What a journey it has been so far. Last week, after a sudden drop in earnings, Target’s price fell and I swooped up an additional 30 shares of the major retailer. Now, I own 80 freaking shares and couldn’t be happier. But the good great news didn’t stop there. No, that investment also put me over a milestone that I have been eyeing for a few months now. This last purchased pushed my forward dividend income over the $3,000 mark and you know what, there is no turning back now. How did I get to this point? Let’s take a look!
The last time I crossed a thousands milestone was in May 2015, when I surpassed $2,000 in projected dividend income. Ironically, the stock purchase that pushed me over the $2,000 mark was Citizens and Northern Bank, yes that is the same bank that Lanny purchased last week, Looks like the two of us are going to be in an arms race to see who has a larger position. Challenge freaking accepted Lanny. Woah, I just got off track there. So in 15 months, I was able to add another $1,000 in forward income via dividend reinvestment, stock purchases, and good old-fashioned dividend increases. I don’t want to sit here and go through every…single….purchase I have made over the last 15 months; that would be extremely boring. Instead, I want to summarize some of the observations about the change in my portfolio during this time stretch. Most will be good, but of course there will be some bad.
First, with the bad. I want to get the bad stuff out-of-the-way first so I can end on a positive note. I was progressing along great last year and my dividend income was beginning to take off. Then we all remember what happened last November, right? KMI, the darling of the dividend community at the time, slashed their dividend 75% in 2015. How could anyone who was impacted by the cut forget that day? Owning ~100 shares at the time, that was quite a step back in the journey. KMI is now a stronger company because of it and trust me, I would take long-term dividend security over day over a short-term high dividend. But man did it suck losing $100+ in annual dividend income in one day. Lesson learned, that’s for sure…and now I consider debt levels and I even ran a screener focusing on companies with lower debt to equity ratios. The other negative factor is something all of us have been dealing with in the dividend growth investor community. This year, compared to the last several, dividend growth rates for a large amount of companies has slowed. So not only was my income getting slashed by one of my companies, but the forward income levels for my other positions weren’t growing as quickly in the past. Some interesting headwinds I faced in the last 15 months, but luckily, the upcoming good events helped me prevail!
And now to the fun part. After reviewing a crazy 15 months (Heck, I got married in the last 15 months!!), there were a few things that jumped out at me as major contributors to crossing $3,000 in income. First, the most obvious, I have invested a larger than expected amount of capital since May 2015. My “no kidding” moment of this article because it is pretty obvious that if you invest in more dividend paying stocks your dividend income is going to increase. In the last 15 months, I have invested $28,505 in the market, and that doesn’t even factor in my semi-monthly 401k match that is used to purchase a Vanguard Index Fund yielding over 2%. This also parlays very well with my second point. If you all remember, last year Lanny wrote and article and sold me on the concept of purchasing stocks in large amounts (ideally over $3,000 per purchase). When the funds are available, I absolutely try to buy in large amounts because I love the large/powerful DRIP that I will receive quarterly. Plus, not intentionally, my last few large stock purchases have been higher yielding stocks (Pfizer, Citizens and Northern, T.Rowe Price and Target) and this has certainly helped. For example, I now own over 200 shares of Citizens and Northern, the bank Lanny purchased last week. With each dividend, I will receive 2+ shares via DRIP, which then produces an additional $3 in forward dividend income. Is this the largest means of growing your forward dividend income…no. But man do the large DRIPs help accelerate this cycle in my opinion and after a while, those large DRIPs really begin to add up. Last buy not least, I received my employer’s 401k match a few months ago. Free dividend income right there, and this added over $20 in forward dividend income without lifting a finger.
So now what? Where do I go from here now that I have crossed $3,000 in forward income. Time to put the pedal to the metal here and keep on accelerating. Lanny is over $7,000, so I have to work my tail off to try to catch him. Seriously though, I still have some progress to reach some of my 2016 investing goals. By the end of the year, I want to cross $3,250 in forward dividend income and invest over $20,000 in “New Capital.” Currently, after crossing this milestone, I am sitting at $3,033 and $10,025, respectively. Time to roll up my sleeves and get to it!
I am a true believer in the “Every Dollar Counts” mentality. Folks, the results are real here. I started dividend investing in 2012 with $0 in dividend income and in less than 4 years my income has grown to over $3,000. The only way to get to where we want to go is by finding a way to scrape, claw, and get every dollar we can to help increase our passive income streams. Man I can’t wait to hit financial freedom, but for now, I have my eyes set on crossing $4,000 in forward income. I’m challenging myself to get there in half the time it took me to increase my income this time around (15 months). So here it is, I am aiming to crush $4,000 in dividend income in 7.5 months, or by the middle of April 2017. How ironic is it is that it is right around tax day? Couldn’t be more appropriate for a CPA. Thanks for joining me on this amazing ride everyone!
Bert