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Overall, 2016 was a great year for our dividend income portfolio.
Despite not hitting our goal for the year in dividend income earnings, we continue to grow our portfolio.
We actually came up short by over $300, which doesn’t look good.
Looking back, I think we got a little carried away setting an unrealistic goal of earning $2,250 in dividends last year. I think this year, we will try and set a more realistic but challenging goal.
Another factor holding us back from hitting our target was the new investments we made. We invested about $3,000 less in new money last year compared to 2015. That certainly didn’t help.
Because of our shortfall in new investments, we decided to set a new goal and invest a minimum of 20% of our income each month in 2017.
That is just the minimum actually. We really want to invest closer to 26% of our income each month.
More details to come on this new investment goal.
Here are a few highlights from the past 12 months.
2016 Dividend Income
It was no surprise that we recorded our highest annual dividend income earnings during 2016. We continue to grow our dividend income each year by double digit returns and are expecting another great year in 2017.
In total, we earned $1,918.16 in dividends paid out from 29 different stocks in our portfolio last year. This was an increase of $443.16 or 23.1% since last year (2015).
Here is a look at our dividend income over the past 6 years –
As you can see, we have steadily grown our dividend income each year since starting out in 2011. We expect to see similar growth in the future as long as we continue to invest new capital into the market.
New 2016 Investments
Since we are still in the allocation phase of building our income portfolio, we continue to be active investors of quality dividend stocks.
During 2016, we invested $10,687.90 in a variety of dividend stocks. This was actually a decrease of ($2,741.29) from last years new investments.
We just couldn’t seem to add any more money to the market … which was a little disappointing.
New 2016 Investments – $10,687.90
Using our current yield on cost of 4.45% (see below), I am estimating this new capital increased our 12 month future dividend income by at least $475.
Since we had a disappointing year when it comes to new investments, we made a goal back in October of 2016 to increase our future dividend income to $3,000 by the end of 2017.
At the time, that was a $900 increase and required at least $20,000 of new investments over 14 months.
We are now 2 months into this goal and are on target. The plan will require us to invest about $17,000 now during 2017.
That is an aggressive goal but one that will “pay dividends” (sorry for the pun) down the road.
Highest Monthly Total
We set a new monthly record in dividend income and it wasn’t in December.
In September, we earned $276.78, which is our highest month ever! Prior to 2016, our highest monthly total was $237.43 (December 2015) – so you can see the growth our portfolio is experiencing.
September 2015 Dividend Income – $276.78
Originally, we figured on hitting a new milestone last month. However, I forgot about WalMart not paying a dividend in December and instead in January. We fell short by about $8 from setting a new monthly record in December.
There is no reason why we won’t set a new record in 2016 … it should happen this March (and again in June and September).
This year we should also see our first ever $300 dividend income month … which is an exciting milestone for us to hit. It won’t be long and we will be getting excited about a $500 month!
Yield on Cost
Our yield on cost dropped from 4.53% in 2015 to 4.45% last year.
This was a result of adding lower yielding companies to the portfolio that have higher growth rates. Companies like Apple (AAPL) and Cisco Systems (CSCO) were introduced to the Money Sprout Index (what we call our portfolio). Both of these companies have lower current yields but make up for it on growth rates.
Yield on Cost – 4.45%
In addition to adding high growth companies, we also added to our positions in higher yielding companies like Omega Healthcare (OHI) and Realty Income Corp. (O).
Finally, we added shares of stock in the same old boring companies like Aflac (AFL), Johnson & Johnson (JNJ), Target (TGT), and WalMart (WMT) to name a few.
The combination of all these new investments, along with shares we have owned for years put our average yield at 4.45%.
3-Month Rolling Average
I like to track a 3-month rolling average when it comes to reporting dividend income. While it is important to keep track of monthly income earned each month, the rolling average accounts for fluctuations month to month. The fluctuations are a result of quarterly payout cycles dividend stocks payout on.
We ended 2016, with a 3-month rolling average = $168.38, up from $143.86 at the start of the year. If everything goes to plan, we hope to push this average up to over $200 by the end of 2017.
We finished the year with a portfolio of 29 dividend stocks that represent all 10 sectors.
Early last spring, we sold our entire position in BHP after a dividend cut. Late in the year, we added 2 new companies to the portfolio – Apple and Cisco Systems.
While the portfolio is not completely diversified across sectors and individual stocks, we feel that we have built a solid foundation that will weather any type of market.
Looking forward, I would expect to add a few more companies to our portfolio, while we continue to add to existing positions. I am excited about the past growth of our portfolio and can’t wait to report our 2017 results in another year!
How did your dividend stocks portfolio do in 2016?
Full Disclosure – At the time of this writing, we owned shares in the following stocks noted in this post – AAPL, AFL, CSCO, JNJ, O, OHI, TGT, and WMT. The material above is not a recommendation to buy. Please do your own research on a company before deciding to invest.