The year is almost done from a dividend income perspective and I am starting to look at where I will deploy some savings early in the new year. I nearly have my full TFSA contribution of $5,500 ready to go once January 1st comes around the corner. I am still interested in one of the two overlooked Canadian dividend aristocrats but where I invest will invariably be based on my diversification status and the value of a number of potential investments.
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My dividend income for November 2014 is an amazing $820.33. I cannot wait to receive dividend increases over the coming 6 months to see where I land for 2015. I am really hoping to break the $10K dividend income for the year. I expect to get on average 10% dividend increase from the companies themselves as many of my core holdings average above 10% in dividend growth. With a small portfolio, the 10% dividend increase is not much but as my portfolio grows, 10% starts to show.
An interesting fact about my dividend income is that 27% of my dividend income comes from my smallest account which also has the lowest ROR. I am sharing this fact as it highlights that when you invest solely for income you do forfeit growth. A comparable growth account earns around 16% of my dividend income but provides me with over 15% in investment return annually.
Obviously, there is an appropriate time for each account. I am still very much focused on growth through equity and dividends but that one account focused on income is the RESP which will see withdrawal in the not so far future. It’s like a test retirement account.
In the end, it’s the difference between 3% average dividend yield with growth, versus 6% fixed income and limited growth. Dividend growth stocks will provide a much higher ROR than the fixed income.
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DISCLOSURE: Please note that I may have a position in one or many of the holdings listed. For a complete list of my holdings, please see my Dividend Portfolio.