Wednesday, June 25, 2014

Dividend Income Update: May 2014

I’m not sure if it was the 16 hour work days or the rainy Alberta weather that made May fly by so fast. With only three months of really warm weather, you can only hope that June, July and August will just slow down as much as possible. The good news is that I managed to find some space to plant a small garden this year. If you’ve never planted a garden before, you don’t know what you are missing. Fresh, inexpensive organic food in your diet is a must for any dividend investor in order to extend the time we have on this planet to see our investment plan into fruition. Look for an update to my 2014 gardening adventure in an upcoming post.

Hooray for Dividends!

For someone who recently lost half of his life’s savings, it’s important to celebrate the little victories in order to keep moving forward in a positive way. I was really impressed with the increase in dividend income from just one year ago. Looking back into the archives of the Loonie Bin, I saw my dividend income for May was $178 just a year ago. With re-invested dividends and dividend increases, I was able to buy more shares and catapult my dividend income over the last twelve months. I’m pleased to announce that my total dividend income for the month of May, 2014 was:

$322


Unfortunately with May being in the quarter with the least amount of dividends paid out from companies, it’s hard to get that total up to par with the other months. That doesn’t mean you should ever forcefully buy stocks in order to compensate for this lull in dividend income. Find stocks that fit your investment strategy and increase your holdings over time at the cheapest share price possible. If you ever live off your dividend income, it just means you’ll have to budget your money to cover the low income months. For some it might mean eating canned tuna instead of halibut steaks. For others with larger dividend incomes, it means you might have to wait a month before hiring another maid for the east wing in your manor. I hope your friends Muffy and Prescott at the country club don’t find out!

Market Outlook

Since I don’t have a crystal ball and my telepathy is more like telepathetic, I looked to some articles written by smarter people to see what the Summer will bring. I read that June could bring a downfall in the markets; bad news for most, good news for dividend investors. As always there were more articles telling people to give up on dividend investing for their own good. Yes, everyone please sell all your dividend stock right this minute. Then dividend stock prices will fall mysteriously and smart investors will gladly buy them from you at a cheaper price.

I’m may be no investment scientist but dividend investing has been around since the inception of dividends, and it will probably never go away any time soon. People need a way to make more than a .5% return for their retirement. In this low interest rate environment, dividend stocks is the means to make enough money to fend off inflation’s nasty claws. According to the experts, if I was 40 years old I should have 40% of my investments in fixed income and 60% in equities. Well, people these days are living longer and retiring earlier which means we need a different approach. When I turn 40, I’ll have 100% of my investments in equities. When I’m 50? 100% equities. When I’m 65? 99% equities because I like to live dangerously. When I’m just a brain in a robot’s body at 105, I may switch to 50% fixed income/50% equities.

Like I’ve said in the past, this won’t be my Grandma’s retirement when I decide to retire. It’s going to be long and it’s going to be expensive. Thank God I found dividend investing when I did. It’s going to make things so much easier for me down the road!

This article was written by The Loonie Bin. If you enjoyed this article, please consider subscribing to his feed.

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