October 2015 Dividend Update

This should be the first post in (hopefully) a long (or short?) series of updates on our way to financial independence. As noted here, we had some difficulties deciding which assets we would use to become financially independent. We saw upsides and downsides in all types of assets, so we decided to try them all.

This post series will be solely dedicated to our dividend stocks and will cover dividend income, purchase of dividend stocks and ultimately year over year increases.

So without further ado, please find below an overview of our dividend stocks:

20151120 Dividend Overview

The experienced readers among you will note that these stocks are primarily traded within only two countries (and the USA is not one of them), this is not a coincidence and has to do with limitations as a results of retirement accounts and avoiding double taxation. We are already, and will be in increased capacity, exposed to American stocks via the Meesman Worldwide Stocks ETF, so we ok with not directly owning US dividend stocks (note, this may change in the future, but with the declining value of the Euro vs. the mighty greenback, this probably won’t happen in the near future).

If you group the above dividend stocks by sector, the distribution of our portfolio is as follows (based on market value as of November 20, 2015 at 10:00 Amsterdam time):

20151119 Dividend Stock by Sector

As you can see in the above figure, not all industries are represented. Two major industries not included are IT and healthcare. This was not done on purpose but a result of available stocks and research done to date. Over time we may add stocks from these sectors to our portfolio, and we will likely also try to re-balance the distribution to avoid being too heavy on energy stocks (energy stocks are a double edged sword, as they can be both lucrative and volatile).

Since inception of the dividend stock portfolio in July 2015, this is what our dividend income has been so far:

20151101 Monthly Dividend

We had the opportunity to drastically change our portfolio by mandatorily selling ETF’s as a result of changing retirement accounts and receiving a significant sum of money as a result of our home sale. As a result we have a considerable cash pile to re-invest in dividend stocks. Our month over month dividend growth will therefore be rather large initially, but this will taper off in the next year once the majority of the cash pile has been invested. For all beginning dividend investors reading this post, please don’t compare our growth with yours as it would be an apple to pear comparison!

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7 comments

  1. Hey CF, you are talking about choosing not to invest directly in the US (prefer Canada for example) because of double taxation. We were looking to invest in the US (Aristocrats via DRIPs) but we are not sure now what is the best way. And in case we want to invest in the US, do you know if we have to hire a broker? Thank you again for your help and advice 🙂 !

    1. Hey Valibert,
      we have decided not to invest into US stocks from our Canadian pension account for taxation reasons. However, we would not mind investing from our Dutch bank/broker account! In that case you just fill out the W-8BEN form to make sure you don’t pay too much tax (form is to show that you are not a citizen of the US and thus have a different tax regime). Depending on where you are, you should be able to just use a regular broker/bank account (for the Netherlands/Belgium this could be Degiro, Binckbank, ING, ABN for example) to invest into US stocks without any issues. Good luck!

  2. Hey CF,

    Having the opportunity to build up a portfolio from scratch with a lot of cash available is a great opportunity.
    The mixed DGI and index approach that you take is one that I have on my mind as well. I “just” need to get over the double tax on dividends…

    Good luck over the next months with your build up

    AT

    1. Hello AT,
      It’s actually a lot more difficult than we had imagined, starting with a bit pot of cash. Especially now in 2015 when a lot of stocks are expensive/affected by lower oil prices, its difficult to make an selection. We have bought some shares at really good prices, others not so much (its hard to tell where the bottom is during a temporary slump/correction). We will have to see how it all shakes out, we are going to hang in there for the long run!
      We definitely hear you on the double taxation, it really makes you wonder what the best strategy is (i.e. local dividend stocks vs international vs ETF’s vs etc…), as the tax takes a huge portion of your profits away (plus you alreadt use after tax money to get it in the first place).
      Take care!

      1. We both struggle with the same issues: what and where to invest given the current market and potential double taxation.

        I start to look now at some Belgian REIT to invest, just to get a decent dividend, taxed only once. But getting a good yield is not so easy. Then again, it should be to hold on until forever, so the growth of the dividend should be more important.

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