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Financial independence for my family will be achieved through several different sources of income and asset classes. For example, my employer will eventually pay me a pension after I leave my job, which should help supplement many of our expenses.
There will be other sources of income too … like from dividend paying stocks. This passive income stream is mostly “hands-off” … unlike my W2 job that I have now. This year alone, we will earn over $6,500 in dividend income and won’t need to spend much time working on it. It really doesn’t get any better than that!
Eventually we would like to build a much larger income stream from our dividend stocks.
Based on our forward projections, we are set to earn around $6,950 in dividend income over the next 12 months. Our average annual spending is currently just under $60,000 … so our dividend income stream would cover about 11.6% of that amount.
Knowing we can cover over 10% of our spending from dividends is an awesome feeling to have. But we don’t want to settle there … which is why we have set a goal to cover 50% of our expenses (or $30,000) from dividends. This will take a lot of sacrifice and hustle … but it is certainly possible.
Each month we track our dividend income, new investments into dividend stocks, company dividend increases, etc. so that we can track how close we are getting to our goals. Today, we are reporting our April 2018 dividend income results.
April 2018 Dividend Income – $446.03
Here is a breakdown of how we earned almost $450 last month in dividends.
April 2018 Dividend Breakdown by Company
Overall, we had 10 stocks pay out a dividend in April, along with a bond fund. We earned dividend income in both our taxable and tax deferred accounts.
Awesome companies like Genuine Parts Company, Coca-Cola, and Walmart gave our family a paycheck for simply owning shares in their company. This is the best way (in my opinion) to generate passive income!
Here is the breakdown of dividend income (by stock) in April from our taxable accounts. These include stocks held in our Robinhood, Fidelity, and Computershare accounts that will be reported as income earned in 2018.
- Best Buy Co. (BBY) – $4.58
- Cincinnati Financial Corp. (CINF) – $47.51
- Cisco Systems Inc. (CSCO) – $28.05
- Genuine Parts Company (GPC) – $3.60
- The Coca-Cola Co. (KO) – $5.99
- Altria Group Inc. (MO) – $2.10
- Realty Income Corp (O) – $14.71
- SYSCO Corp. (SYY) – $11.66
- Walmart Inc. (WMT) – $27.88
April 2018 Taxable Dividend Income = $146.08
Here is the breakdown of dividend income (by stock) in April from our tax deferred accounts. This includes a Rollover IRA we recently built out from several past employer retirement accounts. In addition, we hold some stock in a Roth IRA that was opened up several years ago.
- Cardinal Health Inc. (CAH) – $46.55
- Genuine Parts Company (GPC) – $25.20
- Altria Group Inc. (MO) – $35.33
- Fidelity U.S. Bond Index Fund (FSITX) – $66.78
- Fidelity U.S. Total Market Index Fund (FSTVX) – $126.09
April 2018 Non-Taxable Dividend Income = $299.95
Note – All of the dividends we currently receive are reinvested into new shares of the same stock using DRiP regardless the type of account. The only exception right now are any dividends received in our Robinhood account. They currently don’t offer DRiP, but at some point all the funds we earn are invested back into shares of a dividend stock.
April 2018 Total Dividend Income = $446.03
Growing Future Dividend Income
One of our favorite tasks to do each month is to update the dividend income we earned in our tracking spreadsheet. It is really fun to watch our dividend income grow month to month and year to year. This is probably one of the best ways to stay motivated in hitting our investment goals.
Besides reporting our dividend income earnings, we also like to track how we grow our future dividend income. We actually track this by reporting our future annual dividend income amount.
This is a very simple calculation that takes the number of shares we own of each of our stocks and multiplies it by the current dividend of the company. The result is the amount of income we could expect to earn over the next 12 months … if we walked away today and never touched our portfolio again.
Of course this calculation assumes the company’s we own will not cut their dividend , which is unlikely (but not impossible).
There are 3 different ways we can grow our future dividend income – new investments, dividend reinvestment’s (or DRiP), and company dividend increases.
New Capital Invested in April
We didn’t invest a lot of new money in March. There is still some debt we are working to pay down leftover from earlier this year.
The goal is to pick up our new investments a bit starting in April and May. Investing our tax refund should help give us a needed boost and help us hit our goal of $10,000 of new investments for 2018.
Here are the new investments we made in April in our accounts (taxable and tax deferred accounts) –
- $50.00 automated investment in Cincinnati Financial (CINF) – $1.48 in future income
- $453.05 investment in Genuine Parts Company (GPC) – $14.40 in future income
- $692.24 investment in Altria Group Inc. (MO) – $33.60 in future income
- $894.71 investment in Realty Income Corp (O) – $47.41 in future income
- $50.00 automated investment in Exxon Mobil Corp. (XOM) – $2.21 in future income
- $1,427.56 investment in Vanguard Total Stock Market ETF (VTI) – $25.15 in future income
Future Dividend Income from New Investments = $124.25
The total amount of new capital invested in March was – $3,567.56
Here are the new investment totals for the year –
- January 2018 Investments – $189.57
- February 2018 Investments – $373.94
- March 2018 Investments – $231.72
- April 2018 Investments – $3,567.56
Note – all new investments in April were made in taxable brokerage accounts, with the exception of $500 of the VTI investment. We recently opened up a new Roth IRA account for my wife and invested $500 to start.
