2024 Goals 2-3 Giving and Dividend Growth

Certainties and Uncertainties

Confident people may or may not have a proper perspective of life’s uncertainties. It seems that almost everyone expects, with some exceptions, to make it through 2024. Part of the reason for this is that we made it through 2023. Realistic people, and especially those who have read the books of Proverbs and Ecclesiastes, realize life is uncertain. It also pays to read James 4:13-15 which says:

“Come now, you who say, ‘Today or tomorrow we will go into such and such a town and spend a year there and trade and make a profit’— yet you do not know what tomorrow will bring. What is your life? For you are a mist that appears for a little time and then vanishes. Instead you ought to say, “If the Lord wills, we will live and do this or that.”

So, if the Lord wills, I will reach my seventy-third birthday in February. If He wills, I will be able to work on my 2024 goals. But if He doesn’t, it is well with my soul.

2024 Giving Goal

In 2023 our charitable giving increased by 50% over 2022. A good portion of that was due to the things I learned about QCDs: Qualified Charitable Distributions from my traditional IRA. For 2024, based on my age, my RMD is $73,151.87. If I don’t take the Required Minimum Distribution, then I will have to pay a penalty tax of 10-25% depending on the situation. There is no point in delaying the RMD. That is allowing the IRS to tax you without mercy.

So the certainty or my desire is to give all of the $73,151.87 to qualified organizations under the tax code. When I do this, I need to get a receipt from the charitable organization for the amount given. Be reminded that, “QCDs are not deductible as charitable contributions on Schedule A. But, as with deductible contributions, the donor must get a written acknowledgement of their contribution from the charitable organization, before filing their return.” Source: IRS

The RMD amount can be fully funded by cash that I have been holding in my IRA in anticipation of the need to do withdrawals this year. So my bare minimum QCD goal is $75,000 for 2024, or about $6,250 per month. I can, however, give up to $105,000 from my IRA in 2024.

Therefore, I hope to achieve at least a ten percent increase in giving in 2024 from what we were able to give in 2023.

Standard Deduction or QCD?

The standard deduction for married couples filing a joint return for 2024 is $29,200. If I take the QCD approach, then our property taxes will be less than the standard deduction, so I will benefit from taking the standard deduction and the recipients of our giving will benefit by receiving more, because no taxes are withheld when paying directly to the charity from the IRA. In addition, because Cindie and I are now both over age 65 (she doesn’t look that old!), we each get an additional standard deduction amount for 2024 of $1,550.  So our total standard deduction will be $32,300.

The reason I share this is because I cannot declare QCD gifts in the same way that a gift is deducted from our regular checking account. It cannot be listed on the Schedule A. This is still a win, as we give away more and still get a decent amount of tax benefit from the standard deduction. If we give gifts other than QCD gifts (and we will), then those can be listed on the Schedule A. However, we will want to be thoughtful about this and most of our giving will be directly from my IRA.

The 2024 Dividend Growth Goal is Easy Income

This year I will be setting a lower target for dividend growth. Last year it was 9% and this year I hope to achieve 7%. That should be an easy target. There are reasons I think this. First of all, VYM is our largest holding, and it has a five-year dividend growth rate of 5.6%. SCHD has a five-year dividend growth rate of 13.05%.

ABBV is one of the largest holdings in my ROTH IRA, and it as a growth rate of 10.52%. Even one of my favorite BDCs, CSWC, has a growth rate of 11.62%. AVGO is 19.25%, HPQ is 12.96% and SAR is 10.70%. Of course, there are other holdings with lower or no growth in dividends, so a blend, I believe, can easily achieve seven percent, if the Lord wills.

All scripture passages are from the English Standard Version except as otherwise noted.

IRS