I’ve teased over the last month that we crossed a MAJOR investing mile. I’m finally excited to share the news with everyone. Our family’s portfolio is now projected to earn over $10,000 in dividend income!
reflections about the journey
What started as an improbable journey 6+ years ago in a car ride with Lanny to a client in Pennsylvania is now starting to become more of a reality. At the time, I was new to dividend investing. I knew about a dividend reinvestment. But I didn’t truly comprehend the power that dividend reinvestment and dividend increases had on your portfolio. Luckily for me, I picked an amazing mentor and best friend to help guide me on this journey. From zero dollars in dividend income to $10,000 in dividend income, then eventually, to financial freedom, I am thankful to have such a great person to share this journey with. Life is all about the company you keep, and I’m very, very thankful for those I have that are so close to me.
Each month, we are releasing our monthly dividend income summaries to track our growth and progress. It does an excellent job of showing our growth in the SHORT TERM. Month over month, year over year. But not multi-year. On our website, we maintain our Dividend Income page. This page aggregates each monthly dividend income total, and provides link to our dividend income summary articles. For this article, to help reflect, I sipped a cup of coffee and just reviewed the growth over the years.
In January 2014, I received $27.85, in dividend income. In January 2019, I received $346.55. Talk about growth! These small changes in our portfolio, small additions, saving every dollar, pushing ourselves as hard as possible, it really works. I can’t say that enough. The math works when you put the plan to action. Sure, the results don’t materialize in one month. I never made a “get rich quick trade” that made my dividend income jump. It has all been slow, steady, and methodical. We stick to our dividend stock screener and buy when the metrics make sense. In fact, this is an excellent reminder that I need to continue to do that. Too often, I let investment opportunities go buy when our screener screams “BUY BUY BUY.”
As I finish reflecting and transition into talking about some of the major initiatives that helped me save and invest over the year, I want everyone to know that this is possible. It is possible for anyone to build a portfolio that generates at least $10,000 in annual dividend income. And I couldn’t have done it without all of the encouragement from my wife, Lanny and the dividend investing community. Everyone has been amazing and we are all surrounded by the RIGHT people to achieve Financial Freedom.
How I Crossed $10,000 in Dividend Income
Through saving and investing a large percentage of my income, I’ve been able to fuel my dividend growth portfolio over the years. Admittedly, I’m frugal, but not nearly as frugal as Lanny. That dude takes it to an unbelievable level (evidenced by his (~$3 per hour Living Cost per Hour). I’ve made plenty of financial mistakes over the years that have cost me thousands of dollars in dividend income. In theory, if I didn’t make these mistakes, today I would be writing about crossing $12,000 in dividend income, not $10,000.
Slowly, but surely, I am trimming the fat from my budget to squeeze out every dollar possible to invest in my portfolio. Lately, I’ve been challenging every dollar to save as much as possible. With each dollar saved, once I established my emergency fund, has found its way into my investment portfolio over the years.
But saving wasn’t the only way. I’ve made some other moves over the years to help jump start my portfolio:
-Several years ago, my wife and I started maximizing our 401k contributions. After that transitioned, our retirement balances began to sky rocket. Further, the tax savings allowed us to invest more in our dividend portfolio.
-When available, we utilized Health Savings Accounts and maximized our contributions. once again, capitalizing on the tax savings. Due to the fact that our health insurance plan is not a high-deductible plan, we haven’t been able to contribute this year. And we won’t be able to going forward. But this really helped us jump start some income over the years.
-Putting capital to work as soon as possible. Lanny always emphasizes the importance of buying income producing assets. Over the last three years, I have been more aggressive buying stocks with cash and pushing the envelope with the amount to invest. Once again, there is still a lot of work to do (and Mr. Market needs to show us some value for goodness sake). But still, it is critical to continue pushing and pushing to find investment opportunities to find ways to make your cash earn more. From 2016 – 2018, I did this well. And my portfolio responded as a result. Now, let’s make this a priority again as 2019 finishes out and I push forward to 2020.
Fun $10,000 in Dividend income tidbits
I thought it would be fun to slice and dice the $10,000 in dividend income number in a few different ways. This section will review what $10,000 in dividend income means from a few different angles.
-My dividend income stream alone will produce $325 in additional dividends each year (assuming a 3.25% yield). That doesn’t even include the impact of dividend growth. To me, it is so cool seeing how you income stream continues to produce MORE income. It is such a key part of watching your dividend snowball grow and pick up steam along the year.
-I recently refinanced my mortgage and saved $48 per month. My new monthly mortgage payment is $992.92. My dividend income stream cover 10 months of mortgage payments! Once I cross $12,000 in dividend income, I’ll be able to safely say that my income stream covers my mortgage payments. I cannot wait for that day.
-I ran the $10,000 dividend income through a dividend compounding calculator on dividend.com, assuming a VERY conservative 7% annual return for 15 years. After 15 years, the $10,000, with compounding, will grow to $23,966. The website states the average return for dividend stocks over the last 75 years is 11%. Assuming an 11% return, that $10,000 grows to $52,360.
I leave today feeling as exited, humbled, and motivated as ever to continue pushing forward. One of the best parts of dividend investing are the milestones. Lanny wrote about it a while ago and I truly believes it holds true. When you exceed one milestone, you immediately set yourself up for the next one. When it comes to dividend investing and portfolio growth, the ceiling continues to get pushed higher and higher with each feat. I’m celebrating $10,000 today; however I immediately have my sights set on crossing $12,000 in dividend income. To me, achieving $1,000 per month is the next step in my investment journey.
Thanks to everyone for making this such an amazing journey. Lanny, my wife, and the community. I couldn’t have done it without each of you. Now, let’s continue to make EVERY DOLLAR COUNT and push ourselves towards financial freedom.