A 60-year-old Canadian investor is generating an impressive monthly dividend income of $9,000, and he’s recently opened up about his top stock picks. This story has caught the attention of many financial enthusiasts and showcases the power of strategic dividend investing.
Dividend investing is making a strong comeback as more investors seek reliable income-generating stocks, especially after a recent Federal Reserve rate cut. In fact, First Trust— a financial services powerhouse—reported that dividend-focused exchange-traded funds (ETFs) attracted $4.5 billion in inflows during July and August alone. Market analysts believe dividend-paying stocks are likely to be the biggest beneficiaries of ongoing rate cuts as investors look beyond high-priced momentum stocks for quality, affordable options that often go unnoticed.
About two years ago, a Redditor shared his remarkable investment journey on r/Dividends, a thriving community of more than 590,000 members. He disclosed that he was pulling in a staggering $110,666 annually from dividends—approximately $9,222 each month. While this income could allow him to retire immediately, the investor plans to work for an additional two years to wrap up his medical practice and support his youngest child’s education.
When asked about his investment strategy, he emphasized the importance of dollar-cost averaging, recommending that individuals contribute 15% of their income monthly. His impressive earnings didn’t take shape until he was 34, underscoring that consistent commitment over decades is crucial for building substantial wealth. Although he wishes he’d shifted to dividend stocks sooner, his experience serves as a compelling lesson for others.
Let’s dive into the investor’s portfolio, which has propelled him to this enviable monthly income.
Top Stock Holdings
- Vanguard FTSE Canadian High Dividend Yield Index ETF (VDY.TO): This ETF is a cornerstone of the investor’s portfolio. It includes top Canadian dividend stocks like Royal Bank of Canada, Enbridge, and Toronto-Dominion Bank, and alone contributes a significant portion of his dividend income. VDY.TO generated about 8.5% of his overall income.
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Enbridge Inc. (ENB.TO): This Canadian energy giant boasts a generous dividend yield of 6.6%. As one of the largest contributors to his portfolio, Enbridge has consistently increased its dividends for three decades.
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Brookfield Asset Management Ltd. (BAM.TO): This alternative investment firm holds about 5.8% of his portfolio. With a focus on real estate and renewable energy, its steady dividend yields make it a strong choice for dividend-driven investors.
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Canadian Natural Resources Limited (CNQ.TO): The company’s historical dividend increases—over 24 years running—translate to consistent returns for investors. CNQ accounts for 5.1% of his portfolio, further reinforcing his dividend income strategy.
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Bank of Montreal (BMO.TO): This major player in the Canadian banking sector contributes to his monthly dividends, representing 4.5% of his total investment portfolio and experiencing considerable stock growth over the past year.
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Schwab U.S. Dividend Equity ETF (SCHD): With around 4.1% of his investments in this ETF, which tracks top U.S. dividend stocks like Coca-Cola and Home Depot, he capitalizes on the dividend potential of solid blue-chip companies. There’s an important note for Canadian investors, as holding U.S. dividend stocks could lead to tax implications on foreign income.
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Tourmaline Oil Corp. (TOU.TO): This natural gas company offers robust dividends, benefiting from lucrative special dividend distributions.
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Microsoft Corp (MSFT): While traditionally seen as a tech stock, Microsoft’s recent dividend increase showcases its appeal as a multi-faceted investment option. It represents about 3.4% of his holdings.
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Broadcom Inc. (AVGO): Known for its semiconductor solutions, Broadcom complements the portfolio with an impressive history of annual dividend growth, even as it garners attention for its innovations in the AI space.
This compelling narrative of strategic investing provides valuable insights for anyone looking to build a consistent income stream through dividends. By adopting a long-term perspective and focusing on high-quality stocks, investors can work toward financial independence and effective retirement planning.
As the interest in dividend investing continues to grow, understanding successful strategies can motivate others to step into the world of stocks with newfound confidence and knowledge. Whether you’re looking to diversify your portfolio or build substantial income over time, there’s a lesson to be learned from seasoned investors like this Canadian dividend enthusiast.