Reaping Dividends: slow and steady
November 10, 2014
Every time I get annoyed about something to do with our income or expenses, or am reminded that I have to keep holding a job I currently resent for whatever reason, I go back to the drawing board to see how we’re doing with income replacement.
I’ve never been an early retirement fanatic, precisely, but I do want all the freedom of choice that I dream comes with having loads of money squirreled away. Then there are days I want that freedom to walk and not look back at the workplace in any form.
At the moment, we’re drawing regular and miniscule dividend income from the stock portfolio. I’m proud of my few picks, they may bump up and down, but they do continue earning some money.
Look, a visual!
In 2010, I earned a whole $4.40 of dividend. I’d pried loose as much money as I could from bills to buy two lopsided sets of stocks. I couldn’t even buy a whole 20 shares! When I dip my toes in, it’s a very timid dip. Though, remember, this was just about the time I’d just come off a huge stint of unemployment. Clearly, my financial behavior holds – in times of uncertainty, invest in growth.
In 2011, I earned $18.80, just hanging onto those stocks, and throwing a little more cash into the account in a burst of enthusiasm.
In 2012, I earned $20.40.
In 2013, we earned $56.00 (gross) and thanks to the hit of an inactivity fee ($50), $6.00 (net). Way to go, inattentive me.
In 2014, we’re at $31.60 gross earnings and I don’t intend to get hit with any other stupid fees, so we may log record earnings this year… record earnings meaning a whole dollar more than last year.
The dividends just get reinvested regularly, but I still think this calls for a reprise of my song: All I want for Christmas is a great stock portfolio.
ohhhhh! Byootiful visual! Now the trick will be to learn to avert the eyes when that handsome line turns downward.
IMHO your diversification into rental income is a wise addendum to the reinvestment strategy. My experience has been, over the years, that a “stay-the-course” stock investment policy works out over the long run — the very long run — but it requires nerves of stainless steel. Oh what the heck: make that titanium.
Having another source of income & investment (other than the day job) will probably help when the time comes that you have to force yourself not to panic. And it will come, because that’s the way the market works, as we all know.
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You might notice I ONLY charted dividends. 🙂 Since I’m buying and holding, I’m not going to look at the actual stock prices.
I’d like a range of income sources, not just dependent on the stock market, since I know how easily a main job/investment portfolio can go away.
There are a lot of very good arguments for not focusing on dividend stocks (most of them involving taxes) and instead getting diversified index or growth index funds. Still, I have to admit that I love seeing my quarterly dividends from PG&E show up in my savings account. Free money! (Except, of course, the taxes part.)
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Dividend stocks aren’t a major part of my overall financial picture but I will need to figure out when it makes sense to do what with them. Meanwhile, wee dividends are kinda nice. They’re just getting reinvested at the moment though.
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