How Much Annual Dividend Income Do We Want to Earn in 2014?
We may earn money or products from the companies mentioned in this post.
Since dividends are a major piece of my overall multiple income source strategy, it is important that I set future goals. These short term goals will help me plan ahead so that I stay on target for even longer term goals.
Eventually, I would like to earn $2,500 per month in dividend income but certainly won’t get there overnight. This will be a multi-year process and 2014 will be a stepping stone to get closer to this ultimate goal.
Note – $2,500 per month would match about half of my family’s expenses per month and help my wife and I ease into our retirement.
2014 Dividend Income Goals
Since tracking these numbers starting back in 2011, I have been able to increase my annualized dividend income by at least 50% each year. For years 2011 through 2013, I did not set any goals on what my annual dividend earnings should be – big mistake. However, starting in 2014, I plan to set goals for the upcoming year (and beyond) and begin tracking them on The Money Sprout.
In 2014, I would like to increase my annualized dividend income to $1,250 – a 92% increase from 2013. In order to reach this goal, I will need to invest more aggressively throughout the year – which may be difficult in the current market conditions.
Here is a look at my dividend income results (2011 – 2013), along with my projected annualized dividend income for 2014.
2014 Dividend Income Goals
In order to increase my annualized dividend income by 92% next year, the following must happen.
- Dividend Increases – The companies that I am invested in continue to increase their dividends in 2014.
- Yield on Cost – I ended 2013 with a Yield on Cost (YOC) of 4.48%. In order for me to reach my goals, this number will need to stay the same or slightly increase next year.
- Invest New Money – Since I am in the accumulation phase of building a dividend income portfolio, new investment dollars are critical. I have calculated I will need to invest an additional $10,250 into the stock market. That comes out to about $850 per month.
The biggest challenge of the new year will be coming up with the additional $850 to invest each month. Ideally, I would like to build additional sources of income that could feed this process but that is harder said than done.
The overpriced market will also play a big role in my success or failure in meeting my 2014 goal. Most dividend stocks are trading at a premium right now, so I will try and leverage dollar cost averaging throughout the year to minimize as much risk as possible.
I am certainly looking forward to meeting my challenge for 2014 and can’t wait to document it along the way.