It’s dividend income update time. One of my favourite times of the quarter as I get to review my previous three months worth of passive income received from my ISA portfolio. Given my strategy of wanting to acquire enough dividends in order to cover my costs and be able to retire, it is really the dividend payouts that I care about. For each of the companies I invest in, I like to see a steady and growing stream of dividend payouts.
My dividends really do provide me with a comfort blanket during times of market turbulence as we have experienced over the last quarter. The market can be irrational at times as it seems to gyrate up and down on a whim but dividends add that bit of stability, reliability and predictability to my portfolio. 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, EPS and payout ratios.
So how did I do over the months of January, February and March?
Over the last three months, 35 companies sent me a dividend payout, adding up to a total of £891.
This has been another record quarter. It is a 70% increase from the same quarter last year as I received £515 during the first quarter of 2018. When comparing to the same quarter in 2017 where I received £347, it is a massive 155% increase! The dividend juggernaut keeps chugging alone.
My biggest contributor over the quarter was Imperial Brands which paid me £166 in dividend income. Other notable mentions go to BAT and Steel which paid me close to £100 each!
It continues to amaze me that I regularly receive gushers of cash for nothing but owning shares in high quality companies. Besides the initial research work needed, there is not much effort required. I simply put my feet up, and let the dividends role in. Unlike my job where I am paid by the hour, the dividends I receive are not linked to my time or effort. By having an ownership stake in the biggest companies in the world, I am reaping the rewards of other peoples hard work. Other peoples time and effort is making me money.
If you need a visual picture of what a good dividend growth stock looks like, look at Anglo Dutch fast moving consumer good giants giant Unilever, which has increased its cash dividend over the past few decades. An investor who never bought a single extra share of stock beyond the first purchase has literally had ever-increasing sums of money bestowed upon him from his share of the, soaps, detergents, deodorants, toothpaste, lotions, tea’s and ice cream sold in nearly every country on Earth.
And Unilever, is just one of the companies I own. A whole host of other companies I own have a history of regularly increasing their dividends.
Take my biggest dividend payer Imperial Brands as an example. The company has been increasing its annual dividend by 10% over the past several year. This steady increase over the years adds hugely the dividends I receive each and every year. I currently own 255 shares in the company. In 2010,l I would have received £194.56 in dividends from the company. Today, that number is £478. More than double what I would have received a mere 8 years ago!
I envision that if I don’t add another penny to my portfolio, I would end up somewhere close to £1,000 in dividend income for the same period next year. This is what dividend growth does. It together with reinvesting your dividends is the rocket fuel that stratospherically propels ones passive income.
That is why I love dividend investing. When you own excellent businesses, everything gets better with time. It is such a welcome reprieve from the rules that govern the rest of our daily living. Where you normally have to pay bills, it is a welcome pleasure to receive increases wards of money instead.