Dividend Income – How We Earned $901.91 (December 2021)

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We set a record for monthly dividend income earned in December 2021. This was our highest income month ever … beating our previous all time high by over $130!

Back in September we set a monthly dividend record when we earned over $770. Now in December, we pushed past $900!

We have our sights set on hitting $1,000+ of dividend income in a month sometime in 2022.

Before I get into the details of our December 2021 dividend income, I wanted to give a quick overview of our dividend stock portfolio.

We currently earn dividend income from over 40+ publicly traded companies, along with 2 ETFs.

The income we earn and are growing each year is part of our long term financial independence (FI) plan.

At some point in the future, we plan to use our annual passive dividend income to cover a portion of our yearly spending. We are building our portfolio of dividend stocks so that it can grow passively all on it’s own every year.

Based on some estimates, we could expect our dividend income to double every 8 years (or so) if we were to leave it alone. So in less than 20 years, we should be earning well over $25,000 annually in dividends (at a minimum).

That should be able to cover at least 30% of our projected spending at that time. This isn’t the only source of future income we are planning on … just part of the bigger puzzle!

And the great thing about earning dividend income is that it is tax friendly (currently) and inflation protected.

Today we are reporting our latest monthly dividend income results.

December 2021 Dividend Income – $901.91

Here is a breakdown of how we earned over $900 last month in dividends.

Dividend Income December 2021

In total we had 18 stocks and 2 ETFs pay out a dividend in December from our taxable brokerage account.

This was the highest dividend income month we have ever recorded! We blew past our previous record set back in September (2021) by over $130.

We managed to increase our dividend income by over 51% compared to last December (2020).

Much of this growth came from new investments into Lockheed Martin (LMT), Realty Income (O), Vanguard Real Estate ETF (VNQ), and Vanguard Total Stock Market ETF (VTI) earlier this year.

Here is the breakdown of dividend income (by stock) in December from our taxable accounts.

The following stocks are held in our Fidelity account –

  • Vanguard Total Stock Market ETF (VTI) – $206.19
  • Lockheed Martin (LMT) – $98.00
  • Vanguard Real Estate Index ETF (VNQ) – $97.01
  • Johnson & Johnson (JNJ) – $63.60
  • Microsoft (MSFT) – $59.70
  • McDonald’s (MCD) – $55.20
  • Target (TGT) – $54.24
  • Realty Income (O) – $46.64
  • AFLAC (AFL) – $45.21
  • Archer Daniels Midland (ADM) – $34.41
  • Consolidated Edison – $31.82
  • T Rowe Price (TROW) – $26.46
  • Emerson Electric (EMR) – $25.95
  • Intel (INTC) – $19.11
  • QUALCOMM (QCOM) – $8.84
  • Walgreens Boots Alliance (WBA) – $8.60
  • Home Depot (HD) – $8.25
  • Coca-Cola (KO) – $7.56
  • W W Grainger (GWW) – $3.24
  • Visa (V) – $1.88

December 2021 Taxable Dividend Income = $901.91

As always, we continue to follow our buy and hold stock strategy with the dividend income we received last month.

This means that all of our income was reinvested to purchase additional shares of stock.

Growing Future Dividend Income

One of my favorite personal finance tasks is to update the dividend income we earn each month.

It is inspiring to watch our dividend income grow month after month and year after year.

But what is even better than reporting our dividend income earnings?

Tracking our future dividend income growth!

So every month we track our future annual dividend income.

This simple calculation takes the number of shares we own of each of our stocks and multiplies it by the current dividend of the company.

The result of this calculation represents 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.

This calculation assumes the companies that 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 –

  1. new investments
  2. reinvested dividends
  3. company dividend increases

Let’s take a look at how we grew our dividend income in December from these 3 different methods.

1 – New Investments in December

We invested $8,000.06 of new dollars into our dividend stock portfolio during December.

Most of these new funds were from the assets we got back from the sale of our home over a year ago (October 2020).

My wife and I decided we had way too much cash (from selling our house) sitting around not earning anything. So we started dollar cost averaging shares of Vanguard Total Stock Market ETF (VTI) and Vanguard Real Estate ETF (VNQ).

We don’t anticipate needing these funds for several months … if not years, so we had to do something with the cash.

In addition to those funds, we also reinvested our child tax credit payment for December. Plus we had another $170+ of options income we earned that was all reinvested into our dividend income portfolio.

2 – Reinvested Dividends in December

In the past, we reinvested most of our dividends using DRiP. That was setup through our broker to automatically reinvest dividends of a stock back into partial shares of the same stock.

