First off, we will start with a quick refresher for the viewers out there on our situation and what it is we’re working towards as a goal – after all you can’t very well make a plan without knowing where it is you’re hoping to end up, right?
We are a 30 year old couple living in Canada, who are looking to retire in about 10 years, or at least be able to greatly scale back our working hours at that time. Our preferred method of investing is through dividend stocks first and foremost but we also do have work savings plans and pensions that are invested in index funds. The end goal isn’t 100% set in stone just yet, but we feel confident that $50,000 yearly in passive income through dividends would allow us a comfortable retirement stacked on to our other pensions etc.
Why does any of that matter? Simply put the stocks that are ideal for us to reach our goals may or may not be applicable to you and your situation.
Now that we’ve got what our situation and goals are out of the way let’s discuss what it is we’re looking for in these stocks:
Dividends- The company must pay a dividend. Preferably in the 3-7% range although there will be exceptions made for exceptional companies.
Dividend growth- Must have a track record of raising their dividend year over year, the amount that it must raise will vary with what the starting yield is ie. if Apple pays out a 1.5% yield for instance we may expect a greater yield than say Interpipeline where we bought in with an 8% starting yield on cost.
Company balance sheet- This is placed third on the list but is really the top of the pyramid when it comes to what you need in a company you plan to hold a long time into retirement. The company must show a stable financial situation, solid revenue numbers and some form of moat or competitive advantage around it that gives the confidence to the investor that they will hold this market position for a long time.
What we’re attempting to do is to eliminate as much risk as possible by having a clear game plan and doing the work up front to look these companies over and pass or fail them onto our shorter list of holdings.
*It is important to note that you’ll always have to do follow up research and keep at least somewhat up to date with the headlines surrounding these companies*
Now, onto the list:
- Financials: Bank of Nova Scotia (BNS), Canadian Imperial Bank of Commerce (CM), TD Bank (TD), Manulife Financial (MFC). (4 companies)
- Utilities: Fortis (FTS), Canadian Utilities (CU) (2 companies)
- Consumer Discretionary: Disney (DIS), McDonalds (MCD) (2 companies)
- Consumer Staples: Coca-Cola (KO), Pepsi (PEP), Kimberly-Clark (KMB) (3 companies)
- Energy: Enbridge (ENB), InterPipeline (IPL) (2 companies)
- Healthcare: Johnson & Johnson (JNJ) (1 company)
- Industrials: CN Rail (CNR), 3M (MMM), Legget & Platt (LEG) (3 companies)
- Technology: Apple (APPL), Microsoft (MSFT) (2 companies)
- Telecom: Bell (BCE), Telus (T), AT&T (T.US) (3 companies)
- Real Estate: Brookfield Property Partners (BPY.UN), Artis REIT (AX-UN.TO) (2 companies)
Total : 24 Companies
There’s a small Canadian bias here and that mainly comes thanks to withholding taxes placed on US stocks held by Canadian investors outside of retirement accounts – so in short – we will attempt to keep all of our US holdings into our RRSP accounts while our TFSA and non registered accounts will be for our Canadian eligible dividends received.
This strategy will give us a nearly tax-free retirement, which essentially boosts the value of your portfolio 20+% right from the start!
What we’re curious to know is how does this portfolio compare to your current portfolio? Or your ideal portfolio? Are we missing any fantastic companies out there?
Let us know below or on our Instagram page @FindependenceCanada
We’d like to note that we either already currently own the above listed companies or are planning on adding them to our portfolios as they become priced to our liking. Please use these only as ideas and do your own due diligence researching any of the above mentioned companies to find the ones that are right for you.
Thanks for stopping by,
FIC.