Achieving Financial Freedom Through Dividend Investing
To all my #FinancialFreedom seekers out there, welcome and thank you for being a reader of my articles! Being able to share this journey with you is truly a blessing and an honor. Through Dividend Investing, we can achieve our dreams of F.I.R.E.! Read on!
$1,075.11 – A Dividend Milestone
This week marks a great milestone in my own personal financial journey: I cracked the four figure annual dividend income mark!
Through the purchase of 64 more shares of $PG, my annual dividend income increased by another $181.76/yr.
As of 7/24/18, my annual dividend income has reached $1,075.11.
Find the rationale for my $PG purchase decision here.
What Does $1,075.11 Mean to Me?
I look at my current annual dividend income of $1,075.11 and I see one thing: The Potential.
I am fully cognizant that this amount of annual income is not very much money – in fact, it doesn’t even cover one house payment. I cannot live on $1,000 per year.
But by harnessing the ‘brick-by-brick’ mentality, I am seeing that the ‘dream’ idea of living off passive income generated through dividend payments is becoming reality. I am seeing that this is not only possible but that it WILL happen if I continue on my current course of action.
THIS IS AMAZING.
I still have a large cash position to invest in the market. I am building up my positions slowly, typically in $5k increments at the moment. I do believe many stocks are overvalued at this present time, so for me, being long cash is the right move until stocks reach better valuation points.
However, the hedge against the market continuing to trend in an upward trajectory is to infuse these smaller positions. If I am ‘wrong’ this strategy will at least make me ‘less wrong’ and in the end, I will still be adding positions in great stocks at reasonable value levels.
The End Game
It is totally realistic that when I have fully invested my cash position, I will have anywhere from $10-15k of dividend income per year.
Again, this simply amazes me! Once my capital is deployed, I expect that each and every year I will have $10-15k of income, relatively free and clear from any work on my part.
The only thing left for me to do is manage my positions, but most of the stocks I purchase are ‘buy and hold forever’ stocks, so the chances of me selling are highly unrealistic. So long as I am doing my homework in the beginning, I do not care about the fluctuation in day-to-day stock prices: I am only after the dividend income.
Again, The Potential of what this can turn into amazes me. The potential for a cascading ‘dividend snowball effect’ through having my dividends on DRIP is truly astonishing.
My end goal is to have my DRIP system set up where I am re-investing $10-15k in these stocks per year, every year, and continuing to build my dividend income higher and higher through automatic share repurchases.
Warren Buffett Does the Same Thing
If you ever wondered how Buffett made his money it is through these principles:
- Find undervalued companies
- Build and improve the operations
- Get the companies to pay him dividends
He has also invested heavily in the insurance/reinsurance industry, which if managed correctly, are basically dividend payers.
Now I am not claiming to be on the same investment level Warren Buffett, but I am smart enough to learn from the greatest investor that ever lived and buy into the model of finding undervalued companies and earn a nice dividend in the process.
Bringing It Home
I will be writing more about my dividend strategy more in a different article but needless to say, I am very excited to be seeing this investment strategy paying ‘dividends’ (pun intended)!
We can only work so many hours in a day; but our money’s potential to work for us is limitless.
I hope this article gets you excited about the potential of putting your money to work for you. I know that I was inspired by a dividend blogger a few years back which put me on my current course of action; my hope is that I can inspire you as well!
Let’s build our wealth together!
“Someone’s sitting in the shade today because someone planted a tree a long time ago.” – Warren Buffet (Tweet This)
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Disclaimer: (1) All the information above is not a recommendation for or against any investment vehicle or money management strategy. It should not be construed as advice and each individual that invests needs to take up any decision with the utmost care and diligence. Please seek the advice of a competent business professional before making any financial decision.
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