October Dividend Income

After 33 years of clocking in and out of work and religiously saving 10% annually every year, in good times and bad, I have decided to share my monthly dividend income to show what regular saving and investing can accomplish.

For the month of October I made $3,520; an increase of +9.15% versus this time last year. It’s back to seeing bigger months and it feels good. I’m changing the look of my monthly posts just a bit and will focus strictly on dividends received and I now have included a list of each dividend paid.

10/1/20 PPLPPL CORP750.97
10/7/20 MRKMERCK &CO. INC COM114.24
10/13/20 VTRVENTAS INC4.91
10/15/20 LEG LEGGETT &PLATT INC68.85
10/15/20 WPCWP CAREY INC514.82
10/19/20 BCEBCE INC44.66
10/30/20 BGSB&G FOODS INC253.27
10/30/20 OGEOGE ENERGY CORP105.9
10/30/20M1 FinanceM1 DIVIDEND GROWTH ACCOUNT17.6

Fatherly Advice

The very first two pieces of advice I received for investing was more than 30 years ago and they still apply to today.  The advice came from my Father who knew truly little about the investing world but had two qualities that were invaluable.  While my Father had no experience in the world of investing, he did have a lifetime of experience and a strong saving habit.

What You Can’t See..

In August of 1987 I started my first full-time job, and I had the decision to sign up for the company 401K.  Being 18 I had no idea what a 401K was and when I asked my Father, he said “just signup and save 10%, if it is never in your paycheck you will never miss it.” 

He could not have been more right.  Years after that decision I made a lot of dumb financial mistakes and at times struggled financially to make ends meet.  However, not once did I ever think about reducing my 401K contribution because to me it was just another deduction on my paystub, so I never saw it as a source to increase my paycheck.  Those early years I had horrible saving habits and I could not imagine where I would be today if I did not follow his advice.  I look back now and cannot believe I maintained this savings habit for 33 years.

Just Ignore It

The second piece of advice came more out of frustration.  To this day I still remember my very first 401k contribution of $60 on September 15th, 1987.  Back in 1987 we did not have the internet where we could check our 401K balance regularly and had to wait for your quarterly or annual statements.  I received my first statement that following January and I noticed that the total value was less than the contributions I made; I was losing money!  At the time I was oblivious to the Black Monday crash of 87 and how it affected me.   

I was so frustrated with this 401K thing, my Father overheard me complaining and said just ignore it and it will grow.  Losing money bothered me so I diligently read every quarterly report and by the end of 1988 my account balance was larger than all my contributions.  I made back all my lost money and then some.  Unfortunately, my Father passed away in the summer of 1988, and I never had the opportunity to thank him for the advice.

Decades later I can look back at how those two experiences shaped my financial life and how powerful that advice was when I look at my portfolio and it is still applicable today. Regardless of how much knowledge I have attained about investing my two biggest wealth builders is the knowledge that markets always recover and consistent savings is the easiest path to building wealth.   It shows that financial behavior (in this context) is more important than financial knowledge.

Buys and Sells for the Week

The markets for the most part feel like it is trading sideways and not too much getting me excited. My buys this week were limited as I simply have no cash left so this is my last buy until November comes around and I get new infusion of cash. Here is a summary of what I bought or sold this week:

  1. Avista Corp (AVA) – increased position – When the share price dropped below $33 I used the last of my cash to buy at $32.76/share which netted a 5% yield. It closed the week at $34.97 so a very quick 7% gain.

Annual Benefits Went Up (Again)

Across the U.S. everyone is getting notifications to renew benefits for 2021 and here is a quick rundown of how mine has panned out. For my benefit selection I elected to maintain the exact same coverage as 2020:

BenefitIncrease (decrease)
Medical Insurance+5.18%
Dental Insurance+3.01%
Long Term Disability+3.74%
Life Insurance+3.95%
Spouse Life Insurance+3.69%

I am far from being an actuary with understanding risk pools, distributions, risk profiles, etc… to make a determination if this is good or bad but its just another thing to plan for. Two friends of mine tell me their medical insurance increased 10% and 14%, I guess I’m lucky in that regards. Overall the rise in benefit costs will decrease my weekly paycheck by $5.54 or annually $288.

