My Dividend Growth Portfolio has a dual purpose: to drive growth in share value while generating a steady stream of passive income to support my retirement goals. With a current dividend yield of 3.42%, the portfolio is heavily weighted towards growth. However, as I approach retirement, I plan to shift my focus towards maximizing income while reducing exposure to growth. To achieve this, I make monthly contributions of $2,000-$4,000, totaling $12,000 this year, and supplement it with my tax-deferred ROTH TSP account. I reinvest all dividends through DRIP, but as my income grows, I'll carefully select reinvestment opportunities and set aside the necessary funds to cover taxes on my withdrawals.
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May Dividends Received
DRIP Shares Purchased
Embarking upon the fruitful month of May, my dividend portfolio flourished, generating a generous sum of $131.63 through various dividend payments. A testament to the power of reinvestment, I maintained the strategy of keeping dividend reinvestment activated for all my positions. Consequently, these earnings were promptly reinvested into the very holdings that had yielded them, solidifying the growth of my portfolio. The cumulative dividends received thus far in 2023 now stand at an impressive $882.77. A remarkable transformation becomes evident when comparing the dividends of May 2023 to those of the previous year. Astoundingly, my dividend earnings have doubled compared to May 2022 when I received a modest $62 in dividends. This noteworthy development underscores the tremendous progress my portfolio has made over the course of just one year. Through consistent reinvestment and a careful selection of dividend-paying stocks, my passive income stream has undergone a remarkable transformation, surpassing expectations and bolstering my confidence in the strength of my investment strategy.
Below, is a look at my dividend income over the last 24 months.
High Yield Savings Account (HYSA)
Beyond the realm of dividend investments lies a cornerstone of my financial strategy – the High Yield Savings Account (HYSA). This vital component serves as the haven for my cash position, continuously nurturing its growth. Among the myriad options available, I have chosen American Express as my trusted companion in this endeavor. Not only does it seamlessly integrate with my bank, but it also provides a competitive yield of 4%, amplifying the potential for my savings to flourish. In the month of May, my HYSA diligently worked its magic, generating a substantial $53 in interest. This welcomed influx bolsters my annual total to an impressive $95.33, a testament to the power of allocating funds strategically within this account. At the very end of May I added $60,000 to my HYSA, bringing it's total to just over $77,000.
May and Annual Performance
As the month of May unfolds, an intriguing phenomenon persists within my dividend portfolio: a persistent lag behind the illustrious S&P 500 index. Throughout the year, this performance gap has been a recurrent theme.
A significant contributor to this disparity is the presence of SCHD and its exposure to the banking sector. While SCHD has undoubtedly provided a steady stream of income, its performance has faltered, dragging down the overall portfolio returns. Additionally, other notable positions such as 3M, Realty Income, and General Dynamics have also contributed to this underwhelming performance. While my portfolio remains income-focused, it is imperative for the underlying positions to exhibit growth potential.
Projected Annual Dividend Income
Amidst the journey of building my investment portfolio, an exciting milestone has been reached. Currently, my portfolio is generating an impressive $3,038 in annual dividend income. This translates to a steady stream of $253 per month, derived from a dividend yield of 3.42%. The realization of this consistent passive income source is a testament to the efficacy of my investment strategy and the power of dividend investing. In pursuit of a deeper understanding of my portfolio's financial prowess, I have taken the initiative to create a dedicated sheet to track and analyze my dividend income. Motivated by the desire to gauge the magnitude of my earnings on various time scales, I meticulously calculated the income I generate on a yearly, monthly, weekly, daily, and even hourly basis. The chart below showcases this comprehensive breakdown, providing a fascinating glimpse into the monetary fruits borne by my dividend investments.
Yearly Dividend Income: $3,038
Monthly Dividend Income: $253
Weekly Dividend Income: $58.38
Daily Dividend Income: $8.34
Hourly Dividend Income: $0.35
This granular analysis not only offers a quantitative perspective on the financial impact of my portfolio but also serves as a motivating force, highlighting the potential for continuous growth and compounding returns. By quantifying the value of time in relation to my dividend income, I gain a profound appreciation for the wealth-generating capabilities of my investment choices.
In conclusion, my dividend portfolio continues to be a cornerstone of my financial strategy, generating a robust annual income of $3,038. This steady stream of passive income, equivalent to $253 per month, showcases the effectiveness of dividend investing and its potential to provide long-term financial stability. Despite the persistent lag behind the S&P 500 index, I remain committed to analyzing and understanding the factors influencing the performance of my portfolio. Recognizing the impact of holdings such as SCHD and other positions, I am motivated to explore strategies to enhance both income generation and capital appreciation. The creation of a new sheet to track dividend income has allowed me to gain a comprehensive understanding of the financial impact of my investments on various time scales. From yearly to hourly income, this granular analysis highlights the power of compounding returns and serves as a constant reminder of the wealth-building potential inherent in dividend-focused portfolios.
Join me on this journey of unlocking the power of dividends, where strategic investment decisions, diligent tracking, and a relentless pursuit of knowledge pave the path to financial success. Together, let us embrace the transformative possibilities offered by dividend investing and embark on a journey toward financial independence and a prosperous future.