Hope everyone enjoyed Labor Day! The stock market continued to surge OVER 7% during the month of August! Then, the HEROES ACT or HEALS ACT still sits in Congress, as they are on recess and they make attempts to finalize the next economic stimulus package. Dividend income, though, continues to be a very hot topic, as us investors away announcements, fearing the potential dividend cut.
In August, we set ANOTHER record for dividend earnings and it shows proof that dividend income is one of the best passive income streams. Time to dive into my August 2020 dividend income results!
Dividend Income
Dividend Income is the fruit from the labor of investing your money in the stock market. Further, Dividend Income is my primary vehicle on the road to Financial Freedom, which you can see through my Dividend Portfolio.
How do I research & screen for dividend stocks prior to making a purchase? I use our Dividend Diplomat Stock Screener and trade on Ally’s investment platform (one of our Financial Freedom Products) – commission free.
Related: Dividend Diplomat Stock Screener
Relates: Financial Freedom Products
I also automatically invest and max out, pre-tax, my 401k through work and my Health Savings Account. This allows me to save a TON of money on taxes (aka thousands), which allows me to invest even more. In addition, all dividends I receive are automatically being reinvested back into the company that paid the dividend. This take the emotion out of timing the market.
Related: Tax Strategy – Part 3 to Reduce Taxes & Increase Investment.
Related: The Power of Dividend Reinvesting
Related: Why I Don’t Time or Predict The Market
Growing your dividend income takes time, consistency and allow compound interest (aka dividends) to work it’s magic. I have gone from making $2.70 in a single month in dividend income to well over $3,500+ in a single month. That dividend income record was set in 2019. The power of compounding and dividend reinvestment is a wonderful component to the portfolio. Each and every month, whether big or small, I continue to report the passive income that dividend investing provides me. Why?
*Not pictured is my wife’s dividend income above*
I want to show YOU that dividend investing makes it possible to achieve financial freedom and/or financial independence. We all start somewhere, but consistently investing, compounding (reinvesting) dividends and keeping it simple, allows you to be in a significantly better position than most. Further, if I can grow this portfolio and income stream, YOU can too.
dividend income – August 2020
Now, on to the numbers… In August, we (my wife and I) received a total of $1,060.52 of dividend income. A record dividend income month for us, to say the least! This actually is a HUGE MILESTONE for us. Crossing 4 digits in a non-quarter-end month brings music to the ears! The passive income stream just continues to grow.
Despite the pandemic from COVID-19, dividend income continues to grow, due primarily to additional investment and reinvestment. In the dividend stock purchases article released earlier in the month, my wife and I invested over $5,000+ in dividend stock investments!
Further, though the dividend cuts hurt very bad, I know we did not take the worst of it. Dividend increases have also helped fuel the income growth. Dividend increases are discussed below and that’s one of the best feelings of being a dividend investor.
Related: Dividend Cuts: Pandemic Impact on Lanny’s Portfolio
Here is the breakdown of dividend income for the month of August, between taxable and retirement (far right column) accounts:
Looking at the list above, there are some LARGE dividend payments. First, that AT&T (T) dividend is over $125, just wild! Second, National Grid (NGG) pays semi-annual and their dividend payment was huge, at over $130. There is a new position, of Eaton (ETN), but sadly – I didn’t acquire as many shares as I should have, as their stock price has skyrocketed.
We shall see how Kinder Morgan (KMI) does with their dividend. Kinder Morgan increased their dividend earlier this year by 5%, but that was less than they had planned, see their announcement headline, though, below!
However, everything on this list seems to be very safe in terms of dividend safety. WestRock had cut their divided (though I would argue they never had to, agh!), which I am hoping they are using the extra cash flow to pay down debt.
Related: Stocks to Buy in a Post-Pandemic World
Related: Top 5 Foundation Dividend Stocks and watch our video: Top 5 Foundation Stocks VIDEO
As for our retirement accounts, we received a total of $364.64 or 34%. The other 66% was from the individual taxable portfolio that can be used for everyday expenses. I need to keep bolstering the taxable account, as that passive income stream can be accessed today/right now. However, I continue and will always maximize the 401k and IRA, as that continues to pay-off in dividends, literally.
Related: Maximizing your Roth for 10 Years… Then Set It & Forget It!
DIvidend Income Year over Year Comparison
2019:
2020:
Dividend income, year over year is higher by $73.77 (including my wife’s dividend income of $170.55 last year with mine). This is a 7.50% growth rate from prior year. This time next year, we will be pushing over $1,000. We can do this, no doubt!
The dividend aristocrats were heavy, with AT&T (T) continuing to snowball into more shares and more dividend income. I am loving my new dividend aristocrat position with General Dynamics (GD), adding a nice chip in.
Related: Dividend Increases Expected in July 2020
CVS (CVS) dividend should be higher next go around, as I have slowly been adding one more share here and there. I am looking forward to when their debt is lower and they increase their dividend. I originally anticipated CVS to increase their dividend in the 4th quarter of 2020, but I am now estimating this could be in the 4th quarter of 2021, due to the pandemic. Their earnings support it, without a doubt, and I know us investors are patiently waiting for the dividend increase!
