# Income investing for a senior?



## gmail (Mar 10, 2016)

I'm new to the forum here & looking for some input / advice re the above. Here's my situation.
I'll try to be brief first (and then try to answer any questions or provide other info. as requested):
I'm 64, wife is 60. No dependents. Own own home, no mortgage, no debts. 
Retired. Previously part-owner in private company which was “wound up” ten years ago. No pensions for either self or wife. ( I currently work part-time, no benefits).
Financial assets (figures are approx.)
Cash – bank accts - $1300000(hisa)
RRSPs- cash, money market MF,GICs -$358000; equityMF & common shares-$53000
TFSA (maxed out)-cash-$84000. Stocks,ETFs-$8000
Investment Account- cash-$28000 Mfs & stock -$54000
Total= (apprx.) $1900000.
As you can see I'm probably “cash-heavy”. I have been in & out of “the markets' over the years & made a few bucks at it. ( I remember the good ol' days of the '80's? Where for a few years you could pick stocks off a dart board & make money!) But those days are gone & I've been reeling in recently & converting most to cash.
At 64, I don't know how many more stock market 'cycles' I can handle (mentally or physically!), so i'd like to set things up to focus my investing towards a) preservation of capital and b) generating income.
I'd appreciate some input how I could best juggle the above around to maximize this. Is it as simple as picking a few blue-chip dividend paying stocks (or ETFs) and a laddered GIC acct.
and let the money trickle in? If so WHICH ONES?  Or are there other trains of thought? (ie just follow the Couch Potato instructions?)
Oh – and I'm a GREAT BELIEVER in the K.I.S.S. Principle!! So no convoluted schemes for me  (also my wife is not “financially astute”, shall we say. So if anything happens to me, I dont want her left with anything too complicated to deal with).
One other note: outside from the above amounts I will be keeping separately a little “slush fund” – maybe $50 G…. to continue to “play the markets”.
I'll stop here now & see what comments /input I get from the Forum. Thanks in advance.


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## carverman (Nov 8, 2010)

gmail said:


> I'm new to the forum here & looking for some input / advice re the above. Here's my situation.
> I'll try to be brief first (and then try to answer any questions or provide other info. as requested):
> I'm 64, wife is 60. No dependents. Own own home, no mortgage, no debts.
> Retired. Previously part-owner in private company which was “wound up” ten years ago. No pensions for either self or wife. ( I currently work part-time, no benefits).
> ...



A few commas in the right places would help understanding the real numbers here,

A million is 1 followed by 6 zeros. So unless it's a typo..are you saying you have 1, 900,000 in liquid assets? Nice, you have nothing to worry about then!


> As you can see I'm probably “cash-heavy”. I have been in & out of “the markets' over the years & made a few bucks at it. ( I remember the good ol' days of the '80's? Where for a few years you could pick stocks off a dart board & make money!) But those days are gone & I've been reeling in recently & converting most to cash.


makes perfect sense to me.

At 64, I don't know how many more stock market 'cycles' I can handle (mentally or physically!), so i'd like to set things up to focus my investing towards a) preservation of capital and b) generating income. [/quote]

just like me at 70, I have my life savings in cash..GICs....with my health being what it is these days..I cannot take any risk.


> I'd appreciate some input how I could best juggle the above around to maximize this. Is it as simple as picking a few blue-chip dividend paying stocks (or ETFs) and a laddered GIC acct.
> and let the money trickle in? If so WHICH ONES?  Or are there other trains of thought? (ie just follow the Couch Potato instructions?)
> Oh – and I'm a GREAT BELIEVER in the K.I.S.S. Principle!! So no convoluted schemes for me  (also my wife is not “financially astute”, shall we say. So if anything happens to me, I dont want her left with anything too complicated to deal with).


Cant help you there...even Blue Chip stocks fluctuate...so there is always some risk there in today's investment climate. 



> One other note: outside from the above amounts I will be keeping separately a little “slush fund” – maybe $50 G…. to continue to “play the markets”.
> I'll stop here now & see what comments /input I get from the Forum. Thanks in advance.


