Dividend income, it’s amazing! Seriously, as I progress further and further in my financial independence journey I become increasinly convinced that dividend income is what keeps me on course. Monthly savings differ and stock prices love irrational ups and downs, but dividends from established businesses are something you can count on – month after month. They’ve kept my eye on the ball in the past two years.
Everyone that plays or watches sports knows that keeping your eye on the ball is more important than taking into account what the other players are doing. It’s how you win the game, be that football, basketball, tennis or any other ball sports. And winning the financial independence game is what it’s all about.
Why do I like the boring and recurring nature of dividend income? Well, there’s two very good reasons.
First, every time a dividend payment hits my account I’m filled with joy that I made money without having to lift a finger. While I was sleeping, going out with friends, cycling – although not last month due to my accident, and generally enjoying life businesses all around the world worked their asses off to forward me a piece of their profits. It’s a great recurring stimulus.
Second, I can take advantage of the double compounding effect. On the one hand I get to see how these dividends increase year after year, semi-automatically almost, while on the other hand I get to put fresh income immediately to work in the stock market again. As a result, I propell my passive income forward faster and faster as I progress.
Once that passive income surpasses my monthly expenses I’m effectively financially free and I could potentially retire early. So let’s see where I landed in June with regards to free-of-work income!
At the beginning of the year I told you guys that I was aiming for €1,500 in dividends for 2016. Since that time I’ve come to realise that I might have aimed for the stars instead of the moon, but I’m still happy to report that I passed the €1,500 forward dividend income mark. Still on track, but not really.
However, that’s just a minor complaint when you consider that I only started a little under two years ago and had three amazing months back to back already in 2016. On top of that I managed to seriously up my game this month compared to June last year even though almost the same nine companies distributed a dividend – re-investment at its finest. If I keep this up I should seriously push my financial independence date forward yet again.
All dividends below are listed in Euros, and are after foreign withholding taxes and a 27% income tax levied by the Belgian federal government.
|07/06||JNJ||Johnson & Johnson||8.54|
|29/06||RDSB||Royal Dutch Shell||31.14|
In total nine companies’ dividends landed in my brokerage account, most of them being quarterly regulars, with French oil tycoon Total (EPA:FP) being the odd one out because its payment date seems to jump all over the place. Its sector brethren BP (LON:BP) and Royal Dutch Shell (AMS:RDSB) help push income from oil operations to almost 50% of this month’s income.
My recent addition to US chip maker – I first wrote chimp maker, ha! – Qualcomm (NYSE:QCOM) is also paying off already, with the current payment being over four times as much as before. And with the company’s recent strong performance and earnings I can expect that payment to grow even more in the next years.
I’m really pleased with another three figure month in the books – that’s four months in a row now that I made over €100. June’s total number comes in at €106.73, which is almost enough to cover all groceries during the same period. I guess I’ll never be hungry again? Great!
As most of you know my net worth soared to new heights the past couple of weeks, barraging past any previous upper limit like nothing before. And I’m glad to say that the same thing is happening with my passive income. Compared to last year, June’s income grew by a staggering 91.07%. That’s not as much as the numbers we saw in January and February, but still very solid considering its my overall strongest quarter.
Most of that increase is the result of fresh money being shoveled into stocks, but a small portion comes from organic growth like is the case with Aflac (NYSE:AFL), Johnson and Johnson (NYSE:JNJ) and IBM (NYSE:IBM). These companies work around the clock to up my passive income. You can see their and my efforts reflected in the chart below.
At the moment I’m hovering around 48 Euros of income on average every month for the entire year. Just half a year has passed by and I’m already nearing last year’s number, amazing!
Of course I won’t stop there. Over the coming months I’ll try to save as much as possible and continue to invest those savings into high-quality businesses that will fuel my free-of-work income ever higher.
Now that we’re six months into 2016 it’s fair to say that it’s been a good year so far. At the moment I’ve made a grand total of €579 in dividend income, which is almost enough to live on for one month with just the bare essentials. With six more months to go it seems unlikely that I’ll make my €1,500 target for this year, but no matter. Winning the lottery takes time, or so I’m told.
So I’ll just do the rational thing – even though some might consider it insane because it’s very repetitive: saving as much as possible and investing those savings for the future. Money has the awesome property to turn into more money if you put it to good use, so you can bet on it that I aim to do just that.
Of course, the grass always looks greener on the other side of the fence, but it’s no use to complain about that. Others might be doing better, but who cares? Remember, keep your eye on the ball and not the other players!
How was your month in terms of dividends? Have you recovered from the dividend bonanza of the past couple of months?