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At the end of every month I publish a dividend stock portfolio update.
This portfolio of stocks that my wife and I own currently consists of 35+ publicly traded companies and is part of our long term financial independence (FI) plan.
We have been slowly building this portfolio for the past 10+ years.
My wife and I plan to use our dividend income stream to offset some (not all) of our monthly expenses someday.
This year alone (2018) we are expecting to earn close to $6,700 of dividend income. That would cover approximately 11% of our current spending. That doesn’t get us all too excited, but the future growth does.
Based on our dividend growth calculations, we expect our dividend income to double every 9 years (or so) if we were to leave it alone. So in less than 10 years, we should be earning $14,000 annually in dividends. That would be enough to cover 23% of our current spending.
Then in just under 20 years, we should be earning around $28,000 per year in dividend income … which would cover 47% of our current spending.
Finally in about 30~ years, our dividend stocks will be earning us around $56,000 per year which would pay for 93% of our current spending.
Covering 90%+ of our expenses sounds great. But we also don’t want to wait around 30 more years to leverage our dividend income stream. So instead, we want to work at lowering our expenses as much as possible, increasing our other income sources, and continue to grow our dividend income portfolio.
So … today we are reporting our latest dividend income results.
August 2018 Dividend Income – $433.86
Here is a breakdown of how we earned over $400 last month in dividends … which is about $75 more than one of our monthly car payments.
August 2018 Dividend Breakdown by Company
Overall, we had 11 stocks pay out a dividend in August, along with our single bond fund. Just like past months, we earned dividend income in both our taxable and tax deferred accounts.
Awesome dividend paying companies like Lowe’s, Clorox, and Procter & Gamble gave my family a raise just for simply owning shares in their company. These are examples of companies we have owned shares in for over 7+ years.
Here is the breakdown of dividend income (by stock) in August from our taxable accounts. These include stocks held in our Robinhood, Fidelity, and Computershare accounts that will be reported as income earned in 2018.
- Apple Inc. (AAPL) – $9.64
- Caterpillar Inc. (CAT) – $17.20
- Clorox Co. (CLX) – $33.62
- CVS Health Corp (CVS) – $3.50
- Hormel Foods Corp (HRL) – $3.94
- Lowe’s Companies (LOW) – $12.43
- Realty Income Corp (O) – $19.80
- Omega Healthcare Investors (OHI) – $62.04
- Procter & Gamble (PG) – $14.00
- Verizon Communications Inc. (VZ) – $17.28
August 2018 Taxable Dividend Income = $193.45
Here is the breakdown of dividend income (by stock) in August from our tax deferred accounts. This includes a Rollover IRA we recently built out from several past employer retirement accounts.
- Apple Inc. (AAPL) – $18.39
- CVS Health Corp (CVS) – $76.02
- Hormel Foods Corp (HRL) – $18.95
- Lowe’s Companies (LOW) – $24.21
- Williams-Sonoma Inc. (WSM) – $32.53
- Fidelity U.S. Bond Index Fund (FSITX) – $70.31
August 2018 Non-Taxable Dividend Income = $240.41
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.
August 2018 Total Dividend Income = $433.86
Growing Future Dividend Income
At the end of every month, I track and update our future dividend income growth. Reporting our current monthly dividend income is nice, but projecting our future dividend income is really motivating.
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. Let’s take a look at how we grew our dividend income in August from these 3 different methods.
New Capital Invested in August
Just like the past several months, we didn’t invest a lot of new money in August. Instead, we focused more on paying down some of our debt … specifically one of our auto loans. In addition, we have also been focusing a little more on building our 457b account … so that we can optimize our taxes this year.
Here are the new investments we made in August in our accounts (taxable and tax deferred accounts) –
- $50.00 automated investment in Cincinnati Financial (CINF) – $1.39 in future income
- $50.00 automated investment in Exxon Mobil Corp. (XOM) – $2.05 in future income
- $192.10 investment in Hormel Foods Corp (HRL) – $3.75 in future income
- $246.48 investment in Vanguard Total Stock Market ETF (VTI) – $3.97 in future income
Net Future Dividend Income from New Investments = $11.16
The total net amount of new capital invested in August was – $266.77
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
- May 2018 Investments – $457.00
- June 2018 Investments – $309.30
- July 2018 Investments – $266.77
- August 2018 Investments – $538.58
Note – all new investments in April were made from a bunch of our federal tax refund in case you are wondering why the big jump that month.