Having a slush fund available to pay any unexpected emergencies is always a good idea..I have one..my TFSA.


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## gmail (Mar 10, 2016)

"A few commas in the right places would help understanding the real numbers here,"

Sorry about the commas - I thought you guys were good with numbers?  (the number of zeros is correct)
Thanks for comments. 
Anyone else?


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## wendi1 (Oct 2, 2013)

I would be considering annuities for at least part of your stash (say, enough to pay your expenses every month), since you are risk-adverse. If you purchase the annuity with non-registered funds, the payments are tax-free. You have a lot of non-registered money, and this requires no maintenance once you have set it up.

Then you can set up a ladder of GICs or a HISA, or a buy a bond etf (or all three) with the remainder. I like some stocks for inflation protection. The couch potato is quite simple to implement, and doesn't take a lot of attention, although they do recommend you re-balance it once in a while.

You do seem to be in very good shape - as long as you don't slake your thirst for Lambos and yachts, you both should be fine.


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## tygrus (Mar 13, 2012)

I think your financial profile indicates you are too risk adverse to go heavier in the equities market and there is no real reason to. 

But you should know you arent truly protecting your hoard if thats your goal - all of your investments are treading water against inflation. You generate probably 2% in HISA but inflation is running double that. And your registered investments are very conservative as well probably not doing much better.


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## gmail (Mar 10, 2016)

"You do seem to be in very good shape - as long as you don't slake your thirst for Lambos and yachts, you both should be fine."

My '07 Hyundai Elantra still gets me from A to B, so it'll do for a while yet.. Had a nice aluminum row-boat once, but sold it when we sold our cottage.  Thanks!


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## gmail (Mar 10, 2016)

tygrus said:


> I think your financial profile indicates you are too risk adverse to go heavier in the equities market and there is no real reason to.
> 
> But you should know you arent truly protecting your hoard if thats your goal - all of your investments are treading water against inflation. You generate probably 2% in HISA but inflation is running double that. And your registered investments are very conservative as well probably not doing much better.


Yeah, you're prob. correct. Any suggestions how I can improve on that?


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## My Own Advisor (Sep 24, 2012)

First, congrats on the good nest egg, if the zeros are correct. 

You might want to read this post. I've been thinking about this stuff myself, although I'm in my early 40s now.
http://www.myownadvisor.ca/asset-allocation-retirement/

If you risk adverse, I would suggest something like #1 in my post. Keep a healthy cash buffer, use CPP and OAS for living expenses, and then invest in an all-in-one balanced growth fund or monthly income fund + a few dividend ETFs for income.

I wouldn't "play the markets" unless you enjoy gambling. 

I think between the cash buffer, some maturing GICs and a few (like 2-3 ETFs) you can create a nice income stream and keep your capital intact.


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## gmail (Mar 10, 2016)

thanks my own adviser - I'll read that.
Unfortunately, I LOVE gambling ... I'm just not very GOOD at it !!


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## tygrus (Mar 13, 2012)

I would get the big cash onto a GIC ladder and then get more aggressive with the other accounts. Your TFSAs I would put into REITs yeilding in the 6-7% range and then the other accounts into a broad ETF. Get some US exposure. I estimate you could generate about $2,000 extra per month just by making a couple tweaks like that and still be very protective of your nest egg.

No need to play with $50k.


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## gmail (Mar 10, 2016)

I have no experience with, & little knowledge of, REITs - but I'm not adverse to them. Remember too, I want to keep things as SIMPLE as feasible. Can you suggest which REITs I might consider?


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## tygrus (Mar 13, 2012)

gmail said:


> I have no experience with, & little knowledge of, REITs - but I'm not adverse to them. Remember too, I want to keep things as SIMPLE as feasible. Can you suggest which REITs I might consider?


You can buy a REIT index XRE or ZRE which is yielding about 6% right now, or you can buy the top 5 holdings separately in those ETFs for a little higher yield or a combination of the two. REITs are sensitive to interest rates because they use leveraging so keep that in mind and watch for concentrations in sectors and in bubbly parts of the country. For $84,000 of your portfolio, I think it an acceptable risk.


