April 2023

Dividend Income Update

Hello everyone, we are still enjoying our first trip as retirees.

pictured: The Alhambra, Granada, Spain

I will be sharing some info about the cost of our trip in my next post, but for now, here’s a quick update on our dividend income and portfolio.

Since departing Canada, I see that a lot of my holdings are down from a month ago, but I still received my dividends like clockwork. I’m glad I don’t have to sell any shares when prices fall to pay for my living expenses (like this trip!).

That’s the beauty of dividend income. It keeps on giving.

Total return matters, but dividend paying stocks have proven time and time again to outperform the non-dividend payers. I also don’t like having to solely rely on the stock price going up in order to make money. I want the best of both worlds, dividends + cap gains.

I often hear people say that dividends are not tax-efficient, and that you’re far better off tax-wise “making your own dividends” by selling shares and realizing a capital gain.

Unfortunately, it’s not that simple. Tax is never a one size fits all. With various sources of income, everyone’s tax consequences are unique.

One thing is true, however, there’s no denying that dividends from eligible Canadian companies are tax-efficient, just like capital gains. And… depending on your income, dividends can be far superior, thanks to the dividend tax credit.

I know it’s hard to have an income solely based on eligible dividends, but if you do, and live in Ontario, you would be able to earn $50,000 in eligible dividends and pay virtually no tax.

Use the following calculator provided by taxtips.ca to check how $50,000 in capital gains compares to $50,000 in eligible dividends for your province.

https://www.taxtips.ca/calculators/enhanced-basic/enhanced-basic-tax-calculator.htm

Both provide you with investment income, but as you can see from the calculator, there’s a lot of zeros in the “tax payable” column under eligible dividends across many provinces.

Change the numbers to whatever you like to see how various investment income can impact your tax depending on where you live.

March Dividend Update

I’m going to preface this section by saying I haven’t actually confirmed these numbers, but they should be pretty accurate barring any dividend increases or DRIPs that have not yet been reflected.

Should there be any miscalculation, I will let you know in my next post.

With that being said, in March, we earned a total of $4,107.88 which is a 31% increase over last March.

Here’s a list of the companies that paid me this month: