Do I Invest in many stocks or a single dividend capturing stock?

Asked 3 years ago

Hi all. I am located in Canada but figured this could apply to either the USA or Canadian stocks. I want to focus more on a dividend capturing strategy and probably have around 20 years up my sleeve. If I stay with Canadian stocks in a Canadian account, then there are no taxes to be paid ever on profits. So, my question is, would you: A) Put enough money in one stock so you can start dripping the dividends and once you have enough with a share dripping each quarter (or whatever), would you then dump your next lot of money into another stock and build that up until you get enough dividends to automatically drip each time with that one and so on. or B) would you just dump money everywhere and just buy new stocks with the extra cash each time? If I do the DRIP thing, then it will save on fees each time. Plus, I do like the idea of just concentrating on one stock to get it going and then moving on to the next one. I am not yield chasing. I am looking at good dividend growth stocks only. I hope this makes sense.

Osasere Okunloye

Sunday, September 12, 2021

It may be dangerous to put all your eggs in one basket. However, your question is a very good one. What I will advise is that you invest in 3-4 stocks first, then from the dividend, you can invest in others. Make sure you do a good research before investing in any stock.

Andrew Moran

Monday, September 13, 2021

Of the two options, I would go with option A, particularly considering that you are not chasing yields but rather dividend growth.

This way, you are accumulating a handsome position size in the dividend-paying stock, you are receiving an income, and you can gather more money to purchase other stocks.

You could also find dividend-paying Canadian exchange-traded funds (ETFs) that could complement your single dividend-capturing stock, such as iShares S&P/TSX 60 Index ETF (XIU), BMO Canadian Dividend ETF (ZDV), and iShares S&P TSX Composite High Dividend Index ETF Units (XEI).

Indeed, in this market that is reaching all-time highs, dividend yields are the most important since it can be hard to achieve capital gains.





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