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## birdman (Feb 12, 2013)

Your situation is quite similar to ours (I'm 70, wife not interested in investing, etc). For what its worth, I have 25% of my cash assets invested in the market (dividend paying stocks-banks, telcos, utilities, etc) and 13% in alternative investments (MIC's) which I wish I didn't have. I also have some bullion. Balance is mainly in term deposits. To reduce my taxes our RSP's only contain term deposits as my stock investments receive better tax treatment outside our RSP's. With the current interest rate environment I am not a fan of annuities but also understand their relevance. I don't trade my stock investments that much but I do enjoy following the market, watching BNN, and discussing things with my buddies. If I wasn't I would look at a couple of ETF's.
Not sure what your long term plans are and your eventual estate thoughts but I did consider establishing an Alter Ego trust for my 2 boys who are both married with children. Eventually decided against it. Not sure if your wills are utd and as an aside we share all our financial information with our children. 
Carry on-you are doing fine.


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## gmail (Mar 10, 2016)

I appreciate all the input. Thanks.

frase - yes, we seem to have a bit in common. (I have 2 married children too). what's an "Alter Ego" trust?


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## birdman (Feb 12, 2013)

Well, there are people on this forum who will know more about it than myself but generally all you assets are put into the trust and the income is distributed from there. You can have control of it but after your death the management of the trust passes onto your children and estate taxes can be avoided.??? I'm sure some others will post here with more details or you can also do a google search.


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## gmail (Mar 10, 2016)

ok. yes, I've read about that. Just never knew it was called "Alter Ego" ( not the same as a Living Trust, is it?) I like the idea of avoiding estate tax (probate?), but it's prob. something one shouldn't rush into.


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## Jaberwock (Aug 22, 2012)

Why are you holding so much cash? You need to make your money work for you.

Savings accounts, money market funds and GIC's do not provide enough income to keep up with inflation. You are guaranteeing that you will run out of money if you want to maintain decent lifestyle and you or your wife live to be 90+. There will be nothing left for your kids.

Here's what you should do:

Hold enough cash to cover for emergencies, and about 1 year worth of withdrawals, so that you are never forced to sell into a short term panic down market. $100k should be enough.

Invest the remaining $1.8 million in a portfolio that pays you sufficient dividends to allow you to live on the income without touching the capital.

The core of this portfolio should be blue chip stocks that regularly increase their dividends (banks, utilities, pipelines, telecoms and US dividend champions). Add some REITs to bump up the return, and include a smattering of preferred shares (there are some real bargains available right now). A small percentage of your portfolio can be smaller cap companies and royalty corporations to boost the overall return with minimal extra risk.

You will have an income of about 5%, or $90k per year plus your CPP and OAS (you can split your income with yous spouse to stay below the clawback threshold).
Can you live on $108k per year??

Stock market cycles should be of no concern to you, provided the companies you own keep paying out dividends. Avoid investments in commodity companies, and your dividend increases should easily outpace any decreases, and your income will keep up with inflation. Your kids will inherit the capital, which you never have to touch


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## gmail (Mar 10, 2016)

jaberwock - you're pretty close to my own thinking on this (see my OP). I've accumulated the cash in just the last little while ( converting other investments.) I wanted to ask the forum here for input / comments to see what suggestions came up. All good input I might add - thanks. I guess i just wanted to get some support that I was heading in the right direction


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## james4beach (Nov 15, 2012)

gmail said:


> Cash – bank accts - $1300000(hisa)


Assuming this means 1300 K, you should be careful about the CDIC insurance maximums: 100 K per institution.

With the amount of cash you have sitting around it will be challenging to keep it all CDIC insured. With a GIC ladder and using a brokerage to buy GICs from different issuers, you can spread some of it around different institutions (and stay within the 100 K limits) but it will still be challenging. I think it can be hazardous to leave uninsured cash amounts sitting around.

