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Mutual Fund News


Special to The Globe and Mail



Magnetic resonance imaging technologist

The portfolio

Includes shares in Bank of Montreal, Fortis Inc., Telus Corp., and Johnson & Johnson

The investor

Gurjit Sidhu has always been good at saving money; in fact, early in his career when interest rates were above 5 per cent, he envisioned saving up to a million dollars - somewhat wistfully, admittedly - in a high-interest savings account and living off the income. He has since become passionate about dividend stocks.

A fan of dividends

Aside from their still-respectable yields, what makes dividend stocks appealing to Mr. Sidhu is the preferential tax treatment afforded by the dividend tax credit. What also arouses his enthusiasm are dividend reinvestment plans (DRIPs), which he found out about "after stumbling upon the website."

Offered by many companies, DRIPs reinvest dividends without commissions and sometimes at a discount to market prices. Moreover, many of the DRIPs have share purchase plans that allow investors to buy additional shares under the same commission-free and price-discount conditions.

Doesn't mind if the market goes down

"As a dividend investor, my goal is building up a certain level of income through dividends rather than looking for a return through growth of my investments," says Mr. Sidhu.

He can't foresee the market's direction but can still progress steadily toward his goal by "saving as much as possible, minimizing costs, and dollar-cost averaging through DRIPs."

"I don't care too much where the market goes, as long as my companies maintain or increase their dividends over time."

Best move

"Learning more about, and taking full advantage, of true DRIP programs."

Worst move

"Investing in penny stocks.... It cost me, but I consider those losses my 'tuition.'"


"Figure out what you really want to accomplish financially. Writing it down helps to dissect what you want. Also, learn as much as possible: read, read, and read some more."

Want to share your strategies?


© 2007 The Globe and Mail. All rights reserved.

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