Monday, March 12, 2018

7 Reasons Why I Love Dividend Investing

It's just a personal choice to build a dividend growth stock portfolio instead of a total return portfolio. A choice I have made after reading the likes of Tom Connolly, John Heinzl and Stephen Jarislowsy. These are my gurus. It is also imperative to study the masters of investing like Benjamin Graham and Warren Buffett.

Neither one is wrong or right it's just a belief system that I have developed where I want to control my investments and pay the least amount of cost to do so. All of us are comprised of different people and take on some of their personalities along the way. Very few of us have any new ideas, instead we follow tried and true ways of getting ahead.

I've learned to love this investment style as a retiree because I just think it fits my outlook for the rest of my life and how to help fund it.

These are just some of the reasons I love dividend investing;

#1 It's Fun

It's not much more complicated than that. I find it exhilarating and a lot of fun to collect a monthly or quarterly dividend payment deposited directly into my account. I let the cash build up and when the time is right I buy another dividend paying stock.

#2 Watching Income Grow

It's another great feeling to watch your income grow in your retirement account. Every time a company you own increases it's distribution your income grows. Combined with time this compounds and will continue to grow.

#3 I Make the Decisions

After gathering as much info as you can, you make the decision on what and when to buy a company. You are not relying on an advisor to tell you that. This leaves you in total control of your investment plan. Learn to do this on your own.

#4 Keep up With Inflation

Owning dividend growth stocks is one of the best ways to stay ahead of inflation. To me, the last thing you want in retirement is a fixed monthly income. Eventually you will fall behind the cost of living and your income will stagnate. Think of a pension that does not include indexing, I know of this because I collect one. I will receive the same monthly amount until the day I die. I wonder if things will cost more in 20 years as they do now? You have to plan and grow your income.

#5 Easy to Build A Portfolio

It is. Do your due diligence researching companies you know about. Stick to what you know. If it doesn't pay a dividend then you don't own it. I own my cable company, phone company, power company, insurance company and gas company. You could also buy the grocer you spend a ton of money at if you want. Keep it simple and concentrate on the best.

#6 You Get Raises

This reduces your overall cost over time. The more dividends you collect fromyour company every year reduces your ACB (Average Cost Basis). It accelerates even more when the company raises it's dividend.

This is why you buy companies with at least a 10 year history of raising it's dividend. It's like getting a raise when you negotiate a new contract with your employer.Who doesn't like to get a raise?

#7 Helps Cut Your Tax Bill

I'm not a tax accountant but dividend income is treated a lot more efficiently than your paycheck. Check your own province for how that income is taxed. If your're still building a portfolio inside an RRSP or TFSA then this is not a worry. You are exempt until withdrawal from your RRSP. The TFSA is the most tax efficient at the moment so concentrate your efforts there.

This is not a personal finance blog so please study as much as you can online to see what is best for you or shoot me a question in the comments below. Do not misconstrue my reasons as investment advice for your situation.


These are just some of the reasons I like to buy my own individual dividend paying stocks. Do you own a dividend stock portfolio? What do you like about it, if you do?

Related Post: Buy For The Dividends

Recommended Reading: How to Make Money in Stocks

Del Vicario on Growth Stocks

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