I’ve made no secret of my love towards dividend growth investing. For me it is a strategy that just seems to make sense. Dividends to me are tangible. The money I receive every week into my account is real. It is money I can use to spend on rent, pay for a holiday or reinvest in order to get even more dividends. Dividends allow me to make sense of the virtual stock markets. It allows me to look past the vicissitudes of stock prices and instead focus on the underlying business. It gives me the mindset of an owner and allows me to think in terms of what is meaningful to a business; cashflows. I would rather collect golden eggs year after year than slay the golden goose for a onetime benefit.
Readers of this blog will already know that my portfolio is on pace to generate more than £3,886 in dividend income over the coming year. This is money that comes in to my account regardless of what I do. It is free money. It is purely passive. It is a good second source of income to have and can be used to cover a good amount of expenses.
And the best part is this £3,886 is not a stagnant or one off figure. Instead it is a recurring figure that will grow by the year as the companies I am invested in do better and make higher profits.
All The Dividend I Have Received Before.
I started my journey as a dividend growth investor in late 2015. My only regret, not having started sooner. As the saying goes, “The best time to plant a tree was 20 years ago. The second best time is now.” If I had started dividend growth investing earlier, I would have had more to show for it. To see what I mean, let’s take a peak at my historical annual dividend figures.
Looking at the historical dividend figures, they are as follows:
- 2015 – Dividend Income Received £ 35
- 2016 – Dividend Income Received £ 858
- 2017 – Dividend Income Received £ 1,501 2018 – Dividend Income Received £ 2,432
- 2019 – Dividend Income Received £ 3,685
- 2020 Year to date – Dividend Income Received £2,585
If we add these numbers up, we get a cumulative total of £11,096.
That’s over £11,000 in total dividend income!
£10,000 for practically nothing!
I mean, just think about that. What could you do with an extra £11,000!
We’re talking about four month salary for a person on the UK average wage. But instead of slogging it out for month, waking up to alarm clocks and fighting traffic, I got paid for lazing around. I got paid for simply holding shares in wonderful companies that churn out profits year after year and pay a portion of those profits in the form of dividends.
Whilst I could have used this money in any which way I liked, I did the ‘adult thing’ and reinvested it. I used the money to buy even more shares in these great companies so that I can get even more dividends in the future. I am essentially using money to buy more money.
If I had started on this journey at an earlier date, that number would of have been many magnitudes higher. But I shouldn’t be too hard on myself. I need to appreciate the fact that I am one of the few that stumbled upon the concept of financial independence in is 20’s and did start this journey as a result.
I also need to keep in mind that if I had never started on this journey of dividend growth investing, this number would be zero. I would have nothing to show for all those days I woke up to an alarm clock, fought traffic to get to work, worked hard, created value for the world, and went to bed tired. It would almost be like all of it never happened. What would it all be for if there wasn’t something to show for it? Instead, I have used dividend growth investing as a tool to create a permanent legacy for myself.
What more, I am using dividend growth investing to live the life I want. On my own terms and in my own time. The idea is to create enough dividend income to cover all my expenses. That way there would be no need for a job. There would be no boss telling me what to do and when to do it. I would be financially independent.
Life can be whatever you make it out to be. It is your legacy that will be remembered. Would you be happy working 8-6 your whole life? If so then so be it. But for those that want more control over their time and the freedom that comes with it, there’s a whole future out there for you waiting to be discovered. So do the research. Read about financial independence (LINK). Start your journey.