The Great TFSA Race: Conservative income investor

Paul Boughey, 49, Cambridge, Ont.

TFSA: $48,300

Portfolio: 40% REITs | 40% Dividend paying stocks | 20% Small-cap stocks

Paul Boughey fired his financial adviser after seeing his investment returns go nowhere for several years. The self-employed telecommunications consultant doesn’t have a company pension to look forward to at retirement, but he’s found investing in dividend-paying stocks through his TFSA is probably the next best thing. “I love dividend stocks—just love them,” says the Cambridge, Ont., resident. “My ultimate goal with my TFSA is to have it supply a dividend stream that will essentially pay me and my wife a ‘pension’ of sorts.”

Two years ago, Paul bought shares in Toronto-based financial services giant Manulife Financial (MFC), which has operations worldwide. “It’s a local company to us here in Cambridge,” he says. “I look for stocks that are beaten up and build my portfolio around them.”

After buying Bank of America (BAC) in January 2012 with that year’s $5,000 TFSA contribution, Paul sold it this spring for $12 a share, doubling his money. His other holdings include RioCan Real Estate Investment Trust (REI.UN), Crombie REIT (CRR.UN), Crescent Point Energy (CPG) and Pengrowth Energy (PGF). His biggest disappointment is Candente Copper (DNT) of Vancouver. “The company is waiting for a huge copper mine in Peru to pay off,” Paul says. “It’s my worst performer and I’m down $4,400. I’m hoping it will eventually pay off.”

Paul is mulling over an investment in Bank of Montreal (BMO) or Bank of Nova Scotia (BNS); both make money and offer 4% dividends. He’s also looking at Inter Pipeline (IPL), a Calgary-based petroleum firm. “There’s more oil coming from the West and they have to move it somehow. Plus, it pays a 5% dividend, which they increase on a regular basis.”

Paul doesn’t trade much. “If I get the stock at a decent price, I don’t mind holding,” he says. He also has a couple of stocks that are slightly underwater, but “what I make on the stock dividend in a year makes up for the loss.”

His endgame? To have his TFSA throw off an annual income when he retires that will cover his basic living expenses, including property taxes, utilities, insurance and groceries—about $10,000. “I’m hoping the government eventually raises the TFSA limit to $10,000 a year,” Paul says. “I’d love that and am keeping my fingers crossed that it will happen sooner rather than later.”