Some instruments that will probably be useful for your situation are

- a bond fund. Short term bonds in particular are almost like having cash, just about no risk of loss
- GIC ladder, definitely
- a good quality "balanced fund"


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## james4beach (Nov 15, 2012)

gmail said:


> I have no experience with, & little knowledge of, REITs - but I'm not adverse to them. Remember too, I want to keep things as SIMPLE as feasible. Can you suggest which REITs I might consider?


Beware that REITs have as much risk as stocks. They could potentially lose 50% or 60% of their value over a number of years.


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## james4beach (Nov 15, 2012)

If you want to keep things as simple as possible, I think the easiest way to go is to hold a combination of the following. Each of these balanced funds is about 60% stocks, 40% bonds. That alone would probably be too much stock exposure for your taste, but since you're also holding HISA + GIC separately you can reduce your stock exposure down to a point that's comfortable for you.

Cash and fixed income
HISA
GIC ladder

Balanced funds
RBC Monthly Income
Mawer Balanced Fund (for registered)
Mawer Tax Effective Balanced Fund (for non-registered)


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## lonewolf :) (Sep 13, 2016)

gmail I would consider a portion in Swiss annuities in several currencies including gold stay away from Euro I dont think it will be around to much longer
Maybe .5% in bitcoin
hold a little gold in goldmoney (goldmoney.com)


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## mordko (Jan 23, 2016)

According to RBC, their Monthly Income is supposed to be benchmarked against 57% FTSE TMX Canada Universe Bond Index and 43% S&P/TSX Capped Composite Total Return Index. 

For some reason RBC does not provide comparison vs their own benchmark, but if I were to guess, it has been unspectacular. Performance would have been helped by a very high allocation to bonds which obviously had a bit of boom. The fact RBC does not provide a comparison to their own benchmark on their website is poor form in itself. Given the type of securities they invest in, MER at 1.2% is atrociously high by international standards. No fund investing mostly in total universe Canadian bonds and with MER over 1% deserves 1 cent from anyone.

There is a small number of Canadian funds which tend to charge reasonable MER - and can be easily compared vs their benchmarks thanks to information supplied by providers. TD e-series, Tangerine, Mawer and Steadyhand are worth a look. And "income" can be provided by absolutely any mutual fund as long as one is permitted to sell units. That would be all of them.


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## OnlyMyOpinion (Sep 1, 2013)

James was your post #19 an intentional bump?
Just asking since this thread was last active March 13, 2016 when the OP (gmail) posted. 
We haven't heard from them since then.


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## Beaver101 (Nov 14, 2011)

lonewolf :) said:


> gmail I would consider a portion in Swiss annuities in several currencies including gold stay away from Euro I dont think it will be around to much longer
> Maybe* .5% in bitcoin*
> *hold a little gold in goldmoney *(goldmoney.com)


 ... would this be considered investment diversification?


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## james4beach (Nov 15, 2012)

OnlyMyOpinion said:


> James was your post #19 an intentional bump?
> Just asking since this thread was last active March 13, 2016 when the OP (gmail) posted.
> We haven't heard from them since then.


Oh, here's what happened. Someone posted a follow up note, but then requested that post be deleted. I deleted their post but took interest in the thread while I was here


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## blin10 (Jun 27, 2011)

Jaberwock said:


> Why are you holding so much cash? You need to make your money work for you.
> 
> Savings accounts, money market funds and GIC's do not provide enough income to keep up with inflation. You are guaranteeing that you will run out of money if you want to maintain decent lifestyle and you or your wife live to be 90+. There will be nothing left for your kids.
> 
> ...


same way I think, but it's not for everyone.... most people cannot handle stock market volatility and panic... imagine if he invested 1.8 mill in 2007 and in 2008 crush he logs in and sees -1 million in his account, what would he do? selling would be a terrible idea


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## Jaberwock (Aug 22, 2012)

blin10 said:


> same way I think, but it's not for everyone.... most people cannot handle stock market volatility and panic... imagine if he invested 1.8 mill in 2007 and in 2008 crush he logs in and sees -1 million in his account, what would he do? selling would be a terrible idea


He would sit back and enjoy his dividends. Most of the companies he would have invested in continued to pay the same dividends throughout the 2008 downturn and most have resumed regular dividend increases and are now worth more than their pre-recession values. He would now be sitting on a portfolio worth $2.5 to $3 million, and he would have enjoyed a big fat dividend income for the past ten years.
I know, because that is what I did in 2007 after selling a small company.


