Dividend Income Update – December 2012

Another month has passed by, and it’s time for me to post an article on my favorite subject: dividend income. The reason why I love to post articles on dividend income is because it’s pure numbers. It’s hard to argue the success of long-term dividend growth investing when you can slowly and surely see dividend income rise over time and get closer to covering one’s expenses.

What you’re going to see below is my highest monthly dividend tally ever! Of course, this was helped a bit by the fact that some of my holdings (including The Coca-Cola Company (KO) and Wal-Mart Stores Inc. (WMT) among others) decided to move up their dividend payout dates and pay out in December of 2012 instead of January of 2013. This was a move to help investors avoid potential negative tax consequences affecting dividend payouts. While I appreciate these companies looking out for investors, as it shows what kind of culture they have, I would have preferred they just continue paying out like normal. Of course, I’m receiving peanuts compared to major shareholders who likely applauded, and voted for, the moves. I also received a special dividend from Southside Bancshares, as they paid out two special dividends totaling $0.33 per share over and above the usual $0.20 per share.

I hope these monthly dividend income reports provide inspiration for any investors out there that are just starting out. It’s easy to see these payments rising month after month and it shows that it’s possible to one day pay for monthly expenses with dividends, which would provide an investor opportunities and freedom to pursue other interests than full-time work. Without further ado:

December 2012 Dividends Received

  • ConocoPhillips (COP) – $36.30
  • Aflac Incorporated (AFL) - $25.90
  • Intel Corporation (INTC) – $38.25
  • Phillips 66 (PSX) – $6.75
  • Southside Bancshares, Inc. (SBSI) – $33.39
  • Harris Corporation (HRS) – $14.80
  • Chevron Corporation (CVX) – $36.00
  • Emerson Electric Co. (EMR) – $24.60
  • Norfolk Southern Corp. (NSC) – $25.00
  • Lorillard Inc. (LO) – $31.00
  • Johnson & Johnson (JNJ) – $42.70
  • Avista Corp. (AVA) – $15.95
  • The Coca-Cola Company (KO) - $10.20
  • McDonald’s Corporation (MCD) – $46.20
  • General Dynamics Corporation (GD) – $10.20
  • Wal-Mart Stores, Inc. (WMT) – $15.11
  • Unisource Energy Corp (UNS) – $17.20
  • Medtronic, Inc. (MDT) – $9.62
  • Illinois Tool Works Inc. (ITW) – $13.30

Total dividends received during the month of December: $452.47

Wow! That’s a hell of a total right there. This is the first time I’ve ever crossed the $400 mark in one month, and I did it in less than three years of investing. I went from being worth less than I was as a baby to being able to claim a full $450 in passive income in one month. That’s progress right there. And the great thing is that I’m no genius. I simply try to identify high quality companies that have common stock trading for a relatively attractive price which grow their dividends annually over the rate of inflation. You can do this too!

This month’s total obviously is much higher than what I received last month, at almost triple the amount. Of course, again, this month’s total was artificially ramped up a bit due to premature dividend payouts, and so because of that my January 2013 dividend payout total will be much less than it should have been. So, the celebration is on for today, but January will be a bit sobering. This total is also very attractive compared to the dividend total I received in December of 2011, being almost 2.5 times higher.

This month’s dividend total covered a full 37.9% of my expenses this month! That’s simply fantastic. It’s good to know that I only needed to come up with about $740 from my day job to meet my expenses. The journey to financial independence is a wonderful journey indeed when one can see tangible, real results like this.

With December’s dividends totaled up, I can now publish exactly what I earned in dividends during the entire year of 2012. I received a total of $2,602.58 in dividends through the entire year of 2012, blowing away my goal of receiving $2,000 in dividends for the year! I’m so extremely fortunate and grateful for this. I can’t wait to put together an even more challenging dividend income goal for 2013 very soon, as I will be reviewing the year of 2012 shortly and also looking forward to this year’s goals.

I’ll update my dividend income page to reflect December’s dividends.

Full Disclosure: Long all aforementioned securities

Thanks for reading.

Photo Credit: sscreations

Comments

  1. says

    Wow. December was an impressive month DM! Congrats!

    Congrats on three years of solid progress too. You have continued to impress me with your discipline and tenacity.

    Best wishes for 2013!!

    • says

      The Stoic,

      Thanks for the support! I’ve been unbelievably lucky and fortunate. I’m extremely thankful for that.

      Tenacity is definitely the name of the game, as DGI is certainly no get-rich-quick scheme.

      I hope you’re off to a wonderful 2013.

      Best regards!

