Dividend Income Growth

I have started pulling together our dividend income for 2007 although a number of investments still have dividend payments remaining in December.

Incomplete 2007 Dividend Income

 Company

Q1

Q2

Q3

Q4

Total

Pepco

$ 5.26

$ 5.30

$ 5.35

 

$ 15.91

Bellsouth

$ 4.62

$ 4.62

$ 4.62

$ 4.62

$ 18.48

CMS

$ 2.99

$ 3.00

$ 3.01

 

$ 9.00

Connoco

$ 5.46

$ 7.30

$ 7.60

 

$ 20.36

Chevron

$ 6.76

$ 7.60

$ 7.65

 

$ 22.01

Duke

$ 22.13

$ 22.36

$ 23.69

 

$ 68.18

Edison

$ 3.59

$ 3.61

$ 3.63

$ 3.65

$ 14.48

ExxonMobil

$ 16.26

$ 17.86

$ 17.94

 

$ 52.06

GE

 

 

 

 

$ -

IBM

$ 94.70

$ 139.27

$ 108.66

 

$ 342.63

Lowes

$ 2.18

$ 2.18

$ 3.50

$ 3.51

$ 11.37

Medtronic

$ 9.33

$ 9.34

$ 10.64

$ 10.66

$ 39.97

Merck

$ 50.92

$ 51.36

$ 51.79

$ 52.18

$ 206.25

P&G

$ 9.12

$ 10.35

 

 

$ 19.47

Pfizer

$ 195.04

$ 198.97

$ 202.76

 

$ 596.77

Spectra

 

$ 9.90

$ 9.98

 

$ 19.88

BUD

$ 30.05

$ 30.22

$ 34.00

 

$ 94.27

Microsoft

$ 0.16

$ 0.16

$ 0.16

 

$ 0.48

JNJ

$ 3.25

$ 3.62

$ 3.64

 

$ 10.51

VXF

$ 1.11

 

 

 

$ 1.11

VWO

 

 

 

 

$ -

VTI

 

 

 

 

$ -

 

 

 

 

Total

$ 1,563.19


For the past couple of years I have been able to grow my annual dividend income by over 50% a year. An early look tells me we are not going to even be close this year. We will be lucky if we get 20% over my 2006 dividend income total of $1830.44. I clearly missed the mark this year.

Dividend income plays an important part in our financial freedom goals. Even if we hit a $2 million net worth goal, we won't be financially free if we can't develop a cash flow off of it to cover our living expenses. This is why dividend income plays a big part in my strategy.

However this was a complex year. I started the year cash poor from major purchases in 2006 including an engagement ring, and a second rental property. In addition I started saving for our new home, we had been saving for our wedding, and my investments this year in dividend paying stocks was significantly less than previous years.

I have recently resumed my attention on these dividend stocks as the banking sector has been hit hard and currently have very attractive dividend yields. I hope I will be making some new investments that will help recover our dividend income growth in 2008.

Related in DRIPs:

2013 Passive Income: Dividends (Jan 25, 2014) Here is a summary of our 2013 dividend income. This passive income comes from our taxable stock portfolio that is included in our monthly investment reviews. All retirement investment holdings are excluded from this dividend income summary. This passive income...

Annual Dividend Hikes (Nov 26, 2007) In the beginning of the year, I reviewed my 2006 passive income, mainly from dividend paying stocks I own. Here is the same list of companies with any quarterly dividend hikes seen in 2007:   2005 Dividend 2006 Dividend 2007...

How Do You Invest In A DRIP? (Nov 07, 2006) Ok so your interested in DRIPs - sounds like it might be a cheaper way to buy investments. Here my advice on how to make them work for you. What are DRIPs? 1) Don't invest in a DRIP; figure out...

Comments (12)


Hi 2 million,

Thanks for the update. I'm curious whether the current mortgage situation has or will have any impact on your mortgages for your properties and what your plans are, or if you've noticed any indirect effects?

