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 publish articles updating my 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, getting closer to covering one’s expenses.
I had a great month of May when it comes to dividend income. Of course, how can it not be great when we’re talking about collecting a paycheck without having to go into an office somewhere and work for it? What’s not to love about collecting a dividend payment? I wake up in the morning and the dividend is already in my account, waiting for me. What I do for the rest of the day, however, is up to me. It’s like getting paid just to wake up and be alive. How wonderful!
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. What you’ll see below is a list of every dividend I collected over the prior month, which company paid the dividend, and the amount of the dividend. Without further ado:
- Verizon Communications Inc. (VZ) – $21.45
- Toronto-Dominion Bank (TD) – $15.16
- Deere & Company (DE) – $18.00
- AT&T Inc. (T) – $47.00
- General Dynamics Corporation (GD) – $13.80
- Clorox Co. (CLX) – $25.90
- Air Products & Chemicals, Inc. (APD) – $16.20
- Apple Inc. (AAPL) – $2.60
- Realty Income Corp. (O) – $13.27
- Procter & Gamble Co. (PG) – $33.81
- ONEOK, Inc. (OKE) – $33.28
- Omega Healthcare Investors Inc. (OHI) – $10.80
- Kinder Morgan Inc. (KMI) – $86.40
- Orchids Paper Products Company (TIS) – $21.00
Total dividends received during the month of May: $358.67.
Just incredible. This is actually my worst month in almost a year in terms of the total amount of dividend income I received over the course of a month, and yet we’re still talking about more than $350. How amazing is that when you’re baseline is so high that over $350 is a low relative number?
I’ve mentioned this numerous times, but I remember just starting out in the auto industry as a parts driver. So I’d have to show up to work at 7:00 a.m. to get the truck loaded for its first run of the morning. I remember being out behind the dealership in the middle of a Michigan winter morning where it’s dark and somewhere around 20 degrees, and here I am loading up this small truck with boxes of parts. Fun stuff, right?
Well, it would have taken me an entire week of doing that kind of work to earn the same amount of money I just received over the course of May from the equity I own in the collection of wonderful businesses you see above.
So a week of waking up way too early, being way too cold, and doing work that was way too miserable, or a month of doing nothing but maintaining ownership in great businesses?
I think we both know the preferable choice there.
Moreover, I’d rather rely on 14 “paychecks” rather than just one.
Even better, this is something almost anyone can do. Financial independence is actually attainable for just about anyone and everyone that lives in a first world country. But you have to want it. And you have to be willing to work hard and do what’s necessary to attain it. I’m living proof of that. No silver spoon. No college degree. No prior financial knowledge. Yet here I am with more than $350 this past month just for being me, all because I’m willing to work hard and do what’s necessary to escape the rat race. And that $350 will likely be even larger next May.
You can see that growth play out – this May’s dividend income was 16.5% higher than what my Freedom Fund generated in May 2014. Not bad considering one of my heavy hitters – OHI – paid out a prorated dividend, which negatively affected May’s comparison. I certainly don’t mind when a company wants to split a dividend and pay out a good chunk of it early, as that gives me an opportunity to reinvest it even faster.
I was able to cover 17.8% of my personal expenses this past month via passive dividend income alone. This result, while pretty solid, was significantly lower than it normally would be, and that’s because there were a lot of expenses realized during May relating to the trip to Omaha to attend the 2015 Berkshire Hathaway Inc. (BRK.B) annual shareholders meeting. Nonetheless, I’m pretty happy with being able to cover nearly 20% of my expenses during a month when both the dividend income is lower than average and expenses are higher than average. What a great position to be in.
One other thing I really love about these dividend income reports is that they’re always moving in the right direction – always up. While my portfolio value might decline here and there, the annual dividend income continues to increase every month. That juxtaposition shows the difference between relying on the stock market for income (selling shares) and relying on the businesses you own a piece of to send you your rightful cut of profits. One position relies on millions of traders to come to some kind of consensus on what your slice of equity is worth (an unlikely proposition). The other just relies on wonderful businesses to do what they do best and send you a check (they’re generally pretty good at this).
I’m very excited about where things are going. I’m staying incredibly active in regards to adding to the portfolio, and so I think the second half of the year is going to be a lot of fun. Free cash flow is the best it’s been since I quit my full-time job last year and I’m buying stocks at a pace not seen in a long time. This might be one of the best summers I’ve ever had in terms of deploying capital.
One of my goals this year is to receive $7,200 in dividend income during this calendar year. We’re five months into 2015 and I can proudly say my dividend income total YTD is $2,560.85. I’m behind my goal at only 35.6% of the way there thus far, but I think June’s going to be a fantastic month for dividend income and will put me pretty close to back on track. And, as aforementioned, I anticipate finishing the year strong with some serious capital deployment occurring over the next few months. Stay tuned!
I’ll update my Dividend Income page to reflect April’s dividends.
Full Disclosure: Long all aforementioned stocks except BRK.B.
Did you have a great May for dividend income? On track for your goal this year?
Thanks for reading.
Photo Credit: holohololand/FreeDigitalPhotos.net