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## My Own Advisor (Sep 24, 2012)

Jaberwock said:


> He would sit back and enjoy his dividends. Most of the companies he would have invested in continued to pay the same dividends throughout the 2008 downturn and most have resumed regular dividend increases and are now worth more than their pre-recession values. He would now be sitting on a portfolio worth $2.5 to $3 million, and he would have enjoyed a big fat dividend income for the past ten years.
> I know, because that is what I did in 2007 after selling a small company.


+1

And therein lies the beauty. Your portfolio value may fall but as long as dividends don't get cut, or eliminated, your income stays intact (and grows higher over time).


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## blin10 (Jun 27, 2011)

Jaberwock said:


> He would sit back and enjoy his dividends. Most of the companies he would have invested in continued to pay the same dividends throughout the 2008 downturn and most have resumed regular dividend increases and are now worth more than their pre-recession values. He would now be sitting on a portfolio worth $2.5 to $3 million, and he would have enjoyed a big fat dividend income for the past ten years.
> I know, because that is what I did in 2007 after selling a small company.


In a perfect scenario that's exactly what he would do (it's easy to talk about 2008 now, wasn't fun in the moment).... but for most people it would be a huge stress and panic would set in... all i'm saying is that going in 100% stocks is not for everyone, he needs to understand what can happen, and if it does happen will he be mentally prepared (he's a retiree).....


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## james4beach (Nov 15, 2012)

Taking those dividends during a market crash may feel comforting to you, but taking the dividends is just as destructive to your stock portfolio as selling shares during a downturn. The dividends are a cash extraction from equities, just like selling shares. If you didn't take the dividend, you would be reinvesting the distribution and buying at those very low prices. The cash is not "free" or "generated". It is directly paid out from the corporate balance sheet.

There really isn't any difference between taking dividends and selling off shares. A dividend focused portfolio does not "last longer" in retirement, nor is it "more stable" during market crashes. I do agree that dividends are an easier mechanism for record keeping purposes, conveniently automatic, and have some nice tax treatments.

Focusing on dividend investing is mostly harmless, too, unless it leads you to make bad decisions such as hugely overweighting some sectors (banks).


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## TomB16 (Jun 8, 2014)

gmail said:


> ( I remember the good ol' days of the '80's? Where for a few years you could pick stocks off a dart board & make money!)


I was just getting into investing during that era. I thought I was a genius. lmao!


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## My Own Advisor (Sep 24, 2012)

The reality is, depending on how much OP spends....there is no issue 

I mean really, we can debate about total return approach vs. dividend income approach forever but if you have > $1.3 M in cash, no debt, no mortgage, own your home....that's a solid 20 years of spending $50K or so per year with next to zero growth.

Personally, I'd have that amount of money (if I ever have that much, hopefully.....??) in about 30-40 Canadian and U.S. dividend paying stocks.

I like my chances with that approach long-term to combat inflation and provide income.

If the biggest stocks in banking, AND telcos, AND utilities, AND REITs and AND energy companies _all cut their dividends, at the same time, _we have bigger issues on this planet to deal with  Like Trump's small fingers on a war button I'm thinking...

@james, you must admit, for many of us in CMF, the psychological benefit to earning dividends is huge. Buy, hold, reinvest as you wish, watch dividends get increased, stay the course. Much better than many other alternatives, including selling assets in a down market no?


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## james4beach (Nov 15, 2012)

My Own Advisor said:


> @james, you must admit, for many of us in CMF, the psychological benefit to earning dividends is huge. Buy, hold, reinvest as you wish, watch dividends get increased, stay the course. Much better than many other alternatives, including selling assets in a down market no?


I agree, huge psychological benefit and if that confidence helps avoid gut reaction moves (like selling during volatile markets out of panic) - that's also good.