Thanks!

Having dividend income is nice but how much does it affect your taxes?

Don't publish my email id. Thanks.

I just found your post...I love it and your blog.You are now on my main link page.Keep up the grate work!

Clint,
Given our very conservative mortgages - all 3 mortgages are 30yr fixed mortgages we haven't experienced any issues with them and don't expect to as long as we keep paying the monthly payment ;-).

Bharani, My understanding is dividend income is only tax at 15%. Its the cheapest income you can you have in my opinion (with the exception of a cash flow postive, but report a loss rental property). Granted you can invest in stocks that don't pay dividends and reinvest all the money in the company, but unless these companies eventually start paying money to you, what kind of investment are they? You can't hold them forever because they wouldn't do you any good. My 2 cents.

I am interested in your dividend strategy, but it looks like it will take a tremendous amount of capital invested to realize any real continous income. I guess Rome wasn't built in day.

Question: How are you purchasing these stocks? DRIP programs or do run mostly via Sharebuilder, etc. I've seen you mention this before, but I haven't seen a post that details your process.

Go Hokies!

Hi 2million,

The tax question above is a valid one imho. Basically:
1. Are you sure it's only the 15%?
2. Change the equation - 15% might be less than capital gain tax, but you can escape from capital gain taxes.

Explanation:
1. I don't know the situation in the USA, but in Belgium dividends (taxed at 15%) are paid out of after-tax profits here. Since profit taxes are 30ish%, you get an effective tax rate of a bit more than 50%. Dividends suck in Belgium. I don't know if dividends are paid out out of before-tax profits in the USA.

2. Also, since there is a capital gain tax in the USA, moving out (at least fiscally - stay within the grey zone) should be on your long term to do list. The richer you get, the more expensive the opportunity cost off staying. (How much per month is staying in the USA worth to you?)

Fyi, you need 300K euro in provable assets to enter Monaco (which you have) and need to be there 180+ days a year. The good part: There are companies that can fake this for you... (letting water run, using electricity, ...) Imagine paying no taxes... true freedom!

Conclusion: I would go for capital gains all the way and make sure they are not taxed.

Good luck!

currently use DRIPs for some and Sharebuilder for the rest. I am currently opening a Vanguard Advantage brokerage account which i will detail once open.

To avoid US taxes you need to renounce US citizenship and then they will likely try to hit you with an exit tax. This is a big reason why I didn't complete the process for a US green card and moved back to Australia instead. Australia doesn't tax citizens who don't live in the country (just treats them as foreign investors in Australia), so if we move elsewhere in the future our tax situation is more flexible. I'm skeptical that E300k would get you the right to live in Monaco!

Keep it up! Your site is awesome!!!

Hey Belgian, thanks for the info!

I'm in Belgium too and I'm trying to figure out the wisest way to invest for the long term and for income generation under all possible market conditions.

In the States index funds and dividend growth investing seem to stand out as interesting ideas. But in Belgium? Still trying to figure out the possibilities.

All ideas and suggestions are welcome! I can be contacted at i3bexxp02 AT sneakemail DOT com

hi - love your blog - have been telling my friends about it - but there is an issue i'd like you to address (maybe in another future posting on DRIPS) or email me: one of the problems with multiple DRIP stocks is logging the cost basis for multiple purchases so that you can calculate capital gains when you sell your shares - so with multiple stocks (and god forbid if they merge or spin off) over many years of re-investments you could be looking at 500-1,000-2,000 share lots to keep track off to calculate your capital gain!!! any thoughts on this issue?

Heres my $0.02 -- I don't think its a big issue. Almost all DRIPs have online access now adays. You can download you account histry in a spreadsheet and calculate cost basis in less than 5 minutes. Yes its a pain, but not a big deal for me.

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A personal finance weblog of my journey to reach my goal of $2 million + the value of my primary residence.
Current Net Worth: $1,574,185

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