Last time, I checked to see how close we are to financial independence and we are about 2/3 of the way there. This means our passive income from all sources covers about 2/3 of our current living expense. I also found that the dividend from our dividend portfolio will be a bit higher than I thought. That’s what I’ll go over today.
Our dividend portfolio is a huge part of our passive income strategy. Currently, we reinvest the dividend, but it will be a ready source of income whenever we need it. My goal for 2015 is to generate at least $9,000 from our dividend portfolio. However, this is probably a bit too conservative. When I sat down and calculated it, I found that our dividend payout should be about $9,700 this year. That’s not including new money, reinvestment, or dividend growth. I’ll increase my dividend goal to $10,000 for 2015.
The main strategy for our dividend portfolio is to invest in solid companies with good track records of raising their dividend. This way, our dividend income will grow every year even if we can’t add new money. We have been doing pretty well so far since we started following this strategy. Here is our dividend record since 2012. Prior to 2012, most of the investment in our taxable account was in growth stocks.
- 2012: $6,791
- 2013: $8,036
- 2014: $8,759
- 2015: $9,700 projected
The stock market had an awesome year in 2014 and a rising tide lift all boats. Most of our dividend stocks appreciated and we handily beat the benchmark, Vanguard Dividend Appreciation ETF (VIG.) I think we beat it by about 5%, but I will have to do tax to get the exact number. I traded a bit more than I planned to and I didn’t track performance closely.
For 2015, I hope to minimize trading so it will be easier to keep track of the performance. I’ll compare our performance with VIG again. Here is our dividend portfolio.
|shares||price 1/1/15||dividend %|
|Leggett & Platt||500||44.03||2.80%|
|Procter & Gamble||100||89.74||3%|
|Kinder Morgan I||111||40.6||4.30%|
|National Retail Property||200||42.43||4.00%|
|Deere & Co.||100||85.88||2.80%|
I sold about 1,000 shares in 2014 to diversify a bit. I used to work for Intel and these stocks are obtained via grants or the employee purchase plan. The price is quite good right now, but it’s a cyclical business and I’m sure it will go down at some point. I probably should sell a few more shares this year.
Shell and Chevron
The oil business didn’t do well in 2014, but I’m sure they will be fine in the long term. Gasoline will be $4 at some point and these companies will make a killing.
Mattel was one of the worse stocks to hold in 2014. Toys are going on screen and I guess they couldn’t keep up. I’ll have to keep a close eye on them this year. If they can’t recover, then I’ll probably have to sell.
Mondelez isn’t quite a dividend stock at 1.6% payout. They haven’t done well since splitting off from Kraft 2 years ago. This is a growth stock that’s not really growing. I’ll probably sell this one off at some point too.
Everything else seems to be okay at the moment.
Here is an easy way to see what sectors you’re invested in. I log into Personal Capital and go see my portfolio under the Investing tab. Once there, I select my dividend portfolio and click the “US Sectors.”
There is one mistake here. They omitted Shell. It should be under energy and bring that column up a substantial amount.
Ugh, we’re still low on utilities, basic materials, and communication. I’ll make sure to add to these sectors when we reinvest this year. I don’t DRIP because it’s complicated when we do tax. I just accumulate the money and make a purchase when I can.
Sign up with Personal Capital to easily check your sector weighting.
That’s it this time. It would be great if we can surpass $10,000 in dividend in 2015. We have some extra cash to invest so there is a good possibility it can happen. Those big round numbers are always exciting.
Dividend Investing Resources
- Dividend Mantra – Jason is completely focused on dividend so he’s much more knowledgeable than I am.
- dividata– See dividend growth and current dividend payout.
For 2018, Joe plans to diversify his passive income by investing in US heartland real estate through RealtyShares. He has 3 rental units in Portland and he believes the local market is getting overpriced.
Joe highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help every investor analyze their portfolio and plan for retirement.
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