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Investment Ideas Investor enjoys fifteen years of early retirement thanks to dividend stocks

Susan Brunner adjusted to the bear market of the early 2000s by reducing capital withdrawals from her portfolio and tilting more toward dividend stocks to boost income yield.

Susan Brunner

Occupation

Early retiree

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The portfolio

Mostly Canadian dividend stocks, including Royal Bank of Canada, Power Financial Corp., Enbridge Inc. and TransCanada Corp; for diversity: consumer and industrial stocks, including Canadian Tire Corp. Ltd. and Canadian National Railway Co.

The investor

Susan Brunner was laid off in 1999, just as her son was starting college. But being a diligent saver since the late 1970s, she had built up a substantial investment portfolio and become financially independent – thanks, in part, to low taxes on dividend income.

So, Ms. Brunner retired early to pursue personal interests. They include reading, blogging at spbrunner.blogspot.com and social activities, such as meetup.com groups in which investing is discussed.

There have been a few bumps in the road, such as the bear market of the early 2000s. She adjusted by reducing capital withdrawals from her portfolio and tilting more toward dividend stocks to boost income yield. She also became more careful in her spending.

How she invests

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Ms. Brunner still follows the investment approach laid out when she was profiled in a Me and My Money column in September, 2010: investing in companies that not only pay dividends but raise them regularly. One big benefit of rising dividends is being able to keep pace with increases in the cost of living during retirement.

The dividend growth over the five years since 2010 has been great, way more than the rate of inflation. She reports: "My five-year median dividend and income increase is 8.9 per cent per year to the end of December 2015." The growth rate has slowed a lot in the past two years, but remains above inflation.

Ms. Brunner has no problems with market volatility. Concerning bear and bull markets, she remarks: "I can handle either one. In both 2000 and 2008 bear markets, I lost some 30 per cent of my portfolio value, but my portfolio recovered well. I have ridden out a number of bear markets and will continue to do this."

Best move

"One good stock I bought in 2008 was Computer Modelling Group. …I still have this stock, but I did sell off some in 2011 because it had moved up a lot and was too much a percentage of my portfolio … I have made a total return of 32 per cent per year since 2008."

Worst move

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It's been a long wait for a decent return on her Bombardier position, having bought it in the 1980s. Paying 60 cents a share (split adjusted) helps, though. So does the "$2.34 per share in dividends over the years."

Advice

Ms. Brunner likes how stocks with rising dividends tend to be less volatile. She is also a firm believer in staying invested over the long term.

Want to be in Me and My Money? Contact Larry MacDonald at mccolumn@yahoo.com or his Website.

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