Boom shakalaka! What a month December turned out to be to round off my first full year as a dividend growth investor. Because most of my holdings forward a piece of their profits in the last month of every quarter it felt like Christmas lasted an entire month. Jingle bells, indeed!
As a passive income focused investor few things get me riled up like seeing a bunch of dividends hit my accounts. It’s not a get rich quick scheme, but when over ten companies pay you a dividend every quarter the strategy nevertheless amounts to a rather large source of income quickly.
The dividend payments themselves are just one part of the equation though. Indeed, dividend growth investing is like double dipping your savings in a spicy sauce called compound interest.
On the one hand, the companies you own a piece of compound internally by increasing their distributions each year. Take the example of McDonald’s (NYSE:MCD) you’ll find below in the list below; this fast-food chain paid a $0.89 quarterly dividend compared to its $0.85 dividend last year. In other words, I’m enjoying an almost 5% higher payment this year without getting my hands dirty whatsoever.
On the other hand, and this is what this series of articles is all about, you can aid your passive income growth by re-investing any dividends received. By doing so, you drive your investments forward externally, thus effectively doubling the compounding effect.
Ultimately, both effects lead to a point in time when your investment income exceeds your expenses, which in turn renders you financially independent. That’s why I find keeping track of my income growth so important. On top of that you guys get to follow along and see how my strategy materialises over time.
You’ll find a detailed list of payments and the total amount I received below, together with a review of my past performance and forward outlook.
On top of my regular paycheck, my year-end bonus and a rather big tax refund, I also received additional income from eleven international companies. It should come as no surprise then that I had money coming in almost every day this month. And all of this happened while I was out doing my thing, without having to lift a finger.
Let’s see which businesses pitched in towards my passive income stream!
All dividends below are listed in Euros, and are after foreign withholding taxes and a 25% income tax levied by the Belgian federal government.
|07/12||HOMI||Home Invest Belgium||95.63|
|08/12||JNJ||Johnson & Johnson||8.60|
|10/12||IBM||International Business Machines Corp.||4.40|
|15/12||KO||The Coca-Cola Company||3.18|
|18/12||RDSB||Royal Dutch Shell||18.75|
What I really like about this month’s payments is how they all come from such different backgrounds. There’s a bit of health care, utility businesses and consumer products on the more defensive side, but also energy and information technology. Because of this diversification it’s rather unlikely that December’s income stream ever dries up.
Even better is the total amount: €178 in fresh money, whoa!
Most of the growth spurt comes from a policy change over at REIT Home Invest Belgium (EBR:HOMI), however. Because the Belgian federal governement raises the taxes on REIT dividends from 15% to 27% from 2016 onwards, the good management over at HOMI decided to introduce an interim dividend under the current 15% regime. As such, this is only a small Phyrric victory.
Regardless, I’m really happy with this month’s progress. What’s not to love when your passive income covers your entire utility, telecommunications, and food expenses? And of course, these dividends aided me in building my stake in Diageo (LON:DGE), the world’s largest distiller and a solid dividend growth stock.
As a consequence, the loss I took on the KMI debacle earlier this month didn’t hurt too bad – psychologically at least.
One of my favourite things to say with regards to dividends is “up, up, and away!” and the following few paragraphs of this series of articles epitomise that spirit perfectly. Every month I’m delighted to see a big increase in passive income in my dividend tracking spreadsheet – triple digits, for the win!
And December is no different from previous months like October and November. My income level is a whopping 354% higher compared to 2014.
Subsequently, my average income for 2015 grew by a rather large amount too: up from November’s €58 to a solid €72.5 on average. And with my recent acquisitions of equipment manufacturer Caterpillar (NYSE:CAT), oil tycoon Royal Dutch Shell (AMS:RDSA or AMS:RDSB) and aforementioned Diageo that number can only grow in the future.
Looking forward, the above bodes well for January next year. As you can see, January of this year was a rather slow month, but I currently have a couple of extra payments locked in already so I should be off to a fantastic start in 2016 in terms of free-of-work income.
In September the actual passive income my portfolio generated already broke through my initial goal for 2015 by jumping over the €500 mark. So the entire fourth quarter is icing on on already awesome cake. Sometimes I still can’t believe how fast I boosted my income towards €500, especially because I’ve achieved dividend income to the tune of €870 for the entire year, which is 74% more.
