As a Canadian, i have something called a TFSA. (Tax Free Savings Account).
Any money made on this is tax free. There are no tax breaks upon depositing to your TFSA. The current limit on total lifetime contributions is 95k. This increases by about 6k each year.
My goal is to max this out, and my wife's as well. The idea being instead of taking the tax break now, i will have tax free dividend income upon retirement.
Currently the majority of my holdings are in an ETF "HMAX". The dividend yield is 15% per year.
I'm amazed that more people aren't investing in this.
Do you guys in the USA have anything similar to a TFSA? What would your strategy be regarding this?
BTW, my house is paid off (i'm old lol) and probably worth 1 or 1.1 mil.
@Bruins4Life
Yeah we have Roth IRA’s (individual retirement accounts). $7,000 annual contribution limit.
similar in nature. I max this out annually and have traditional IRA accounts and taxable brokerage accounts also. I receive sizable tax breaks due to the married filing jointly standard deduction and 4 children so tons of “tax credits”, so I have very little personal tax liability as is. So fine “paying the tax now” as they say.
I focus on high quality income ETFs yielding 8% + with diversified sectors and strategies, along with MLPs and “preferred” stock offerings.
my portfolio has not only paid significantly in dividend income (reinvested at this juncture), but I’ve also seen nice price appreciation (not this month however).
with how much I contribute bi-weekly, I should have about $85,000 per year in annual dividend income payments within 10 years and at age 44, work will then be essentially optional when factoring that I have no debt other than my home…
UPDATE TO THE DIVIDEND PORTFOLIO
DIVIDEND ETFS:
JEPI- 306 SHARES
JEPQ - 279 SHARES
QYLD- 877 SHARES
SCHD - 38 SHARES
DIVO - 67 SHARES
VYM - 19 SHARES
SPYI - 41 SHARES
AGGH 169 SHARES
SVOL 101 shares
CSQ 50 shares
PFFA 50 shares
TLTW 29 Shares
IBHE 82 Shares
CRF: 287 Shares
PREFFERED STOCK HOLDINGS:
ET PREFERRED SERIES C,D,E - 790 COMBINED SHARES
ET COMMON STOCK: 1207 SHARES
WELLS FARGO PREFERRED - 181 SHARES
AG MORTGAGE PREFERRED- 89 SHARES
COMPASS DIVERSIFIED PREFERRED - 47 SHARES
DIGITAL REALTY PREFERRED - 38 SHARES
PUBLIC STORAGE PREFERRED- 89 SHARES
VIASP PREFERRED 50 shares
UPDATE TO THE DIVIDEND PORTFOLIO
DIVIDEND ETFS:
JEPI- 306 SHARES
JEPQ - 279 SHARES
QYLD- 877 SHARES
SCHD - 38 SHARES
DIVO - 67 SHARES
VYM - 19 SHARES
SPYI - 41 SHARES
AGGH 169 SHARES
SVOL 101 shares
CSQ 50 shares
PFFA 50 shares
TLTW 29 Shares
IBHE 82 Shares
CRF: 287 Shares
PREFFERED STOCK HOLDINGS:
ET PREFERRED SERIES C,D,E - 790 COMBINED SHARES
ET COMMON STOCK: 1207 SHARES
WELLS FARGO PREFERRED - 181 SHARES
AG MORTGAGE PREFERRED- 89 SHARES
COMPASS DIVERSIFIED PREFERRED - 47 SHARES
DIGITAL REALTY PREFERRED - 38 SHARES
PUBLIC STORAGE PREFERRED- 89 SHARES
VIASP PREFERRED 50 shares
ADDED**
SCM 50 SHARES
CTDD 50 SHARES
PDI 50 SHARES
FPQI 50 SHARES
How long have you covered calls/divi guys been in these positions? I did a little poking around and several of these listed are quite new and several have experienced some serious drops and several are paying out more than the divis earned, the payout ratio is greater than 1 and that is very dangerous.
That HMAX and all the other Hamilton funds seem to be restricted to Canadian investors, thats too bad because the covered call one on the SPX looks interesting but I would be wary given the extreme highs on the market in general.
