Here’s Why Dividend Investing is Not Just for Retirees

You may have heard about retirees living on dividend income, but is dividend investing just for retirees? If wisdom comes with age, and retirement planning almost universally includes increasing portfolio allocations to dividend-paying, income-producing equities, then should we follow this sage advice much sooner? Many people have the impression that dividend-paying stocks are not as exciting as growth-oriented stocks—we don’t agree with this. Here’s why dividend investing is not just for retirees.

Why Dividend-Paying Stocks can Benefit Retirees

Before we dive into why dividend investing is not just for retirees, let’s first understand why it is good for retirees. Retirement planning focuses on decreasing monthly expenses and increasing income sources independent of employment income. A dividend-paying investment portfolio effectively realizes the income side of the retirement plan equation.

The Advantages of Owning Dividend-Paying Stocks for Retirees Include:

  1. Dependable income is not affected by underlying stock volatility;
  2. Long-term dividend-payers are usually solid, dependable companies;
  3. Income may increase as many companies increase dividends over time;
  4. Dividends often keep up to or even exceed inflation (thereby protecting buying power);
  5. There is less need to draw-down on principal investments to generate cash flow (allowing for principal growth through capital gains); and
  6. Eligible dividends earned by Canadian taxable investors are treated favorably for tax purposes) by the Canada Revenue Agency (does not apply to registered retirement savings accounts such as RRSPs or RRIFs).

Why Dividend-Paying Stocks are Good for Everybody Else: All of the Above!

Who isn’t in search of a dependable income stream with long-term underlying capital growth derived from an investment strategy that allays much of our day-to-day concern about market volatility?

Even in the capital accumulation phase of our early working years, we want to protect as much of our hard-earned savings as possible while maximizing our passive income over the long-term.

Additionally, if invested in dividend-paying equities, we can take advantage of long-term capital growth of the underlying stocks and compounding…today!

Dividend-paying stocks make a lot of sense for many of us and should be given serious consideration. Chasing high-flying media-hyped stocks may seem more exciting, but holding established dividend-payers will help you sleep better at night.

“The true investor…will do better if he forgets about the stock market and pays attention to his dividend returns and to the operating results of his companies.” – Benjamin Graham, “Father of Value Investing,” author of The Intelligent Investor.

Why a Dividend-Paying Portfolio may be Right for You

  1. If you can cover your monthly expenses with the dividend income stream without drawing down on your principal investments, it can provide you some comfort knowing that you are unlikely to outlive your savings.
  2. As well, your principal investment can grow over the long-term allowing for a legacy for your heirs and/or charitable giving.

As an asset class unto itself, historical evidence suggests that dividend-paying stocks outperform non-dividend paying stocks over the longer term. Additionally, dividend-paying stocks tend to be less volatile than the overall market as the dividend acts as a crutch to the stock price in volatile markets.

“We all hope for capital gains, but the only thing we can really count on is the dividend” – Geraldine Weiss, (was known as the “The Grande Dame of Dividends” and “The Dividend Detective”)

The Bottom Line

Keep in mind, investing is not a mutually exclusive process. Establishing a dividend-focused portfolio generating enough income to cover your expected expenses is an ideal equity strategy foundation, but a diversified approach to investing can be beneficial. Diversifying enables you to invest any additional funds in other investment strategies aligned with your financial objectives and tolerance for risk.

At Bloom Investment Counsel, Inc., we have been managing customized, dividend-paying portfolios using a disciplined decision-making process built on nearly four decades of investment management experience. Our long-standing clients speak to our ability to protect, preserve and build their wealth in the long-term.

Learn more about our customized, dividend-paying portfolios or get in touch today to find out how we can help you build your dividend-paying portfolio to provide stable cash flow.


Bloom Investment Counsel, Inc. is a well-established Toronto-based independent, privately-owned boutique investment management firm providing customized, actively managed, Canadian and U.S. dividend-paying portfolios for wealthy individuals, family offices, foundations, corporations, institutions and trusts.

Founded in 1985, Bloom has experience in managing in excess of $2.5B in assets over the years. We believe that generating independent cash flow is central to the success of our clients’ portfolios because it provides capital for the present day, if needed, while continuing to preserve and build wealth for the future.

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This content is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this content should consult with his or her financial partner or advisor.

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