From a Presidential election perspective, I see neither candidate impacting my insurance benefits however there is a Biden proposal that may impact my 401K contribution benefit. Biden’s proposal is to remove the pre-tax 401K benefit and instead provide a flat tax credit when you file your annual tax return. This may or may not be a wash but from a weekly perspective this will impact my take home pay. Accounting for the pretax loss my weekly paycheck will decrease an additional $31.35 weekly or $1630 annually. Whether or not this happens does not matter but I will plan for it accordingly to be conservative. This brings my total weekly take home paycheck reduction to $36.89.

Buys and Sells for the Week

The closer we get to elections and/or discussions of a second round of COVID relief the markets get more confusing as to which way it wants to move. I cannot control the market but I can control what I buy and sell. Here is a summary of what I bought or sold this week:

  1. Avista Corp (AVA) – increased position – I bought a small position as I continue to work on getting my average cost per share below $35 with this 18 year dividend grower and a 4.7% yield.
  2. Walgreens Boots Alliance (WBA) – increased position – Second week in a row I bought WBA in an attempt to build up my small position. Their quarterly report was good but not great. I think the company has finally found a bottom with sales & earnings during the COVID crisis and hopefully can move forward from here. I’ll continue to add WBA with its 45 years of dividend growth and a 5% yield as long as share price remains below $38/share.

Where Can I Retire

I had a little fun recently and decided to turn it into one of my regular passive income metrics. During the month of September the Census Bureau published their latest household income metrics and I decided to take a look and see how my current passive income measures up.

The data set I chose was to use the average household median income by state. In my opinion, since I will be retiring with my wife, I thought the this data best represented typical income in each state and was a better measure than using average income which can be skewed from higher income earners.

The data unfortunately is only representative thru 2018. To adjust for something a little closer to today’s dollars I inflated the incomes using 2019’s average inflation rate of 1.8%.

The results came in the currently I have enough passive income to retire in only 2 states (Mississippi and New Mexico). Mississippi I just squeaked into the 90th percentile by just 0.8%. New Mexico I just squeaked into the 80% range by 0.6%.

My choices are pretty slim right now but as my passive income grows it will be fun to color off the states as my income grows.

If this is something you would like to do here are the data links to get you there:

1. Census Bureau Spreadsheet can be downloaded from this link https://www2.census.gov/programs-surveys/cps/tables/time-series/historical-income-households/h08.xlshttps://www2.census.gov/programs-surveys/cps/tables/time-series/historical-income-households/h08.xls

2. You can create your own map here https://mapchart.net/usa.html

I’m toying around with including the entire world map to see which countries I can retire to but for now I am good with just the U.S.A. states.

Buys & Sells for the Week

Markets continue to move higher with some critics placing the reason on renewed hopes of an additional COVID relief package from Congress. I cannot control the market but I can control what I buy and sell. Here is a summary of what I bought or sold this week:

  1. Bank of Nova Scotia (BNS) – increased position – I bought a small position a couple weeks ago and added another small buy as it hovers in the low $40s with a 6.3% yield.
  2. AT&T (T) – increased position – Not the best dividend growth stock but a 7.3% yield is nothing to sneeze at. Only downside is dividend growth over the last few years has been less than the rate of inflation, but the high yield compensates for now.
  3. Walgreens Boots Alliance (WBA) – increased position – WBA is currently a very small position in my portfolio. With 45 years of dividend growth and a 5% yield its time to add more shares.

Adult Kids Living With You

My oldest daughter graduated from college last December and got her first full-time job in March of this year. That is great news for her and we are extremely happy for her. However, her entry level salary prevented her from living on her own so here she is living at home.

My wife and I are entering a new phase of parenting and wondering “will we have a permanent stay at home adult child or even worse will she be a boomerang kid?”. I’ve listened to many a co-worker over the years tell stories or complain of adult children not leaving or having to move back in. Luckily one of my strong skills is listening to others so I absorbed it all in.

No single story was the same. In some instances it was a child’s fault and in others it was the parents and sometimes it was both. After considering all the stories I came up with an idea that would allow my daughter to focus on growing up and moving out while at the same time my wife and I could dial down the treating of my daughter like a kid and think of her more as a grown woman. With that we sat with our daughter and asked she lay out a plan on what she would like to accomplish over the next 3 years and have a plan to move out.