But now that we have a solid foundation built … we are letting most of our dividends accumulate and buying stocks directly on our own. I did recently flip the DRiP switch back on for a couple holdings – Microsoft (MSFT), Lockheed Martin (LMT), and Realty Income (O).

Most of the $901.91 in dividends we earned in the month were reinvested back into the portfolio.

3 – Company Dividend Increases in December

This is my favorite way to grow future income (and the easiest) … which is from company dividend increases. These company increases make this a passive income stream that will grow each and every year on it’s own.

For the first time in a very long time, we didn’t have a single company announce a dividend increase during the month. So in December, we didn’t get any boost to our future dividend income number from increases.

Just for reference … 2021 overall was a great year for dividend increases in our portfolio. It was just a slow month in December, so no reason for any concern at this point.

Typically I like to see companies increase their dividend by 6% or more. I recently calculated a weighted average of our 2021 dividend increases at 6.98%. So we are on track with increasing our dividend income by at least 6% per year without doing a thing!

Total Future Annual Dividend Income

We started the new year (2021) with a future annual dividend income total of $4,333.23. Each month since the first of the year, we have increased this future income number.

This number represents what we could expect to earn in dividend income over the next year … if we never invested a single new dollar, reinvested any dividend income, and no company provided a dividend increase for the next 12 months.

The combination of new investment dollars, dividend increases, and reinvestment’s … allowed us to grow our future dividend income to $6,632.04 by the end of December!

This was an increase of $4.43 in one month … when comparing it to November (2021).

Note – this was by far the lowest monthly increase this year but has a story behind it. One of our call option contracts that was in the money got assigned and we sold our shares. We took a small loss on the transaction and before we could reinvest the funds the month came to a close.

The good news is that for 2021 in total, we grew our future dividend income by $2,298.81!

This increase came from three different sources –

  • new investments
  • companies raising dividends
  • reinvested dividend income

December 2021 Future Annual Dividend Income = $6,632.04

So what does this mean for future growth?

I like to use the rule of 72 formula to predict what our dividend income “could” look like in the future.

Let’s take a look at the rule of 72 dividend income projection.

The Rule of 72 Projections

By using the rule of 72 calculation below, it helps us project out when our income will double by using our future dividend income.

Using the rule of 72, I have estimated that our dividend income will double about every 8 years.

This is based on our goal to increase dividend income by 9% (at a minimum) every year. For example, between 2019 to 2020 … we increased our dividend income by 9.6%. This year (2021) we increased our dividend income by over 49.7%.

As long as we can grow our dividend income by 9% or more, we will double our dividend income every 8 years … or less.

Based on this, I can calculate out how our dividend income could grow (and double) based on our future annual dividend income number of $6,632.04 … that would be earned on January 1, 2023.

Take a look at how our income could double overtime –

  • 1/01/2023 – Annual Dividend Income = $6,632.04
  • 1/01/2031 – Annual Dividend Income = $13,264.08
  • 1/01/2039 – Annual Dividend Income = $26,528.15
  • 1/01/2047 – Annual Dividend Income = $53,056.30

Our updated figures tell us we should be earning over $53,000 per year in dividend income by January 2047.

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 all of this income is in taxable accounts … which means we potentially may pay taxes on some of this income.

The good news is that most of our income comes from qualified dividends … and the majority of it won’t be taxed under current tax law.

Dividend Income December 2021 Summary

In December, we earned $901.91 of dividend income from our taxable brokerage accounts.

This was our highest monthly dividend income ever … breaking our previous record by well over $100!

The dividend income could help cover a lot of our monthly expenses – like a car payment, utility expenses, cell phone bill, and more.

My wife and I have set a long term goal from this dividend income portfolio to cover at least a 25% of our monthly expenses … which right now is about $1,625 (our monthly spending has been adjusted to about $6,500).

Our family would have a lot more flexibility knowing a good portion of our monthly expenses could be covered by our passive dividend income stream. That is an awesome feeling.

The overall goal for 2021 was to earn $4,500 in dividend income from our taxable brokerage accounts. We blew past our original goal many months ago and ended up earning a total of $5,818.98 in dividends for 2021.

That was $1,318.98 more than our original goal! Next year we plan to be more aggressive with our goal setting.

Another bright spot over the last several months, is how we increased our forward dividend income by so much.

We are now on pace to earn $6,632.04 over the next 12 months … without doing anything. This figure does not include any new investments throughout the year. No dividend increases and no dividend income reinvested.

I really looking forward to an awesome 2022 for building our dividend income stream!

How was your dividend income in December? Are you actively investing and growing your portfolio?

Full Disclosure – At the time of this writing, we owned shares in all of the stocks mentioned in this post. The material above is not a recommendation to buy. Please do your own research on a company before deciding to invest.

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