It’s finally time to publish the first dividend income update of 2018!
In case you missed the 2017 dividend income updates, you can check out my newly created DIU page here.
Now, I’m especially excited to publish this months update because a new all-time high was achieved.
For the month of January 2018, I am thrilled to report that $28.26 in dividend income was paid!
As you can see from the chart included below, this months income far exceeded all of last years monthly totals.
In fact, dividend income paid in January is already equal to 48.61% of the entire amount of income earned in 2017!Dividend Income Paid In January 2018 - DIU # 8 Click To Tweet
The Power of Dividend Income Investing
I understand that $28.26 doesn’t buy much nowadays. And I get that Bitcoin and Marijuana “investors” have experienced greater returns in the past year.
But failing to grasp the power of dividend income investing is extremely short sighted.
For example, a couple hundred percent return is better from a growth perspective in the short term. However, unless you’ve selected the next Apple or Amazon growth story, the growth potential is limited by the amount of money you can afford to invest.
To demonstrate this concept, let’s imagine that you invest $1,000 and you earn a 500% return. Ultimately, you have multiplied your money by 5, which means you end up with $5,000. But here’s the thing, though – you now have the responsibility to continue to grow that money. Frankly, it’s unlikely that the original company will grow another 500%, and it’s even more unlikely that you’ll be able to reinvest those funds to earn another 500% return.
On the other hand, you’ve got good ol’ predictable dividend income investing. In this case, let’s imagine you’re able to invest $1,000 per month in to passive dividend paying stocks yielding 5%, which is not unreasonable.
Based on those numbers, you’d end up investing $12,000 per year which would create $600 per year in dividend income.
Furthermore, if you were consistent with this approach over a 10 year period, you would’ve created a cash flow machine that generates $6,000 in annual income. Technically, if you don’t need that money to live off, you would be earning more than what could be provided by a growth stock every single year. In addition, you would then have an abundance of cash flow to take more risk on growth stocks. And this is without even factoring in dividend growth rates…
Moreover, I realized that my strategy to reach financial independence through dividend investing can realistically be achieved within 10 years.
In short, adding $1,000 in dividend income per year would create a business that generates $10,000 per year in 10 years. Again, this is without considering dividend growth rates. Based on a 10% annual dividend growth rate, your 5% yield would grow to a 10% yield in 10 years. This means that your $10,000 in annual income has now grown to $20,000. Of course, not all holdings will grow at this rate. But I kept the numbers simple for this example.
If you break the numbers down further, it would only require $83 in dividend income per month to add $1,000 per year. Considering that I’ve been adding approximately $50 in annual income the last two months, adding $83 per month is not that far off.
Nevertheless, this realization has caused me to re-think my annual income goals. And it has also made me reconsider my spending.
Dividend Income paid in January 2018
Total dividend income paid in January: $28.26
Last quarters total (October 2017): $17.95
QOQ growth (compared to October 2017): Up 57.44%
Total dividend Income paid in 2018: $28.26
Monthly average in 2018 (as of February 10, 2018): $15.78
How many businesses paid dividends in December: 4 (up 2 since last quarter)
Based on my goal to earn at least $425 in dividend income this year, I’d say this year is off to a great start.
I added a total of $46.96 in annual dividend income in January, which has pushed income substantially higher when compared to the most recent forward update.
Furthermore, the recent market pull back has created a plethora of investment opportunities.
“If you worry about a stock market correction you shouldn’t be in the market” – Warren Buffet
As an early stage dividend investor, I more than welcome market corrections.
I look at market corrections as an opportunity to release shares from weak hands, and I feel extremely fortunate that my calm, patient nature lends itself well to investing.
In conclusion, I look forward to growing this business during the remainder of 2018. I also can’t wait to share the progress in the months to come.
To give you a clue in to how fast the RTC portfolio is growing, dividend income will surpass the 2017 total by March.
Questions for the Readers: How was your dividend income for January? What are your thoughts on the recent market correction?