My Daughter Had Different Plans

My wife and I sat with our daughter we explained our expectations that we want her to move out after three years and asked her to think about how she would accomplish that and come back to us with a plan.

A week had passed when my daughter finally approached us. She appreciated us talking to her but told us she had different plans. Because Congress just passed the CARES Act which froze student loans (i.e. no interest) my daughter said she plans on putting all of her free money towards paying off her student loans and would get back to us after that to make a plan. This caught me and my wife slightly off-guard but it was a very logical and mature decision to make. While not what we expected we were impressed none the less.

Did She Just Patronize Us?

Shortly after my daughter started working she began working a consistent 20 hours of over-time and suddenly she was flush with cash. 6 months had passed and with all of her over-time she made more than enough to payoff her student loans but she had yet to talk with us. We were left wondering did we just get buffalo’d? Was she just patronizing us to make us go away? Should we approach her or let it carry on more and see where it goes?

As my wife and I were trying to figure out the best way to approach this we were surprised last week when my daughter came to us and said “I haven’t forgotten what you asked for and I sketched out a plan but need your help to start some accounts.

Guess we learned our first lesson, we raised our kids pretty well and we need to trust them more as adults. We didn’t let her know we were getting a little anxious but we were so happy she came to us on her own.

Her Plan Was Pretty Good

She first explained that starting in December her probation period at work ends and her salary jumps from $40K annually to $55K annually which is not just a big boost but becomes a livable wage. She then explained she wants to save four buckets of money before she leaves.

The first bucket was for a new used car as she knows she probably has only 4 good years left with her current car which is already 7 years old. Second bucket was retirement, third bucket was investments, and the fourth bucket bucket was an emergency fund. After looking at her income she definitely had more room to save so I convinced her to add a fifth bucket for something in the future that she doesn’t even know she wants (house, marriage, special trip, or whatever comes her way).

From here I helped her setup a brokerage account (with a dividend growth portfolio of course) and a Roth IRA with weekly $96 deposits in each. She set up 2 online saving accounts at Ally and Discover Financial with weekly $96 deposits in each and then set a weekly $25 deposit to her savings account at her regular bank.

My wife and I were pretty impressed with her plan and the budget she set up. By the time she leaves our house she will have good budget and savings habits and enough money in reserve that if something goes wrong she can dip into it without having to run back to Mommy & Daddy. I get life is not easy and never goes as planned but I think she has a pretty good head start on life. Now I have two more kids to go through, too bad I had to work out the kinks on my oldest.

Welcome to the NEW Simple Dividend Growth Blog

For all the readers that followed me on my on my old blog site (http://dgi.wikidot.com/) thank you for following me onto my new site. Unfortunately there was no export/import capability from one platform to another so all my old blog posts won’t be carried over and I’ll be starting over from scratch. I tried to retain most of the old structure but did change some things to make maintenance easier.

One page that I did not carry over and will no longer be maintaining is the Inflation Beaters Index. Maintaing this index takes quite a bit of work and I believe few people (other than myself) used it. Additionally I do not foresee inflation remaining a big factor and as such decided to end it.

The Story So Far…

For those new to the site welcome and thank you for visiting. Hopefully you will follow me as I plod through to financial independence. My story is nothing but an example of how a person with a family on modest salary who consistently saved is working towards financial independence. That said here is a quick summary of my story so far…

I was a single income supporting a family of five on a modest salary up until 2015. We did not have a lot of money after we had kids and inconsistently saved. The only consistent savings we had was 10% every year into my 401K which I have maintained for more than 30 years.

In 2012 I started the dividend growth journey and changed my entire portfolio to a dividend growth strategy. At the end of 2016 I changed employers and had an opportunity to roll over my old 401K into an IRA . Those new IRA funds further accelerated my dividend growth investing and I started over from scratch with a new 401K with a contribution rate of 10% once again.

In 2016 my wife went back to work part-time to help pay for my first child’s college career and then switched to full-time in 2018. By the end of 2018 we had paid off all our credit card debt and then our mortgage. For the first time in more than 20 years we finally started to save consistently outside our 401K as I began investing in my brokerage account once again. In 2019 our financial position improved further and I started regular contributions to a ROTH IRA.

That first child has since graduated and we now have our next two children in college. My expenses should begin to decline rapidly over the next 6 years and just in time as I am targeting to be financially independent by 2028.