Wow. 2020 was one CRAZY year. For so many reasons. However, for us, the name of the game is dividend investing and growing your passive income. Lanny and his wife earned almost $5,500 in dividend income December. That is a tough act to follow. However, we are excited to report that December was a RECORD SETTING month for us. We are eager to share our results and discuss the dividend increases we received. Here is our December dividend income summary.
Why I Invest in Dividend Stocks
I invest in dividend stocks to grow a my passive income. Eventually, one day, my dividend income will be large enough to cover my monthly expenses. That is why we are relentlessly searching for dividend stocks to buy. It is about putting our hard earned cash to work.
To find dividend stocks to purchase, we use our dividend stock screener. Over the years, our stock screener has helped us find some awesome undervalued dividend stocks. This simple, 3 step stock screener is designed to identify undervalued stocks with a strong payout ratio that have a history of increasing their dividend. I can’t think of the last time we purchased a stock without using our stock screener.
Watch: Dividend Diplomats’ Dividend Stock Screener
Building a large dividend income stream takes time, consistency, hard work, saving, and most importantly, investing. I have been investing in dividend growth stocks since 2012. Slowly, but steadily, my income has increased over the years. Now, in 2020, I am enjoying some of my strongest dividend income months. Further, with each purchase, dividend increase, and reinvested dividend, we are setting the table for a strong 2021. It is really exciting to see the growth and larger dividend checks trickle into my brokerage account.
Each month, we share our dividend income summaries to highlight our growth and progress. It is a fun and helpful excercise that holds us accountable. Further, it helps you, our followers, see the stocks we are purchasing.
Bert’s December Dividend INcome Summary
In December, we received $4,699.20 in dividend income. That is a 23.4% increase compared to last year. I am proud to announce that my wife and I had a RECORD SETTING month. It is exciting to see the fruits of your labor start to pay off. The following table shows each dividend payment we received this month:
In every monthly dividend income summary article, I provide a few observations and highlights. My notes for the month of December are as follows.
Observation 1: Mutual Fund Distributions Steal the Show
Man oh man did our retirement accounts deliver some major results in December. For several years, my wife and I have been maxing out our 401(k) contributions. We have been contributing as much as possible for a few reasons. To invest as much as possible and to take advantage of the tax benefits. Trust me, it has greatly increased our dividend income and reduced our tax a bill. Sounds like a win-win to me.
Read: The Tax Benefits of Maximizing Your 401(k)
The results are fascinating and make me wish I had started doing this earlier. We received $3,500 from our retirement accounts this month alone. This is why we love December. Not only do we receive dividends. We also receive capital gains distributions from our funds as well.
To add another wrinkle, the dividends paid by funds were mixed in December. Some funds announced larger payouts while others announced smaller payouts. For example, my wife as VSMPX in an old retirement account. Therefore, we no longer contribute to this fund. As you can see, our payout decreased compared to last year. In other funds, it is more difficult to tell this occurred due to the fact we are actively contributing.
Observation 2: Impact of Dividends Received from My Wife’s New Investments
We have been fortunate to be in a position where we could invest in a lot of dividend growth stocks in 2020. One of the best aspects is that we have been able to really grow my wife’s portfolio. Her holdings are denoted with a “w” after the ticker in the chart above. Look at how many new investments paid her a dividend this December compared to last. The list includes Smuckers, Pfizer, IBM, Walgreens and Discover. All of which are great dividend growth stocks that should pay a growing dividend for years to come.
Don’t Miss: We Disclose Our Full Dividend Portfolios on the Website
In 2021, we are going to continue buying and growing her portfolio. There are still many great dividend stocks we can add to her portfoio. Let’s keep pushing and growing our portfolios! Next December, I would love to see 5 new dividend stocks that paid her a dividend. That would be SICK.
Observation 3: Despite Recent Dividend Increases, Dividend Cuts Still Stung in December
There were plenty of positives in December. In fact, as you’ll see later in the article, December was yet another example that DIVIDENDS ARE BACK. Companies continue to increase its dividend and pay us shareholders larger dividend payouts.
Read: Dividend Stocks are Back! | Reinstating & Rising from the Dividend Cuts!
However, with that being said, we are still feeling the impact of several dividend cuts from earlier in the year. Three companies paid us significantly less money in December 2020 compared to last year due to cuts. Two of the holdings are major integrated oil companies. Yes, BP and Shell both cut their dividend (although Shell announced a very small dividend increase too). Further, Dominion also announced a large dividend cut.
All three companies are looking to right size its balance sheet, de-lever, and preserve cash flow. Unfortunately, that came at our expense this year. Just because we are receiving plenty of other dividend increases doesn’t mean that the losses don’t sting as well.
The Impact of Dividend Increases: December 2020
In this section, I will summarize the impact of dividend increases had on our dividend portfolio. Dividend increases are such an important component of dividend investing. We want to see our dividend income GROW and not remain stagnent and are constantly monitoring our investments for dividend increases. We summarize dividend increases in a monthly article on our series and have even began talking about weekly dividend news on our Youtube Channel. Yes, we love dividend increases that much!
Read: 7 Dividend Increases Expected in January 2021
December was filled with dividend increases. 3 dividend stocks in our portfolio increased their dividends. The following table summarizes the dividend increases we received:
I love Realty Income’s consistency. You can rely on the company’s quarterly dividend increases. That is why the Monthly Dividend Paying Company is one of the dividend investing community’s favorite investments. In December, our increase was small. But hey, every dollar counts on our journey to financial freedom.
Lastly, we received an increase from a community bank headquartered in Pennsylvania. The 4% dividned increase from Norwood Financial added over $3 to our dividend income.
Summary: Bert’s December Dividend Income
The book is closed on 2020. We are so happy to end the year on a high note. Nothing beats setting a personal record, right? The best part of divdend investing is that we are hoping to break this personal record once again in December 2021. Overall, this year has proved one thing to me. Work aggressively to put your capital to work in income producing assets. Work hard, save every dollar possible, and invest as much as you can in the market. No one could have predicted this was how 2020 was going to shake out at this time last year. However, because we continued to consistently invest, we were able to achieve a new personal record. Let’s get back to work, keep pushing, and set ourselves up for an even more successful 2021!
How did you perform in December? Did you set a personal record? What company or fund paid you your largest dividend?
Bert