But I've also watched people create very dividend heavy portfolios and end up with awkward and unsafe portfolios (e.g. income trusts), all because they were hooked on the idea of a 'steady stream of dividends'. This went very badly for income trust investors and energy sector investors. And if we ever get a banking slowdown, it will also harm many retirees who have loaded up with unusually high exposures to bank stocks.

However, if someone can avoid excessive sector exposure and can maintain good portfolio construction, then sure why not high dividends.

Example... I think CDZ is a pretty good ETF. Not because of the dividend focus but because of good sector diversification and solid stock selection.


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## james4beach (Nov 15, 2012)

TomB16 said:


> I was just getting into investing during that era. I thought I was a genius. lmao!


Here is a picture of market valuation over the decades, using the Shiller PE (CAPE) for US stocks
http://www.multpl.com/shiller-pe/

It isn't just your imagination. There's a reason it was so easy when you started in the 80s. Valuations were at a generational LOW in that time -- you literally could pick anything and do fine.

Things are very different now. Valuations are at a generational high, practically at all time highs. Nobody gets rich investing heavily in stocks with valuations this high. Investment today is very unlike investment in the 80s and early 90s. We're now back to bubble valuations across the board.


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## Jaberwock (Aug 22, 2012)

james4beach said:


> Taking those dividends during a market crash may feel comforting to you, but taking the dividends is just as destructive to your stock portfolio as selling shares during a downturn. The dividends are a cash extraction from equities, just like selling shares. If you didn't take the dividend, you would be reinvesting the distribution and buying at those very low prices. The cash is not "free" or "generated". It is directly paid out from the corporate balance sheet.
> 
> There really isn't any difference between taking dividends and selling off shares. A dividend focused portfolio does not "last longer" in retirement, nor is it "more stable" during market crashes. I do agree that dividends are an easier mechanism for record keeping purposes, conveniently automatic, and have some nice tax treatments.
> 
> Focusing on dividend investing is mostly harmless, too, unless it leads you to make bad decisions such as hugely overweighting some sectors (banks).


Taking dividends is not the same as selling off shares. Our investor, if he had been invested in non-dividend paying stock, would have had to sell at the bottom of the market to provide himself with income. By taking dividends, he retained his ownership and participated in the recovery. Dividends cushion the effects of market fluctuations.


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## canew90 (Jul 13, 2016)

Jaberwock said:


> Taking dividends is not the same as selling off shares. Our investor, if he had been invested in non-dividend paying stock, would have had to sell at the bottom of the market to provide himself with income. By taking dividends, he retained his ownership and participated in the recovery. Dividends cushion the effects of market fluctuations.


The missing word is "Growing" dividends. If he invested in stocks with a history of growing their dividends, than likely they will be safer stocks than those that just pay dividends. Those companies may not raise the dividend if there is a drop of 40% or 50%, but its unlikely they will cut either.


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## gaspr (Mar 24, 2014)

james4beach said:


> Taking those dividends during a market crash may feel comforting to you, but taking the dividends is just as destructive to your stock portfolio as selling shares during a downturn. The dividends are a cash extraction from equities, just like selling shares. If you didn't take the dividend, you would be reinvesting the distribution and buying at those very low prices. The cash is not "free" or "generated". It is directly paid out from the corporate balance sheet.
> 
> There really isn't any difference between taking dividends and selling off shares. A dividend focused portfolio does not "last longer" in retirement, nor is it "more stable" during market crashes. I do agree that dividends are an easier mechanism for record keeping purposes, conveniently automatic, and have some nice tax treatments.
> 
> Focusing on dividend investing is mostly harmless, too, unless it leads you to make bad decisions such as hugely overweighting some sectors (banks).


Well said James.


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## sags (May 15, 2010)

One of the knocks on Warren Buffet's Berkshire fund is they don't pay dividends.

I read an study that compared collecting dividends versus selling BRK shares for retirement income.

BRK gave a higher return as when after the shares were cashed out and while the money was being doled out over time, the remaining shares gained more than enough in value to replace the value of the shares sold.

Over many years the total amount of capital remained the same or higher than the original amount.

