As we mentioned in our blog’s one year anniversary post a few days ago, my portfolio has crossed a couple of major milestones recently and I am very excited to finally share them with the community. Over the couple of months, I have crossed both $55,000 in Market Value and $2,000 in Projected Dividend Income. I still can’t believe it, as it seems like just yesterday I was crossed $40,000 in market value (last June) and $1,750 in projected dividend income (last August). Two round, iconic numbers in my eyes. It has been a fun journey between milestones, so lets take a look at how I got there.
How did I Get There?
For those of you have been following, I have been pretty active recently since I have been fortunate enough to have some extra cash lying around. As all good dividend investors do, I have been putting the extra cash to work and soon the cash will be generating some extra dividend income. I don’t want to summarize all of my transactions over the last 9-12 months, but several transactions stick out as having the largest impact over this period:
- Purchase of 21 shares of Schlumberger (SLB) at the end of December. Currently my position has a market value of about $2,000 and produces ~$42 in forward dividend income.
- Purchase of ~26 shares of Archer-Daniels Midland (ADM) in March. That month I performed a stock analysis over ADM and fell in love with the company. It performed well when put through our stock screener and filled a void in my portfolio, so I decided to initiate a position with two separate purchases. Currently my position has a market value of $1,400 and produces ~$30 in forward dividend income.
- Purchase of ~16 shares of Norfolk Southern Corporation last month. NSC is the most recent addition to my portfolio and was done so in a very similar manner to ADM. Lanny wrote a stock analysis over NSC last month that sold me immediately, as I had no position in the railroad industry and this seemed like as good as a time as ever to initiate a position in the railroad industry after the sector had a pullback. Since my purchase, my position has not really moved and currently my market value fluctuates between $1,600 and $1,700, adding ~$39 in forward dividend income to my portfolio.
- While this transaction had a zero dollar impact on my market value, it had some major implications for my dividend income. When I sold my ARCP stake in January, I tried to add some oomph to my dividend income when I re-invested the capital. While I made sure they were solid dividend paying companies with a long dividend paying history prior to reviewing the final yield, one of the largest lessons I learned from my ARCP investment, I was able to re-up my position in HCP and initiate new positions in CZNC and NWFL. The best part, all companies yield over 4% and the three purchases added a combined ~$72 to my forward dividend income, which lessened the impact of dividend income lost when I sold ARCP (Which was about $175 annually). I think I was able to make the best out of that situation.
- Like everyone else who owns the company, I think I nearly dropped my phone when I read the news that Kraft was getting acquired by Heinz. The surge in share price, from the low $60s/share to the high $80s/share that followed the announcement gave my portfolio a nice bump and help propel me over $55k. I can’t wait to learn more about the new combined consumer brand giant and the future dividend policy. While the yield may not be as juicy, it still has to satisfy one of the companies newest shareholders…Warren Buffet.
Phew..In a nutshell, those were the major events that impacted my portfolio in between milestones. The beautiful part of a dividend growth portfolio is that growth is not limited to one avenue. For example, the growth of my portfolio is not limited strictly to the growth of an index, the performance of an individual stock or the interest earned on a CD (if I were to invest all of my capital in that manner). I love that each month, my market value increases a little bit due to additional purchases, the change in the stocks price (of course this can go the other way as well), or by receiving dividends from all of these lovely companies we invest in. As you can see from my list above, each one of the avenues of growth played a key part in my portfolio’s growth over the last 9 months and will continue to do so forever! We say it over and over again, but once that snowball gets rolling the impact on your portfolio is larger and larger and you will find yourself hitting milestones before you even realize it!
Where Do I Go From Here?
So where do I go from here and where do I stand now? After all, hitting $55k in market value and $2k in dividend income certainly is not my end goal as my monthly living expenses are way to high right now. As I reviewed the goals I set for 2015, I now remembered that I did not set up a final market value goal on purpose. Why? Because I cannot control Mr. Markets activities and my portfolio can swing wildly each day based on the mood of the market. It just didn’t make sense for me to base a goal off of a factor that for the most part is out of my control. So this year, I decided to base my goal on contributed capital to my portfolio and defined it as all cash outside of 401(k) contributions and DRIP. My final goal is to contribute $15,000 in capital in 2015 and after my final purchase of NSC a few weeks ago, I am currently sitting at $5,135 of new purchases this year. In order to hit my goal, I will need to purchase ~$10,000 of stock the rest of the year. If I hit my goal and the rest of my portfolio’s MV does not change, that would put me at about $66,000. Thus, with appreciation (if the market continues to increase) and dividend re-investment, I could see myself crossing $70,000 before the year is over. But, as I said before, it is not a goal of mine this year so I won’t be upset if it doesn’t get there. But man would it be cool if I could!
In terms of dividend income, after my last purchase and the receipt of dividends over the last few months, my forward dividend income currently sits at $2,048, or 74.4% of my goal for $2,750. I still feel as if I am pretty behind on this goal considering we are almost five months in and accumulating $700 in forward dividend income requires a healthy amount of capital. But luckily, I still plan on investing at least $10,000 more into the market, have 7 months of various dividend increase announcements and still have a lot of dividends to receive over the time span. As I said in my last quarterly goal review, this will be a close one, but I am looking forward to working my way towards $2,750 until the very end of the year. STAY TUNED!
Summary
Life is a journey, and you never know what path you will end up taking or where each turn will take you. If you asked me a few years ago if I would be producing over $2,000 in dividend income annually, I probably I would have laughed in your face. Luckily for me, I met a fellow Diplomat and he began sharing his knowledge of dividend investing with me during a drive to a small town in Pennsylvania. Now, the rest is history. I still have some work to do to hit my goals this year, but I am so excited that I was able to cross these two milestones recently. It validates what we have been working so hard for over the last few years and it makes me want to reach financial freedom that much more! Thanks everyone for your kind words and support over the last two years, you have been a major part in motivating me to push myself and invest as much as I can now. I wouldn’t be here writing this without the help of Lanny and all of you!
Bert