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Once a month, I publish an update of our our dividend stock portfolio. This portfolio of stocks currently consists of 35+ publicly traded companies and is part of our long term financial independence (FI) plan.
My wife and I plan to eventually use our dividend income stream to offset some (not all) of our monthly expenses. For example, in 2018 we are expecting to earn close to $6,700 of dividend income. That would cover approximately 11% of our current expenses. That doesn’t get us all too excited, but the future growth does.
Based on our growth calculations, we expect our dividend income to double every 9 years (or so) if we were to leave it alone. So in less than 10 years, we should be earning $14,000 annually in dividends. That would be enough to cover 23% of our current spending.
In 18 years, our dividend income will be earning us $28,000 per year … which would cover 47% of our current spending. And then in 27 years … our dividend stocks will be earning us $56,000 per year which would pay for 93% of our current spending.
We also realize that waiting around 27 more years (or even 18 for that matter) to leverage our dividend income stream is not very practical. But using our dividend income in another decade to cover almost 25% of our expenses is.
And even better … is knowing that we can also take steps to lower our annual spending (currently at $60,000) to accelerate this plan.
So … today we are reporting our latest dividend income results.
July 2018 Dividend Income – $365.95
Here is a breakdown of how we earned over $350 last month in dividends … which is the equivalent of one of our monthly car payments.
July 2018 Dividend Breakdown by Company
Overall, we had 10 stocks pay out a dividend in July, along with our favorite bond fund. Just like past months, we earned dividend income in both our taxable and tax deferred accounts.
Awesome dividend paying companies like Coca-Cola, Cisco Systems, and Walt Disney wrote my family a check (well not exactly a real check) for simply owning shares in their company.
Here is the breakdown of dividend income (by stock) in July from our taxable accounts. These include stocks held in our Robinhood, Fidelity, and Computershare accounts that will be reported as income earned in 2018.
- Best Buy Co. (BBY) – $4.60
- Cincinnati Financial Corp. (CINF) – $48.97
- Cisco Systems Inc. (CSCO) – $28.05
- Genuine Parts Company (GPC) – $7.20
- The Coca-Cola Co. (KO) – $6.05
- Altria Group Inc. (MO) – $10.50
- Realty Income Corp (O) – $19.80
- SYSCO Corp. (SYY) – $11.73
July 2018 Taxable Dividend Income = $136.90
Here is the breakdown of dividend income (by stock) in July from our tax deferred accounts. This includes a Rollover IRA we recently built out from several past employer retirement accounts.
- Cardinal Health Inc. (CAH) – $48.30
- Walt Disney Co. (DIS) – $50.40
- Genuine Parts Company (GPC) – $25.40
- Altria Group Inc. (MO) – $35.71
- Fidelity U.S. Bond Index Fund (FSITX) – $69.24
July 2018 Non-Taxable Dividend Income = $229.05
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.
July 2018 Total Dividend Income = $365.95
Growing Future Dividend Income
One of my absolute favorite personal finance tasks to do each month is to update the dividend income we earned in our tracking spreadsheet. It is an awesome 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 actually 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 cool 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 June from these 3 different methods.
New Capital Invested in July
We didn’t invest a lot of new money in July. Instead, we focused a little more of our savings by paying extra on our mortgage and vehicles. We have also been focusing a little more on building our 457b account, so that we can avoid paying federal taxes this year.
Here are the new investments we made in July in our accounts (taxable and tax deferred accounts) –
- $50.00 automated investment in Cincinnati Financial (CINF) – $1.42 in future income
- $66.77 investment in CVS Health Corp. (CVS) – $2.00 in future income
- $50.00 automated investment in Exxon Mobil Corp. (XOM) – $1.99 in future income
- $100.00 investment in Vanguard Total Stock Market ETF (VTI) – $1.68 in future income
Net Future Dividend Income from New Investments = $7.09
The total net amount of new capital invested in June was – $266.77
Here are the new investment totals for the year –
- January 2018 Investments – $189.57
- February 2018 Investments – $373.94
- March 2018 Investments – $231.72
- April 2018 Investments – $3,567.56
- May 2018 Investments – $457.00
- June 2018 Investments – $309.30
- July 2018 Investments – $266.77
Note – all new investments in April were made from a bunch of our federal tax refund in case you are wondering why the big jump that month.