The "magic" according to Buffet and others, is taxation and compounding of the tsunami of cash the fund collects in revenue.

If BRK paid a dividend the cash would be distributed. If BRK retains the cash it compounds creating more cash.

If BRK use the cash to buy another cash generating business, it creates more cash that will compound.

Of course that is looking at historical BRK results and is no guarantee of the future.


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## TomB16 (Jun 8, 2014)

sags said:


> If BRK paid a dividend the cash would be distributed. If BRK retains the cash it compounds creating more cash.


The most productive company and it's investors will always do well to reinvest it's own earnings. I have no doubt, BRK and it's holders have done better by not distributing.

The error in your post is that you seem to be using this as a parable that suggests distributing earnings is bad. It isn't.

The least productive company and it's holders will do well to re-invest any earnings in a more productive company. A company that doesn't distribute does not give the investor this option.

If you have a small portfolio that wouldn't produce enough distributions to re-invest in a timely manner, it is reasonable to think you would do better to have the companies reinvest in themselves.

If you have a medium portfolio with enough dividends to efficiently buy more equities every month, it's an extremely nice option to be able to redistribute the earnings into the equity you feel has the most value.

I will point out that BRK owns quite a few equities and, judging by their portfolio, they seem to appreciate equities which distribute.

Tax differences aside, setting up a DRIP will keep the distributed earnings riding on fortunes the same equity. Setting up a DRIP that is registered with the company usually includes a dividend bonus of 2~5% with which even more shares can be purchased. If you look at the equity market holdings of BRK, you will see a lot of reports of fractional shares. These are obviously DRIPs.

So, the lesson to be learned from studying BRK is that distributing equities are good and sometimes preferred.


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## like_to_retire (Oct 9, 2016)

TomB16 said:


> The error in your post is that you seem to be using this as a parable that suggests distributing earnings is bad. It isn't...................


Agreed. Large, mature, well run companies that produce a lot of cash and don't distribute, have to find a home for that cash within itself. That cash was great when the company was in its early growth phase, but eventually I feel it's wise for the company to distribute excess cash than to find a non-productive place to dump it - like perhaps as bonuses to its management. I feel I can do better with that cash by investing in my own portfolio.

ltr


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## My Own Advisor (Sep 24, 2012)

I don't mind CDZ. Far more balanced than VDY. Fee is too high for me but still an OK product.

If I was looking for income as senior, I would tempted to invest the aforementioned $1.3 M as follows:

30% XEI or ZDV. Low fee, good yield.
http://www.myownadvisor.ca/top-canadian-dividend-etfs-for-your-portfolio-2016/

30% HDV or VYM or ZDY. Low fees and solid yield.
http://www.myownadvisor.ca/top-u-s-dividend-etfs-for-your-portfolio-2016/

30% IDV or VYM or ZDI. Modest fees and solid yield.
http://www.myownadvisor.ca/top-international-dividend-etfs-for-your-portfolio-2017/

10% cash wedge for major and prolonged downturns.

With no debt; own home and >$1 M in the bank today - most people in their 60s are doing quite well folks!


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## james4beach (Nov 15, 2012)

I know a guy who is about to sell his business for about 5 M (that's AFTER taxes). Just imagine.... putting it all in XIU. Man oh man, the eligible dividends. That's something like 120 K annual income forever, with virtually no taxes.

One can dream.

I've mentioned this before but my "put it all in XIU" comment only applies to the situation where you can live entirely off of the XIU dividend, without expecting capital gains within the distribution. Basically you need a few million for that to work because it turns into something like a 2.0% to 2.5% variable withdrawal scheme, which is indeed sustainable forever.

I guess you could do it with 1 million all in XIU if the resulting 25 K per year is enough for you, but that sounds too low for most of us. I'm looking at the pure dividend part of the distribution, because you should not count on capital gains being part of it.


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## My Own Advisor (Sep 24, 2012)

Damn....cash for life big time....


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## james4beach (Nov 15, 2012)

He's a great guy, somewhat of a genius. Built a small business from the ground up... I have profited from it too. I owe him a lot.


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