A portfolio’s income increases three ways. Obviously, one saves money, and buys more stock. Second, dividends are paid out and reinvested into the company. This increases the probability of receiving higher and higher payments in perpetuity. Finally, the icing on the cake is when a company increases its dividend. At the core of my personal portfolio are “dividend champions” or companies who have been paying rising dividends for 25+ years. Some are even dividend kings, with 50+ years of consecutive payments. And so far, 2019 has been a good year. Below is a chart with all the 2019 dividend increases so far.
As you can see, some of the increases haven’t come quite yet. I’m expecting an increase from Chubb Limited and possibly General Mills. Other factors to consider are currency fluctuations. Unilever, Infosys, and GlaxoSmithKline were each affected by exchange rates despite decent financial performances. My other international stock, Rio Tinto, went the other way with a massive special dividend. Take Two and Amazon are the only two securities that don’t pay a dividend. Overall the trends are good, with the majority of these companies increasing their payouts. When factoring in new investments and compounding, the picture is even better.
As you can see, since I began in 2014, dividend payments have increased astronomically. This is all the culmination of investing $1-2,000/month and dripping all subsequent dividend payments. Even one of my underperforming companies, PM, is paying 48% more than it did when I originally purchased the company in 2014. This is because the portfolio accumulated many more shares and the company raised its dividend each of the five years. When working together, the portfolio generated over $2,600 in dividends for 2018. In 2019 I’m projecting about $4150 in income. By 2022/2023 dividends will cover basic living expenses.
So essentially in 3-4 years I will have increased flexibility. I could step down from my current job and take an easier position. Or perhaps even start a whole new career! My entire point is, even with a modest income, one can achieve financial independence. I began this strategy in 2014. Just 9-10 years in, and I’ll have the passive income needed to “live”. This isn’t necessarily retirement or prosperity. But it provides just enough peace of mind to live a better life. Anyway, I thought I would provide a snapshot of the portfolio income. After all, capital appreciation is nice, but strong cash flow is needed to pay bills.
DISCLAIMER: I am long on the stocks mentioned today. I am not a licensed investment adviser or tax professional. I am not liable for any losses incurred by any parties. This blog should be viewed for entertainment and/or educational purposes only. Any transactions published are not recommendations to buy or sell any securities. Please consult with an investment professional before making investment decisions.