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One of my favorite activities here on The Money Sprout is reporting out our dividend income from the past month. It gives me a chance to document our journey of building a sustainable dividend income stream. I discuss how much dividend income we earn, what new stocks we are purchasing, our dividend reinvestment shares, company dividend increases, and more.
Building a sustainable dividend income stream is a goal that my wife and I have. You see … we would like to eventually replace a good portion of our W2 income … and dividends are part of that plan. We likely won’t be able to fully replace our income from dividends, but we should be able to get about half way there in the next 20 years.
Our current spending is approximately $60,000 per year (actually a bit less than that). So we would need to earn $30,000 in annual dividends to replace half our income in the next two decades. Based on current projections (see below), that is possible but will take some work.
We are set to earn around $6,790 in dividends over the next 12 months. That would cover about 11.3% of our current spending.
That is a great start, but we think we can do a ton more. That is why we decide 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 March 2018 dividend income results.
March 2018 Dividend Income – $747.90
This was our largest month ever for dividend income. Here is a breakdown of how we earned almost $700+ last month in dividends.
March 2018 Dividend Breakdown by Company
Overall, we had 19 stocks pay out a dividend in March, along with a bond fund. We earned dividend income in both our taxable and tax deferred accounts.
Awesome companies like Emerson Electric, Consolidated Edison, and Target gave our family a paycheck for simply owning shares in their company. This is a great source of passive income!
Here is the breakdown of dividend income (by stock) in March from our taxable accounts. These include stocks held in our Robinhood, Fidelity, and Computershare accounts that will be reported as income earned in 2018.
- Archer Daniels Midland Co. (ADM) – $21.44
- AFLAC Inc. (AFL) – $31.86
- Consolidated Edison Inc. (ED) – $27.36
- Emerson Electric Co. (EMR) – $24.25
- Hanesbrands Inc. (HBI) – $0.60
- Intel Corp. (INTC) – $14.61
- Johnson & Johnson (JNJ) – $44.02
- Kroger Co. (KR) – $1.00
- Lockheed Martin Corp. (LMT) – $58.71
- McDonald’s Corp. (MCD) – $38.20
- Microsoft Corp. (MSFT) – $34.79
- Norfolk Southern Corp. (NSC) – $19.27
- Realty Income Corp (O) – $14.67
- QUALCOMM Inc. (QCOM) – $6.84
- Target Corp. (TGT) – $35.71
- Unilever plc (UL) – $8.48
- Exxon Mobil Corp. (XOM) – $30.97
March 2018 Taxable Dividend Income = $412.78
Here is the breakdown of dividend income (by stock) in March 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.
- Archer Daniels Midland Co. (ADM) – $50.25
- Amgen Inc. (AMGN) – $33.00
- Ingersoll-Rand PLC (IR) – $52.65
- Johnson & Johnson (JNJ) – $21.00
- Kroger Co. (KR) – $5.63
- QUALCOMM Inc. (QCOM) – $37.05
- Target Corp. (TGT) – $68.20
- Fidelity U.S. Bond Index Fund (FSITX) – $67.34
March 2018 Non-Taxable Dividend Income = $335.12
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.
March 2018 Total Dividend Income = $747.90
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 grow 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 March
We didn’t invest a lot of new money in March. There is still some debt we are working to pay down leftover from earlier this year.
The goal is to pick up our new investments a bit starting in April and May. Investing our tax refund should help give us a needed boost and help us hit our goal of $10,000 of new investments for 2018.