We have a goal to invest $10,000 to $12,000 of new money in 2018 in our dividend stock accounts. So far, we have invested $5,934.44 in our accounts for 2018.
2018 New Investment Total = $5,934.44
At this point, we are getting further behind in our investment goals. I estimate we will invest around $8,000 into our taxable dividend investment accounts in 2018.
Dividend Reinvestment’s (DRiP) in August
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 August, we were able to bump our future annual dividend income by reinvesting in the following 7 companies and 1 bond fund –
- Apple Inc. (AAPL) – $0.39 in future income
- Clorox Co. (CLX) – $0.88 in future income
- CVS Health Corp (CVS) – $2.27 in future income
- Hormel Foods Corp (HRL) – $0.38 in future income
- Lowe’s Companies (LOW) – $0.48 in future income
- Procter & Gamble (PG) – $0.49 in future income
- Williams-Sonoma Inc. (WSM) – $0.91 in future income
- Fidelity U.S. Bond Index Fund (FSITX) – $1.88 in future income
Note – Dividends earned from stocks we own in our Robinhhood account were not directly reinvested through DRiP. Any dividend income earned throughout a given month from Robinhood will eventually be reinvested at some point.
Future Dividend Income from DRiP = $7.68
Company Dividend Increases in August
My absolute favorite way to grow our future income (and the easiest) is through company dividend increases. This is the ultimate passive income opportunity … and every month I get excited when raises start coming in.
The month of August had another unexpected (to me) dividend increase from a company we own shares in.
Company that announced dividend hikes in August that we own shares in –
- 14.3% increase from Altria Group (MO) – $26.65 in future income
Note – This was the second dividend increase from Altria in less than 1 year. Back in March we saw a 6% jump in future dividend income from this company.
Future Dividend Income from Company Increases = $26.65
It is because of these company increases that our dividend income stream will continue to grow every year … even if we never invest another penny.
Total Future Annual Dividend Income
We started the new year (2018) with a future annual dividend income total under $6,000. In just 8 months, we have grown our future dividend income by well over $1,150+ to $7,182.89!
August 2018 Future Annual Dividend Income = $7,182.89
I would like to see our future income grow by a couple hundred dollars more by the end of the year.
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 $7,182.89 … that would be earned on September 1, 2019.
Take a look at how our income could double overtime –
- 09/01/2019 – Annual Dividend Income = $7,182.89
- 09/01/2028 – Annual Dividend Income = $14,365.78
- 09/01/2037 – Annual Dividend Income = $28,731.56
- 09/01/2046 – Annual Dividend Income = $57,539.90
Our updated figures tell us we should be earning over $57,500 per year in dividend income by September 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.
It is also important to remember that some of this income is in retirement accounts that can’t be accessed until a certain date, while other assets are in taxable accounts.
August 2018 Dividend Summary
In August, we earned $433.86 of dividend income from our tax differed and regular brokerage accounts!
Typically, August isn’t one of our higher months for dividend income … so we are pleased with the results.
Our long term goal from this dividend income portfolio is to cover at least half of our monthly expenses … which right now is about $2,500 (our monthly spending is currently just under $5,000). Our family would have a lot more flexibility knowing half of our monthly expenses could be covered by our passive dividend income stream.
Our goal for 2018 is to earn $6,700 in dividend income from all our accounts. After 8 months, we are still slightly behind the pace we need to be at to hit our goal.
For the first 8 months of the year, we have earned $3,919.86 in dividend income in 2018 (January to August).
In order to hit our annual goal, we will need to earn $2,780.14 in additional dividends over the next 4 months. That is an average of $695.04 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.
And even more important is that we still have 2 big dividend paying months to go this year – September and December. We will likely catch way up in September and then hit our goal when December comes around.
In addition to posting solid August dividend income results, we also managed to raise our annual forward dividend income by over $45 to $7,182.89. 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 strong remaining 4 months of dividend income for 2018.
How was your dividend income in August? 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 – AAPL, CAT, CINF, CLX, CVS, HRL, LOW, MO, O, OHI, PG, VZ, WSM, XOM, VTI, and FSITX. The material above is not a recommendation to buy. Please do your own research on a company before deciding to invest.