It’s unbelievable how fast the time flies. 2018 is history and we are already in the second month of 2019. In the rearview mirror, 2018 has been a terrific year. First of all I finally managed to launch this blog. And starting blogging has already transferred my life for the better. The simple process of tracking the progress and writing down the goals, helps a lot to stay focused and motivated. That’s pretty awesome! But what I value even more is that blogging connects me with like-minded individuals from all over the world. No matter the distance and nationality, we all share similar interests and goals. That is why I enjoy exchanging opinions with people from the DGI community, and quite frankly appreciate input from others whose opinions may not be the same as mine.
Another passion of mine is traveling. I prefer gathering great experiences and moments over collecting fancy things. Packing the bags and going to a place where you haven’t been before, is one of the best methods to meet this requirement. Thinking back, the best memories I’ve ever had are somehow connected to traveling. In 2018, I managed to visit two new countries: Thailand and Portugal. I always have a big smile on my face recalling the adventures from both trips.
Last but not least, 2018 has been quite succesful in terms of moving further towards my financial goals. For the first time, the SF portfolio has generated a four-digit annual income. I received €1,163.80 in net dividends for 2018 – which is a year-over-year growth of 66%. This is clearly a result of being consistent with investing. With every new acquisition, the snowball is growing bigger and bigger. My plan is to continue the same way in the new year. As the first month of 2019 is behind us already, it’s about time to have a look on the dividend performance. Below is a summary of my dividend income for January 2019.
Dividend Income: January 2019
In January 2019, six companies have provided me with a dividend check:
- Pepsi (PEP): €13.75
- Altria (MO): €37.65
- Illinois Tool Works (ITW): €9.56
- Walt Disney (DIS): €9.71
- Philip Morris (PM): €16.68
- JPMorgan Chase (JPM): €10.63
In total January’s dividends sum up to €97.98 ($112.19). Not bad! Actually not bad at all when comparing to the dividend income from January 2018 of €25.26 ($28.92). That’s a growth rate of 288%. Wow! Did I mention already how much I enjoy being a dividend growth investor?
|Total||€ 187.67||€ 1,163.80|
|January||€ 97.98||€ 25.26||+ 288%|
|February||€ 89.69||€ 55.35||+ 62%|
Truth be told, this crazy growth rate is partly due to some extraordinary adjustments. One of them is the reallocation of capital from index funds towards dividend growth stocks in the end of 2018. I reckon that this redistribution is going to boost my yearly income by approx. €150 ($172). That’s a fantastic one time effect and I’m more than happy to collect it.
The above chart shows the dividend income broken down by months. Green bars represent the current year and orange bars visualize the previous year. The goal is that each month the green bar should be well above the orange one. That would inevitably lead to a decent growth for the whole year. In this regard, January was a fantastic start. For 2019, I aim for an annual dividend income of €1.600 ($1.832). In conclusion that would equal a year-over-year growth of about 38%.
Currently the projected dividend for 2019 is sitting at €1.330 ($1.523). This is the amount I would receive under the assumption of no new investments and zero organic dividend growth. However, I do expect that many of my holdings will increase the payout in 2019. In addition, I plan to be consistent with investing and add new capital along the way. Consequently the annual income should be able to raise and eventually reach the minimum target of €1.600 ($1.832).
Wrapping things up
I really like the predictability of dividends. While markets continue to be moody, the dividend is most of the time unaffected and safe. Sure, there is a risk that a company might cut its payout. This can’t be denied. But having one or two companies reducing/cutting the dividend is manageable when you hold an army of excellent stocks. Keyword: diversification!
Furthermore by doing some research, we can diminish the risk of buying a potential dividend cutter. Usually there are some alarm signals. Decreasing earnings over time, excessive debt load, overwrought payout ratio, just to name a few. These can be good indicators and it makes sense to monitor them.
In the end, I care much more about the reliability of my income rather than the market value of my portfolio. Ideally, I never want to sell any of holdings. So why should I worry about the price then? In fact, I want to enlarge my portfolio and maximize its cash flows step by step. And January’s income marks just another step towards achieving this goal.
I hope you all had a successful start into 2019!