I consider Dividend Income Investing a truly passive pursuit. The money earned from holding dividend yielding stocks is part of the foundation of my plan for Financial Independence. Although, in the past, I normally monitored my dividend income total based on an annual basis, I have recently started to monitor the income total and growth quarter to quarter.
My original goal for my dividend income this year was in the $35,000 range. However, since I had to liquidate some shares to pay for unforeseen repairs on a rental property, I had to modify my goals for the rest of the year 2015. The current goal stands at $30,000. I am not taking into account the dividends paid by mutual funds because they vary wildly. If the mutual funds pay at the end of the year, the numbers will be added to the total, but not used to determine if I reached my income goal. The goal applies only to individual stocks.
With that being said, let’s get to the numbers.
Dividend Totals:
- 17,500 shares General Electric (GE) @$0.23/share= $4025.00
- 4,524 shares AT&T (T) @$0.47/share========== $2126.28
- 1,900 shares First Energy (FE) @$0.36/share==== $ 684.00
- Total quarter act. dividends================= $6835.28
- Total annual est. dividends= ===============$27,340.00
The total is not too far from my goal for the year, however I am still very far from my ultimate goal for FI. We will see how things turn out going forward. I am looking for stagnant dividend growth in the next few quarters for GE, but I am also EXPECTING growth to return once the restructuring is completed. I seem to recall a song…..”You can’t always get what you want…..You might just get what you need.” That seems fitting for the current situation, so I am going to run with it.
Current Yields:
- GE—- 3.37%
- T ——5.44%
- FE —-3.93%
The annual dividend total does not take into account the potential for compounding through reinvestment. The total dividend income will be adjusted after stocks are purchased and the dividends are added to the account.
The rate of growth for the dividends of FE and GE has been halted to zero in the near term, and although AT&T has been steadily growing, the rate is at an anemic 2%. The low rate of growth of the dividends will be cushioned in the near term because the stocks held are currently yielding more than the average S&P 500 stock which currently sits at 1.93%.
Going forward, decisions must be made whether to continue adding to established positions through dividend reinvestment or to replace those positions with suitable stocks with growing dividends.
DividendDreamer 
Wow … thats massive!! Congrats on a fantastic quarter, DD. Keep it up.
R2R
Thank you. Hopefully, the dividends start growing along the way.
Keep cranking,
Robert the DividendDreamer
AKA — Seeking Dividends
Follow me on Twitter– Seeking Dividends@DividendDreamer
Wow, that’s a really massive dividend income up there you had. If I had that, I’ll probably be much closer to FI already.
Keep it up and great blog.
Thanks very much.
The vast majority of the dividends is in IRA accounts. I did a fair amount of trading to get the share count up. All the while, no taxes on the cap gains because of IRA. I hate trading in an open account. I am still doing a trading strategy with some T shares. Check it out on the blog. Thanks for stopping by.
Keep cranking,
Robert the DividendDreamer
AKA — Seeking Dividends
Follow me on Twitter– Seeking Dividends@DividendDreamer
Considering you are only a few years older than me, and your yearly dividend is 9x more than me. This to put “start early” and the compounding effect into perspective.
The years in between my and your age are plenty enough time for you to have the compounding effect work it’s magic. At about 22 years into it, the numbers will start to get really nice. Just give it time, and……
Keep cranking,
Robert the DividendDreamer
AKA — Seeking Dividends
Follow me on Twitter– Seeking Dividends@DividendDreamer
Thanks very much.
The vast majority of the dividends is in IRA accounts. I did a fair amount of trading to get the share count up. All the while, no taxes on the cap gains because of IRA. I hate trading in an open account. I am still doing a trading strategy with some T shares. Check it out on the blog. Thanks for stopping by.
Keep cranking,
Robert the DividendDreamer
AKA — Seeking Dividends
Follow me on Twitter– Seeking Dividends@DividendDreamer
Since I plan on retiring on dividend, it’s best to put in taxable account. I don’t have much in IRA and Roth IRA I’m no longer qualify. I’m waiting to retire so I can convert the money from IRA to Roth at a lower tax bracket. 🙂
Dividends get a very favorable tax rate on your tax return. However, it is the short term cap gains that are at issue with me. I can go into how the trading can actually end up with you having less than you started while still owing the IRS a huge sum, however, it is very long winded. So, I concentrate specifically on trading in IRA accounts, then as the shares increase, by default, my dividends increase in step.
If all you had was dividend income, your taxes would be very favorable. It really would not matter if the divs were in IRA or open account. However, any sales that resulted in short term cap gains in an open account would require the payment of taxes. In my opinion, it would be most beneficial to find a way to contribute to a tax advantaged account.
http://www.bogleheads.org/wiki/Non-deductible_traditional_IRA
I would look into a non deductible IRA if you want to add to you IRA potential. You might qualify.
Also, if it is an income issue, you might look into opening a business and deducting a 179 deduction for the year and resulting in a loss and thereby lowering your AGI. Then you might qualify
for some type of IRA. Lots of ways to go about it. Each person’s particular situation is different. Keep researching the IRA possibilities. I am sure something is out there for you.
