I am Dividend Niche, I am a 30-something family guy living in Canada. I very recently learned about the long-term potential of dividend growth investing and wanted to share my journey towards financial independence. I hope you enjoy learning about my journey and that you consider how dividend growth investing could help you reach financial independence.
Why I started my journey
Hindsight is 20/20 and I must admit that if I could go back in time I would have made investing in solid dividend growth stocks a priority. The power of time, and compound interest, paired with re-investing dividends, would have really helped me get off to a much stronger start.
When I was younger I did not have a firm grasp of the value of money and certainly did not place enough emphasis on saving for future goals. I managed my budget as a student, but once I joined the workforce, I found that every dollar earned was spent. I could not resist immediately purchasing the latest technology whether it was a flat screen TV, iPhone or other gadget.
Lesson learned: do not overspend in the present at the expense of your future goals. My biggest financial regret was spending a small inheritance I received when I was 19 on unnecessary daily living expenses and consumer purchases rather than investing the capital in dividend stocks. Today, I have practically nothing to show for those purchases and none of them have earned me any money.
I only later realized that unless I took initiative to reduce expenses, I would not be building up enough money to achieve my goals. I had previously spent nearly my entire income on living expenses and consumer items, which left barely any money for savings. Despite having a good income, I temporarily went into debt as the result of large unexpected expenses and not having an emergency fund. After doing some research on managing finances and dividend investing, I decided to build up a portfolio of high-quality dividend stocks to supplement my retirement savings.
While I have heard of some very frugal living practices out there, I will not be cutting back on most of my current expenses. I will reduce some of the expenses I can control and at the same time continue to enjoy some aspects of my life that are certainly not frugal. For example, I will carefully plan for occasional travel, entertaining friends, and gifts for family. I plan on eating out less, as well as cutting back on some of my consumer purchases, especially when there are much better long-term investments to be had!
The Niche Dividend Fund
After all monthly expenses, I have some capital to deploy towards my Niche Fund. Every month I search for a quality stock to add to my portfolio in order to increase my passive income stream. As my fund started from scratch in 2015, I plan on allocating any dividends towards my purchases of new acquisitions. Once my positions are large enough to automatically reinvest through a dividend reinvestment plan (DRIP) full shares, I will utilize this method in order to build on existing positions passively. The overarching objective is to buy and hold high-quality dividend paying stocks and generate passive income. Eventually I hope that this fund will snowball and grow enough to provide financial independence in retirement.
In terms of stock selection, I firmly believe that this is best decided by each individual investor. My own approach involves eliminating any stock that doesn’t pay a dividend, followed by a screen for dividend streak, dividend yield, attractive p/e, low payout ratio, ranking based on sector and desired weight, my own analysis of financial statements, and finally some qualitative analysis. I’ll outline my thinking in more detail in future posts.
Please come back often and check in on how I’m doing towards financial independence. I look forward to hearing from others regarding their progress too.
Thanks for reading!