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I can’t believe how fast the year has gone by so far. Most of the time I want life to slow down so I can enjoy it a little more and spend time with my wife and kids. But the one time I don’t mind it flying by is when I get to publish our monthly dividend income reports!
We are off to a really solid start for our dividend income stream for 2019. The only negative our portfolio has seen so far is a slow down in the size of dividend increases. Our portfolio is averaging about 4% to 5% increases so far this year compared to last year where we at around 6% to 7%.
Before we get into the details of our portfolio, I wanted to provide a quick overview of our portfolio. It currently consists of 35+ publicly traded companies and is part of our long term financial independence (FI) plan.
My wife and I have long term goals to eventually use our passive dividend income stream to cover a portion of our monthly expenses. Hopefully around 50% of our spending can be covered from dividend income.
Based on some back of the envelope calculations, we could expect our dividend income to double every 9 years (or so) if we were to leave it alone. So in less than 20 years, we should be earning $30,000 annually in dividends.
At that point, we should be generating enough dividend income to cover at least half of our current spending.
Today we are reporting our latest monthly dividend income results.
February 2019 Dividend Income – $453.02
Here is a breakdown of how we earned over $400 last month in dividends.
February 2019 Dividend Breakdown by Company
In total we had 12 incredible stocks pay out a dividend in February, along with our bond fund.
Just like every month for over the past year… we earned dividend income in both our taxable and tax deferred accounts.
Fantastic dividend paying companies like Caterpillar, Clorox, and Hormel Foods paid our family a bit of money in February … just for owning shares in their company.
Here is the breakdown of dividend income (by stock) in February from our taxable accounts.
The following stocks are held in our Robinhood, Fidelity, and Computershare accounts that will be reported as income earned in 2019.
- Apple (AAPL) – $9.71
- Caterpillar (CAT) – $17.20
- Clorox (CLX) – $33.80
- CVS Health (CVS) – $4.00
- Hormel Foods (HRL) – $5.46
- Lowe’s (LOW) – $12.00
- Realty Income Corp (O) – $20.52
- Omega Healthcare (OHI) – $64.68
- Procter & Gamble (PG) – $14.23
- AT&T (T) – $8.67
- Verizon Communications (VZ) – $17.65
February 2019 Taxable Dividend Income = $207.92
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.
- Apple (AAPL) – $18.53
- CVS Health (CVS) – $77.12
- Hormel Foods (HRL) – $21.42
- Lowe’s (LOW) – $24.45
- Williams-Sonoma (WSM) – $33.03
- Fidelity U.S. Bond Index Fund (FXNAX) – $70.55
February 2019 Non-Taxable Dividend Income = $245.10
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. Robinhood doesn’t offer DRiP, but at some point all the funds we earn are invested back into shares of a dividend stock.
February 2019 Total Dividend Income = $453.02
Looking back to last February (2018), we earned $395.23 … so we have increased our dividend income by over $50 since that time!
- February 2018 – $395.23
- February 2019 – $453.02
Growing Future Dividend Income
My favorite monthly personal finance task is to update the dividend income we earned in our tracking spreadsheet.
It is a really cool feeling to watch our dividend income grow month after month and year after year. This is probably one of the best ways to stay motivated in hitting our investment goals.
Even cooler than reporting our dividend income earnings, is tracking our future dividend income growth.
We track this by reporting our future annual dividend income amount in each of our monthly posts.
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. How awesome is that?
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 February from these 3 different methods.
New Capital Invested in February
New investments were limited for February in our taxable and non-taxable accounts.
We have been focused on investing more dollars into building our 457 account through my work.
This year we plan to hit the max limit for 457(b) contributions of $19,000. Doing so will help us to keep our federal tax bill at $0 for the year.
We still did manage to invest some money in our accounts in February. Here are the new investments we made in February in our accounts (taxable and tax deferred accounts) –
- $241.05 investment in Vanguard Total Stock Market ETF (VTI) – $4.83 in future income
- $168.08 investment in Vanguard High Dividend Yield ETF (VYM) – $5.83 in future income
Net Future Dividend Income from New Investments = $10.66
The total net amount of new capital invested in February was – $409.13
Here are the new investment totals for the year –
- January 2019 Investments – $382.45
- February 2019 Investments – $409.13
We have a goal to invest $10,000 of new money in 2019 in our dividend stock accounts. For the year, we have invested $791.58 in new money in our accounts.
