The portfolio: Blue-chip dividend stocks, including Bank of Nova Scotia, Toronto-Dominion Bank, BCE Inc., Rogers Communications Inc., TransCanada PipeLines Ltd., Nestlé S.A. and Coca-Cola Co.
The investor: For about three decades, Rev. Dale Broadworth worked for the Canadian Bible Society as a preacher and fundraiser in Northern Ontario.
He made payroll contributions to a pension plan before retiring at the age of 61 in 2010. The plan administrators were going to charge an annual fee of 2 per cent on his $350,000 in assets. That was too big a bite for his nest egg, so the funds were transferred to a commission-based brokerage where the cost would be a lot lower as long as trading was kept to a minimum. But the brokerage recently switched to charging an annual fee of 1 per cent.
The account was then moved again, to a discount brokerage without annual fees.
How he invests: When he invested his pension in 2010, Rev. Broadworth chose an aggressive asset allocation: 10 per cent in cash/bonds and 90 per cent in dividend stocks. He felt this was a risk that had to be taken because rates on bonds and guaranteed investment certificates (GICs) were too low.
Despite a 7-per-cent withdrawal rate, his portfolio has done well and is now worth nearly $500,000. Some part-time work helped, but a big factor was the dividend income and rise in stock prices since he began investing.
Thomas Connolly, editor of the dividend-investing newsletter The Connolly Report, steered him into dividend stocks. "Thanks to Mr. Connolly, I have been able to stay in our home," says Rev. Broadworth. "If I had invested in GICs, my capital would have certainly eroded over time."
Best move: Dividend stocks aside, it was moving his retirement fund to where the cost was lowest.
Worst move: When the first brokerage account was opened, the broker's tips lost him money (until Mr. Broadworth started telling the broker what to buy – namely solid dividend stocks).
Advice: "If you hold high-quality companies that increase their dividends, things generally turn out well."