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.”

Tony practicing at Jeff and Rita’s farm on Sunday. Our small group is amazing!

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.

I didn’t have employers who would give me annual increases like this!
The dividends shown are the AVERAGE MONTHY INCOME!

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)