Dividend growth investing is one of the best instruments to build wealth over time. Thereby the time aspect is of significant importance. DGI is not about finding the next Google or Amazon. It’s more about picking boring companies, staying invested and watch the power of compound interest do its magic. Let’s take Johnson & Johnson (JNJ) as an example. In April JNJ has announced a dividend increase of 5.6%. The dividend yield is at 2.68%. This might sound not much, but when we consider the time aspect, the whole picture changes. If you would have bought JNJ in March 2000 (at around 35$/share), it would equal a yield on cost of 10.8% today. Not bad, isn’t it? But it’s getting even better. Think about all the dividends that JNJ has paid from 2000 until today. When reinvested back, those dividends would have a massive impact on total performance. That is the beauty of the compounding effect: money on money earned leads to exponential growth. And last but not least, don’t forget about capital appreciation. JNJ would be up more than 300% in your portfolio.
Dividend Income: April 2019
In April 2019, 5 companies have rewarded me with a dividend payment:
- Coca-Cola (KO): €8.15
- Illinois Tool Works (ITW): €9.77
- Philip Morris (PM): €17.07
- JPMorgan Chase (JPM): €10.89
- Altria (MO): €38,71
This month’s dividends sum up to €84.59 ($94.75) in total. That result is almost exactly in line with April’s dividend income from the previous year.
|January||€ 97.98||€ 25.26||+ 288%|
|February||€ 89.69||€ 55.35||+ 62%|
|March||€ 166.57||€ 107.33||+ 55%|
|April||€ 84.59||€ 84.92||+/- 0%|
|Total||€ 438.83||€ 1,163.80|
The zero growth in April is due to a payment shift by Daimler AG (DAI). Last year Daimler paid out the dividends in April. This year the payout is scheduled for May. So the flat performance in April will be compensated by some surplus income in the coming month.
Monthly cash flow might fluctuate due to a shifted payment schedule or portfolio changes, as long as this income is growing year over year, I’m more than fine with that. On a cumulative basis, this portfolio still shows some respectable growth figures. This year I have collected €438.83 ($491.50) in dividends so far. Compared to the same period last year, this is a year over year growth of 61%.
The blue line shows the projected dividend income for this year. Based on today’s data, I expect to receive €1,443 ($1,616) in annual dividends in 2019. As the year goes by, I hope to boost that number towards €1,650 ($1,890) which is my annual target for 2019.
Although April’s income was rather flat, I’m more than satisfied with the year to date performance of this portfolio. The cash flow keeps on growing and that is what matters the most. For the remaining of the year, I will continue doing what I’ve done since I started investing back in 2015. That is adding small amounts on a regular basis and thus growing this portfolio.