Here comes dividends, here comes dividends, right down Lanny’s investing lane! Yes, I had to throw a Christmas cheer to the biggest dividend month of them all! It’s been a fast month, with family, work, year-end and a lot of late nights/early mornings. Grab that cup of coffee and let’s see if I was on the naughty or nice list, in terms of the dollar amount of dividends I received this December!
I received a total of $2,657.39 of dividend income in December. Wow. A December record and a full-year paying off, from new investments to dividend increases. What’s wild is – this is the first time where it was officially hard to get to this spot. This has taken many years, saving and investing to get to these figures. One could say, the blood, sweat and tears. Damn, I need a glass of wine for this. Further, the 401(k), Health Savings Account (HSA) and all dividends are automatically invested/reinvested and helps take the emotion out of timing & making a decision. Also, to find out why I max out my 401(k) and HSA – please refer to the 3rd part of my tax series, (though I have the breaks on the 401k, as I recently posted due to the 6 month waiting period, only a little over two weeks of waiting to go!) as that describes the magnitude of benefits to increase the amount you can invest due to reduction in taxes. Here is the breakdown of dividend income for the month of December!
What stands out is the number of entities that send dividends my way. From an individual taxable account, Lockheed Martin (LMT) and Target (TGT) take the cake here, with Shell (RDS) sneaking up from behind. However, what this list also is a testament to is that there are new names this December, such as Dominion (D) and even Vanguard Dividend Yield (VYM) ETF. Speaking of Vanguard – they came in and walloped an, “almost”, $800 dividend to the portfolio and T. Rowe Price’s fund I’ve had for as long as I’ve been investing, distributed over $700 my way. Thank you investment firms!
Similarly, I have split out between the individual stock amounts and the retirement accounts, as the ” – R” indicates a retirement account dividend (or the furthest column to the right). I separate these two, as I like to know what portion of my dividend income is coming from those retirement accounts that I cannot touch until 59.5 (barring any other usage rule I could use). Here, it shows that I received a total of $1,759.32 (up from $1,244.09 last year) or 66.2% of my income from retirement accounts and the other 33.8% was from my individual taxable account portfolio. This ratio, surprisingly, increased from last year and it has to do with the larger VINIX and new VYM dividend. Lastly, this shows from retirement accounts that I’m all ready for my set it and forget it mentality to keep that income going. To see my portfolio – one can go to our portfolio summary page.
Dividend Income Year over Year Comparison
Now, I will compare the previous year’s linked month to this month. Last year was my first time crossing the $2,000 threshold. Who would have thought I would add over 30% more to that in the following year? In regards to the actual growth rate, my dividend income was up 32.26%! My goal is to be well over $3,000 in dividend income next year (that sounds crazy just typing that). One difference here is Delta (DAL) paid in November, instead of paying in December. This was offset by having Dominion (D) in the fold this year. Quite honestly, from a taxable standpoint, the differences were the following actions (outside of Dominion): an additional investment in International Business Machines (IBM) and Kraft (KHC). The remaining increase in the taxable account was due to the other two legs of the dividend stool, which are reinvestment and increases. The retirement accounts blew this out of the water versus last year.
A month wouldn’t be a month without high quality companies increasing their dividend! See the small chart below for the details on the dividend increase announced this month from my portfolio.
Dividend increases this month did not disappoint, yet again! 5 companies lined up December with dividend increases. No real surprises, otuside of the more than expected dividend increase from Norwood Financial (NWFL) and that Dominion came in higher, as my expectations were lowered with the Scana acquisition. Five companies increasing their dividend was a great way to finish the year. Further, in order to add $47.48 to my dividend income, I would have to invest $1,356.57 at 3.50%!
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 a balanced life. My plan is to show that dividend income can be a revenue engine. A revenue engine that can allow you to take back control of your life. Dividend investing, once you learn the right way, becomes easier and starts to make quite a bit of sense!
As I discussed in my normal monthly expenditures article, the dividend income would cover almost 3x my average $984 monthly expense, which includes the mortgage, property taxes, insurance and utilities. If only this was all taxable and happening each month, I would be financially free, no doubt! What a month, everyone, what a month. In similar fashion – 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 allowed promising results already this year.
I know this is jumping the gun, but great job to everyone. Further, thank you for sticking with me, Bert and the Dividend Diplomats in general this year, as we could not be doing this without you. 2019 is going to be an incredible year, one filled with life events, travel and, of course, dividend investing baby! Cheers to 2018 but bring on 2019, LET’S GET IT!!!! Thank you again, good luck and happy investing!