  2. says

    Congrats on passing $400! I really like looking back on where I was last quarter and soon enough last year to see how much progress has been made. KO actually didn’t accelerate their dividend, they just pay on a weird APR-JUL-OCT-DEC schedule. $2600 in dividends is awesome I’m going to be close to that at the end of 2013 maybe pass depending on how things work out. Keep up the great work and I’ll be looking for your 2012 wrap up.

    • says

      Pursuit,

      Thanks so much for catching the KO error. All the companies I could have listed as paying out early that I own (GD, MDT, ITW) and I list the one that didn’t accelerate the dividend! Go figure. That’s what I get for writing an article so late at night.

      You’re going to be smoking my dividend totals pretty soon based on your savings rate. Keep it up! You’re doing great.

      Best wishes.

    • says

      Chris,

      That’s an interesting article there. I currently do not have any health insurance at all, but am likely to enroll in a HDHP very soon, so that HSA could work out very well. I’ll keep you informed.

      Best wishes.

    • says

      Gareth,

      Thanks for stopping by.

      I certainly hope I have a couple in 2013. Over $400 in passive income is an achievement that I definitely did not foresee myself reaching quite as soon as I did, so I’m very grateful.

      I hope your journey is treating you well, and the road to FI is going very smoothly!

      Take care.

  3. says

    DM, thanks for sharing. It is very motivating to strive more. I am impressed on those results and wish to get to it as quickly as possible. Comparing my results with yours I have a long way to go to get to the point you are. But I started late. It’s nice to see your reward which motivates.

    • says

      Martin,

      I’m glad you find motivation here with these posts. That’s the primary reason for posting them. You can see on the “Dividend Income” page that the totals grow very quickly if you stay committed to the plan.

      I started a bit late as well. I certainly wish I could go back in time and use an inheritance I received to start investing at 21 instead of wasting that money, and 7 years, away. But, you live and learn and I don’t have any regrets. I am who I am today because of the decisions I’ve made. Regretting the past would be regretting the present. It’s never to late to start!

      Best wishes!

    • says

      DM, I totally understand. There are things and experience you cannot pass from you to your son and so on. Although there are many books warning us against some mistakes, we still make them. I also learned my lesson. And now I have the plan too and going to stick to it. 2013 is the year to boost my portfolio. Thanks

  4. says

    Impressive! I really don’t think it’s going to take you 10 more years. I’d be shocked if these dividends grew at a pace less than current inflation, not to mention reinvestment. Having an extra $450 to invest is huge.

    • says

      Compounding Income,

      Thanks. You’re doing great as well. Your hard work is paying dividends now, literally and figuratively. Your progress inspires me and others, so keep it up.

      I certainly don’t know what the future holds, but if I could reach FI in under 10 years I would consider that an absolutely epic achievement. I’ll certainly give it my best go!

      Take care!

  5. says

    Congrats DM, 30% above your goal is just fantastic – especially considering the hiatus you took this year. Nonetheless, good to have you back and keep fighting the good fight! Your updates are ALWAYS inspiring and sincerely appreciated.

    • says

      Punctilious,

      Thanks for stopping by! I appreciate it.

      Yeah, if I wouldn’t have taken that hiatus I’d definitely be quite a bit further ahead, but it is what it is. I’m just glad it didn’t last that long and I’m back on the road less traveled.

      I’m glad you appreciate the updates. It’s you readers that also inspire me!

      Best wishes!

  6. Chris says

    Nice work DM, I am happy for you and your progress towards your eventual goal. This is inspiring, thanks for the post as always.

    • says

      Chris,

      I appreciate the support.

      I’m just as grateful for the investments and dividends as I am for this blog and you readers. The whole thing is just really a dream right now. So thank you!

      Best wishes!

  7. says

    Hi DM,

    Always appreciate your article, I read them all. I find your journey fascinating… maybe because it is part of ours as well!

    On that matter, I would like to get an update on your thoughts about your goal. I know you are aiming for retirement at 40 with about $1200 in dividend per month… and let them growth after naturally.

    Could you provide the kind of budget structure for that $1200? What if you get to that number before 40, would you retire sooner? Is “to simplify”‘s blog an inspiration to your strategy?

    It could be great to talk about the goal situation or the way of living it as much as the way to get there ;)

    Thank you for your thoughts,

    G

    • says

      grox01,

      I’m glad you find this journey inspiring as you continue walking your path. We’re all in this together.

      I’m not quite sure I really have a budget structure for early retirement. My budget is organic in nature, and it changes and evolves as life continues to spin and change. As my dividends grow and as time passes, the income that I’ll need may go up or down and I’ll do my best to adjust as I go. I’m basing my FI budget on what I spend now because it’s all I have to go on. I also anticipate having a $0 student loan expense when I’m financially independent, which makes up a significant portion of my monthly expenditures right now.