Here are the new investments we made in March in our taxable accounts –
- $50.00 automated investment in Cincinnati Financial (CINF) – $1.48 in future income
- $40.24 investment in Hanesbrands Inc. (HBI) – $1.20 in future income
- $32.96 investment in Hormel Foods Corp. (HRL) – $0.75 in future income
- $58.52 investment in QUALCOMM Inc. (QCOM) – $2.48 in future income
- $50.00 automated investment in Exxon Mobil Corp. (XOM) – $2.05 in future income
Future Dividend Income from New Investments = $7.96
The total amount of new capital invested in March was – $231.72
Here are the new investment totals for the year –
- January 2018 Investments – $189.57
- February 2018 Investments – $373.94
- March 2018 Investments – $231.72
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 = $795.23
Dividend Reinvestment’s (DRiP) in March
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 March, we were able to bump our future annual dividend income by reinvesting in the following 14 companies and 1 bond fund –
- Archer Daniels Midland Co. (ADM) – $1.55 in future income
- AFLAC Inc. (AFL) – $0.19 in future income
- Consolidated Edison Inc. (ED) – $1.03 in future income
- Intel Corp. (INTC) – $0.35 in future income
- Johnson & Johnson (JNJ) – $1.11 in future income
- Kroger Co. (KR) – $0.10 in future income
- Lockheed Martin Corp. (LMT) – $1.40 in future income
- McDonald’s Corp. (MCD) – $0.97 in future income
- Microsoft Corp. (MSFT) – $0.62 in future income
- Norfolk Southern Corp. (NSC) – $0.39 in future income
- QUALCOMM Inc. (QCOM) – $1.56 in future income
- Target Corp. (TGT) – $3.63 in future income
- Unilever plc (UL) – $0.29 in future income
- Exxon Mobil Corp. (XOM) – $1.27 in future income
- Fidelity U.S. Bond Index Fund (FSITX) – $1.79 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 = $16.25
Company Dividend Increases in March
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 March slowed down with company dividend increases compared to January and February. However, we still got 3 dividend raises from companies that we own during the month.
Note – January started out with 6 dividend hikes and February had 8 … which gave us an awesome boost for 2018.
Here are the companies that announced dividend hikes in March that we own shares in –
- 6.0% increase from Altria Group Inc. (MO) – $8.55 in future income
- 32.4% increase from Best Buy Co. (BBY) – $4.47 in future income
- 0.2% increase from Realty Income Corp (O) – $0.03 in future income
Future Dividend Income from Company Increases = $13.05
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 with a future annual dividend income total under $6,000. In just 3 months, we have grown our future dividend income by almost $800 to $6,790.45. Most of that came from from investments made in our tax deferred rollover IRA.
March 2018 Future Annual Dividend Income = $6,790.45
We are planning to grow our future totals to well over $7,000 by the end of 2018.
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 $6,790.45 … earned on April 1, 2019.
Take a look at how our income could double overtime –
- 04/01/2019 – Annual Dividend Income = $6,790.45
- 04/01/2028 – Annual Dividend Income = $13,580.90
- 04/01/2037 – Annual Dividend Income = $27,161.80
- 04/01/2046 – Annual Dividend Income = $54,323.61
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 start to the year (January – $305.12 & February $395.23 ) with our best month on record for earning dividend income! In March, we earned $747.90 of dividend income. That would just about cover the car payment on both our vehicles … which is a neat way to think of it.
Our goal is to earn $6,700 in dividend income this year. Even though our first quarter numbers look small compared to that goal, we are slightly behind pace to earn our goal amount.
So far, we have earned $1,448.25 in dividend income in 2018 (January, February, and March).
In order to hit our annual goal, we will need to earn $5,251.75 in additional dividends over the next 9 months. That is an average of $583.53 per month. The good news is that our income will have time to compound a little before we reach the end of the year.
Not only did we post solid dividend income results in March, we managed to raise our annual forward dividend income to $6,790.45. 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 April and the start of the second quarter of 2018.
How was your dividend income in March? 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 – ADM, AFL, AMGN, BBY, CINF, ED, EMR, HBI, HRL, INTC, IR, JNJ, KR, LMT, MCD, MO, MSFT, NSC, O, QCOM, TGT, UL, XOM, and FSITX. The material above is not a recommendation to buy. Please do your own research on a company before deciding to invest.