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Building a solid dividend income portfolio is one of the most important parts of The Money Sprout Blueprint. I believe in diversifying your income in order to protect your personal finances – and dividend stocks are a part of that.
While The Money Sprout is NOT an investing site – I like to provide details on how I am building this income stream. I am not giving recommendations to buy or sell stocks here but will show you what I am doing to build this solid income stream.
Each month I provide results on the dividends I earned during that time, changes to my portfolio, new capital invested, and any other important details.
Before we look at February’s results, let’s take a look at my 2014 goals.
2014 Dividend Income Goals
I have set a goal to earn $1,250.00 during 2014 in dividend income. Back in 2013, I earned $650.16 in dividends, so this year’s goal is to basically double my income.
Increases will come from 3 different sources –
1 – Reinvested Dividends – I am currently reinvesting all dividends back into new shares of stock.
2 – New Capital – I have made it a goal to average $850 in new investments each month for 2014.
3 – Dividend Increases – Every company that I currently own has a history of increasing their dividends annually.
2014 February Dividend Income Results
Every month I provide details on my dividend income earned from stocks I own in The Money Sprout Index. As you can tell below, February is typically a very slow month for me when it comes to dividend income. All the stocks I own pay quarterly dividends, so my income fluctuates considerably month to month.
There were 3 stocks in my portfolio that had a dividend payout in February. These 3 companies combined for a dividend payout of $35.68.
February 2014 Dividend Income – $35.68
Note – As you will see below, I reinvest my dividend income into new shares of stock using DRIP.
Here is the breakdown of dividend income (by stock) along with the number of new shares added from DRIP –
- Clorox (CLX) – $21.20 (.57 shares)
- Lowe’s (LOW) – $4.32 (.10 shares)
- Proctor & Gamble (PG) – $10.16 (.13)
Since I am still in my allocation phase of building my dividend income portfolio, I am leveraging DRIP to accelerate acquiring stock. The reinvested income from last month will result in $1.05 in future annual dividends. Certainly nothing I can retire from but another very little step towards building my portfolio.
New Capital Invested in February
Every month I invest new capital into buying more stocks – regardless the conditions of the overall market. While I am certainly focused on what the overall market is doing, I believe it is more important to continue to invest.
At the beginning of the year I set a monthly goal to invest at least $850 in new money into the market. I did not hit the $850 goal in February but am still on track for 2014 based on January investments.
Here are the new investments I made in February –
- $25 automatic investment in Cincinnati Financial (CINF) – .53 shares
- $50 automatic investment in Clorox (CLX) – .57 shares
- $50 automatic investment in Intel (INTC) – 2.10 shares
- $50 automatic investment in Coca-Cola (KO) – 1.33 shares
- $50 automatic investment in Lockheed Martin (LMT) – .30 shares
- $50 automatic investment in Microsoft (MSFT) – 1.39 shares
- $50 automatic investment in WalMart (WMT) – .69 shares
- $150 automatic investment in Exxon Mobile (XOM) – 1.57 shares
Note – As you will notice, I did not make any lump sum investments during the month of February. Instead, I relied on my many automatic investments I have set up. While these individual investments may be small on their own, overall they certainly add up – especially over the course of many months.
The total amount of new capital invested for February was – $475, which was below my goal of $850. However, based on my investments in January ($1,747.41), I am still on target for the year.
- January Investments – $1,747.41
- February Investments – $475.00
2014 Investments – $2,222.41
Investment Goal After 2 Months – $1,700
After two months, I am still ahead of my investment goal by $522.41.
Note – I am currently using leftover savings at the end of each month to buy this stock. This is monthly income earned from my full-time job. My plan is to build additional income streams (i.e. freelance writing) that will be able to fund future stock purchases.
Future Impact of New Investments
I think it is important to highlight the future impact of these new investments. I use projected annual dividend income as a way to quantify these new stock purchases.
The new investments made in February will increase my annual dividend income by $14.33. Here is a breakdown of each investment.
- Cincinnati Financial (CINF) – $0.90
- Clorox (CLX) – $1.62
- Intel (INTC) – $1.90
- Coca-Cola (KO) – $1.49
- Lockheed Martin (LMT) – $1.61
- Microsoft (MSFT) – $1.55
- WalMart (WMT) – $1.29
- Exxon Mobile (XOM) – $3.97
Annual Projected Dividend Income Increase – $14.33
It certainly does not seem like a lot, but that $14.33 is a small stepping stone to help me reach my long term goals. Building a profitable dividend income portfolio does not happen overnight. It is a long and often boring marathon, but one that I plan to continue on.
I raised my annual dividend income projection by $15.40 in February. This increase was based on several factors including those highlighted above – new investment dollars ($14.33) and reinvested dividends ($1.05). Additional increases will also be related to companies that raised dividends – which is something we want to see. Companies that don’t raise their dividends annually are usually stocks I will avoid owning.
At the end of February, 2014 my new projected annual dividend income is $869.80. My end of year goal for 2014 is to bring my annual dividend income up to $1,250 so I still have some work to do this year.
My yield on cost (another important metric) dropped from 4.33% to 4.30%. This was expected since I continue to add new capital to my portfolio. I will still take a 4.3% return on my investment any day!
Full Disclosure – At the time of this writing, I owned shares in the following stocks noted in this post – CINF, LMT, XOM, INTC, KO, MSFT, WMT, CLX, LOW, and PG. The material above is not a recommendation to buy. Please do your own research on a company before deciding to invest.