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.
The first month of the year is already behind us. Did January actually already happen? It may have seemingly flown by, but I still collected dividends from a number of high-quality companies that have a penchant for rewarding shareholders with their rightful share of profits. Nothing to remind you that a month actually came and went quite like a fistful of cash!
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 interests other than full-time work. Without further ado:
January 2015 Dividends Received
- Baxter International Inc. (BAX) – $31.20
- Wal-Mart Stores, Inc. (WMT) – $18.24
- Illinois Tool Works Inc. (ITW) – $16.98
- PepsiCo, Inc. (PEP) – $50.44
- Walt Disney Co. (DIS) – $17.25
- Philip Morris International Inc. (PM) – $115.00
- Altria Group Inc. (MO) – $41.60
- Realty Income Corp. (O) – $12.84
- Digital Realty Trust, Inc. (DLR) – $53.95
- Medtronic PLC (MDT) – $11.29
- Armanino Foods of Distinction Inc. (AMNF) – $14.40
- General Electric Company (GE) – $39.10
- Bank of Nova Scotia (BNS) – $11.25
Total dividends received during the month of January: $433.54
That’s a great start to the year, in my view. It’s funny, but these reports often cause me to reminisce a bit. I still remember when I first started my career in the auto industry. I was making less than $10 an hour to deliver parts to far-flung areas of the state for wholesale and retail customers. Not a hard job, but it paid as such.
These days my monthly passive income is more than I used to get paid for a week of giving up 40 hours of my life to do menial work. And this passive income will very likely grow and continue to hit my bank account, even while I do nothing at all for it. It’s awfully nice to get paid while you sleep. Past decisions to live below my means and invest that excess capital into high-quality business that pay and grow dividends will serve me well for the rest of my life, eventually replacing that old salary completely…and then some. Of course, I’m not done making those kinds of decisions, meaning the results will continue to compound.
I’m hoping to average $600 per month in dividend income this year, which will be a feat. This might be a slow start, but I’ve got 11 months to pick up the pace. And I’m just getting started.
This total is 24.6% higher than the dividend income my Freedom Fund generated last January. I consider that a very solid improvement. A good chunk of that improvement came via dividend raises themselves – PepsiCo, Inc. (PEP), for instance, increased its dividend by more than 15% last year. So you can see on last year’s report, PEP paid me $43.70. This year, they paid me $50.44. Seven dollars here and seven dollars there adds up over time, as these reports show.
I was able to cover 17.1% of my personal expenses last month via dividend income. This was a lot lower than planned due to the fact that my computer crashed and I also hosted some family for a week. As such, my expenses were substantially higher than usual. But a coverage ratio of above 17% still isn’t bad. It’s certainly better than 0%, which is where I was five years ago.
What I really like about these reports is that you can see the consistently rising nature of dividend income through the combination of dividend raises, dividend reinvestment, and the infusion of fresh capital. This update offers a nice juxtaposition next to my most recent Freedom Fund update, which showed a decline in value due to the volatility of the broader market, which can affect my overall wealth. I often talk about why growing dividend income is preferable to live off in early retirement/financial independence in comparison to trying to draw down a portfolio that can wildly oscillate. These reports bear that out, albeit on a small scale.
I’m very excited about the recent volatility across the market, which seems to be resonating from the energy sector’s woes. Not sure if I’ll be extremely active over the next month or two, as I have to conserve some cash in the light of very aggressive investing over the last six months, but I’ll be on the lookout for opportunities. And if I find any, you readers will hear about it first.
One of my goals for 2015 is to receive $7,200 in dividend income throughout the year. This month’s result is a good start, and puts me 6% of the way there. That’s fairly similar to how I started last year off, and I ended up crushing my dividend goal for 2014. So this start possibly portends another great year. Let’s see how it goes!
I’ll update my Dividend Income page to reflect January’s dividends.
Full Disclosure: Long all aforementioned securities.
How was January for you? Have a great month of dividend income? Off to a solid start for the year?
Thanks for reading.
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