Another month is in the books. We are officially rounding third and heading home in 2020. It is crazy that is the 4th quarter. September was another interesting month in the market. Finally, after months of a rising stock market, there were plenty of down days to take advantage of. Whether it was a good day or a bad day, there was one thing that remained consistent: dividend payments. We received a boatload of dividend payments in September. We were VERY close to crossing a nice milestone figure for the month.  Let’s review our dividend income summary for the month of September!

Why I Invest in Dividend Stocks

Our goal is to achieve financial freedom by investing in high quality dividend growth stocks.. In my mind, dividend investing is simple and the EASIEST form of passive income.  Nothing beats receiving income without having to lift a finger, right?

We find dividend stocks to purchase using our dividend stock screener. Our stock screener uses 3 SIMPLE metrics. Over the years, our stock screener has helped us find some awesome undervalued dividend stocks. In an effort to help us, and our readers, quickly find great dividend stocks, we have built some stock lists using our stock screener. The lists include our legentary  Top 5 Foundation Stocks and my 5 Stocks to Buy Now, Always and FOREVER!

Watch: Dividend Diplomats’ Dividend Stock Screener

Watch: Bert’s 5 Stocks to Buy Now, Always and FOREVER

Dividend investing in 2020 is as important as ever. Interest rates on our savings accounts continue to fall. It seems like Ally Bank and Capital One are cutting the savings rate on my “high yield” savings account on a monthly basis. Sadly, this low interest rate environment is not going anywhere anytime soon.

With low interest rates in our forseeable future, we are looking for new ways to earn additional passive income. It is time to put our cash to work! Dividend stocks are one of our suggested avenues for doing so. There are many great dividend growth stocks yielding well over the pathetic low interest rates I am receiving at Capital One and Ally.

Related: Cash is Dead – Why Holding Money in a Savings Account is a Fool’s Game

Building a significant stream of dividend income 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. Now, in 2020, I am enjoying some of my strong income months yet. The best part is…I’m just getting started.

Each month, we share our dividend income summaries to highlight our growth and progress. This is a fun and helpful excercise that holds us accountable. Further, it helps you, our followers, see the stocks we are purchasing.  The comments I receive each month are great, helpful, and motivating. That’s what it is all about.

Bert’s September Dividend Income Summary

In September, we received $1,941.89 in dividend income. That is a 15.7% increase compared to last year. Our growth rate slowed compared to previous months. We were SO CLOSE to crossing the $2,000 mark in September and are looking forward to doing so on a consistent basis next year. The following chart lists the individual dividend stocks and funds that paid us a dividend in September.

In every monthly dividend income summary article, I provide a few observations and highlights from the previous month. My notes for the month of September are as follows.

Observation 1: Lower Mutual Fund and ETF Dividends

This was a trend that I was expecting, unfortunately. However, most of the funds that we received dividends from during the month had lower dividend payments than past quarters.  Normally, this wouldn’t be a big deal. However, the dividends we receive in our 401(k) accounts from mutual funds are large. In fact, they are one of the major contributors to our dividend income in the last month of the quarter.

The perfect example of the decreased dividend payout is VINIX. This represents my old employer’s 401(k) plan. I am not actively making contributions to this fund. Thus, the year over year comparison represents solely the change in the dividend. As you can see, that was quite the dividend decrease.

Watch: Why I’m Investing in Vanguard ETFs

September is behind us, there is nothing we can do about last month. However, I am starting to get concerned about the dividend payouts in December. In December, funds pay a dividend and capital gains distributions. The market has been on a tear, so some funds may take their gains and run. Conversely, if lower dividend payments continue, can we be in store for a December Dud from Vanguard?

Observation 2: Scotts Miracle-Gro’s Special Dividend

At the end of July, Scotts Miracle-Gro shocked us all with a $5 special dividend announcement. Lanny and I were pretty shocked, and pumped up, by the announcement. After all, who wouldn’t love a $5 per share special dividend? The special dividend was paid out in September.  This special dividend accounted for $122 of my total dividend income. Now, how do we get Scotts to pay a special dividend like that every quarter!

