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I say this at the beginning of every new month … but dang this year is flying by. The good news is that this means I can report last months dividend income totals. And this past month did not disappoint.
My wife and I have a goal to eventually replace a portion of our W2 income (when we reach FI) with dividend income. We likely won’t be able to cover 100% of our expenses from dividends we earn … but we should be able to cover a portion of it.
For example, if our yearly expenses when we reach FI are $50,000 … we think that one day 50% of those expenses could be paid for with dividends. How awesome is that?
Now we are a long ways from that point, but this year … we could cover almost 12% of our current expenses from dividend income. We currently spend around $60,000 per year and are set to earn around $6,700 in dividends.
That is a good start, but we think we can do more. Which is why we decided to publish our monthly dividend income results. In order to stay motivated and keep on track with our goals, we report our dividend income totals at the end of every month.
Today, we are reporting our February 2018 dividend income results.
February 2018 Dividend Income – $395.23
This was our largest February ever for dividend income. Here is a breakdown of how we earned almost $400 last month in dividends.
February 2018 Dividend Breakdown by Company
Overall, we had 11 stocks pay out a dividend in February, along with a bond fund. We earned dividend income in both our taxable and tax deferred accounts.
Awesome companies like Clorox, Lowe’s, and Procter & Gamble gave our family a paycheck for basically not lifting a finger. You really can’t get much better than that!
Here is the breakdown of dividend income (by stock) in February 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) – $8.25
- Caterpillar Inc. (CAT) – $15.60
- Clorox Co. (CLX) – $29.00
- CVS Health Corp. (CVS) – $3.50
- Hormel Foods Corp. (HRL) – $1.88
- Lowe’s Companies (LOW) – $10.52
- Realty Income Corp (O) – $14.02
- Omega Healthcare Investors (OHI) – $61.38
- Procter & Gamble Co. (PG) – $13.22
- Verizon Communications Inc. (VZ) – $17.28
February 2018 Taxable Dividend Income = $174.65
Here is the breakdown of dividend income (by stock) in February 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.
- Apple Inc. (AAPL) – $15.75
- CVS Health Corp. (CVS) – $75.00
- Hormel Foods Corp. (HRL) – $18.75
- Lowe’s Companies (LOW) – $20.50
- Williams-Sonoma Inc. (WSM) – $29.25
- Fidelity U.S. Bond Index Fund (FSITX) – $61.33
February 2018 Non-Taxable Dividend Income = $220.58
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.
February 2018 Total Dividend Income = $395.23
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 are growing 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 February
We didn’t invest a lot of new money in February as we are continuing to pay down a lot of our bills from December and January. We had to payoff property taxes, furnace repairs, and braces for my son.
Starting in March, I expect our new investments to pick up a bunch for the next couple of months.
Here are the new investments we made in February in our taxable accounts –
- $50.00 automated investment in Cincinnati Financial (CINF) – $1.40 in future income
- $119.89 investment in Hanesbrands Inc. (HBI) – $3.60 in future income
- $154.05 investment in Realty Income Corp (O) – $7.88 in future income
- $50.00 automated investment in Exxon Mobil Corp. (XOM) – $1.84 in future income
Future Dividend Income from New Investments = $14.72
The total amount of new capital invested in February was – $373.94
Here are the new investment totals for the year –
- January 2018 Investments – $189.57
- February 2018 Investments – $373.94
We have a goal to invest $10,000 to $12,000 of new money into our taxable accounts in 2018. Most of these investments will come in a few months when we get our tax return.
2018 New Investment Total = $563.51
Note – These investments were not from new money, but rather funds rolled over from past employer retirement accounts. So while we are not counting these purchases as new investments, each has helped to grow our future dividend income.
Dividend Reinvestment’s (DRiP) in February
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 February, we were able to bump our future annual dividend income by reinvesting in the following 6 companies and 1 bond fund –
- Apple Inc. (AAPL) – $0.37 in future income
- Clorox Co. (CLX) – $0.88 in future income
- CVS Health Corp. (CVS) – $1.88 in future income
- Hormel Foods Corp. (HRL) – $0.43 in future income
- Lowe’s Companies (LOW) – $0.50 in future income
- Procter & Gamble Co. (PG) – $0.45 in future income
- Fidelity U.S. Bond Index Fund (FSITX) – $1.64 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 = $6.15
Company Dividend Increases in February
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 February continued the strong start of the year in January with company dividend increases. In total, 8 of the companies that we own announced dividend increases. January had 6 companies announce dividend hikes, so 2018 is starting out strong for dividend growth.
Here are the companies that announced dividend hikes in February that we own shares in –
- 7.0% increase from Genuine Parts Company (GPC) – $7.20 in future income
- 2.0% increase from Walmart Inc. (WMT) – $2.14 in future income
- 13.8% increase from Cisco Systems Inc. (CSCO) – $13.60 in future income
- 5.4% increase from The Coca-Cola Company (KO) – $1.23 in future income
- 14.2% increase from Clorox Co. (CLX) – $16.68 in future income
- 4.7% increase from Archer Daniels Midland Co. (ADM) – $12.84 in future income
- 15.6% increase from AFLAC Inc. (AFL) – $17.18 in future income
- 4.2% increase from Unilever (UL) – $1.17 in future income
Future Dividend Income from Company Increases = $72.04
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.
Just think about that for a minute. We increased our annual income by well over $72+ and didn’t do a thing to get that.
Total Future Annual Dividend Income
We started the new year with a future annual dividend income total under $6,000. In about 2 months time, we grew our future dividend income by over $700 to $6,719.89. Most of that came from from investments made in our tax deferred rollover IRA.
February 2018 Future Annual Dividend Income = $6,719.89
Most of our rollover IRA money is now invested and busy earning dividend checks, so we should be able to compare month to month increases that mean something starting in March.
The Rule of 72 Projections
One new feature that I plan to cover now in our dividend result posts are the rule of 72 projections. You can read more about the rule of 72 here, but 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 $6,719.89 … earned on March 1, 2019.
Take a look at how our income could double overtime –
- 03/01/2019 – Annual Dividend Income = $6,719.89
- 03/01/2028 – Annual Dividend Income = $13,439.78
- 03/01/2037 – Annual Dividend Income = $26,879.57
- 03/01/2046 – Annual Dividend Income = $53,759.14
So by 2046, we should be earning almost $54,000 per year in dividend income.
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.
February 2018 Dividend Summary
We followed up a strong January with an even strong February by earning $395.23 in dividend income. Our goal is to earn $6,700 in dividend income this year. Even though our February numbers look small compared to that goal, we are on pace to earn close to our goal amount.
So far, we have earned $700.35 in dividend income in 2018 (January & February).
In order to hit our annual goal, we will need to earn $5,999.65 in additional dividends over the next 10 months. That is an average of $599.97 per month. The good news is that most of our dividend income is earned in the months of March, June, September, and December.
Not only did we post solid dividend income results in February, we managed to raise our annual forward dividend income to 6,719.89. 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 very strong March and the end of the first quarter of 2018.
How was your dividend income in February? 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, ADM, AFL, CAT, CINF, CSCO, CLX, CVS, HBI, HRL, GPC, LOW, O, OHI, PG, UL, VZ, WMT, WSM, XOM and FSITX. The material above is not a recommendation to buy. Please do your own research on a company before deciding to invest.