Investing

Have I got this right? Dividend related, opinion needed!

  • Last Updated:
  • May 5th, 2020 6:29 am
[OP]
Deal Addict
Sep 5, 2010
2324 posts
362 upvotes
Toronto

Have I got this right? Dividend related, opinion needed!

Have I got this right?

I bought 100 stocks of 3 different big cap Canadian companies (telecom, banking and utilities) each of which pays very good and stable dividend of close to 5.25% (based on the price I purchased them at in late March when the market had hit peak bottom)

I am in this for the long term, mainly for some steady dividend income.

Assuming no dividend slashing in the short term, I will be making close to $800 in annual dividend income from these 3 stocks. Not much, but it is a start and better than what I would get from putting my money in a saving account.

So my question really is, and assuming these companies don’t disappear overnight or slash their dividend significantly , should I just enjoy the quarterly dividend returns and not worry if these stock prices go down in the future? In other words, treat this like a dividend cash cow for years to come. If I get lucky and they double in price when things get back to normal in a few years, I could sell and make money. If not , I continue to enjoy the dividend returns. Win-Win.

For the record , I am up an average of 15% for the three stocks since I bought them back on March 23, although I was as high as 20% at one point and know could easily lose all my gains.
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11 replies
Deal Expert
Jan 27, 2006
15928 posts
8794 upvotes
Vancouver, BC
Depends on your mindset really.

The standard dividend growth investor looks at the rate of dividend growth first, dividend second, and share price third as measures of value. The standard investor will typically look at share price 1st and dividend second... won't care too much about dividend growth.

From the sounds of your post, you are looking to be in the first camp - dividend growth investor. If so, you just need to understand that the stock price will move and if you are OKAY with that, then yes you are right - cash flow machine.
Deal Addict
Jul 23, 2007
4326 posts
2716 upvotes
Basically what I do, except I'm not looking to sell for a profit. This calendar year, selling is about the last thing that's on my mind, even after dividend suspensions, and a cut. Every time we can save a few $thousand from our income, I either occasionally buy a new Canadian company or mostly add to what I already own in the taxable portfolio.
Newbie
Apr 9, 2018
25 posts
13 upvotes
First, congratulation for your excellent timing. Yes I would hold for the long term, add more especially if we retest the lows. And if they double in price you could rebalance, that is just sell half position. May I ask which companies you picked? Of the three sectors my picks would be Telus, TD bank and Fortis.
Deal Addict
User avatar
Nov 28, 2007
3115 posts
1010 upvotes
Whitehorse, YT
OP is in it for the long term so there should be no talk of selling and OP should not be watching this daily ...ha! ha!. OP is perfectly on the right track. Total return is what matters i.e. dividends plus or minus gain or loss. Don't forget we get a nice dividend tax credit. And one last thing, don't participate in a DRIP. It makes book keeping very complicated in the long term.
[OP]
Deal Addict
Sep 5, 2010
2324 posts
362 upvotes
Toronto
FrancoisS38856 wrote: First, congratulation for your excellent timing. Yes I would hold for the long term, add more especially if we retest the lows. And if they double in price you could rebalance, that is just sell half position. May I ask which companies you picked? Of the three sectors my picks would be Telus, TD bank and Fortis.
Thank you,

Bought the following on March 23: i copied an pasted this from my notes which includes the dividend payout.


100 x BNS at $49 (.90, $90 a QTR
105 x BCE at $47 (.83 , $87 a QTR)
90 x Hydro at $22.50 (.24 , $22 a QTR)
My Signature is empty. My signature space is not for sale. You may not contact me to advertise your RFD-related activities here. I repeat, this signature-space is not for sale, unless it is a ......day
Deal Fanatic
User avatar
Sep 1, 2013
5851 posts
680 upvotes
It's a reasonable strategy, provided you have very high confidence that this truly is a long term investment, and you will not need to rely on the dividends nor sell the stocks to pay your current living expenses (in case, for example, you lost your job).
Deal Addict
Sep 2, 2009
1423 posts
1098 upvotes
Ottawa
Woodbridge905 wrote: I bought 100 stocks
Just a minor thing: shares.


On topic: One advantage is that I find that with the majority of my dividend holdings for the longterm, the dividends help me sleep at night and ignore the noise (not panic sell).
Deal Fanatic
User avatar
Sep 1, 2013
5851 posts
680 upvotes
cloak wrote: Just a minor thing: shares.


On topic: One advantage is that I find that with the majority of my dividend holdings for the longterm, the dividends help me sleep at night and ignore the noise (not panic sell).
Again, it is a reasonable strategy, particularly if the dividends provide you with a measure of psychological comfort, but .......

Newbie
Sep 6, 2018
82 posts
60 upvotes
CheapScotch wrote: Again, it is a reasonable strategy, particularly if the dividends provide you with a measure of psychological comfort, but .......

good luck trying to convince people here not to chase dividend stocks lol
Deal Fanatic
User avatar
Sep 1, 2013
5851 posts
680 upvotes
jaysdt wrote: good luck trying to convince people here not to chase dividend stocks lol
I think that, as the Covid-19 pandemic continues to affect the economy and more companies cut their divided payout, some people here will change their mind about these stocks.
Newbie
Apr 9, 2018
25 posts
13 upvotes
Chasing yield is as stupid as trying to time the market too much. Chase the growth of the dividend instead, look for total return. Look for things that are not affected by price, that is, free cash flow growth, low debt, etc. Ignore price and yield and focus on income statements and balance sheets. But don't ignore dividend either, it's been proven that dividends account for two third of long term return when reinvested.

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