A blog dedicated to financial independence through frugality and dividend growth investing without a monthly recap of dividends received is like a car without an engine. That’s why I’ve decided to start a monthly recurring series that logs and details the passive income performance of my portfolio. Hardly original with everyone and their dog in the dividend growth community doing the same thing, but I find it necessary for the sake of transparency.
Another reason why I’d like to write these kind of posts is because they keep me motivated. Nothing beats a monthly overview of free and fresh money coming into your checking account! Well, except maybe waking up in the morning only to find out you’ve grown richer than before you went to bed because McDonald’s payed you a handsome amount of cash because you put your money hard at work long ago.
On top of that I hope to inspire others to start their own dividend journey by showing the month-to-month progress of my approach. The power of dividend growth investing is very much in the growth component of the strategy, which peeks its head around the corner after just a couple of months, but shows some real teeth in the long-run. The remarkable growth long-time bloggers have experienced motivated me to invest in dividend paying companies too. Now I wish to return the favour to new community members.
Because I bought my first dividend paying stock in August, it comes as no surprise that December is my highest passive income month yet. Below you can find a list of the companies that payed me a royalty for simply believing in their business and products. Please note that all dividends are denominated in Euros and are after foreign withholding taxes, if any, and a 25% Belgian income tax.
|09/12||JNJ||Johnson and Johnson||2.13|
|15/12||KO||The Coca Cola Company||2.60|
|22/12||RDSB||Royal Dutch Shell||5.56|
Awesome, right? That’s almost €40 of brand-new and fresh money I didn’t have to do a damn thing for. Since you all know I earn about €12 an hour after taxes because of Belgium’s extremely high tax rate on personal income, December’s dividends amount to the equivalent of three hours of work. Impressive!
The thing that really stood out to me this month was the fact that most of the dividends started rolling in while I was out on a quick vacation to Dublin. I was actually having a great time abroad when the aforementioned companies decided to reward me a share of their profits.
You can imagine my surprise when my smartphone decided to interrupt a guided tour around the Guinness brewery – I’ll add you to my portfolio soon, Diageo (LON:DGE) – because Unilever chipped in €6.05 towards my passive income goals. Or when I saw McDonald’s had forwarded an increased dividend while I was actually enjoying a Big Mac on-the-go.
While we’re on the subject of my quick city trip, it might be a good idea to point out that this month’s dividends almost completely covered the costs of my plane ticket from Brussels to Dublin, as you can read in the income and expenses report of October. Dividend growth investing definitely won’t pay for my living expenses yet, but it’s these little things that make all the hard work and the road to financial independence much more enjoyable.
This paragraph should explain the growth component of my dividend stock portfolio, but visualising year-over-year growth is hard to do when you didn’t receive any dividends the year before. Nevertheless, the graph below shows my dividend income since my first payment in September. With most of my stocks paying quarterly, you can see the first inkling of increasing payouts, which are almost completely the result of fresh capital being added to the portfolio.
December’s income was a whopping 330% higher than in September, which is a stellar increase if nothing else. Too bad I won’t be able to keep up quarterly growth like that with my portfolio and dividends growing in size the coming months. Talk about a first world problem!
With 2014 already over I’m a little sad to say I didn’t make the €100 goal I set for myself in August, even though it’s quite hard to predict dividend income for only a third of an entire year. Nevertheless, the grand total of €84 dividends this year is a nice start to a long journey of ever increasing payouts. I’m pretty sure that next year will be fantastic.
As you might have read already, I decided to evaluate my 2014 goals and set new objectives and milestones for 2015. A much higher passive income stream from dividend paying stocks obviously is a big part of that equation. Even though €100 in dividends remained out of reach, I’m really happy about the progress I made this year, both on a personal level and as an investor.
That’s why I can’t wait for the first success stories of 2015 to start rolling in. I hope you guys are all feeling the same way! Are you?