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At the end of each month, I publish an update of our dividend income portfolio.
This portfolio of “awesome” stocks currently consists of 35+ publicly traded companies and is part of our long term financial independence (FI) plan.
One of the things I really enjoy about investing for income is that when the market drops … we don’t freak out. Instead, we buy some awesome companies that will pay us a steady income … all while on sale.
Someday in the future … my wife and I plan to use this dividend income stream to help offset some (not all) of our monthly expenses.
This year (2018) we are expecting to earn close to $6,700 of dividend income. That amount would make 6 of our monthly mortgage payments each year. Plus a little bit leftover to help pay for some utility bills.
That is great and all … but we don’t want to settle with that. Instead, we want to grow this income stream to cover the mortgage payments for the entire year. Plus pay for our property taxes and homeowners insurance. And while we are at it … why not covering all our monthly utility bills too!
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 10 years, we should be earning $14,000 annually in dividends.
Then if that were to double in another 9 years or so … our dividend income will be earning us $28,000 per year.
So in about 18 years (or less), our dividend income could cover 47% of our overall spending. This is based on our current spending of $60,000 per year.
Today we are reporting our latest monthly dividend income results.
November 2018 Dividend Income – $441.39
Here is a breakdown of how we earned over $440 last month in dividends … which is the equivalent of making one of our monthly car payments ($330) + our monthly electric bill.
It’s fun to look at what our monthly dividend income could cover if we needed the cash. The long term goal is to have our dividend income cover at least 50% of our expenses.
November 2018 Dividend Breakdown by Company
Overall, we had 11 stocks pay out a dividend in November, along with our bond fund.
Just like the every month for the past year … we earned dividend income in both our taxable and tax deferred accounts.
Fantastic dividend paying companies like Hormel Foods, Lowe’s, and Clorox paid our family a bit of money … just for owning shares in their company.
Here is the breakdown of dividend income (by stock) in November from our taxable accounts.
The following stocks are held in our Robinhood, Fidelity, and Computershare accounts that will be reported as income earned in 2018.
- Apple Inc. (AAPL) – $9.67
- Caterpillar Inc. (CAT) – $17.20
- Clorox Co. (CLX) – $33.60
- CVS Health Corp (CVS) – $4.00
- Hormel Foods Corp (HRL) – $4.88
- Lowe’s Companies (LOW) – $12.00
- Realty Income Corp (O) – $20.07
- Omega Healthcare Investors (OHI) – $64.68
- Procter & Gamble (PG) – $14.12
- Verizon Communications Inc. (VZ) – $17.65
November 2018 Taxable Dividend Income = $197.87
Here is the breakdown of dividend income (by stock) in November from our tax deferred accounts. This includes a Rollover IRA we recently built out from several past employer retirement accounts.
- Apple Inc. (AAPL) – $18.46
- CVS Health Corp (CVS) – $76.58
- Hormel Foods Corp (HRL) – $19.05
- Lowe’s Companies (LOW) – $24.33
- Williams-Sonoma Inc. (WSM) – $32.76
- Fidelity U.S. Bond Index Fund (FXNAX) – $72.34
November 2018 Non-Taxable Dividend Income = $243.52
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.
November 2018 Total Dividend Income = $441.39
Overall, November was a bit higher for dividend income compared to last month … but the real income will be made in December.
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 November from these 3 different methods.
New Capital Invested in November
New investments were limited for November.
Instead, we focused on investing more dollars into building our 457 account through my work. By doing that, we will basically not have to pay any federal tax this year.
We still did manage to invest some money in our other accounts in November. Here are the new investments we made in November in our accounts (taxable and tax deferred accounts) –
- $50.00 automated investment in Exxon Mobil (XOM) – $2.00 in future income
- $341.05 investment in Vanguard Total Stock Market ETF (VTI) – $6.96 in future income
- $117.94 investment in AT&T (T) – $8.00 in future income
- $91.04 investment in Fidelity Total Market Index Fund (FSKAX) – $1.78 in future income
Net Future Dividend Income from New Investments = $18.74
The total net amount of new capital invested in August was – $600.03
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
- August 2018 Investments – $538.58
- September 2018 Investments – $2,278.65
- October 2018 Investments – $489.02
- November 2018 Investments – $600.03
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 $9,302.14 in our accounts for 2018.
2018 New Investment Total = $9,302.14
At this point, we have one month to go to invest and about $700 to reach the low end of our target.
Dividend Reinvestment’s (DRiP) in November
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 November, we were able to bump our future annual dividend income by reinvesting in the following 7 companies and 1 bond fund –
- Apple Inc. (AAPL) – $0.42 in future income
- Clorox Co. (CLX) – $0.81 in future income
- CVS Health Corp (CVS) – $2.15 in future income
- Hormel Foods Corp (HRL) – $0.35 in future income
- Lowe’s Companies (LOW) – $0.48 in future income
- Procter & Gamble (PG) – $0.44 in future income
- Williams-Sonoma Inc. (WSM) – $1.06 in future income
- Fidelity U.S. Bond Index Fund (FXNAX) – $1.97 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 = $7.68
Company Dividend Increases in November
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 November had 4 dividend increases from companies we own shares in.
Companies that announced dividend hikes in November that we own shares in –
- 1.00% increase from Emerson Electric (EMR) – $1.00 in future income
- 8.33% increase from SYSCO (SYY) – $3.95 in future income
- 12.00% increase from Hormel Foods (HRL) – $11.52 in future income
- 4.76% increase from Walt Disney (DIS) – $4.84 in future income
Future Dividend Income from Company Increases = $21.31
It 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 (2018) with a future annual dividend income total under $6,000. In 11 months, we have grown our future dividend income by well over $1,390 to $7,396.20!
November 2018 Future Annual Dividend Income = $7,396.20
We are looking forward to pushing past the $7,400 mark by the end of the year. This should help push our future dividend income projections higher by using the Rule of 72.
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 $7,396.20 … that would be earned on December 1, 2019.
Take a look at how our income could double overtime –
- 12/01/2019 – Annual Dividend Income = $7,396.20
- 12/01/2028 – Annual Dividend Income = $14,792.40
- 12/01/2037 – Annual Dividend Income = $29,584.81
- 12/01/2046 – Annual Dividend Income = $59,169.62
Our updated figures tell us we should be earning over $59,150 per year in dividend income by December 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.
November 2018 Dividend Summary
In November, we earned $441.39 of dividend income from our tax deferred and regular brokerage accounts.
As I mentioned earlier, that would be enough money to cover the monthly payment on our van plus our monthly electric 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 a very cool feeling.
The goal for 2018 is to earn $6,700 in dividend income from all our accounts. After 11 months, we are still behind the pace we need to be at to hit our goal.
For the first 11 months of the year (Jan. to Nov.), we have earned $5,520.64 in dividend income in 2018.
In order to hit our annual goal, we will need to earn $1,179.36 in additional dividends in December.
The good news is that our income in December will likely be our highest month ever. But I don’t know if we will get enough dividend income in December to actually hit our goal?
It will come down to the amount of dividends our FSKAX fund ends up paying out.
Finally, we also managed to raise our annual forward dividend income by just over $50 to $7,396.20. 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 finish to 2018!
How was your dividend income in November? 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, CAT, CLX, CVS, DIS, EMR, HRL, LOW, O, OHI, PG, SYY, T, VZ, WSM, XOM, VTI, FSKAX, and FXNAX. The material above is not a recommendation to buy. Please do your own research on a company before deciding to invest.