At the risk of sounding like a broken record, I truly feel like I’ve already won the Win for Life lottery. With a high savings potential and the power of compounding interest as a tail wind it feels like nothing can go wrong. Of course, things happen, like the setback Kinder Morgan (NYSE:KMI) was to me, but overall I feel like I’m on a good path to financial independence.
Besides, I’ve just turned 26 and have plenty of time to get where I want to be. I already feel financially secure, both because of the assets I’ve already gathered and because of my frugal lifestyle, so financial independence is only a small step away.
I sincerely hope you guys all feel the same way. Let everyone know in the comments how 2015 turned out for you and what your dividend goals are for the upcoming year. Let’s make sure 2016 is even better than 2015!
Thank you for reading and for your continued support – I appreciate it a ton.
What’s not to love when your passive income covers your entire utility, telecommunications, and food expenses?
Wow! Great for you 🙂
However, this makes me wonder what food you eat. €178 isn’t even enough to feed me, let alone to also pay all utilities and telecommunications. It’s just €5.93/day or €41.53/week! Do you get lunch and dinner at work perhaps?
Food is incredibly inexpensive in Belgium in my opinion, especially if you buy seasonal. Granted, I’m not a big eater! 🙂
However, I eat a lot of pasta (yum), which is probably the cheapest food out there. My monthly food budget hovers around €100. We have no lunch at work or anything like that, but I do get to eat out about two to three times every month through work.
Good tip: I live close to a couple of super markets, so I go in almost every day to purchase what I need. That way I’m able to snipe the daily deals or even buy products that will expire the next day (40-80% off).
Hope this was helpful,
PS: I didn’t forget about your e-mail, just didn’t get around to it yet – sorry!
Quite a nice treat from HOMI to pay the dividend a couple of months early so shareholders avoid the big tax hike. Guess the government won’t be happy about all those millions that won’t be levied in 2016. I also added to my position in Diageo and plan on increasing that position even further if opportunity arises.
Government won’t be too happy, but the solution HOMI implemented is 100% legal so there’s nothing they can do about it. Besides, HOMI is such a small REIT compared to the larger ones… I don’t think they’ll notice.
For us shareholders it’s a nice gift though!
Hi NMW! Great job on your passive income! Out of curiousity: how much percent of your expenses are you currently covering? I’m at about 5% after one year of DGI.
With the €72.5 monthly average income I covered about 7.5% of my expenses in 2015. I believe that number to climb rapidly in 2016 since I’m expecting a lot more income and also because I won’t buy a road bike again.
Covering 5% of your living expenses after one year is a very solid number already. Keep it up!
Happy New Year and what a great 2015 you’ve had! Despite the KMI situation, you have made incredible progress with your dividend income – your graph looks fantastic and I look forward to seeing how it pans out as 2016 progresses!
I had a good 2015, did better than expected with my own dividends and hope to see them grow this coming year.
It’ll be interesting to see what 2016 brings for investors!
All the best!
KMI sucked, but making a mistake had to happen eventually! 🙂 All in all, I’m really pleased with 2015, the progress I’ve made and the things I’ve learned.
You also had a terrific year even with falling just short of a few goals. Huw mentioned in another post that it’s not about making your goals, but progressing towards them and I agree with him.
Here’s to a great 2016 for the both of us, cheers!
Nice way to round up 2015! And great to see that you thrased your target of €500. Congrats is in order we believe.
Thanks, Team CF! Let’s hope we can more than double that goal in 2016. 😉
Very nice progress indeed! I really love to see dividends coming in. It will only rise in the future so keep building your portfolio and become independent 🙂
As I only started in July 2015 building my portfolio (I’m 20 years old), I didn’t receive much dividends yet (about EUR 80 untill now) but my target for 2016 is to receive EUR 750 in dividends and to build my portfolio towards EUR 45000 (currently EUR 28000). So far my goals ^^
Ps: I saw you really like the Total stock for its dividends. Maybe an alternative is GBL. This holding company has a big share in Total (and some other dividend companies) but you don’t pay so much taxes. One reason I don’t like buying French stocks is because you need to pay 25% and 27% taxes, which cuts the dividend in 2. With a holding company like GBL you only pay 27% for the Belgian government and you receive a quite big yield (3,63% atm). Just FYI…
20 years old and already aiming for a total portfolio of 45.000 in 2016 – amazing! I believe you’re by far the youngest in our little financial independence community, congrats.