Time to beef up positions, increase the # of shares I own and set records again in 2021.
Dividend Increases
I received 2 dividend increases in July. Glad I can keep the momentum through August with one incredible dividend increase, showcased below:
Related: The Impact of The Dividend Growth Rate!
Illinois Tool Works (ITW) continued their dividend aristocrat streak. I knew a raise was coming, but honestly did not anticipate such a high dividend increase. Given the global pandemic, dividend increase expectations are low, at least from my viewpoint. I do not anticipate anything greater than mid single digits this year. Therefore, seeing ITW punch an almost 7% dividend increase, in the middle of COVID-19 screams confidence. Further, I love the additional passive income this has created, at $7.08!
September is fully loaded with major dividend players. We are talking McDonald’s (MCD), Lockheed Martin (LMT) and Philip Morris (PM). I cannot wait to see what these 3 dividend companies will do this month.
McDonald’s (MCD) will announce on September 17th – at approximately 4:30-5:00 PM. You heard it here! Lockheed Martin (LMT) should be announcing on September 24th, a week after. Philip Morris (PM) may be announcing on Wednesday, September 9th. 3 Dividend beasts ready to unleash cash to shareholders. Let’s get excited community!
Related: Dividend Increases Expected in September 2020
In total, dividend increases created a total of $7.08 in additional passive dividend income. I would need to invest $202 at a 3.50% dividend yield in order to add that income. Thank you for the increases, as I didn’t have to come up with the capital to create that form of income!
Dividend Income Conclusion & Summary
The name of the game is to apply what you learn through financial education. The next steps are to maximize every dollar for investment opportunities and live life on your own terms. My plan is to demonstrate that dividend income can be a revenue engine. A revenue engine that allows you to take back control of your life. A revenue engine to help you reach financial freedom. Dividend investing, once you learn the right way, becomes easier and starts to immensely make sense!
Excited for the future, no doubt. Further, all of the investing from last year and moves this year, shows that my aim to save 60% of my income, and making every dollar count, has provided the dividend growth.
If you are just starting out on your investment journey and you aren’t sure to start – please see the articles mentioned throughout this post. We are trying to bring you financial education and help you reach your financial goals.
Further, if you are starting out and/or want to know the Top 5 Stocks we always recommend, please see our YouTube video, subscribe to our channel and check us out! We’ll help break down further investing topics not only on this blog, but by showing you through video!
As always, thank you for stopping by, leave your comments and questions below. Good luck and happy investing everyone!
Holy Moly Batman! A 4-digit dividend income month! I wish I could add gifs to show how excited I am for you guys!
-Andrew
Wallet –
Maybe wordpress should start allowing that!
Thank you, though. Obviously, the compounding has been insane. Hope the companies can continue to right their ships!
-Lanny
ITW is a wonderful stock and part of my monthly updated Dividend Growth Stock Database. You can find the list with over 1.000 of the best long-term dividend growth stocks on my blog. ITW has a good yield of 2.4% but earnings are expected to grow by only 0.4% for the next five years. Because it’s a cyclic industrial stock, I would wait to buy more of the stock.
Tom –
Love ITW. I would wait as well, of course. Their P/E ratio is way too high right now and they’ve had an insane stock surge up over the last 12+ months.
-Lanny
Another month and another four digits brought in passively. Congrats. Like that that T dividend too. I have said it before but it’s been amazing to see the growth in income this year despite the minefield of cuts we all have experienced. Looks like 2020 will best our 2019 totals despite an ugly year in finance.
DH –
Thank you, so much. Yes, it has been a minefield that we continue to dodge and jump from. I have been knocked a few times this year, still recovering, but it’s all been progress since the end of Q2!
-Lanny
Congratulations on that level of dividend income at such a young age! The future definitely looks bright. Thank you for recommending PBCT and I’m looking forward to receiving my first dividend from them in November. Keep up the great work!
Forward Dividends –
I appreciate it so much, means a great deal. I cannot wait to see the PBCT reinvestment in full force myself. November should be really cool to see, now that you mention it.
I’ll keep going, so long as you keep going!
-Lanny
Congrats on a record 4-digit month! Nice $125 T payout too! Looking forward to see MCD’s dividend increase later this month as well. Keep up the great work! 🙂
MDD –
Thank you very much, as always. Pumped, as well, 8 days away I believe from the dividend increase. Looking forward to that and LMT in a 15 days, as well.
-Lanny
Awesome numbers and 1k in August is really good.So many common names between us,as you guys always inspire us.T/AAPL are some of my biggest payers
Desi –
Thank you so much. You inspire us, as well! AAPL will be a big payer for YEARS to come! AT&T continues to surprise me with stock price and yield!
-Lanny
Lanny,
Congrats to you and your wife on passing $1k a month in dividends last month. High-single digit YoY growth on that base is pretty damn impressive, especially given the circumstances. I was pumped up by the dividend increase from PM yesterday as it was completely as I expected.
Lanny,
That is amazing! Congrats on the 1K in a non-quarter-end month, I still have a long ways to go as I only received 421.53 in the month of August, but man oh man, hoping to get there as well! Love it!
Stockrider –
You’ll get there in no-time, that’s for sure.
-Lanny