Auto-pilot is the mode I am in right now. The portfolio DRIPs everywhere except in my non-registered account. I try to add $1,000 per month if I can and use the dividends paid to put it to work along with my contribution. The holdings in my non-registered account are very intentional. They are the boring retirement income stocks and I pick the one that scores well in my Dividend Snapshot screener to add to.
Portfolio Management
As I work towards setting up an income portfolio, as opposed to a growth portfolio, I strive to organize my holdings by accounts for tax efficiency. Since there are no taxes in a TFSA, it must hold my dividend growth stocks as the growth will always outpace the income. As the amount of money I can put in a TFSA is limited, it will not be the primary source of income.
My RRSP is always maxed out and primarily through my employer’s account which leaves my non-registered account. Nevertheless, I have a large RRSP dividend portfolio primarily invested in US stocks. As I have to declare all withdrawals as income, dividend income or dividend growth needs to be balanced against the withdrawals if I want to maintain the same withdrawal rate without any impact on the capital.
That leads me to my non-registered account strategy. If you pay attention to my portfolio holdings, you will notice they are banks, utilities and a couple of millionaire makers. The yield is up there in the 4%-5% based on today’s valuation and the businesses are generally safe.
My holdings between income and growth look as follows now. I need to start breaking down my account types to see the patterns towards tax optimization.
wpDataTable with provided ID not found!Dividend Income
My October dividend income is weird as I have updated all my transactions in my dividend tracker to be based on the deposit date and some holdings that would normally pay on the last day of October are now paying early in November as the month end is on a weekend. Our digital economy on the banking side is still restricted to M-F 9-5 banking hours it seems …
The tally for October is at $1,475 which is pushing close to $1,000 in dividend income to November. It is what it is and it’s a reminder to all retirees that you should not be relying on this month’s dividend to pay the bills … This month’s dividend should be for year 2 or 3 of your cash strategy.
Here is the overall portfolio dividend income contribution by accounts:
| Accounts | Income % | Value % | Taxes |
|---|---|---|---|
| TFSA | 17.54% | 21.69% | No Taxes |
| RRSP | 30.98% | 53.23% | As Income |
| Taxable | 47.20% | 25.08% | Capital Gains, Dividends |
I can only do the analysis and planning I do with my portfolio because I have all the data in place in my tracker. There is no way I can do this with Questrade, RBC Direct Investing or any other discount broker. Being in control is not just about making decisions but it’s about having all the data and graphs that you need to answer your questions. Don’t wait to start tracking your portfolio details.
As I plan for financial independence, I like to ignore the Canada Pension Plan (CPP) as it can provide a buffer for any errors in calculation or unexpected challenges. While I know I will receive some CPP, I plan on not receiving any OAS (or more specifically have the OAS Clawback taking it all back).