As many of you know, 2012 is the first year that I have really overhauled my stock investment strategy and changed my focus to simply collecting high-quality dividend paying stocks. Just like any dividend investor can tell you, dividend payment income is a pretty remarkable source of “truly” passive income. I prefix passive income with “truly” because the income they generate literally requires no effort on my part. I simply collect the payments each quarter!
As of this month, I am happy to report the second installment of my quarterly dividend payments received. Please see the image on the left for the total.
Goals for My Dividend Payment Portfolio:
Okay, I know ~$60 of dividend payment income is nothing to get crazy about. Hold on to your seats, right? But remember: $60 could just as easily become $600 or $6,000 over time. What I’m most interested in with this strategy is the potential I see for creating passive income, lower tax payments, and building a bridge of income during early retirement to get me to my other nest egg accounts.
In the next 3 years, I’d like to see my dividend payment income up to $100 per month ($1,200 per year). At a 4% dividend yield, that means I’d have to work my way up to a $30,000 portfolio of dividend paying stocks. Although that sounds like a lot of money, I’m very confident that I could pull this off.
As I’ve previously mentioned, my next round of stock picks is going to be an easy one: I plan to implement the Dogs of the Dow strategy for my next purchase of dividend paying stocks early next year (when I receive my profit sharing check). The Dogs currently have a year to date (YTD) dividend yield between 3.6 and 3.7%, and the portfolio is up 10.5 to 12.5% (depending on which version of the strategy you’re using). Given everything that’s happened this year, that’s not too bad of a return!
My Dividend Payment Portfolio Stock Performance:
For anyone wondering about the equity risk of owning dividend paying stocks, I’ve decided to also include the stock price performance as part of this report:
The second quarter of this year was a little bit of a roller-coaster ride in terms of prices. I’m happy to see that in this short amount of time that the overall portfolio has just barely squeaked by with a marginal positive change in value. You’ve got to remember that sometimes simply not having a loss is a victory!
Despite not much real change in equity, the dividend payments push this portfolio upward over into positive territory!
* Big Disclaimer – Don’t buy these stocks just because I did! Please do your own research or consult professional before taking any action.
If you’re interested in learning more about dividend paying stocks, please check out my following other posts:
Readers – What do you think about my latest dividend payment income? Is it time to quit my job? Just kidding! Who else is using dividend paying stocks as part of their income generation or retirement strategy?
Image Credits: MMD