That’s what dividend investing is for! Investing in dividend stocks allows you to earn dividend income, the best passive income stream! Bias, you better believe it.
Time to dive into Lanny’s August 2022 dividend income results! Have records been set? Almost to financial freedom? One day and one month at a time!
Dividend income is the result of investing your money in the stock market. Also, dividend income is my main vehicle on the road to financial freedom, which you can see through my Dividend portfolio.
How do I research and filter dividend stocks before making a purchase? I use our Dividend Diplomat Stock Screener and trade on Ally’s investing platform (one of our financial freedom products), as well as SoFi’s investing app – commission free.
I also automatically invest and maximize, pre-tax, my 401(k) through work and my health savings account. It saves me a ton of tax money (i.e. thousands), allowing me to invest even more. Additionally, any dividends I receive are automatically reinvested in the company that paid the dividend, aka Dividend Reinvestment Plan or DRIP for short. This takes the emotion out of timing the market and builds on my passive income stream!
Increasing your dividend income takes time and consistency. Investing as often and as early as possible allows compound interest (ie dividends) to work its magic. I went from $2.70 in a single month of dividend income to over…$10,000+ in a single month. A new dividend income record was set in December 2021. Has it been broken this month?! The power of compounding and reinvesting dividends is a tremendous part of the portfolio. Every month, no matter how big or small, I continue to report the passive income I get from dividend investing. Why?
*My wife’s dividend income above is not shown*
I want to show you that investing in dividends makes it possible to achieve financial freedom and/or financial independence. We all start somewhere, but investing consistently, compounding (reinvesting) dividends, and keeping it simple puts you in a much better position than most. Plus, if I can grow that portfolio and that income stream, so can you.
Dividend income – August 2022
Now on to the numbers… In August, we (my wife and I) received a total dividend income of $1,346.72. Another 4 digit banger! We now regularly see over $1,000 in dividends, which is great. Thank goodness for dividend growth and dividend reinvestment, because that does most of the work!
The amount and number of shares shown below show you what it means to buy and hold for the long term. Most positions I’ve held for years, letting dividend growth and reinvestment do their job. This is what dividend investing for financial freedom is all about. The passive income stream is growing at a rapid pace. I know Canadian Imperial (CM) may be one of my oldest stock positions.
The year 2022 promises to be volatile. The stock market roared and also roared. Lately, as the stock market has been trying to make a resurgence, comments from the Fed about its aggressiveness seem to have pushed the stock market back. We had consistent red days and ended September 2 in the red!
In addition, the Fed raised rates by 225 basis points and we expect another 50 or even 75 basis point hike in September. Time will tell us. Student loan forgiveness is in full swing, allowing borrowers to withdraw $10,000 and up to $20,000 of their debt. Additionally, the Ethereum merger should be underway at some point. The housing market is cooling, inflation is still high and recession still looms.
Here is the distribution of dividend income for the month of August, between taxable accounts and retirement accounts (far right column, under “Retirement”). Also, “W” stands for my wife’s account:
So what happened to dividend income this month? National Grid (NGG) really shines here. So much, in fact, that I constantly added to this dividend stock position.
The AT&T(T) dividend is still being felt and seen here. Why? Because it’s lower than what the dividend was before the WarnerMedia spin-off.
Citizens & Northern (CZNC) is definitely keeping the lights on for the month across the dividend-paying stock portfolio. I love community banking and it’s becoming a pretty big dividend payout – growth driven by DRIP and dividend increases.
I also divide my retirement accounts in the right column and the dividends from the taxable account are in the left two columns. Retirement accounts are comprised of HSA investments, ROTHs, and traditional IRAs, as well as our working 401(k) accounts. In total, the retirement accounts earned total dividend income of $337.87 or 25% of total dividend income. That still left over $1,000 and more in the taxable account. Go dividends, keep rolling!
Year-over-year dividend income comparison
Our dividend income was up just $39 or 3% from last year. We’ll take it, because there were a few things to note here.
First, the AT&T dividend is the biggest impact here, with a $58 drop in the dividend. AT&T correctly sized its dividend in the post-spin-off era. However, Verizon (VZ) is in a race to catch up on this as dividend income has increased by more than $30 from their dividend.
I was talking about community banks earlier, but the dividend from Provident Financial (PFS) is a little bigger, due to my increased equity position and the power of DRIP! The impact was around $15.
All in all, a solid month of dividends. The push to $2,000 is on! Keep investing.
August was a quiet month for the second month in a row (July we presented only one dividend increase). Only one big dividend increase this month as September is expected to have a better month. Indeed, we present eight dividend increases scheduled for August!
Illinois Tool Works (ITW), the dividend aristocrat itself, recorded an incredible dividend increase. When all is catastrophic, an ITW Dividend Aristocrat stock just brings the heat!
In total, the dividend increase created $9.45 of additional passive dividend income. I would have to invest $270 at a 3.50% dividend yield to add that income. Thank you for the raises, as I didn’t have to find the capital to create this form of income!
Conclusion and Summary of Dividend Income
The name of the game is to apply what you learn through financial education. The next steps are to maximize every dollar for investment opportunities and live on your own terms. My plan is to demonstrate that dividend income can be a revenue driver. A revenue engine that allows you to regain control of your life. An income engine to help you achieve financial freedom. Dividend investing, once you learn the right method, becomes easier and starts to make a lot of sense!
Excited for the future, no doubt. Also, all of last year’s investments and this year’s moves show that my goal is to save 60% of my incomeand make every dollar countensured the growth of the dividend.
As always, thanks for stopping by, leave your comments and questions below. Good luck and good investment to all!
Editor’s note: The summary bullet points for this article were chosen by the Seeking Alpha editors.