We have a goal to invest $10,000 to $12,000 of new money into our taxable accounts in 2018. So far, we have invested $3,862.79 in our taxable accounts for 2018.
2018 New Investment Total = $4,362.79
Dividend Reinvestment’s (DRiP) in April
Most of the stocks we own are setup to reinvest the dividends back into more shares of the stock. A few exceptions include any stocks we own in our Robinhood account.
In April, we were able to bump our future annual dividend income by reinvesting in the following 8 companies and 1 bond fund –
- Best Buy Co. (BBY) – $0.12 in future income
- Cardinal Health Inc. (CAH) – $1.35 in future income
- Cincinnati Financial Corp. (CINF) – $1.35 in future income
- Genuine Parts Company (GPC) – $0.82 in future income
- The Coca-Cola Co. (KO) – $0.22 in future income
- Altria Group Inc. (MO) – $1.54 in future income
- SYSCO Corp. (SYY) – $0.27 in future income
- Walmart Inc. (WMT) – $0.66 in future income
- Fidelity U.S. Bond Index Fund (FSITX) – $1.79 in future income
- Fidelity U.S. Total Market Index Fund (FSTVX) – $2.58 in future income
Note – Dividends earned from stocks we own in our Robinhhood were not directly reinvested through DRiP. In addition, dividends from DIS and GPC were not reinvested as we didn’t get our DRiP setup in time for those companies. Any dividend income earned throughout a given month is always eventually reinvested at some point.
Future Dividend Income from DRiP = $10.70
Company Dividend Increases in April
My absolute favorite way to grow our future income (and the easiest) is through company dividend increases. This is the ultimate passive income opportunity in my opinion.
The month of April had increases from some of my favorite dividend companies … most notably Johnson & Johnson. If I were starting a new dividend portfolio today … this would be the first stock I would purchase.
We had a total of 4 company dividend increases for April.
Note – January started out with 6 dividend hikes, February had 8, and March with 3 … which gave us an awesome boost for 2018.
Here are the companies that announced dividend hikes in April that we own shares in –
- 7.1% increase from Johnson & Johnson (JNJ) – $18.65 in future income
- 4.0% increase from Procter & Gamble Co. (PG) – $2.14 in future income
- 7.6% increase from Unilever plc (UL) – $2.64 in future income
- 6.5% increase from Exxon Mobile Corp. (XOM) – $8.26 in future income
Future Dividend Income from Company Increases = $31.69
It is because of these company increases that our dividend income stream will continue to grow every year … even if we never invest another cent.
Total Future Annual Dividend Income
We started the new year with a future annual dividend income total under $6,000. In just 4 months, we have grown our future dividend income by well over $900 to $6,957.08.
April 2018 Future Annual Dividend Income = $6,957.08
We are planning to grow our future totals to well over $7,000 by the end of 2018.
The Rule of 72 Projections
At the beginning of this year, I started publishing the rule of 72 projections for future dividend income in our monthly reports. For more information about the rule of 72, you can check it out here. Basically, it is a calculation that shows how often your investments will double.
Using the rule of 72, I have calculated (conservatively) that our dividend income will double every 9 years … without doing anything. Based on this, I can calculate out how our dividend income could grow (and double) based on our future annual dividend income number of $6,957.08 … that would be earned on May 1, 2019.
Take a look at how our income could double overtime –
- 05/01/2019 – Annual Dividend Income = $6,957.08
- 05/01/2028 – Annual Dividend Income = $13,914.15
- 05/01/2037 – Annual Dividend Income = $27,828.31
- 05/01/2046 – Annual Dividend Income = $55,656.62
Our updated figures tell us we should be earning over $55,500 per year in dividend income by 2046!
Keep in mind, this is more of a fun what-if type of scenario. I believe we have figured conservatively … and our income should grow at a faster rate. And it should be fun to watch this number grow every month when we post results.
April 2018 Dividend Summary
In April, we earned $446.03 of dividend income from our tax differed and regular brokerage accounts. While that kind of money won’t cover all our monthly expenses … it would be enough to make my car payment, plus a bunch leftover. I like to think about the dividends we are earning this way.
Our goal for 2018 is to earn $6,700 in dividend income from all our accounts. After 4 months, it appears we are slightly behind the pace we need to be at to hit our goal.
For the first 4 months of the year, we have earned $1,894.28 in dividend income in 2018 (January, February, March, and April).
In order to hit our annual goal, we will need to earn $4,805.72 in additional dividends over the next 8 months. That is an average of $600.72 per month. The good news is that our income will have time to compound a little before we reach the end of the year. Plus all the new investments we made this past month (and earlier in the year) will start earning dividend income.
Not only did we post solid dividend income results in April, we managed to raise our annual forward dividend income by over $160 to $6,957.08. This is basically the dividend income we would expect to earn starting today over the next 12 months … without doing anything.
I look forward to a very strong May and the rest of the second quarter of 2018.
How was your dividend income in April? Are you actively investing and growing your portfolio or maybe waiting for a market correction?
Full Disclosure – At the time of this writing, we owned shares in the following stocks and funds noted in this post – BBY, CAH, CINF, CSCO, GPC, JNJ, KO, MO, O, PG, SYY, UL, WMT, XOM, VTI, FSITX, and FSTVX. The material above is not a recommendation to buy. Please do your own research on a company before deciding to invest.