How Much Dividend Income Do We Want to Earn in 2016?
We may earn money or products from the companies mentioned in this post.
Without question, our most successful source of side income is generated from investing in dividend stocks. Just last year, my wife and I earned an extra $1,475.00 that we automatically invested back into the stock market.
This year, we plan to continue growing this steady and secure source of income.
Investing in Dividend Stocks
Since dividends are a major piece of our overall multiple income source strategy, it is important that we set future goals. These short term goals will help my wife and I plan ahead so that we stay on target for even longer term goals.
Our long term goal is to eventually earn $2,500 per month in dividend income (or $30,000 annually). This is a multi-year process and 2016 will be yet another stepping stone to reaching this goal.
2016 Dividend Income Goals
In 2016, my wife and I would like to increase our annualized dividend income to $2,250 – a 52% increase from 2015. In order to reach this goal, we must continue to make investing in the best blue chip stocks a priority.
Our portfolio growth will come from dividend reinvestment’s, dividend increases, and from new investments made in the market. The biggest gains for now will come from new investments made throughout the year, which is what we plan to continue.
Here is a look at our past dividend income results (2011 – 2015), along with our projected annualized dividend income for 2016.
2016 Dividend Income Goals
|Year||Dividend Income||Percentage Increase|
Last year we only missed our goal by $25 or about 1.6%. Despite missing our target, we feel very comfortable with our projections of trying to earn $2,250 in 2016.
Provided we stay on pace with new investments and continue reinvesting dividends back into additional shares of stock, we have a good chance of meeting our goal.
Reaching Our Goal
In order to reach our goal of earning $2,250 in dividend income in 2016, we will need to continue to build our portfolio.
Using our current yield on cost of 4.52%, I have estimated that we would earn at least $1,800.00 in dividends this year without investing any new money. This of course assumes all of the companies that we own maintain their current dividend at a minimum.
My calculation has not figured in any dividend increases throughout the year, nor has it included any reinvested dividends. Those both should account for some increase, but nothing that I can 100% count on.
In order to hit our goal, we would need to earn an additional ~$450 this year in dividends from new money, dividend reinvestment’s, and dividend increases.
I figure that we will need to invest around $18,000 in new capital this year. This is just an estimate and a lot could change.
When it comes to new investments, we would not be earning a 4.52% yield like the collection of our other companies we already own. Instead, we would likely earn 2.5% to 3.0% on new investments this year, which is around the yield of a stock when we make a purchase.
Note – Remember that yield on cost takes in many factors, time being a big one. New shares of stock will not have had the opportunity to grow their dividends yet this year.
We also need to factor in that all of our new investment dollars won’t have a full year to earn dividends. We will likely split our new investments out between January and December, so we are losing time to reach our annual goal.
Does it matter if we hit our $2,250 dividend income target in 2016? To be honest, not really. However, we like to set these goals to help guide us long term as we are building this side income stream.
Last year, we were able to invest $13,429.19 in new money into dividend stocks. As a result, we saw our dividend income increase by over 50% from the previous year.
By adding another projected $18,000 into the market, we expect to have another exciting year building our portfolio.
What goals have you set for your dividend income portfolio this new year?