The first quarter of 2018 has absolutely flown by. It doesn’t feel that long ago that I was ringing in the new year in style but it’s been three months already. And with the end of the first quarter of 2018, it’s dividend income update time. This is one of my favourite times of the quarter as I get to review my previous three months worth of passive income from my dividend income portfolio.
Without repeating the wild ride we experienced in the market last quarter, I could find comfort in one thing, my dividends. As we all know, the market may move up and down irrationally and seemingly on a whim but I can always take comfort in one thing, my dividends. Dividends provide me with calmness in a volatile market as they are much more stable, reliable and predictable. Sure, dividends may not increase every year and a cut or elimination is even possible but the odds are greatly reduced when you diversify among different companies and sectors and focus on dividend quality – free cash flow, operating margins, returns on capital, EPS and payout ratios. I’ve learnt that it is not worth chasing high yielding companies whose dividends are under threat. It is far better to stick to quality companies that have sustainable yields. In the long run you’ll be better off. With that being said, let’s take a look at my dividend income for the first quarter of 2018.
Dividend income from my ISA account totalled £515 over the past three months – this is up from £347 in the same period last year giving me annual increases of 48%. Looking at the increase from two year ago is even more impressive as I only received £120 in the first quarter of 2016 which has now been increased by 329%!
My biggest dividends in the quarter came from Imperial Brands, Royal Dutch Shell and Britivic which paid me £98, £87 and £45 respectively.
If we had to divide my total dividend income of £515 by the number of days in the quarter, it would show that I received £5.7 in dividends each and every day. This money came into my account without me having to lift a finger. It feels amazing that I could laze about all day and still earn a growing amount of pure passive income from the great businesses that are part of my portfolio.
The aim with all these dividends is not to spend them today. I will keep reinvesting my dividends in order to buy more dividends. The aim is to build up enough annual dividend income to be able cover all my living expenses. That way I can become financially free. With that freedom, I can choose to do what I like, when I like and with whom I like. I no more have to go to work just to earn a paycheck. I’ll have the option to to quit if I choose. With the new found free I can choose to start a passion project or travel the world as any money worries will be behind me. Isn’t it great to have that peace of mind. Isn’t it great to live life on your own terms.
I believe everyone should have some dividend income to fall back on. Building a dividend machine is easier than you think. Sure, it may be hard initially as you are working with small numbers. Just look at my dividend income for the quarter ended December 2015, it was a paltry £35.69 received from BP. Sure I should have seen this negligible amount and quit right there. But I didn’t. I persevered. And today, the fruits of my endeavours are beginning to blossom. I now have an annual dividend income of just over £2,000. And this will grow exponentially due to the power of dividend investments and compounding. So why don’t you join me on my passive income journey to achieve financial freedom via dividend investing. It just might motivate you to start a journey of your own!