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Bonnie Barnes-Tracey Advisory Group

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Bonnie Barnes-Tracey Advisory Group

September 06, 2021

Money Education Financial literacy Good reads
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Dividend paying securities still a good idea?

We believe the most effective way to meet short- and long-term income needs is to invest in dividend-paying stocks or fixed income to create steady cash flow. Our philosophy lets us be less concerned with the day-to-day price of an individual stock or bond and its impact on a portfolio, as long as that same stock or bond pays a consistent dividend or interest along the way.

This investment philosophy has worked exceptionally well over the years and even through times where investor behavior is tested, the consistency of dividend paying investments is always a good idea.

And during times of market uncertainty, we like to help clients reflect on their overall financial goals and comfortable level of risk. The truth is that it is easy to fall into the trap of letting risk exposure drift when there has been little to no penalty for being exposed to that risk for an extended period of time. That said, we also know that it’s tough not to be influenced by rocketing technology stock returns while our strategy moves along steadily over time. It’s at these times we encourage clients to look at their holdings through the lens of a targeted overall return that aims at meeting overall financial needs and goals. If a stated goal to achieve an average return of 8% is still valid, and it’s currently performing more than twice that, does this have an actual bearing on an ability to handle risk? The quick answer is no, not really. In actuality, risk tolerance should be lowering over time, not increasing as an investment timeline naturally shortens.

Our counsel has been—and will continue to be—to stay the course. The tried and tested investment philosophy we have been using is working, and our clients have been more than likely exceeding their stated return goals over the past year. The markets will correct, they always do, and the buffer of excess return that’s likely built up over the short term should help mitigate any impact on the value of a portfolio in the days to come.

Should you want to come in and revisit your allocation because something has fundamentally changed in your personal circumstances, your timeline or comfortable level of risk, we welcome the opportunity to chat with you at any time.

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CIBC Private Wealth” consists of services provided by CIBC and certain of its subsidiaries through CIBC Private Banking; CIBC Private Investment Counsel, a division of CIBC Asset Management Inc. (“CAM”); CIBC Trust Corporation; and CIBC Wood Gundy, a division of CIBC World Markets Inc. (“WMI”). CIBC Private Banking provides solutions from CIBC Investor Services Inc. (“ISI”), CAM and credit products. CIBC Private Wealth services are available to qualified individuals. Insurance services are only available through CIBC Wood Gundy Financial Services Inc. In Quebec, insurance services are only available through CIBC Wood Gundy Financial Services (Quebec) Inc.


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