Maximizing Cashflow and Growth Through Dividends

Maximizing Cashflow and Growth Through Dividends

Today we’re going to talk all about dividend investing for Canadians, including shedding some light on using dividend investing as part of your investing strategy. We’ll take a look what to look for, and of course the different types of dividend investing available to Canadians.

Now if you’re a long time listener of the show, then you know that there are quite a few investing strategies out there. Dividend investing is definitely one of the really popular ones, especially among those that like the idea off their investments spinning of passive cashflow on an ongoing basis, as opposed to you having to sell-off some of your ETFs or stocks to generate the cashflow you want.

And so todays guest is Nick McCullum from the site Sure Dividend. They specialize in dividend investing whether it’s through ETFs or individual stocks so I thought it would be great to have him on the show, so we can learn and to help us make an informed decision on whether having a dividend focus within our portfolios is something that may be a good fit for you.

Nick and his team do a ton of research on dividend investing, and specific dividend investing stocks and ETFs so if this is something of interest to you, and something that you’d like to learn more about, then you can check out the resources page that Nick actually created specifically for Build Wealth Canada listeners. There you can actually do a free trial to see their research and advice, and really see if this type of investing is the right fit for you. To learn more and get a free trial to any of their newsletters, you can go to the custom page that they created for us, over at suredividend.com/kornel.

Also a huge “Thank You” to our sponsor, Canspace.ca

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Questions Covered:

1. Your company and site focus heavily on finding high-quality dividend stocks and ETFs. What made you decide to focus specifically on strong dividend paying companies for your investment strategy?

2. One of the articles that I really enjoyed from you was when you compared the performance of the US Index (S&P 500) vs Dividend Aristocrats in the US. Can you explain what the dividend aristocrats are (in Canada vs the US) and what your findings were when you compared the two?

3. Why do you think they have outperformed the S&P 500?

4. Why do you think they really started to outperform the S&P 500 after the crash and not before then?

5. Have you found that the Canadian aristocrats have beat the Canadian index too?

6. Because of these higher returns, combined with the low-interest rate environment that we’ve had for the past while, I can see how these types of stocks are really appealing to investors. Of course with the flood of investors rushing in to buy these types of stocks, one begins to worry that the increased demand drives the price of these stocks up, potentially making some of these stocks expensive and arguably overvalued. For somebody interested in having more dividend exposure in their portfolio, how do you protect yourself from buying an overvalued stock?

7. We have a lot of Canadian listeners on the show, and if they focus heavily on Canadian dividend stocks then they are going to have too much of their portfolio in certain sectors which can hurt them from a diversification perspective. How do you recommend offsetting this problem?

8. Do you find that this is a similar problem in the US?

9. Are there certain rules-of-thumb and cut-offs that you use to ensure you aren’t too concentrated in any one sector? For example one cut-off that I like is to not have more than 20% of your portfolio in any one sector and not more than 5% in any one company. Do you use something similar?

10. For somebody that wants that extra dividend exposure as part of their portfolio, it seems that they have 3 main options:

Buy the dividend aristocrat ETF
Buy the stocks that are within the aristocrat ETF directly to bypass the ongoing ETF fees.
Or, they can pick and choose individual stocks that are strong companies and dividend payers.

What are the pros and cons of these different approaches and which options do you recommend for the different types of investors out there?

11. Having a heavily dividend-focused strategy seems to be not as common as just buying the entire index. For example, anybody that searches about the different investing strategies will find for example Warren Buffett suggesting something like the S&P 500 as opposed to an Aristocrat ETF. Other blogs and publications seem to favour a more broad Market approach too.

The robo-advisors are another good example where in their model portfolios, they generally buy broad market ETFs instead of being heavily focused on dividends. Why do you think that is?

12. Tell us more about your newsletter and training, as well as the free trial that you have for those that want to learn more about dividend investing?

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