Thapana Onphalai
This is what dividend investing is all about! Investing in dividend stocks allows you to earn dividend income, the best passive income stream! Bias, you better believe it.
Time to dive into Lanny’s December 2023 dividend income results! Were records set? Love the end of the year dividend tally, as the retirement account is pumped up. Almost to financial freedom? One day and one month at a time!
Dividend Income
Dividend income is the fruit from the labor of investing your money in the stock market. Further, dividend income is my primary vehicle on the road to Financial Freedom, which you can see through my Dividend Portfolio.
How do I research & screen for dividend stocks prior to making a purchase? I use our Dividend Diplomat Stock Screener and trade on Ally’s investment platform (one of our Financial Freedom Products) and on SoFi.
I also automatically invest and max out, pre-tax, my 401(k) through work and my Health Savings Account. This allows me to save a ton of money on taxes (aka thousands), which allows me to invest even more. In addition, all dividends I receive are automatically being reinvested back into the company that paid the dividend, aka Dividend Reinvestment Plan or DRIP for short. This takes the emotion out of timing the market and builds onto my passive income stream!
Growing your dividend income takes time and consistency. Investing as often, and early, as you can allows compound interest (aka dividends) to work its magic. I have gone from making $2.70 in a single month in dividend income to well over … $10,000+ in a single month. A new dividend income record was set in December of 2021. Was it broken this month? The power of compounding and dividend reinvestment is a wonderful component to the portfolio. Each and every month, whether big or small, I continue to report the passive income that dividend investing provides me. Why?
*Not pictured is my wife’s dividend income above*
I want to show you that dividend investing makes it possible to achieve financial freedom and/or financial independence. We all start somewhere, but consistently investing, compounding (reinvesting) dividends and keeping it simple, allows you to be in a significantly better position than most. Further, if I can grow this portfolio and income stream, you can too.
Dividend income – December 2023
Now, on to the numbers… In December, we (my wife and I) received a dividend income total of $10,193.04. Crossed the $10k threshold, again! We did this in 2021, and glad to be back in this territory again!
The amount and number of stocks listed below show you what it means to buy and hold for the long term. Most of the positions I have owned for years, letting dividend growth and reinvestment do its thing. This is what dividend investing for financial freedom is all about. The passive income stream is growing at a rapid pace.
2023 has been one heck of a year. No joke, it was a roller coaster and the S&P 500 finished off with a return of over 24% of the year. Will be fun to see what 2024 will bring to the investing table, that’s for sure.
The Fed has now paused for 3 months, as they let data and the interest rate hikes they’ve done over the last 21 months really sink in. Expectations are rate cuts next year. Will it be 2? Will it be 3? Who knows, I turn off the noise and keep investing.
Here is the breakdown of dividend income for the month, between taxable and retirement (far right column, under “Retirement”) accounts. In addition, “W” means my wife’s account:
As you can tell, Vanguard’s High Dividend Yield ETF (VYM), which we have been buying for 3.5 years, literally has paid immense dividends. My wife and I received over $1,300 in dividend income from this awesome ETF.
Now, there were a ton of dividend aristocrats that paid over $100 in dividend income, which is unreal! Aflac (AFL), Target (TGT), Archer-Daniels-Midland (ADM) and T. Rowe (TROW) all paid over $100 each. Talk about long-term holds.
New names on the list you may see are eBay (EBAY) and Main Street (MAIN). I own eBay since I use their platform to sell items and make money for my side hustle. As for MAIN, loving their dividend income and management they have at the helm.
Looking forward to Shell (SHEL) to continue to grow bigger and bigger, I expect an increase this month. Pulling for double digits.
I also split out my retirement accounts in the far right column and the taxable account dividends are in the left two columns. The retirement accounts are composed of HSA investments, ROTH and Traditional IRAs, as well as our work 401(k) accounts. In total, the retirement accounts brought in a total dividend income amount of $6,193.47 or 61% of the dividend income total, similar to last month. This still left over $4,000+ in the taxable account. I look forward to when this is $12k next year, hopefully. Let’s go!
Dividend Income Year-over-Year Comparison
2022:
2023:
Our dividend income is up… $2,082.73, a 26% jump from last year! Heck yeah, let’s go. This is going to be all about Vanguard ETFs here plus receiving nice year-end distributions from the Vanguard Mutual Fund – VINIX for both my wife and I. Retirement dividends (i.e., 401(k), IRAs, etc.) were over $6,000 this go around.
This is all positive, despite the punch in the gut from Intel (INTC) and their dividend cut. Still holding Intel stock, and I took in the nice appreciation they had in their stock price. Will dividend growth follow in a few years?
Lockheed Martin (LMT) is always nice to see, going from $124 and change to $134 and change. Dividend growth and dividend reinvestment running its course on one of my oldest dividend stock investments.
McDonald’s (MCD) was also fun, as they had a nice dividend increase this year and my $88 is getting closer to the $100 threshold. 2024 maybe!
In total, if we keep this growth rate up – we are talking over $12,000 in forward income in 2024? Let’s freaking go… obviously – again – majority of this income is not touchable currently, since housed in retirement based accounts.
Dividend Increases
9 dividend increases, if you include the Exchange Traded Funds (ETFs) ,with dividend growth ranging from as small as 0.20% to as solid as 9.92%.
The best dividend increase below? John Deere (DE) and their 8.88%. Why? This is their third dividend increase in 2023 people. Huge.
CVS Pharmacy (CVS) coming through with a massive 10% dividend increase. Given the uncertainty in the industry, you never know, as Amazon (AMZN), Mark Cuban, Walmart (WMT) and the like are all battling to be your pharmacy. However, CVS continues to acquire and diversify themselves.
In total, dividend increases created $387.84 in additional passive dividend income. I would need to invest $11,000 at a 3.50% dividend yield in order to add that income. Thank you for the increases, as I didn’t have to come up with the capital to create that form of income.
Dividend Income Conclusion & Summary
The name of the game is to apply what you learn through financial education. The next steps are to maximize every dollar for investment opportunities and live life on your own terms. Therefore, my plan is to demonstrate that dividend income can be a revenue engine. A revenue engine that allows you to take back control of your life. A revenue engine to help you reach financial freedom. Dividend investing, once you learn the right way, becomes easier and starts to immensely make sense.
Excited for the future, no doubt. Furthermore, all of the investing from last year and moves this year, show that my aim to save 60% of my income, and making every dollar count, has provided the dividend growth.
As always, thank you for stopping by, leave your comments and questions below. Good luck and happy investing everyone!
Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.
