Sometimes I am Surprised
One way a disciplined investor monitors their investments is to see if the targets are met. Of course, that means you have to have a target. Also, a disciplined investor checks to see if the stated approach (tactics) is working as well. In other words, my target might be to have dividend income of $70,000 per year. My stated approach might be “increase dividends annually by at least 10% by buying and holding dividend growth investments.”
Why I was Surprised
This past Saturday I was using the iPhone Dividend Tracker app to view our largest ETF holding. That holding is VYM. I came upon some screens that seemed to be wrong. I looked at the numbers and thought “there must be some mistake!” The growth of dividends and the projected dividend growth through year 2040 seemed irrational. However, upon further investigation, I believe the numbers and graphs presented by Dividend Tracker were correct.
The Dividend Tracker Screen Shots
The following gallery shows the data and graphs from the app. While I don’t necessarily expect to live until the year 2040, it is possible. I would be 89 years old in February 2040. Even if I don’t make it to that crazy year, it is likely that my wife will. After I saw these graphs, I did a download of the balance and dividend history of our Fidelity Investments accounts.
The Story From 2003-2020
The table shown here is from the download. As you can see, based on our actual results, we had dividend growth every year except 2008. In 2008 I realized that my plan and my investments were not in agreement. In 2008 I was 57 years old. I thought I might retire at age 62. That was my target age for starting to draw Social Security benefits.
Therefore, in 2008 I sold the investments that did not align with my target retirement date and my target dividend income objective of $70,000 per year. I then started to purchase stocks with a history of dividend growth and a sensible dividend payout ratio.
The Last Ten Years
In the last ten years our income growth over the previous year has always been at least 10%. If I were working, I doubt there is any employer who would give me a 5% raise every year. During all of my working years, I probably only had two years where my increase was over 5%. As the table shows, 10.52% was my worst year for dividend income growth. That is why I am a dividend growth investor. It is also why I don’t have too many dollars set aside in cash or invested in bonds.
Did I hit the target?
I said I wanted $70,000 in dividends by the time I was 62 years old. Not only did I achieve that target, but we succeeded beyond my imagination. To God be the glory. He has prospered us.
Proverbs 10:22 “The blessing of the Lord makes rich, and he adds no sorrow with it.” (ESV)
Proverbs 21:5 “The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty.” (ESV)