Ah, dividends. I sure do love me that sweet passive income. It’s enough to get me a little hard.

You know Jim Gaffigan is funny without resorting to low brow sex jokes. Maybe you should try that.

Nah.

Of course not. That would be actual work, and we all know you’re barely capable of that.

I used to think tracking my dividend income was kinda dumb, but now I’m 100% on board. I love seeing just how much I can expect to get in passive income during the year. I even have a little spreadsheet and everything. I’d have a big spreadsheet but my Excel skillz aren’t exactly on par with the rest of y’all. It makes me feel a little inadequate.

I didn’t really have a goal in 2018 regarding dividend income. I just focused on putting cash to work in good opportunities. I wanted to buy fantastic companies at decent prices, and for the most part I think I succeeded. I loaded up on pipeline stocks and Canada’s largest banks. I bought a REIT trading at 70% of book value that owns some of the world’s best real estate. I also bought Starbucks and a Mexican airport operator.

But I also can’t fully shake my value investor roots. I bought cheap names like a mutual fund provider and some of the beaten-up restaurant trusts. I think these are decent businesses trading at rock-bottom prices.

These stocks were bought throughout 2018, so they won’t give me the full potential of their income until this year. I’ll then add stocks throughout 2019 and repeat this exercise next year at this point.

So we’re going to look at two separate goals for 2019. The first is the amount of dividend income I’d like to physically collect this year. The second will be the forward income I can look forward to on December 31st, 2019.

2019 income

As it stands right now, I’ll collect a few dollars under $12,000 this year in dividend income. This assumes zero dividend growth throughout the year.

Let’s address dividend increases first. I’m going to be conservative and predict my portfolio will generate a 3% dividend growth rate. I’m doing this for a couple of reasons:

  1. While my portfolio has a lot of dividend-growth names in it (BMO, BNS, CM, CU, ENB, BCE, IPL, BEP.UN, and more), it also has many no-growth names that I think are a good value today.
  2. I want to be pleasantly surprised on the upside rather than counting on a 5%+ internal growth rate

I’m looking at $360 in annual dividend growth from a 3% growth rate alone, which puts me up to $12,350 in expected dividend income.

Next is the capital I’ll put to work this year. I’ve just made my TFSA contribution for 2019 and I have some cash in that account. I also have a RRSP sitting in a GIC that comes due near the end of February. This will get put back to work. And I had a little cash in my RRSP account that was just recently invested.

In total, this will add up to approximately $50,000 I’ll put to work in dividend-paying stocks in the next two months. If these stocks pay me a 4% yield I’m looking at another $1,500 in dividend income in 2019. Note I’m being conservative here and assuming I’ll miss one dividend payment from each stock I buy over the next two months.

Next I have to assume the amount of capital I’ll put to work over the course of 2019. This depends on a number of factors so I really can’t guess very accurately. I’d like to be conservative and assume I’m not going to invest another nickel, but that’s probably not realistic. So let’s say another $10,000 will be put to work this year.

But wait. There’s more. I’m not spending dividends yet. Therefore I’ll have $12,000 in dividends that I’ll be able to reinvest this year. At a 4% yield that’s an extra $480 in income.

Add all these sources together and I think a $15,000 goal for dividends collected this year is reasonable.

Forward income at the end of 2019

The forward income goal isn’t going to be much different than the actual income collected, since I plan to put the majority of my investment dollars to work in the first quarter.

Here’s what I think I’ll be looking at come 2020:

  • $12,000 in dividend income today
  • Plus $2,000 from fresh capital put to work in the first quarter
  • Plus $400 from capital put to work in quarters 2-4
  • Plus $500 annually from reinvested dividends
  • Plus $400 in dividend increases

That comes to $15,400 in forward income just from what I plan to do. I’ll need to come up with additional money to increase this.

I’m going to set my goal at $16,500 in forward dividend income at the end of 2019. I’m not sure I’ll be able to do it at this point, but it’s good to stretch a little.

The extra wrinkle

These results are just my dividend income. We’re not including my wife’s contribution here.

Her dividend income is much smaller than mine, a gap we’re looking to close over time. We’re going to start doing this in a big way in 2019 and then I’ll include both in 2020 and years beyond. This is why I’m not anticipating much in the way of additional contributions to my accounts in 2019.

Tell everyone, yo!