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The stock market has taken a beating lately and it looks like it will continue for some time. While it can be difficult to watch the value of your stock holdings plummet, all is not lost.
Market corrections are a fantastic time to buy additional shares of stock at a huge discount.
In the meantime, as the market moves up and down over the years, there is one metric that we track that continues to grow steadily one month at a time. I am referring to our future dividend income that despite the market, continues to inch upwards on a steady pace.
How to Grow Future Dividends
There are basically 3 ways our future dividend income grows. First, anytime a company that we own in the Money Sprout Index raises its annual dividend, our 12 month dividends increase.
Next, buying new shares of stock also helps to push our future dividend income higher. There is no better time than a market correction to buy top dividend stocks. Each time we add another share of a dividend stock, our future income increases.
Finally, anytime we reinvest our dividends into new shares of stock, our future dividend income goes up too. My wife and I don’t like any lazy money lying around, so all dividends we currently receive are used to buy more and more stock.
Reporting 12 Month Forward Dividend Income
There is nothing guaranteed about future dividend income as we have discussed here plenty of times. However, since we are investing in top dividend paying companies, there is a very strong probability our future dividend income will continue to grow.
By estimating our future dividend income, we can get an idea of where we are at in our long term investment goals.
Here are the first five 12 month forward dividend income results that I have previously published.
- Update #1 (March 2015) – $1,239.21
- Update #2 (April 2015) – $1,288.31
- Update #3 (May 2015) – $1,501.44
- Update #4 (June 2015) – $1,551.65
- Update #5 (July 2015) – $1,580.05
Note – These numbers are also posted at the end of each month in our dividend income results. I like to do this to show the growth of our future dividend income from the new investments we are making.
Not to get too far ahead of ourselves, but our goal for 2016 is to earn a minimum of $2,000 in dividend income. By posting these monthly updates, we can start to see what type of new capital will be needed to hit our $2K target.
August Updated Future Dividend Income
Our future dividend income has grown since we last reported our July dividend income results. Most of the increase was a result of new capital being added to the market and a few reinvested dividends. Our updated future dividend income has grown to $1,598.33!
At the time of this writing today, our future dividend income has risen by another $18.28 since last reporting our numbers in July. That is a little behind where we want to be, but it was a slow month as far as dividend reinvestment’s. In addition, there were no new announced dividend increases since we last reported. Finally, the amount of new capital that we have invested over the past month or so has declined from prior months.
July 2015 Future Dividend Income Projection – $1,598.33
Even though the overall stock market is in a correction phase, our future dividend income continues to rise. That is the awesome power of investing in top dividend paying companies.
As long as the underlying business is still in good shape, there is never a better time to add money to the market then when stocks are cheap. We will continue to add more and more capital as allows during this market downturn.
There are certainly no guarantee’s that we will receive $1,598.33 in future dividends in the next 12 months. However, the chances are very good that we will earn at least that amount and probably more based on the companies we have invested in.
Since the companies that we have purchased all have a strong history of annual dividend increases, we are confident in future dividends. Even if one company were to freeze or even cut their dividend, there are several others that will make up for one bad apple. That is why it is important to diversify the number of dividend stocks we own.
Are you buying during this market downturn?