      I do read “to simplify”. I really like what Glenn is doing there, but it wouldn’t really work for me. As much as I like his approach I believe that would isolate me from society too much.

      You know, it’s funny…I think about FI pretty much every day. What I’ll be doing, what I’ll be thinking about, how much life will be different. Yet, I don’t really convey those thoughts or ideas as much as I’d like on the blog. I’ll have to change that.

      Best wishes!

    • says

      I was wondering why I didn’t get a response from you… I just realized that I didn’t check to be notified!!! :)

      So thank you for your answer and I am happy to find a little bit more about how you think or see things as this is the premise for our future project… living life.

  8. says

    Congrats DM!. Nice going. I think with better than expected results like that, your dividend goals should be all be attainable, hopefully sooner than you plan.

    • says

      Integrator,

      Thanks! I certainly hope you’re right. You definitely know a thing or two about dividend income and attaining goals, so your thoughts and support are much appreciated.

      I hope you hit that $50k dividend goal! That would be simply amazing. Keep up the great work.

      Best regards.

  9. Anonymous says

    Isnt it just so much fun, watching our dividends come in and grow? I, too, would have rather not had the extra dividends this month, as it will lower the next quarter, but it is what it is. My goal for 2012 was to reach $3600 in dividends, and I made $3700, so I exceeded my goal too. Havent decided on a goal for this year. Its been fun watching your journey, continued good fortune to you.

    • says

      Anonymous,

      It’s amazing fun to watch the dividends grow. I do agree with you! I guess I’m easily entertained, but I just love seeing dividends hit the brokerage account.

      Congratulations on hitting $3,700 in dividends this year! You exceeded your goal, which was a pretty big goal. I hope I can hit somewhere around that by the end of 2013.

      It sounds like you have a pretty big portfolio with some pretty serious dividends there. That’s over $300/month. Keep up the great work!

      Take care.

    • says

      Headed Home,

      I’m with you. Although I would have preferred the dividends hit my account in 2013, thereby saving me the tax load for a year and keeping my payouts a little smoother, the fact that the companies are looking out for shareholders speak volumes.

      Good luck with the renovation!

      Best wishes.

    • says

      FI Journey,

      Wow! We had pretty similar dividend income totals. Great job! I hope we continue along similar paths and continue to grow our wealth.

      You’re right on KO. I really can’t believe I made that amateur mistake, but that’s what I get for writing an article at 10 p.m. after a long workout session. I could have listed any number of companies that did accelerate the dividend, and listed a gigantic company that did not. Funny.

      Please stay in touch. I hope our journeys continue to inspire each other!

      Best wishes!

    • says

      DGM,

      Thanks! We both had a great 2012. I certainly hope 2013 is just as kind to us as we prospered in many different ways.

      I agree with you. The tangible, and growing, characteristics of dividends really allow them to function as a motivational tool to keep us investors focused on the big picture, while still giving us short-term tastes of victory.

      All the best for the coming year!

      Take care.

  10. says

    Congratulations on the 2012 milestones. You have done awesome work. I remember when you portfolio was just breaking the 5 figure mark. I am trying to impress upon my 23 y.o. son to follow the dividend way..

    I have a question on your hiatus months, did you feel that you had reached some kind of ‘savings/frugal living’ burnout? Kind of like work burnout?

    Don’t get me wrong, you still saved an impressive amount those couple of months, more that I could have, but I was just curious if there was a slight strain there of your lifestyle. Kind of like when you diet with only healthy foods and have a binge of ice cream or sweets, pasta, pizzas, bread, whatever….

    IF that were the case, maybe you could talk about that and what happened, what you plan in the future to avoid a similar, for lack of a better word, ‘binge’? I know it would help me and others who might have felt that way or have completely fallen off the wagon ;)

    • says

      me myself and I,

      Interesting question there. Thanks for asking that.

      My hiatus wasn’t so much of a “burnout”, but rather it was me questioning myself as to whether I was doing the right thing. It had been a while at that point since I had lived what most people would call a “normal” life. I had been frugal for some time, dating back to at least a couple years before this blog was initiated. Even though back then I wasn’t intently frugal, I simply wasn’t making much money and had big regular expenses like rent, a car payment and associated expenditures (gas, insurance), food costs and everything else. I was barely making it for years.

      So, once I was finally making good money I was already well entrenched into this journey. I guess I just took a breather and enjoyed the higher purchasing power for a bit to see “the other side”. It wasn’t glamorous or worthwhile, and I realized that everything I was saying and writing was true. I guess sometimes I need to speak to myself the loudest.