2019 New Investment Total = $791.58
We are now $9,208.42 remaining to invest in order to hit our annual goal.
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 7 companies and bond fund –
- Apple (AAPL) – $0.48 in future income
- Clorox (CLX) – $0.84 in future income
- CVS Health (CVS) – $2.33 in future income
- Hormel Foods (HRL) – $0.41 in future income
- Lowe’s (LOW) – $0.72 in future income
- Procter & Gamble (PG) – $0.41 in future income
- Williams-Sonoma (WSM) – $1.01 in future income
- Fidelity U.S. Bond Index Fund (FXNAX) – $1.88 in future income
Future Dividend Income from DRiP = $8.08
Company Dividend Increases in February
This is my absolute favorite way to grow our future income (and the easiest) … which is from company dividend increases. This is truly a passive income stream that will grow each and every month all on it’s own.
The month of February was busy with 6 dividend increases from companies we own shares in. I will say though that the size of dividend increases in 2019 is trending down compared to last year.
Companies that announced dividend hikes in February that we own include –
- 1.92% increase from WalMart (WMT) – $2.19 in future income
- 2.54% increase from Coca-Cola (KO) – $0.63 in future income
- 4.48% increase from Archer Daniels Midland (ADM) – $13.11 in future income
- 5.66% increase from Cincinnati Financial(CINF) – $11.48 in future income
- 5.90% increase from Genuine Parts Company (GPC) – $7.84 in future income
- 6.06% increase from Cisco Systems (CSCO) – $6.80 in future income
Future Dividend Income from Company Increases = $42.05
Note – This is down from last February’s (2018) future dividend income gains of $72.04. As I mentioned earlier, the increases were much higher last year from what we are seeing so far in 2019.
The good news 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 (2019) with a future annual dividend income total of $7,477.26. That number represents what we could expect to earn in dividend income this entire year … if we never invested an extra dollar, reinvested any dividend income, and no company provided a dividend increase for the next 12 months.
So far in two months, we have grown our future dividend income by over $106 to $7,583.39!
February 2019 Future Annual Dividend Income = $7,583.39
We are looking forward to pushing past the $8,000 future dividend income mark sometime in 2019. By using the Rule of 72 calculation below, it helps us project out when our dividend income will double by using our future dividend income calculation.
The Rule of 72 Projections
At the start of last year (January 2018), 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 $7,583.39 … that would be earned on March 1, 2020.
Take a look at how our income could double overtime –
- 03/01/2020 – Annual Dividend Income = $7,583.39
- 03/01/2029 – Annual Dividend Income = $15,166.78
- 03/01/2038 – Annual Dividend Income = $30,333.55
- 03/01/2047 – Annual Dividend Income = $60,667.10
Our updated figures tell us we should be earning over $60,000 per year in dividend income by March 2047.
That would actually also be our dividend crossover point … where our dividend income would cover 100% of our spending. Personally, I don’t want to wait that long for our crossover point … which is why we still actively build our portfolio.
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.
February 2019 Dividend Summary
In February, we earned $453.02 of dividend income from our tax deferred and regular brokerage accounts. This was our largest February dividend income month ever … as we blew away our past February high of $395.23!
The dividend income amount could cover our monthly van payment plus it would likely cover our internet and phone bill.
My wife and I have set a long term goal from this dividend income portfolio to cover at least half of our monthly expenses … which right now is about $2,500 (our monthly spending is currently around $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. That is an awesome feeling.
The goal for 2019 is to earn about $8,010 in dividend income from all our accounts.
After the first two months, we are $7,151.63 behind our goal. Not to worry though as January and February are usually much lower months than March.
And December (2019) will be over $1,000 of income again like last year.
So far for the year (2019), we earned $489.94 in pretax accounts while the remaining $368.43 was earned in our taxable brokerage accounts.
Finally … we managed to raise our annual forward dividend income in February by over $60 to $7,583.39. 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 an awesome 2019!
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, CAT, CINF, CLX, CSCO, CVS, GPC, HRL, KO, LOW, O, OHI, PB, T, VZ, WMT, WSM, VTI, VYM, and FXNAX. The material above is not a recommendation to buy. Please do your own research on a company before deciding to invest.