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If you read Bob Lai’s investing blog, you’ll know that he’s pulling in more than $2,500 a month from dividends. It’s enough to theoretically cover 55 per cent of his household’s expenses.

Dividend investing is often positioned as something for retirees seeking investment income. But Mr. Lai’s situation got me thinking about how dividends can be relevant to younger people as well. Based in Vancouver, Mr. Lai recently turned 39 and is married with two young kids.

He uses his dividends to reinvest in more shares of the companies and funds he owns, but it strikes me that dividends could also be used to supplement a household’s income. The dividend stocks themselves could be held untouched for the future, but the income would flow quarter-by-quarter through the years.

Might dividends be an alternative to the side hustles that some young adults are looking at to add to their income? Here’s an edited version of a Q&A that Mr. Lai and I did by e-mail recently on dividend investing.

Q: Dividend investing is often associated with older investors looking for income, particularly for retirement. What’s the appeal for a young guy like you?

A: The idea of not having to touch the principal and only living off dividends were the main attractions. We want to be able to pass our investment portfolio to our kids, our grandkids and create a legacy. We also learned that dividend income can be very tax-efficient.

Q: Give us a sense of your dividend portfolio – what are your big holdings, your big successes and your misfires?

A: To be clear, we are hybrid investors. Our core investment portfolio consists of index-tracking exchange-traded funds and dividend stocks. We also invest a small percentage of our portfolio in growth stocks like Tesla, Facebook, Google that have potential higher risks. We invest in the iShares Core MSCI All Country World ex Canada Index ETF (XAW) for geographical and sector diversification. Our other big holdings include the Big Six Canadian banks, Manulife, Telus, Apple, Fortis and Enbridge. I list all the holdings of our dividend portfolio on my blog. Some of my big successes include the likes of Intact Financial, Apple, Waste Management, Target and Visa, which have given us multi-bagger returns. But we also had a few misfires like Huskey Energy and General Electric.

Q: What are you doing with the money coming in from dividends?

A: We reinvest all the dividends. We let dividend cash build up to at least $1,000 before buying additional shares. This is to keep the trading commission less than 0.5 per cent of the overall transaction cost. (Note: many brokers charge commissions to buy and sell stocks and ETFs, but there are both brokers and apps that let you trade for free).

Q: Do you feel at all out of step with current stock market conditions and the speculative mood of so many investors?

A: Our investing strategy is very simple. It boils down to: be an owner. We invest in companies that make products that we use on an everyday basis. Thanks to social media, too many people think that making quick bucks via stock trading is easy. But if investing is that simple and market timing is so easy, we would see more trader billionaires on Fortune’s 100 richest people list. Investment is more about staying on course, being boring, and looking at the long term. Too many people ignore the psychology part when it comes to trading. As someone told me a long time ago – your ego is not your amigo when it comes to investing. Keep a core investment portfolio and speculate with a small portion (less than 5 per cent).

Q: What dividend stocks are on your radar for when the markets next fall?

A: When there’s another market crash (it’s not an if, it’s a when), we plan to take the opportunity and invest in dividend paying stocks like Waste Connection, Apple, Enbridge, the Canadian banks and renewable utility stocks.

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Rob’s personal finance reading list

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Paycheque Project: We want to hear from you

Where does your money go each month? How much do you allocate toward rent or a mortgage, for car payments, fitness, student loans or eating out? The Globe is looking for young adults to participate in our paycheque profile series. It’s a look at how young adults in Canada are spending their monthly paycheque – no judgment, just the facts. Here’s a recent profile of two renters earning $65,000 who opened a trading account right when the pandemic started. If you want to share your story, contact Globe personal finance editor Roma Luciw at

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More Rob Carrick and money coverage

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