@wallstreetcappers
Ive been in for about 18 months now, beginning Jan 2023. My positions for the most part have appreciated in value and are paying high monthly div, which at the current time for me is reinvested back in. JEPQ for example has risen about 10% in price appreciation plus collecting a big monthly div...
I am still building my positions but will be at a point where I am achieving $60,000-$80,000 in annual dividend income at age 45 and will seriously be able to consider launching into my passions, quitting FT employment altogether, etc. I currently invest about $2500 monthly into this high dividend fund, composed of these covered call ETF's, some bond ETF's, Preferred stocks, MLP's, BDC's, Certificate of deposits, etc. Currently have 35 holdings and feel pretty diversified given the circumstances.
@steponaduck
You are going to pay 120% for a yield like that, those havent been around for decades so they will sell for a premium to par. Its actually not a horrible idea to buy a 30 year at par now, good odds you will be able to sell it at a 20-30% premium when the FED starts lowering rates.
I agree on the high yield instruments, I did a bit of digging on the list above and its for sure high risk especially the ones that pay out more than they take in and you have to dig to find that out. Then you have to look at a long term chart and see if you potentially could lose more on the investment than you do making the yield versus a risk free government bond or bond fund. There are predictable high yield funds like Fidelity investments that have been in a tight range for years and yield over market. Some of these funds havent been around long enough to test in a chop or down market especially those CC funds, that monthly payout is a siren song I tell ya.
@wallstreetcappers
Yeah I chart my portfolio weekly and look at the performance every day. You could consider it a passion of mine.
I feel well diversified between the CC funds, bond funds, CEFs, BDCs, preferred stocks I own, CDs, a few conservative RIETS, and now the government agency bonds
@steponaduck
The current 30 yr yield today is like 4.6 or so that means if you are finding a CUSIP that is showing a yield of 6 plus then there is something going on. I tried to look it up and could not find the exact instrument, I found some similar but not even close to the yield you listed. To find a government yielding 6 when market is 4.5-4.6 that means its either being sold at a premium (higher than 100 par) or it is not a treasury at all rather an instrument or some unit but not a real bond and then if that instrument decides to leverage then I could see that 6 percent being possible. There are leveraged government funds that get better than market rate but with leverage comes risk as you know.
I'd love to see a 30 year at 6 plus selling at par, I would put some into such an bond but not a managed unit or instrument that uses leverage, that is too much risk for me. I dont know what that CUSIP is but it cant be a 30 year bond at that rate. The last time a 30 year was yielding over 6.5 was in 1999!
@steponaduck
When I looked up the CUSIP it did toss me into some agency products and when I saw that (not the exact CUSIP) I was wondering if it was some leveraged bond unit but that makes sense a Freddie going out that long might fetch that rate since mortgage rates are smack right there at that 6.5 to 7 range and they for sure sell their loan baskets all the time.
Its a titch risky given the state of the mortgage market but if rates do go down yours will go UP in principal value so that is for sure a possibility!
REALLY appreciate the insight brother. I was aware of the risk and started a modest $13,000 position in this. I could and might add more but overall it is a small % of my holdings and I am comfortable with the risk in the short term. If we see cyclical rate patterns and the rates drop in 5,7,10 years I will sell this for a 20% premium and all the while will have collected 6.625% APY. While I cannot predict the future, it is hard to imagine rates going much higher than they are now (7.25% 30Y Fixed, 6.875% 5-1 Arm).Prime business paying 8.5%...eeek. so mild risk of my principle value going down if I ever had to get out of it, which I dont anticipate.
@wallstreetcappers
This CUSIP was recently called so I took the proceeds and have invested in RF/PRE.
This is a Regions Bank preferred stock series E: and with a DCE of $19.74 the current yield is 5.61% with room for price appreciation and a par value of $25.00.
I will look to buy as much of this as I can over the coming months as the yield is slightly better than CD's and I will realize price appreciation of 20% when these preferred shares are called away.
Established in 1995,
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