Thank you for the suggestion on GBL – knew about it already. I prefer to keep the Total stock, however, since GBL is invested in some companies I don’t like to see. The tax hit from French stocks sucks, but it’s the same with almost every other country out there with the exception of the UK.
For your information, the foreign withholding tax in France is 35% which can get reduced to 15%. So for us Belgians it’s 15% plus 27% in Belgium, which is 37.95% in total! You can read more about it here: http://www.nomorewaffles.com/2014/12/how-to-deal-with-foreign-withholding-taxes-dont-cripple-your-yield/
Best of luck in 2016, make sure to smash your goal!
Happy new year NMW! Looks like you had an excellent December when it comes to dividend income and a great 2015. Will be interesting to see what 2016 brings for you.
December was just massive, mainly due to the one-time deal of Home Invest Belgium. I’m sure I’ll be able to continue growth throughout 2016 and beat the magical €1,000 mark easily.
Nice progress NMW!
I hope you can keep those contributions and investments going for the next couple of years. You will be financially independent in no time!
I’ve had to go through that same KMI drop a few weeks ago… -as I also bought shares right before the dividend cut announcement, but I still think long term those pipeline assets will be fine, so I’m holding it (and reinvesting the dividends as the stock is cheap). Apart from that it was a little risk-off with some buys in chocolate from HSY and some drugs from ABT.
Over the past year I had to adjust my dividend goals upwards a few times, which is great. I collected $7,873 during 2015 which is a 65% increase from the $4,777 I got in 2014.
I’m excited for 2016 as I will start up some side-hustle projects that have potential to make some side income if things go well. And of course those earnings would go straight into the investment portfolio to accelerate the snowball.
As for graphs, I just added a ‘Trailing 3 month average monthly dividend income’. Which helps to smooth out spikes a bit and gives me a more realistic ‘average’ monthly dividend income. After a couple of years that will be a trailing 6 or 12 month average. Might be nice for you too to add that.
Have a great 2016!
At this speed it’ll take me less time than I initially thought, but let’s not get ahead of ourselves! My current living situation (sharing an apartment) isn’t a long-term solution in any way whatsoever, so my living cost is likely to increase in the future.
I’m sorry to hear you also got burned by KMI and its recent dividend cut. Would you care to elaborate on why you’re holding on? Personally, my confidence in management just took a hit – saying two different things in just a couple of weeks time doesn’t make much sense.
Man, I wish I had your level of dividend income already. You’re boasting some massive YoY gains! 65% more at almost $5,000 isn’t something you see every day.
Thank you for suggesting the trailing monthly income – I’ll look into it.
Long time no talk NMW, glad to see things are going smooth over here, solid progress brutha, Keep it up, you made some big increases in dividends since i last visit your page!
Glad to see you drop by again! Things have been going great on my end – and judging from the numbers on your blog, you’re not doing bad yourself either, ha.
Best of luck in 2016,
First of al my best wishes for 2016!
Wow, you certainly crushed your dividend income goal. Receiving the dividend from HOMI in December with still 15% RV was a nice treat. I did send an e-mail to the company and I got a reply from the CEO which said that they are happy to have investors that appreciate it.
Pretty neat that you sent HOMI an e-mail and received a response from the CEO. 🙂 I was surprised to see they moved the 2016 dividend forward to evade the imminent tax hike. Now I hope they stick to a semi-annual dividend rather than the past annual dividend in May.
Best wishes and best of luck in 2016,
Great result and a great blog! I’m receiving on average about $200 monthly in dividends here in Australia. Will definitely follow this blog.
Thanks, much appreciated!
I’m sure your $200 in monthly dividends is really starting to fuel your growth. Looking forward to check out your blog and see that number grow over time.
Stack’Em Stack’Em To The Top
Can’t seem to get that blonde out of my head of the WSOP 2009 😉