Summer is here in the great state of Georgia and just like I know it will be HOT in Atlanta every summer, I know every month I will have great companies send me some of the cash they made. Companies call these cash payments dividends and it is a way for them to share some of the profits with their owners. And since we own stock or shares of these companies, we are part owners.
I love investing in companies that pay us cash (dividends) every month because it will be these dividends that we actually live off of in the future. I want our portfolio to be everlasting. Meaning, I don’t want to have to decide in the future when and how much (of our portfolio) I need to sell to support us. I want to have a strategy that keeps me from worrying about “what if” we run out of money.
So what companies do we own that paid us in May?
- Kinder Morgan Inc. (KMI) – $11.73
- Starbucks Corporation (SBUX) – $4.60
- Realty Income (O) – $10.40
- STAG Industrial (STAG) – $8.01
Total dividends received in the month of May = $34.74
As of right now, we don’t own many companies that pay in the 2nd month of each quarter, so I will need to address this as we build this portfolio over the years to balance things out a bit. Realty Income and STAG pay us every month which helps smooth things out, and I will probably add a couple more monthly payers when we start adding to the portfolio again. If you are new to our journey then you should know that we are using all of our extra cash to knock out our remaining debts… you can read why HERE.
I have now been tracking this portfolio for one year and I know that we were paid $29.76 in May of 2015, Kinder Morgan cut its dividend and we have added Starbucks to the mix since then, but regardless, we still had a 16.7% increase from last May. I’ll take that kind of raise any day!
Let’s discuss Starbucks for a minute…This is the first dividend we have received since investing $1,353 back in March. A few months ago, many people got upset about Starbucks changing the way they calculate their rewards program to earn free coffees. Here’s an idea… create your own rewards program by being an owner instead of (or in addition to) a consumer. We have essentially “Earned” 2 or more “Free” coffees every quarter for the rest of our lives. Don’t get me wrong I still need you consumers (my wife is one of them) out there buying those lattes to aid in our early retirement, I just want you to think and be an owner in the items you consume.
Just in case you are thinking that these amounts are too small and won’t matter much in the long run, let’s run some projections and use our handy little crystal ball. The dividend paid per share is $.20 and I own 23 shares that I bought for $1,353, paying us a little more than $18.50 this year. The average rate of dividend increases over the last 3 years has been 23.6%. Now, let’s assume we never add another dollar and Starbucks continues to increase their dividend by 23.6% every year for the next 30 years (highly unlikely, but let’s have some fun). Those 23 original shares would grow themselves into paying $14,500 a year in dividends and be worth just north of $1,000,000…how’s that for a rewards program!?
When it comes to money, you must have a plan! If you don’t, someone or some business will come around with a plan to separate it from you.
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