Dividend investing comes in all sizes, time periods and investments. The main goal truly remains the same – to build a passive income generating portfolio, that grows every year. We wrote about Milestones are Part of Being a Dividend Investor over 6.5 years ago. Today’s article is about the thresholds that can be achieved, celebrated, backs to pat and the headnod to happen. In fact, we (Lanny and his wife) are about to hit a threshold that’s probably worth celebrating. Let’s dive in. Now, we all can “hopefully” agree that dividend investing can be one of the best sources of passive income streams. Whether you just are starting out or you’ve been doing it for over 10 years, it just keeps getting better and better. I am going to break down what I think are those dividend milestones, dividend income milestones to be exact. Get your coffee, sit down, and enjoy the read, you’ll feel the caffeine pumping through your veins in no time! $100 dividend Income Milestone You’re a few months or a year into investing. Let’s assume you are investing around $100 per week and you just crossed the 30th or 35th week of doing so. Your yield is near 3.50% and you JUST crossed your triple digit dividend income goal. It’s clicking now, you now can pay for your monthly insurance bill or at least a month’s worth of an expense. $1,000 Dividend Income Milestone You’ve now built a foundation. Possibly even own a few of the foundation dividend stocks – such as McDonald’s (MCD), Pepsi (PEP), Johnson & Johnson (JNJ); each representing 5%-15% of your portfolio. The valuation has been growing, as well, and you’ve been investing for anywhere from 1-3 years to get to the $1,000 dividend income mark. Portfolio is worth anywhere from $30,000-$45,000 now. You no longer invest $100 per week but now do $250 per week at a minimum. At this phase, you start to engineer your budget to find more ways to save more, find extra money to invest more. You are considering an automatic investment, such as Charles Schwab’s SCHD ETF or even Vanguard’s High Dividend Yield ETF VYM. $5,000 Dividend Income Milestone Investing is now just an automatic process to you. You’ve been investing 3-5 years at this point and you are reinvesting all of your dividends, the power of DRIP is real! You are now seeing $250-$750 dividend income months consistently. You know in your head that it means more cash to be reinvested to produce even more income. Dividend growth is really meaningful, such as when McDonald’s announces their next increase or Realty Income (O) announces their 3rd dividend increase in the year. You’re well diversified within industries. You’ve crossed the $100,000 threshold in portfolio value and you are salivating at how QUICK the next $100,000 is really moving here. Your value is somewhere in between $125,000 and $175,000. You’re focused on keeping your expenses in check, but also growing your income, to buy more stocks. Just like the the THREE STOCKS we are looking to buy this December. Financial freedom is starting to seem can be an actual reality, vs. when you were at the $100 mark. You dream of the days where each month is $5,000. You know that you’ll get there, and you are hungrier than ever to build. You now have sizable positions and are always picking the stocks you’re adding to. You’re close to tapping out the # of holdings you like in your portfolio , too. $10,000 Dividend Income Milestone WOW… you are dominating, essentially. You start to think of the $1,000 per month on average mark approaching. You’ve been investing 5-10 years in the dividend investing game. It seems like a long time, but it isn’t but it is all at the same time. You’ve experienced dips, cuts, increases, economic swings and volatility. You’ve endured though, why? Because you are a dividend investor. Your value didn’t drop as much, but didn’t increase as much as others. The dividends paid during the bad times and even increased for the most part. You now are committed to the goal. Your portfolio has now cruised to well over $200,000 and you can smell $500,000 in the distance. Half a million fricken dollars. You now have a cash flow that is almost the size of someone’s social security check. You wish so bad your friends, relatives and peers did this, too. You are starting to realize you shouldn’t give personal finance or guidance to those that aren’t seeking it, due to annoying or frustrating others with your dividend income goals, investing and how you want to use as much of your money to invest as possible. You know every single dividend increase that is coming for each stock you have, each month, in your portfolio. You’ve ran the numbers at this point and know that even if you stopped investing, time will take care of the rest and you’ll be okay. $25,000 Dividend Income Milestone Ah… the $25,000 milestone. This one is bittersweet. Why? My wife and I (Lanny) are really close to this one. In fact, so close we can almost taste it. This isn’t about us, it’s about you, though. You’ve been investing for well over a decade, possibly even between 10 and 20 years and all likes in the middle. You now know what it’s like to have thousands of passive income added to your total just by the power of the dividend growth rate. In fact, dividend growth adds a few thousand dollars in dividend income each year. You continuously look to right-size your portfolio, as you no longer like the small spin-off companies and you actually try to optimize your portfolio more than anything at this point. You want a low cost, efficient dividend stock portfolio. One that achieves the average yield you want with the average dividend growth rate you want. It could be a 3-4% dividend yield portfolio with a 6-7% dividend growth rate, on average. Financial freedom is a true discussion now. You can afford a few months of traditional living expenses. You know it can be done or at least can be a strong supplement to your financial picture. You really love the tax rate on qualified dividends and you know the math backwards and forwards for how much salary it takes before taxes to produce a $25,000 dividend income amount. Close to $40,000 in salary wages, in fact. You know the job’s not done, yet. But damn, you are close. $50,000 Dividend Income Milestone You are on top of the world here. For most, this covers all annual expenses. You did. You fricken did it. You’ve been investing, more than likely, somewhere in the 20-30 year range. If sooner, congratulations to you. This passive income stream is so real, it’s not even funny. Over $4,000 in dividends coming in per month. This is the equivalent to almost $80,000 in salary. Everything is an option at this point. Whether it’s a trip, time away, visit a friend, visit a family member you name it. In fact, you might be financially free. Your dividend stock portfolio is low maintenance, and you check in on it 3-5x per month, just to see how valuations are looking, how dividend growth is looking and if any small moves need to be made. Dividend growth alone adds a few thousand in income each year at this point, covering any increase in cost of living and then some. You chuckle at the thought of inflation at this point. $100,000 Dividend Income Milestone The snowball is an avalanche. At $100,000 you’ve been investing for multiple decades. You’re wise of age and wise of personal finance. You did it. You’re a master and have mastered the journey. You now want to teach. You want to teach younger family members, younger generations the power of knowing what you can do with time. Time is what you have less of these days, but the time is more plentiful than it ever has been before. You know THAT has been the biggest asset of yours as you’ve built your dividend income portfolio. You are happy. No stress about money, hopefully, at this point. You can handle the emergencies, you can make memories and moments and be there, without having to second guess the cost (though who are we kidding, you still do!). You are slowly planning and thinking of what other impacts you can make your close ones and even the world. How are you estate planning? Becomes a question. Remember, to stay humble, know you worked hard, saved money and invested. Many will not understand the path. They won’t understand how you can achieve almost $10,000 per month just by waking up now. You know what you had to do. You did it. Now that your coffee is done, feel free to drink a beer or glass of wine. You earned it. Conclusion Those are the dividend investing milestones on my mind, in my head, currently. Now, they are on paper, online here on this blog for you to think about, enjoy, contemplate and decide. What milestone are you in and which do you want to cross? It’s all up to you and there’s one thing I know – is that you can do it. -Lanny
This content was originally published here.
