Reaping Dividends: April 2017 report
May 1, 2017
My brokerage is TradeKing, I’ve been very happy with their low fees and service. They’re offering a promotion through my referral link right now: New accounts opened with a $500 minimum deposit get $500 in free trade commission and new accounts opened with a $5000 minimum deposit get $1000 in free trade commission.
- Given my apathy towards the trajectory of my full time job (flattish for now) and the trajectory of my salary (also flattish), I’ve decided to carry on with investing in dividend stocks. It’ll be useful for early income replacement if I were to voluntarily retire, but also in case my health drops precipitously. There’s no guarantee I’ll stay healthy enough to work for as long as I want to work.
- The $15,000 that I was holding finally went into two more stocks in January – both have already paid out their dividends as well.
Year to Date Dividends: $518.20, Fees: $9.90, Net: $508.20
Income Replacement
For perspective, I like to think of the dividends investing project in terms of how much of our income it can replace, or how much of our fixed expenses it can cover.
At a whopping $508.30, this year’s dividends can pay 50% of one mortgage payment. Over the past 6 years, I’ve made a total of $1,940.80. It’s all been reinvested, I haven’t taken any dividends out of the portfolio and won’t for some years yet.
Income projection. If nothing changes, we’ll see about $1500 in dividend income this year.
While I’m not trying to live on dividend income and while I’m nowhere near the 15% income bracket, I theoretically prefer growth stocks to dividend stocks because I don’t want to be taxed on money that’s just being reinvested in the market when I could be letting it ride.
In reality, I’m lazy, meaning I use broad stock indexes for which I DRIP the dividends, and I really do like getting quarterly dividends from the one utility I own so I’m keeping it and even DRIPPing some of it (more of it since Wells Fargo took over and “can’t figure out” how to fix it to go back to the way it was before they took it over).
You make a good point – I don’t love being taxed on money that’s just getting reinvested but given the unpredictability of my health, I’m ok with paying the taxes and have the income stream earlier.
Keep at it. Dividend takes a lot of time to build.
Thanks, I appreciate the encouragement!
Good work!
How much harder do these investments make your taxes? I really want to dabble but am terrified of the tax implications. It sounds really complicated, esp because I’ll need to convert any US income I make into NZD and vice versa. To have a professional accountant do my taxes ends up being something like $400 per form to fill out…WAY WAY WAY more than I would make from the meager amount I have to invest!
Honestly, they don’t make them much harder – they just generate an extra form. The things that made it hard were my rental property plus my two income stream office expenses and deductions and so on. I’m not sure about the conversion part, for you, though. Do you currently use software to do your taxes? If you do, that should be pretty simple to factor into your usual return.
Great job! I am all about the dividend growth at this point. What I love is not just the dividends, but the growth in the dividend year after year, as healthy companies will raise the dividend every year. Also, if a company is struggling a little bit, you get paid to wait until they turn it around.
April is a lean dividend month for me, but I realize it will take time to grow. Keep at it!
Thanks! I’m trying to be patient of course, this is a long term project!