Financial Planning

Live Off Your Dividends – Never Eat into Your Capital


Mark McNulty


February 21, 2022

February 21, 2022

The following is a transcript from our recent webinar, “Live Off Your Dividends”. To request the recorded webinar and sign up for our monthly videos please email

Mark McNulty: Thank you for coming tonight. We are going to talk about living off your dividends - how to finance your lifestyle just from the dividends of your portfolio without ever eating into the capital. To me, that’s the highest level of financial security that you can make. Living off just the income that your portfolio is generating, never eating into the hard-earned capital.

Rob, why don’t you introduce yourself and talk about what you’re going to be covering today?

Robert Mark: Hi. My name’s Rob Mark. I head up all portfolio management at McNulty Group. Like Mark, I’ve been doing this for almost 25 years now. First, as a research analyst and then as a portfolio manager. I cut my teeth at a Montreal- based firm called MacDougal, MacDougal and MacTier or the 3Macs. 3Macs is the oldest brokerage firm in Canada and pre-dated Confederation. There, we specialized in managing money for high-net-worth families, multi-generational and so that was really where the idea of investing for the long-term in high quality dividend growing companies was instilled in me. And to that end, I started a fund that was based off dividend growth back in 2014. And that’s still the basis of what I do here at McNulty Group and how we manage the vast majority of portfolios for the families that we work with.

Mark McNulty: Rob’s responsible for making the money and Michael is responsible for making sure that we give as little as possible to Revenue Canada. Mike, you want to talk a little bit about yourself and a little bit about what you’re going to be sharing with the audience tonight.

Michael Wilson: I’m Mike Wilson. I’ve been managing dentists’ money for around a decade now and prior to that, I was a chartered accountant with Ernst and Young and Mark is right - my job is to make sure we keep as much of the money as possible because you can’t spend what you can’t keep. I think the impact income tax has on your ability to live off your dividends is often under-appreciated.

Mark McNulty: So, Mike, you’re going to talk today to the audience a little bit about how to get money tax efficiently out of their corporations, out of their RSPs, etc. So, Rob generates the income with his dividend growers, which he’s going to cover, and Michael makes sure that we pay as little tax as possible as you take money out of your accounts to finance your lifestyle.

Rob, maybe you can talk about the strategy in specific terms so everybody can start understanding how you run things.

Robert Mark: Thanks, Mark. I’ve basically been training and implementing this type of strategy my entire career. And although today we’re really talking about dividends and the power of dividend growth for retirement, ultimately dividends are just a feature of our investment strategy. Our investment strategy is all about investing in high quality, best in breed, world leading businesses for the long-term. The fact of the matter is one of the key characteristics of these types of businesses is they tend to pay dividends and they tend to pay dividends that grow. And so not only are you participating in the growth and success of these businesses, we’re able to fund lifestyle on top of them through the dividend payouts that we receive.

If we think of our stocks in the business we own as patients, you know, using that metaphor, the dividend and the dividend growth is a temperature check, you know, their ability to pay the current dividend is saying how healthy the company is today in the here and now. And if that dividend is growing, if the board of directors is comfortable increasing it, it means the future health of that patient is not only good but going to improve. And so that’s how we participate both from a capital appreciation standpoint and from an income standpoint.

Mark McNulty: Okay, so Rob, walk us through how you choose the best of the best.

Robert Mark: Yeah, so this is the process and what I really institutionalized in my time at 3Macs. It’s four key principles that we use to find best in class companies. We call it “The Four M’s”. And that refers to, as you can see here, macro, management, margin and moat. And I’ll go pretty quickly here, because there’s a lot going on, but macros, we’re looking for broad investment themes. Management is incredibly important. It’s something that I frankly think only people in my position in our industry can do. This is one thing that the DIY’s can’t do. You just don’t have the access to management that I do. You don’t have 20 years’ experience of vetting CEOs and finding which ones are good and bad.

Margin is a bit of a catch all that’s on financials. We want to own companies that are leaders on most financial metrics. And then the last one is moat. This is a Warren Buffet truism that any investor worth his salt should know backwards and forwards. And it’s just the analogy of the moat around the castle. You know, if we find companies that have that have macro factors at their back, amazing management teams and phenomenal margins and financial results, people are going to want to eat their lunch. And so you need protection, that company - that castle needs a protection around it and we’ll give a few examples of what an economic moat looks like.

Mark McNulty: The benefit of this strategy is that we know where all our clients’ money to finance their retirement is coming from on January 1 regardless of what happens in the stock market.

Management is incredibly important. It’s something that I frankly think only people in my
position in our industry can do. This is one thing that the DIY’s can’t do.

We can sustain a crash. The cash flow that’s being generated through Rob’s strategy and the amount of money that Mike’s keeping is our bread and butter.

We’re not picking which stocks that we’re going to have to sell next year to fund retirement, we’re being paid dividends. I’d encourage you once again to reach out to us we. We’re all happy to talk on any topics you’d like. We hope to hear from you soon thanks very much everybody for attending tonight thank you everyone.