I Bought my First Dividend Stock

The first investment I ever bought was a mutual fund with Tangerine Bank. My parents were invested in mutual funds, I knew that I “should be investing,” so I did what they did.  This was back when I was in university (the first time).

Eventually, I wanted to learn more about the stock market, so hubby and I bought an online course through The Great Courses. And were completely overwhelmed with all of the information.

So we ditched the stock market and invested in real estate. Eventually, I moved that money out of the high-fee mutual fund and into index fund ETFs that I self-manage. 

And for years, I stayed away from individual stock purchases because the analysis and sheer number of choices seemed overwhelming and something I just didn’t have time for.

Well, that has recently changed.  

I bought my first individual dividend stock ????. Keep reading to find out what I bought and all of my thoughts about this shift.

What is a Dividend Stock?

But first, if you’re new to investing, you might be thinking – what is a dividend stock, and how does it differ from other investments?

A dividend stock is a stock that shares part of its profit to shareholders. This profit share is known as a dividend and is usually paid out quarterly.

A dividend stock differs from an ETF (exchange-traded fund) in that an ETF is a bundle of stocks, and a dividend stock represents just one company.

That said, an ETF could be a bundle of dividend stocks.  So, you could get the best of both worlds – if that’s your thing.

This post may contain affiliate links, meaning I may receive a commission if you purchase through my links.  Please read my disclaimer for more information.

My Investment Strategy

The beauty of an ETF is that it can help diversify your portfolio with low fees and minimal effort.

This plays nicely to my investment strategy of keeping things boring.

Previously, I’ve written about my Personal Investment Policy Statement and why you should have one too. Now that I’ve shifted my strategy a bit, it might be time to review my statement and update it with my current goals.

When I look over our investment portfolio (which I do twice a year when calculating my net worth, here is our current investment breakdown. (I say “our” because hubby and I have combined finances and tracking).

It’s also important to note that the following is our current asset allocation and not necessarily our ideal one.

• 55% of our portfolio is in rental real estate
  • This is the 9 rental properties we own and self-manage
• 15% is tied up in our pensions
  • I have a defined benefit pension which I will eventually commute when I leave my job
  • Hubby has a defined contribution pension
• 22% of our portfolio is invested within our RRSPs
  • Mostly broad-based ETFs, but we do have some REITs and some alternative investments
  • Some are actively managed, with the majority being self-managed
• 8% of our portfolio is in our TFSAs
  • Mostly broad-based ETFs, but we do have some exempt market investments
  • This is minimal because we have opted to favour the RRSP due to our higher income levels and attempting to offset the tax burden of our rental properties
  • The long-term plan is to top these up eventually

Our plan is for both of us to be work optional within the next 3-5 years and to not die with zero but leave some inheritance to our kids and their future families.  

The rental properties in our portfolio will help us with the generational wealth piece, but they won’t be paid off for years. So, how are we able to go work optional? Our plan is to cannibalize our RRSPs until our rental properties have minimal mortgages. And to convert any extra income to our TFSAs.

With our personalities, I don’t think we will ever 100% stop working altogether.  But if we can withdraw our RRSPs in lower-income years, we can take advantage of the tax arbitrage of these accounts (contribute in high-income years and withdraw in lower).

Why Change Strategies?

That’s a rough breakdown of our investments and goals.  You will notice above that there is no mention of individual stocks. So, why did I start investing in dividend stocks? And when I say I, I mean me. In this case, hubby wasn’t involved.

Last year, we decided to set some money aside each time hubby worked an overtime shift.  This money was to be our fun money. Either of us could spend it on whatever we chose without discussing it with the other person and without guilt.

Well, I have a really hard time spending money on myself. So, I decided to use my fun money to have a little fun and learn about stock investing at the same time.

Yes, I realize this was never the intention of our fun money. But I’m working on it.  This feels like a bit of a baby step.

I also have TFSA room, so it seemed like a bit of a win-win.

The third reason was that the more I learn about personal finance from other creators who share their stories, the more confidence I’m getting because my competence is increasing. 

Melissa from Our Life Financial is a great role model.  I learn from her every time we talk, and most recently, I learned a ton about dividend stocks during our conversation for the Women Can Money Summit.

Other dividend investors I look up to are GYM at Gen Y Money and Mark at My Own Advisor.

And finally, I also want to get on the “passive income” bandwagon. I like the idea of earning dividends as a source of income. I know there’s lots of debate around dividend investing. But it’s just another piece of my investing puzzle.

What Did I Buy?

Okay, enough about the preamble. What dividend stock did I buy?

After some analysis (admittedly, probably not enough), I bought the Bank of Nova Scotia, ticker symbol BNS.

And I bought it within my TFSA account at Qtrade.  

SIDE NOTE – You can get up to $2000 cashback when you open any new self-directed trading account with Qtrade Direct Investing with this link and promo code: CASHBONUS2024 and you can get an extra $50 sign-up bonus if you deposit $1000 into one of your accounts.

I set up monthly auto-deposits into my TFSA account, so I don’t have to pay the admin fee. (my plan for those deposits is explained below.)

The stability of the Canadian banks and their dividend payout history helped me feel comfortable with my choice.  Realistically, you probably can’t go wrong with any of the big Canadian banks, and I didn’t want to get lost in analysis paralysis. 

But these are just my opinions and should definitely not be taken for financial advice of any kind.  Please do your own research or consult a professional.

When I bought BNS, the share price was $66.00. As of the moment I’m writing this post, the share price is $64.50, a slight decrease. But I’m not losing sleep over it because I’m investing for the long term.

Buyer’s Remorse or Regrets?

One of my regrets is I completely forgot about trading fees. 

I’ve only ever bought ETFs before this, and the ones I’m buying have no fees for purchases.

My original plan was to buy more BNS monthly with automatic monthly contributions.  But because of the trading fees, I will wait and buy either quarterly or semi-annually so that the fees don’t erode into the money I have to invest.

It’s also important to note that if I were buying dividend stocks in an unregistered account, there would be a bit of an annual tax drag, as I would owe tax on the annual dividends earned. (For this reason, value or growth stocks may be a better tax option in unregistered accounts as you only pay capital gains tax when the stock is sold).

But, because I’m using my TFSA to house my dividend stocks, and it’s such a small portion of my portfolio, there are really no taxes for me to consider – so no regrets there.

Final Thoughts

Well, I did it. I can finally call myself a dividend investor.

Long term, I’ll probably stick with ETFs and real estate, but it’s good to have experience in several things.  And I really feel like I’ve come a long way.

When I first learned about investing in the markets, it seemed extremely overwhelming and confusing. But little by little, I learned and experimented, and now I am proud to say I own individual stocks in my portfolio.