Observation 3: My Wife’s New Dividend Payments Compared to Last Year

I have been very proud about how we have been able to grow my wife’s dividend portfolio over the last year. The fruits of our hard work are finally starting to pay off. These new dividend stock positions are really starting to pay off and add some serious cash to our pockets.

Read: Our Entire Dividend Portfolio, which shows both our dividend stock portfolios.

In the table above, each dividend payment received by my wife is denoted with a “W.” Compared to last year, she has received 5 new dividend payments. The largest dividend payment was Exxon Mobil (XOM). It feels like forever ago since we built her position in the oil giant.  We continue to add to our position in Pfizer (PFE). We consider PFE an undervalued dividend stock and even published a video about why we may add to this 4%+ yielder.

Observation 4: The Power of Dividend Investing is Real

This last observation is one that is more of a rallying cry. Each month, I am amazed by the power of dividend reinvesting. What do I mean by this? It is simple. Dividend increases and reinvesting dividends make a huge difference over time. This power increased the quarterly dividend we received from T. Rowe Price (TROW), for example. DRIP increased our dividend payment from Target (TGT) by $3. In aggregate, each additional dollar and cent added brings you one step closer to financial freedom. Man do I love dividend investing.

Dividend Portfolio News & Updates: September 2020

In this section of my article, I discuss the impact dividend stock purchases and dividend increases had on my portfolio.  Even though we had a successful month, we need to continue pushing forward. That is the purpose of this section. To show what we did to grow our dividend income during the month!

Last week, I published my dividend stock purchase article. Therefore, I won’t discuss each individual purchase in detail. September presented some great dividend stock opportunties for investors and we were able to capitalize. We invested over $3,300 in capital into the market in four dividend stocks. The dividend stocks are Cisco (CSCO), AT&T (T), Walgreens (WBA), and People’s United (PBCT). The following table summarizes the stock purchases.

Our average yield on stock purchases was over 5%. It is easy to see why, when considering the companies we purchased last month. Going forward, I would anticipate our average dividend yield to decrease. In October, I can confirm that I have purchased some stocks with a dividend yield below 5%!

Next, let’s discuss the dividend income added due to dividend increases. Finally, after several months, we did not receive a  dividend cut. That is huge. Nobody likes taking a step forward. Especially when the step backwards is rather large (thanks for the massive dividend cuts BP and Dominion). 4 of our holdings increase their dividend in September. The company, dividend increase, and additional dividend are summarized in the following table.

The largest dividend increase was Starbucks. Both in terms of percent dividend increase and additional dollars received.  That dividend increase can buy us a few cups of coffee each year (kidding)!  The other two dividend increases, Philip Morris and Realty Income, were in line with their expectations. PM’s dividend increase was in line with Altria and Realty Income continued  marching forward with their micro, quarterly dividend increases. I must say, I do love the Monthly Dividend Paying Company and their consistency.

Read: We review ALL dividend increases in September and Predict the Expected Dividend Increases in October. 

In total, we added $187.30 in dividend income from dividend stock purchases and dividend increases. With dividend income from 401(k) purchases, that number eclipses $200.  The dividend snowball continues to roll downhill!

Summary

Overall, I couldn’t be happier with the progress in September. The bottom line is simple. Each month, we are one step closer to financial freedom.  Our strategy of investing into dividend growth stocks is working.  If my dividend income summary doesn’t prove this point to you, I strongly suggest you read Lanny’s dividend income summary as well! He and his wife earned over $3,300 in dividend income in September.

Let’s continue pushing forward and attack the rest of the year. Let’s try harder than ever to make every dollar count and invest every cent possible into income producing assets. I’m pumped up and motivate to finish strong. Hopefulyl you are too!

How much dividend income did you receive in September? What dividend increases did you receive? Did you notice a decrease in your mutual fund dividend payments as well?

Bert