Dividend Income – June 2021
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I truly believed we would set a new record for our monthly dividend income in June 2021 … but what I didn’t expect was to shatter our previous record.
In June, we surpassed our previous record month (December 2020) by more than 13%!
Before I get started discussing our June 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 several 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 over $20,000 annually in dividends (at a minimum).
That should be able to cover at least 25% 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.
June 2021 Dividend Income – $676.86
Here is a breakdown of how we earned over $600 last month in dividends.
Dividend Income June 2021
In total we had 19 stocks and 5 ETF’s pay out a dividend in June from our taxable brokerage accounts.
Just like this past March, June is another one of our biggest dividend income months of the year – along with September and December. This past month was no different.
We had our highest dividend income month ever in June … and earned over $600 in a month for the first time ever.
I expect in December we will come close to our first ever $700+ dividend income month, based on recent additions to our portfolio.
The month of June included a ton of payments from several of my favorite buy and hold forever stocks. I consider these companies the foundation of our dividend income portfolio. A few of these names include – McDonald’s (MCD), Johnson & Johnson (JNJ), Microsoft (MSFT), Consolidated Edison (ED), and Lockheed Martin (LMT).
Here is the breakdown of dividend income (by stock) in June from our taxable accounts.
The following stocks are held in our Fidelity account that will be reported as income earned in 2021.
- Lockheed Martin (LMT) – $88.98
- Vanguard Total Stock Market ETF (VTI) – $64.63
- Johnson & Johnson (JNJ) – $63.60
- Microsoft (MSFT) – $53.56
- McDonald’s (MCD) – $51.60
- AFLAC (AFL) – $45.21
- Target (TGT) – $40.98
- Archer Daniels Midland (ADM) – $33.30
- Consolidated Edison (ED) – $31.82
- Walmart (WMT) – $30.80
- Realty Income Corp (O) – $27.03
- Emerson Electric (EMR) – $25.45
- T.Rowe Price (TROW) – $22.68
- PepsiCo (PEP) – $21.50
- Intel (INTC) – $19.11
- QUALCOMM (QCOM) – $8.84
- Walgreens Boots Alliance (WBA) – $8.42
- Vanguard High Dividend Yield ETF (VYM) – $8.28
- Home Depot (HD) – $8.25
- Global X NASDAQ 100 Covered Call ETF (QYLD) – $7.85
- Vanguard Real Estate TF (VNQ) – $5.28
- iShares Preferred ETF (PFF) – $4.85
- W W Grainger – $3.24
- Visa (V) – $1.60
June 2021 Taxable Dividend Income = $676.86
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 –
- new investments
- reinvested dividends
- company dividend increases
Let’s take a look at how we grew our dividend income in June from these 3 different methods.
1 – New Investments in June
We invested $6,044.77 of new dollars into our dividend stock portfolio during June.
This is just a continuation of our recurring monthly investments that we started back in March.
We had way too much cash sitting around not earning anything from selling our home last fall. So we started dollar cost averaging shares of Vanguard Total Stock Market ETF (VTI). We are now buying shares every week as a way to allow our cash to grow.
And in June, we started allocating a smaller weekly investment into buying shares of 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.
2 – Reinvested Dividends in June
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).
Other than our DRiP shares, we added to our position in Omega Healthcare (OHI), Realty Income (O), Cincinnati Financial (CINF), and Archer-Daniels Midland (ADM) from dividends received in June.
3 – Company Dividend Increases in June
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.
The month of June saw several solid dividend increases, which was a bit unexpected to be honest.
One of my long term growth dividend stocks, Target (TGT) was the biggest announcement of the month for our portfolio with a 30%+ increase!
Companies that announced dividend hikes in June that we own include –
- 32.35% increase from Target (TGT)
- 7.77% increase from Caterpillar (CAT)
- 4.50% increase from Clorox (CLX)
- 0.20% increase from Realty Income (O)
Typically I like to see companies increase their dividend by 6% or more. Over the past couple of months, it seems like the dividend increases have really heated up.
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 by several hundred dollars.
This number represents what we could expect to earn in dividend income this entire 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.
With all those new investments we made in 2021, our future annual dividend income number has exploded.
The combination of new investment dollars, dividend increases, and reinvestment’s … allowed us to grow our future dividend income to $5,825.32!
For 2021 in total we have grown our future dividend income by $1,492.09!
This increase came from three different sources –
- new investments
- companies raising dividends
- reinvested dividend income – $2,500+
June 2021 Future Annual Dividend Income = $5,825.32
At the current rate, there is no reason why we wouldn’t push past $6,000 of future dividend income mark sometime in 2021.
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 will likely grow our dividend income by over 30%.
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 $5,825.32 … that would be earned on July 1, 2022.
Take a look at how our income could double overtime –
- 07/01/2022 – Annual Dividend Income = $5,825.32
- 07/01/2030 – Annual Dividend Income = $11,650.64
- 07/01/2038 – Annual Dividend Income = $23,301.28
- 07/01/2046 – Annual Dividend Income = $46,602.56
Our updated figures tell us we should be earning over $46,000 per year in dividend income by July 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 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 June 2021 Summary
In June, we earned $676.86 of dividend income from our taxable brokerage accounts. This was our highest dividend income month ever!
The dividend income amount would cover several of our monthly expenses as of today.
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 $1,250 (our monthly spending is currently around $5,000).
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 is to earn $4,500 in dividend income from our taxable brokerage accounts. So far, we have earned a total of $2,538.10 in dividends for 2021.
After 6 months, we are $1,961.90 behind our goal. We would need to average about $326 per month the rest of the year to hit our target.
With all of the new investments we have made the past 6 months, I expect the dividend income for the remainder of the year to explode. In fact, I can see us getting closer to hitting $5,250 in dividend income this year compared to our $4,500 goal.
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 $5,825.32 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 2021 for building our dividend income stream!
How was your dividend income in June? 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.