Keep cranking,
Robert the DividendDreamer
AKA — Seeking Dividends
Follow me on Twitter– Seeking Dividends@DividendDreamer
The website you gave doesn’t include SEP- IRA for business owner. http://www.irs.gov/Retirement-Plans/Retirement-Plans-for-Self-Employed-People
Se is a whole different story. If you go with a simple IRA , you can go dollar for dollar to reduce your income to 12500 this year. The SEP requires you to do somewhat complicated calculations to determine the contribution, and most people make error determining the max. I will answer as many questions as I can. However, the best way to do it involves knowing the AGI and then making a choice. Let me know
Keep cranking,
Robert the DividendDreamer
AKA — Seeking Dividends
Follow me on Twitter– Seeking Dividends@DividendDreamer
1. $50,000
(From Schedule C, C-EZ, or K-1)
Step 2. Deduction for Self-Employment Tax 2. $3,532
(From IRS Form 1040)
Step 3. Adjusted Net Business Profits 3. $46,468
(Subtract Line 2 from Line 1)
Step 4. Contribution Percentage (expressed as a decimal) 4. 0.25
(Desired contribution as a percentage of earned
income, 0%–25%, which can vary each year)
Step 5. Contribution Factor 5. 1.25
(Add 1.00 to Line 4)
Step 6. Adjusted Earned Income 6. $37,174
(Divide Line 3 by Line 5)
Step 7. Maximum Earned Income 7. $260,000
(Enter $260,000 for 2014 or $265,000 for 2015)
Step 8. Final Earned Income 8. $37,174
(The Lesser of Line 6 and Line 7)
Step 9. Contribution Amount 9. $9,294
(Multiply Line 4 by Line 8)
Here are some additional guidelines for calculating your SEP IRA contribution:
Your Contribution Amount
■ You may contribute as much as 25% of compensation per participant, up to $52,000 for 2014 and $53,000 for 2015, to
a Fidelity SEP IRA. The maximum compensation limit is $260,000 for 2014 and $265,000 for 2015. You should verify
your contribution amount with your tax advisor.
Calculating Contributions for Employees
■ A common-law employee is an employee who works for a self-employed person, a partnership, or a corporation, but
who has no financial interest in the employer’s trade, business, or profession. To calculate contributions for common-law
employees, simply multiply the same percentage of compensation you are contributing for yourself by each employee’s
wages, as shown on their W-2.
Calculating Your Contribution if You Are Self-Employed
■ Individuals with self-employed income must base their contributions on “earned income.” For self-employed individu-
als, earned income refers to net business profits derived from the business, reduced by a deduction of one-half of your
self-employment tax, less your SEP IRA contribution.
If you are self-employed or own your own unincorporated business, simply move step by step through this work-
sheet to calculate your SEP IRA contribution. You will need to have your income tax forms nearby (particularly
Form 1040 and Schedule C, Schedule C-EZ, or Schedule K-1). Remember that the amount you can contrib-
ute annually is limited by the IRS, and you must contribute the same percentage of compensation for all
eligible employees as you contribute for yourself. This worksheet will assist you with calculating your contri-
bution and can help you stay within the IRS limitations. You may also want to try our interactive version online at
Fidelity.com/retirement. Both tools are intended to serve as guides only, and you should consult your tax advisor
for further assistance.
Let me know if this link works. That is the formula, but the link won’t work. I will try again
Keep cranking,
Robert the DividendDreamer
AKA — Seeking Dividends
Follow me on Twitter– Seeking Dividends@DividendDreamer
My employer already offer 401k, if I quit and strickly run a business then I can invest upto $40k, but if I quit, I’d use the money to spend, extra money probably go to Roth. I don’t like the idea of having to wait to get the money out. Our government might also change the rule/law as they did with social security.
https://www.google.com/url?sa=t&source=web&rct=j&ei=t5xQVbzuEcPfoATM9oGgDg&url=http://money.usnews.com/money/retirement/articles/2014/12/01/how-to-max-out-your-retirement-accounts-in-2015&ved=0CEIQFjAF&usg=AFQjCNHgfsONV8pmK-te1zRgUqO8J0WGGQ
Check this out. You might be able to contribute to a Roth. Good luck.
Congrats on huge dividends Robert! Keep inspiring!
Thank you. Good luck on your end. Tha KS for stopping by.
Keep cranking,
Robert the DividendDreamer
AKA — Seeking Dividends
Follow me on Twitter– Seeking Dividends@DividendDreamer
No doubt that you keep cranking! 😉 Just keep it up, you’re an inspiration for FI!
Cheers!
Mike
Thanks. I am doing OK with the divs right now, but I have 2 renters that need a good *** kicking. They are so far behind and I am getting fed up. Sorry to rant. Good luck. Thanks for stopping by.
Keep cranking,
Robert the DividendDreamer
AKA — Seeking Dividends
Follow me on Twitter– Seeking Dividends@DividendDreamer