STICKY: Dividend Income (Q1 2021)

Owning stocks from my Master Stock List, I’m generating passive dividend income from my Vanguard taxable account.

Each month, I contribute dollars to my Vanguard money market account and wait for it to build enough cash to purchase a dividend stock(s). Now that Vanguard has free stock trades, I’ve started building smaller positions in quality companies. In Q1 of each year, I also receive annual bonuses that will go to the purchase of dividend stocks too.

Goal

Generate over $15,000 in forward annual stock dividend income by 6/30/25. This means on 6/30/25 that my next 12-months of dividends should be expected to be over $15,000.

Updated Income

I hit a nice milestone in January 2021 by having received over $5,000 in dividend income the past 12 months. I love milestones because they are like mini-goals to focus on and achieve. My next stop is $10,000 of income while I eventually get to my $15,000+ of forward income by 6/30/25 (which is when I plan to retire).

So, I’m in an interesting situation right now and I’m being tested. The market is hitting new highs and I’m really struggling to find good value on my quality companies. I refuse to pay 30x earnings of a company that doesn’t grow very fast. Premium prices come with quality stocks but I’m not overpaying … it’s really that simple.

In Q1 2021, I only executed one buy and that was $3,600 of British American Tobacco (BTI). I’m currently sitting on over $32,000 in cash and it grows every pay period. I’ve already got 12 stocks and I feel I’m about half-way there in my total stock holdings. One of my March 2021 articles explained where I’d like to be next – stocks like Pepsi, Hershey, and Procter & Gamble are a few that top the list.

But to buy these quality companies in a rising stock market I need to be patient. I will eventually own them but on my terms. In the meantime, my dividend growth is starting to slow as evidenced by my forecasted dividend income (chart above) flatting out around August 2021. Trust me, when the time is right I’ll have plenty of cash to jump into these stocks and my dividend income will jump too but I’d rather be patient. I’ll get better yields and a better long-term total return too.

YOY Growth Looks Good

Yellow shade is forecasted or expected dividends based on current stocks

It’s great to see my year-over-year (YOY) dividend income grow each month. While some people try to evenly spread out their monthly income, that’s not something I focused on. You see my 4 big months (highlighted in red in the chart above) of the year generate 46% of my income. I wouldn’t care if those 4 months generated 75% or more of my income.

Looking forward, I’m expecting to receive $6,591 in forward annual dividend income. This is assuming I make no changes to my current stock portfolio and add no more capital (though I will add capital). The $6,591 leaves me $8,409 short of my $15,000 dividend income goal (by June 2025) but I’m happy with my progress and I’ve got to time to close the gap. I know when I put my growing cash to work I’ll be much closer to my dividend goal.

Thanks for reading!

Mr. TLR