% Growth
2 None 7.10 0.00 0.00 0.00
3 Yield < 2% 3.28 0.00 12.06 36.75
4 Yield > 2% 0.00 0.00 3.70 5.43
5 Yield > 4% 0.00 0.00 26.45 0.00
7 Yield > 6% 0.00 0.00 4.93 0.00

Dividend Income

My February 2021 dividend income is $3,863.

I am going to repeat that balancing the income per month is not important. When you retire, you SHOULD NOT be living month to month from the income. That’s just pain bad personal finance. You SHOULD be having at least 1 year of cash to pay for the monthly bills.

Dividend Income February 2021

My yield for the entire portfolio is at 2.15%. It’s perfectly acceptable with a long-term dividend growth portfolio. While it generates about $30,000 annually in dividends, if I were to switch it to a dividend income and double the yield for simple math, I could generate $60,000 in annual dividends.

My magic number is $80,000 or a portfolio value of $1,777,777. Getting closer to financial independence. The closer I get, the more free I feel.