Turning the Corner to Dividend Growth

24 Nov 2015 20:19

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I have now completed 4 full years of dividend growth investing and feel that I am finally making that turn onto Dividend Growth Street!

When I started this journey I had a specific goal to replace 20% of my income with dividends by the time I retired. With a small


accumulation of investment money and a 15 year plan I knew exactly how much my dividend income had to increase by each and every year, 50% in the first year and then 15% each year until my goal.

Every year I had to contribute significant new funds to meet the growth rate and also to make up for the occasional investing mistake. Then came the summer of 2015. My oldest child was entering her senior year in high school and my wife and I decided to redirect all available funds to shore up our children’s college savings. Starting in June of 2015, no additional money was being used to fund the Dividend Growth Portfolio. To make matters more complex, I have a total of three children all 2 years apart so the college funding will continue for a full six more years! It is for a good cause but at what price? Thankfully the wife and I were smart enough to put college savings aside when our children were first born so the damage could have been worse.

Considering I have needed to add a decent amount of funds each and every year to meet my income growth goals I really started to wonder if I’m putting my retirement at jeopardy for the sake of my children. Did I finally become one of THOSE parents? After looking at my portfolio for 2015 I noticed something interesting, I met my 2015 goal of increasing dividends 15% without adding any new money since June.


Holy cow, in just the fourth year of investing, the portfolio is growing organically at a significant rate. 71% of the portfolio growth was met through companies growing their dividends and reinvesting those dividends back into shares of more dividend growth companies. Of course it is not 100% organic growth but still extremely positive to stay on or near to plan while investing in my children. With a little luck, I could get a bonus or even a promotion during the next six years to add some new funds to the Dividend Growth Portfolio to keep it on track.

The next few years will be interesting to watch. After all the hard work of budgeting, saving and investing it is starting to take a life onto its own and I feel my investment vehicle making that final turn onto Dividend Growth Street. Cannot wait for the day when the turn is complete and I can just cruise down the street with no worries.

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