Two weeks ago I wrote about the Win for Life lottery in Belgium and how to build your own Win for Life fund. As you all know, I’ve been doing so since August of last year, when I purchased my first individual dividend growth stocks. Since then I’ve kept close tabs on all dividends hitting my account and today I’d like to once again share my progress towards building a sustainable passive income stream that covers all my living expenses.
I publish these write-ups for the sake of transparency, but also to keep myself motivated. Financial independence and dividend growth investing are long-term strategies, so it is important to keep my spirits up. Even though the stock market’s rollercoaster ride continues over here in Europe, dividend growth has been both steady and remarkable over the past few months. This has proven to be a massive boon to my anxiousness to press onward.
In March I crossed the €100 dividend income mark for the first time because many European stocks pay an annual dividend instead of sticking to a bi-annual or quarterly payment scheme like UK and US companies often do. Of course, it doesn’t stop there. My assets have been even busier than even myself, so I’m glad to report another record high this month.
Let’s dig through this month’s numbers!
For 2015 the goal remains free-of-work income to the tune of €500 through high-quality dividend paying businesses from around the world. Five big ones might sound like a lot of money, especially when you take into account both foreign and domestic taxation, but I’ve found that it’s relatively easy to put together a portfolio that throws off that amount of money each year.
At the moment my dividend growth fund should conjure up a little under €700 in forward dividends every single year, so it’s safe to assume that I’ll manage €500 this year. That’s a lot of fresh and freely available money! And the best part? The total amount will continue to grow, even if I decide to stop buying new stocks.
All dividends below are listed in Euros, and are after foreign withholding taxes and a 25% income tax levied by the Belgian federal government.
|01/05||DE||Deere and Company||2.33|
|15/05||HOMI||Home Invest Belgium||47.81|
|15/05||PG||Procter and Gamble||3.26|
|29/05||RB||Reckitt Benckiser plc||8.05|
Eight payments – eight companies that managed to once again increase their earnings and rewarded their shareholders with a larger dividend cheque. As you can see, the majority of May’s income stems from three Belgian stocks. While it may seem like I have introduced a strong home bias into my portfolio, the high Belgian portion of May’s income simply stems from the fact that most Belgian companies distribute an annual payout this time of year.
In total I made just under €118 in dividends in May, which is the highest number yet – awesome! Home Invest Belgium‘s (EBR:HOMI) dividend put in much of the legwork this month, mainly because the Belgian REIT is one of the largest positions in my portfolio, but also because its subjected to a tax level of just 15%.
People often say that there’s no such thing as a free lunch, but I would beg to differ. I usually spend less than 100 Euros on food monthly, so that means I basically ate for free the entire past month. As you can see, I am already reaping the fruits of my efforts and this kind of tangible progress motivates me to continue going the extra mile in the future.
Unlike me, the stocks and the businesses I own a small piece off know no downtime. Their operations and hustling continue long after I’ve gone to bed and start plenty of hours before I get up in the morning. By doing so, they grow in size and subsequently build their earnings. That in turn means more future dividends for me, especially if I continue to invest over time.
The graph below captures the effect of this proces beautifully. As you can see, the trend line below moves up relentlessly, partly because of the annual payouts mentioned before, but also because I have continued purchasing new stocks and because of the organic dividend growth inherent to the strategy.
The strong gain this month is nu surprise when you take into consideration that first-time payers Anheuser-Busch InBev (EBR:ABI or NYSE:BUD), Home Invest Belgium (EBR:HOMI), Kinepolis Group (EBR:KIN) and Reckitt Benckiser (LON:RB) make up the bulk of May’s payout. Still, two quarters ago my passive income was a meager €13.42 compared to €117.66 now.
Quarter-over-quarter growth tops out at 400%, a massive increase yet again!
When adding May’s payout to the dividend piggy bank, total passive income from investments for 2015 jumped to €308.75 or 61.75% of my annual goal. Whoa, we’re just five months into the year and already we’re way passed the midway point. European companies sure do give a nice boost at the beginning of the year, it seems.
Nevertheless, the speed at which new and increased dividend payments hit my account will taper off over the coming months. That’s why I’ll continue to purchase small chunks of large corporations worldwide. For example, a couple of days ago I added the British utility National Grid plc (LON:NG) after reading about it on both There’s Value and Dividend Drive not too long ago.
In my book, you simply can’t go wrong with a government mandated utility the size of NG. Consequently, I’m happy to now own 100 shares of National Grid, mainly because its high yield pushes my forward dividend income higher by roughly €45. That’s a hefty additional paycheck I can reasonably rely on for many years into the future.
Are you happy with this month’s dividend income like I am? Be sure to let everyone know in the comments!
Thank you for reading and for your continued support.