One Source of Retirement Income You Should Know About: Dividend Income

Have you heard that living off dividends in retirement is a dream shared by many investors? If not, don’t worry—this article is here to bring you back to the basics so that you too can learn about this source of income and take advantage of it (even today) for your retirement years.

Withdrawing Investments for Retirement Income

Nibbling on your investments—selling them little by little to fund your retirement—may seem almost an impossible balancing act: you want to maintain a certain quality of life for an uncertain period of time, but selling off investments reduces your retirement savings. Additionally, high inflation will increase the funds you need to maintain that quality of life.

Investments need to keep increasing if they are to keep up with inflation, and your investments should, optimally, provide enough income in your retirement years so that you don’t have to sell them—you can have your cake and eat it too.

Dividend investing can help you attain both.

Dividend Investing for Retirement Income

By dividend investing, we mean investing in a stock that pays dividends (dividend income) to investors.

When you buy a stock, you are lending the company money.

You hope that the company will do well so that your investment will appreciate, and you are compensated when you eventually sell the stock (buy and sell).

When you buy a dividend-paying stock, the concept remains.

The difference, however, is that you are paid to wait (hold): you receive dividends while you wait for the potential capital gains on your investment.

Companies pay dividends as a method of sharing a part of their earnings to thank investors for their ongoing support and incentivize investors to continue investing in them (buy and hold).

Companies can also choose to reinvest earnings and not pay dividends, but paying dividends is a way for companies to maintain investors’ trust because it signals to investors that the company is doing well.

For this reason, in bear markets, companies with established track records of dividend payments tend to continue to pay dividends even if the business does not realize a profit.

This is good for investors because the stock price can fall in bear markets, but you continue to receive dividends, which is a source of downside protection.

Additionally, companies with established track records of dividend payments tend to be well positioned and depending on their industry, may be able to raise prices for their goods or services thereby offsetting any increase in costs from inflation (labor or material).

With an increase in earnings, dividend payments may also increase—providing investors with a stream of inflation-protected income that can not only keep up with but may even exceed inflation.

This why dividend investing allows you to have your cake and eat it too.

It is also something you should know about today because if a stream of dividend income is not needed right now, it can be reinvested to take advantage of the power of compounding and grow your cake so there is more to eat later during your retirement.

Should you wish to invest in dividend-paying stocks yourself, it is important that you research each company to ensure the stock is a good investment, and that your portfolio of dividend-paying stocks is appropriately diversified to offer you both downside protection and market returns.

Bloom Investment Counsel, Inc. Can Help You Attain Dividend Income

When thinking about your retirement, investing with a professional investment manager may be the least risky method to help you attain dividend income and to stay ahead of inflation.

Bloom Investment Counsel, Inc. has nearly four decades of experience providing actively managed, customized dividend-paying portfolios for wealthy individuals, family offices, foundations, corporations, institutions, and trusts.

This is a hands-free personalized investment management service where we construct and manage your investment portfolio for you based on your unique long-term financial needs, objectives, and goals, as well as preferences and constraints on your invested capital.

Learn more about why dividend-paying stocks can benefit retirees and why dividend investing is not just for retirees, discover our personalized investment management services, or get in touch with Bloom today to find out personally, how our customized dividend-paying portfolios can benefit you today and you in the future.


Bloom Investment Counsel, Inc. is a well-established Toronto-based independent, privately-owned boutique investment management firm providing actively managed, customized 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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