We may earn money or products from the companies mentioned in this post.
The Money Sprout is not an investing site. And it never will be. I will never give any recommendations on stocks to buy or sell (I got really burned on this in the past). Nor will I claim that dividend stocks are the best option to invest ones money.
Many people are successful by investing their money in real estate (many are not) while others may only be comfortable with putting their investments into CD’s or other low risk accounts. I prefer dividend stocks but that may not work for everyone.
The important point here is to have a place to recycle your income and put it to work. That could be a new business project, a real estate investment, savings account, etc. In my case (for now) that place is dividend stocks. I believe that investing in the blue chip stocks is the best way for me to accelerate my income potential – regardless of the market.
2014 Dividend Income Goals
Years from now I would love to live off my dividend income alone. In theory this sounds great but the road to that point takes careful planning. As I travel down that path to reach this goal, I have set shorter term goals instead.
I have set a goal to earn $1,250.00 during 2014 in dividend income. In 2013, I earned $650.16 in dividends – so I need to basically double my earnings which won’t be easy.
2014 January Dividend Income Results
Each month I will give a status report on my dividend income portfolio, so here we go with our first month.
There were 3 stocks in my portfolio that had a dividend payout in January. These 3 companies combined for a dividend payout for the month of $70.11.
January 2014 Dividend Income – $70.11
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 –
- Cincinnati Financial (CINF) – $28.37 (.55 shares)
- Lockheed Martin (LMT) – $33.41 (.23 shares)
- Sysco (SYY) – $8.33 (.23)
As I mentioned above, all my holdings are setup to reinvest dividends back into additional shares of stock to save me time. These reinvested shares as a whole will result in $2.41 in annual dividend income increases this year.
New Capital Invested in January
In January I hit my goal of investing at least $850 in new money into the market. I actually surpassed that amount by a large one time lump sum investment in a company.
Here are the new investments I made in January –
- $25 automatic investment in Cincinnati Financial (CINF) – .50 shares
- $50 automatic investment in Lockheed Martin (LMT) – .33 shares
- $50 automatic investment in Exxon Mobile (XOM) – .51 shares
- $50 automatic investment in Intel (INTC) – 1.96 shares
- $50 automatic investment in Coca-Cola (KO) – 1.24 shares
- $50 automatic investment in Microsoft (MSFT) – 1.38 shares
- $50 automatic investment in WalMart (WMT) – .64 shares
- $150 automatic investment in Clorox (CLX) – 1.66 shares
- $1,272.41 lump sum investment in Target (TGT) – 21 shares
Note – I am a big fan of automatic investments as I am in the allocation phase of building my portfolio. Small, on-going investments each month help me dollar cost average into a stock while diversifying across many different companies.
The total amount of new capital invested for January was – $1,747.41. This puts me ahead of my goal to average $850 a month by +$897.41.
Note – The money invested is currently part of my savings or a portion of my monthly income from my full-time job. My goal is to eventually invest income generated from new streams created outside of my full time job.
I am not here to debate whether you agree with these stock picks or not. The point is that I am putting my dollars to work for me. For you, it could be paying the mortgage on a rental property or putting your money into a savings account.
The net impact of these investments will result in a increase to my annual dividend income by $50.67. Here is a breakdown of each investment.
- Cincinnati Financial (CINF) – $0.84
- Lockheed Martin (LMT) – $1.76
- Exxon Mobile (XOM) – $1.29
- Intel (INTC) – $1.76
- Coca-Cola (KO) – $1.41
- Microsoft (MSFT) – $1.55
- WalMart (WMT) – $1.20
- Clorox (CLX) – $4.71
- Target (TGT) – $36.12
Annual Dividend Income Increase – $50.67
You may think an extra $50 is nothing to get excited about. However, if I continue to make similar investments each month, then we are talking about an extra $600!
Impact on Dividend Income
Based on new investment dollars, reinvested dividends, and dividend increases – I was able to raise my annual dividend income to $854.40
My yield on cost (another important metric) dropped from 4.48% to 4.33%. This means that I am earning an average of 4.33% in dividend yield on my investments combined. That is a pretty good return if you ask me compared to other investment options.
Note – The drop in yield on cost is related to the large investment during the month and was expected.
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, TGT, SYY. The material above is not a recommendation to buy. Please do your own research on a company before deciding to invest.