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