Another year has almost ended and it is that time to report my dividend income results for the past 12 months. As I shift my investment strategy from chasing high yielding stocks to searching out only the best dividend stocks, I am slowly starting to build a stable foundation for my income portfolio. I personally believe that investing in dividend paying stocks is the best way to build positive cash flow.
While investing your money in a certificate of deposit or online savings account comes with no risks, the return on investment is just too small. I want my money to work for me and expect a higher return than 1% or whatever my savings account will return. This is why I try and leverage quality stocks that pay a sustainable and healthy dividend to shareholders.
Over the past year, I have made decent progress towards reaching my income goals by investing in dividend stocks. Here are my results.
Dividend Income Stocks – 2011 Review
At the close of 2011, I currently own 10 dividend paying stocks, 9 of which are members of the 2012 dividend aristocrat index. Several of the stocks I own are held in a brokerage account, while 2 of the holdings were bought through direct stock purchase plans. Here is a list of my dividend stock holdings and the current yield of each company.
- ABT – ABBOTT LABORATORIES (3.50%)
- CINF – CINCINNATI FINANCIAL (5.40%) – Automatic investment through company direct stock purchase plan.
- CLX – CLOROX COMPANY (3.70%) – Automatic investment through Computershare transfer agent.
- ED – CONSOLIDATED EDISON HLDG CO INC (4.00%)
- INTC – INTEL CORP COMP (3.60%)
- JNJ – JOHNSON & JOHNSON (3.50%)
- LOW – LOWES (2.20%)
- MCD – MCDONALDS CORP (2.90%)
- PG – PROCTER & GAMBLE CO (3.20%)
- SYY – SYSCO CORP (3.70%)
I currently hold stocks in three different brokerage accounts, which charge various commissions. My two automatic investments were purchased using direct stock purchase plans, which do not charge any commissions or fees.
In the past, I would have opted for chasing higher yields by investing in riskier stocks. Fortunately, I learned that many companies that offer high yields (over 7%) cannot sustain that type of payout. Now I focus on stocks that can provide modest income returns over many years.
2011 Dividend Income Totals
Over the past 12 months, I have continued to grow my monthly dividend income. Here is a breakdown of my returns each month for the past year.
- January – $6.72
- February – $16.35
- March – $33.59
- April – $6.78
- May – $17.98
- June – $34.41
- July – $6.85
- August – $18.43
- September – $34.75
- October – $8.79
- November – $20.37
- December – $38.79
2011 Dividend Income Total – $243.81
The 10 stocks that make up my portfolio all pay quarterly dividends, which is why my monthly totals vary. Starting in 2011, I will begin tracking a 3-month rolling average which will help highlight my monthly progress.
Note – Each dividend payment I receive is used to purchase additional stock using DRIP (dividend reinvestment programs). This allows me to compound my earnings and accelerate my income.
2012 Dividend Income Goals
The start of a new year seems to be the perfect time to set new investment goals, which is exactly what I plan to do for 2012. Here is a snapshot of my dividend goals for 2012.
Earn $500 Dividend Income – I would like to double my dividend income over the next year to $500. This will be a lofty goal, but one that is attainable if I plan accordingly. In order to accomplish this, I will need to allocate new money to my portfolio, while continuing to reinvest all of my dividend payments.
Invest $6,000 in New Money – Investing an additional $6,000 over the next year will help me work towards doubling my dividend income. That means I need to invest $500 each month to reach this goal. I am currently contributing $100 each month through my automated investments (CLX and CINF), so I need to come up with another $400.
Add 2 – 5 new Positions – As noted earlier, I currently own 10 stocks in my portfolio. I want to continue adding more shares to these positions through DRIPs and additional investments. At the same time, I would like to add another 2 to 5 stocks to my portfolio to diversify even further. I feel very strongly about building a diversified portfolio.
I am excited about the new year and working to reach these goals. Overtime I plan to make dividend stocks a large source of my personal income and hope to use 2012 as a launchpad to reach my goals.
What investment goals have you set for the new year?