We have a goal to invest $10,000 to $12,000 of new money in 2018 in our dividend stock accounts. So far, we have invested $5,395.86 in our accounts for 2018.
2018 New Investment Total = $5,395.86
Dividend Reinvestment’s (DRiP) in July
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 July, we were able to bump our future annual dividend income by reinvesting in the following 8 companies and 1 bond fund –
- Best Buy Co. (BBY) – $0.11 in future income
- Cardinal Health Inc. (CAH) – $1.84 in future income
- Cincinnati Financial Corp. (CINF) – $1.47 in future income
- Walt Disney Co. (DIS) – $0.76 in future income
- Genuine Parts Company (GPC) – $0.80 in future income
- The Coca-Cola Co. (KO) – $0.22 in future income
- Altria Group Inc. (MO) – $1.72 in future income
- SYSCO Corp. (SYY) – $0.24 in future income
- Fidelity U.S. Bond Index Fund (FSITX) – $1.86 in future income
Note – Dividends earned from stocks we own in our Robinhhood account were not directly reinvested through DRiP. Any dividend income earned throughout a given month from Robinhood will eventually be reinvested at some point.
Future Dividend Income from DRiP = $9.02
Company Dividend Increases in July
My absolute favorite way to grow our future income (and the easiest) is through company dividend increases. This is the ultimate passive income opportunity … and every month I get excited when raises start coming in.
The month of July had one unexpected (to me) dividend increase from a company we own shares in. Despite being much slower than past months, we still saw a 10%+ increase in future income from one of our stocks.
Company that announced dividend hikes in July that we own shares in –
- 11.1% increase from Norfolk Southern Co. (NSC) – $8.64 in future income
Note – This was the second dividend increase from Norfolk Southern in less than 1 year. Back in January we saw an 18% jump in future dividend income from this company.
Future Dividend Income from Company Increases = $8.64
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.
Total Future Annual Dividend Income
We started the new year (2018) with a future annual dividend income total under $6,000. In just 7 months, we have grown our future dividend income by well over $1,130 to $7,137.40!
July 2018 Future Annual Dividend Income = $7,137.40
It would be awesome to grow our future dividend income by another $800+ or more for the remainder of the year (5 months) … but that would be a little difficult I think.
The Rule of 72 Projections
At the beginning of this year, 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 $7,137.40 … that would be earned on August 1, 2019.
Take a look at how our income could double overtime –
- 08/01/2019 – Annual Dividend Income = $7,137.40
- 08/01/2028 – Annual Dividend Income = $14,274.80
- 08/01/2037 – Annual Dividend Income = $28,549.60
- 08/01/2046 – Annual Dividend Income = $57,099.21
Our updated figures tell us we should be earning over $57,000 per year in dividend income by August 2046.
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.
July 2018 Dividend Summary
In July, we earned $365.95 of dividend income from our tax differed and regular brokerage accounts. That is enough money to cover one of our monthly car payments with a little extra cash leftover.
Our long term goal from this dividend income portfolio is to cover at least half of our monthly expenses … which right now is about $2,500 (our monthly spending is currently just under $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 a very cool feeling.
Our goal for 2018 is to earn $6,700 in dividend income from all our accounts. After 7 months, we are still slightly behind the pace we need to be at to hit our goal.
For the first 7 months of the year, we have earned $3,486.00 in dividend income in 2018 (January to July).
In order to hit our annual goal, we will need to earn $3,214.00 in additional dividends over the next 5 months. That is an average of $642.80 per month. The good news is that our income will have time to compound a little before we reach the end of the year. Plus all the new investments we made this past month (and earlier in the year) will start earning dividend income.
And even more important is that we still have 2 big dividend paying months to go this year – September and December. We will likely catch way up in September and then hit our goal when December comes around.
Lastly, not only did we post solid dividend income results in July, we managed to raise our annual forward dividend income by just over $30 to $7,137.40. 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 second half of 2018.
How was your dividend income in July? 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 – BBY, CAH, CINF, CSCO, CVS, DIS, GPC, KO, MO, NSC, O, SYY, XOM, VTI, and FSITX. The material above is not a recommendation to buy. Please do your own research on a company before deciding to invest.