      The only sense of “burnout” I really had was simply due to being so busy. I have a sense of that all the time. I work over 50 hours a week, try to hit the gym at least 3 times per week, I research investments and run my portfolio as well as I can and I also run this blog. So, it’s a lot to keep up with. I guess I took a break from things.

      All in all, the hiatus was actually great. It provided me a sense of first-hand inspiration as I realized that what I’m doing is completely justifiable and almost righteous in a way. I now cannot imagine living any other way, or trying to achieve any other goal.

      I know it sounds cheesy, but I relate my experience to “The Matrix”. There is a difference between knowing the path and actually walking the path. Whereas before that hiatus I knew what I was doing and generally felt really great about it, I felt positively enlightened after the break.

      I hope that helps. I’m rambling a bit this Saturday night.

      Best wishes!

  11. Anonymous says

    This is Took2summit, I’m on a machine I can’t log in with.

    I have mentioned this to you before but thought I’d bring it up here again.

    I highly recommend you visit:
    http://www.bankrate.com/calculators/retirement/72-t-calculator.aspx

    This explains how you can withdraw money from 401k and ira before 59 1/2 without paying the penalty. The reason I bring this up is probably obvious. If you save your money in a 401k to the max ($17,500) and max out IRA ($5,500) you can save $23,000. Assuming you are in a %30 tax bracket, you would have to save the equivalent of $33,000 to equal that $23,000!

    The ONLY downside I can see is if your employers 401k isnt open architecture and you can’t invest in individual securities. However, I can almost guarantee that there is a high quality high dividend mutual fund offered that would be equivalent, and the 30% tax savings would more than offset the fact.

    The IRA ofcourse would have open architecture and you can invest in any security you want.

    I bring this up again as I really believe you should be taking adventage of an extra 30% every year. I also believe the extra 30% makes up for no open architecture, but that is a personal opinion you will have to make. However, your company may offer open architecture 401k.

  12. says

    well you seem to be pretty stubborn in your thinking, which is fine haha. I read through it all and I understand your point on ROTH and being in a low tax bracket. However, I would suggest a traditional.

    You can save 25%-30% on taxes upfront, and can still pull the money out for monthly expenses when you retire at 40 due to withdrawing based on retirement and actuary tables.

    It’s really just taking 30% out of your pocket by not doing this on that 5500 (though I would recommend maxing out traditional 401k as well)

    I will put the 401k discussion aside as I am sure you would be completely against it. However the 5500 in a traditional. 30% is a $1650 savings that you could invest more of each year. its a free $1650 dollars and would not effect you in any other way.

    Currently you pay taxes twice, you pay taxes on money going in, and you pay taxes on money going out. However with traditional IRA, you just pay taxes once, money coming out. And since you anticipate being in a very low tax bracket, this makes perfect sense.

    BTW you can still do early withdraws from a traditional IRA while doing part time work. There really is 0 arguments against doing a traditional IRA in your current situation :) I would be open to hear if you can come up with just 1 reason not to.

  13. says

    How many shares do you have for the dividend income you’re getting? I suppose I could spend the time to go figure out the dividend payout for each stock and then do some quick division but might be worth throwing out there anyway.

    I’d like to max out my SEP IRA at $50k per year and have thought of doing a mix of dividend paying stocks, mutual funds and vanguard index funds.

  14. says

    Scratch that I found the link to your portfolio – sweet

    Note: I’d “like” to max out my SEP IRA at $50k a year but don’t think I can really afford to do that now anyway

  15. says

    Hey DM, I’m a young investor (26) and really enjoy your blog. Thanks for doing it! I’m new to the dividend growth theory and have “some skin in the game” already. However, I am curious how you are receiving dividends monthly from many companies that pay them quarterly? Sorry if I am missing something really dumb here. THanks again for your posts! I hope to be where you are at some point!

    • says

      zoralsurgeon,

      Thanks for stopping by.

      Congratulations on getting started so early in life! You have a huge advantage with time on your side, and a big jump on many other people out there. Take advantage of that.

      I’m not quite sure I understand your question. Most of the companies that I’m invested in pay out dividends quarterly, but not always every three months evenly. Nonetheless, you’ll still see my dividend income reports repeat themselves (in terms of companies listed) to a degree every three months. So you’ll likely see a similar report the one above in March of 2013, less the companies that accelerated their dividends.

      I hope that helps!

      Best wishes.

    • says

      It is not that DM is getting paid monthly per company, it is that his portfolio is so diverse right now, he has companies that pay in Jan/April/July/Oct/Jan….(like ITW) then ABT that does Feb/May/Aug/Nov….and AFL that does Mar/Jun/Sept/Dec… so he gets some kind of payment every single month, then if he gets real creative can arrange it so he gets one every week….

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