Dividend Growth Portfolio 2024

Lifestyle

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In 2012, I retired from my engineering career and our household earned income decreased by 65%. Ouch! Most households can’t deal with this kind of reduction, but I was prepared. We already lived frugally and I ramped up our passive income. I invested in dividend stocks, rentals, and worked on some side hustles. I was lucky because everything worked out very well over the last 12 years. Our FIRE income grew to surpass our expenses.

It’s been a few years since I shared our taxable account. Today, I’d like to give an update on our dividend portfolio.

Dividend income is my favorite form of income because it is very passive. I don’t have to do much and the dividends will keep rolling in AND grow. I used to like rental properties, but they are too much work. These days, I don’t have time to be a DIY landlord anymore. That’s why I invest in Real Estate Crowdfunding. I can benefit from the real estate investment, but I don’t have to fix the toilet. The only problem with real estate crowdfunding is tax filing. Some sponsors are chronically late with the K1 forms and I have to file a tax extension every year. It is annoying, but not a deal breaker. Also, the pandemic and high interest rates caused problems for many sponsors. Some projects didn’t perform as well as expected. Anyway, let’s get back to the dividend portfolio.

Evolution of the dividend portfolio

Before I retired, our taxable account was invested in index funds and growth stocks. When I retired, I wanted to increase our passive income so I focused more on dividend growth stocks. These companies increase their dividends consistently. At that point, I assumed Mrs. RB40 wanted to retire in a few years.

We set her tentative retirement target date to 2020. However, it didn’t work out as I imagined. Mrs. RB40 is one of those people who want to be productive and contribute to society. She could retire if she wanted to, but she prefers to work. After I understood her point of view, I stopped investing in dividend stocks. Dividend income is nice, but you have to pay tax every year. That’s why I have went back to growth stocks over the last few years. Luckily, they have done extremely well lately.

Dividend income

Here is the chart of our dividend income since 2012.

It grew steadily from 2012 and topped out in 2019. If I kept my focus on dividends, it’d probably be much higher today. I get envious every time I read Bob’s dividend report. Their dividend portfolio generates over $4,500 every month! That’s amazing. But we did okay too.

Growth of portfolio

Here is the value of our dividend portfolio.

I got lucky over the last few years and our portfolio grew quite a bit. Since 2019, I haven’t added much money to this portfolio because I wanted to increase our passive income with real estate crowdfunding. That worked out pretty well too. You can see the RE crowdfunding performance here.

Individual stocks

Here is the spreadsheet.

For 2024, the overall yield is 1.81%. That’s pretty low for a dividend portfolio.

The performance looks better than it really is. I got rid of some losers over the years for tax deductions. Anyway, let’s look at some highlights.

Best percentage gain – Eli Lilly

I purchased LLY in 2011. It was my first dividend stock. Since then, LLY gained 2,044%! They had some setbacks this year, but LLY is still our best dividend investment. Recently, the total dividends received ($3,683) surpassed the price we paid for the stock ($3,481). It’s all gravy from here. The dividend yield is quite low at 0.7%, but that’s because the stock price increased so much over the years.

Best $ gain – Nvidia

By 2020, I stopped buying new dividend stocks because I realized Mrs. RB40 wanted to keep working. I refocused on growth stock and got very lucky. At the time, Facebook changed its name to Meta to pivot onto the Metaverse. I was onboard and purchased Nvidia, Meta, and Unity. Unfortunately, the Metaverse hasn’t pan out as Mark Zuckerberg envisioned. All the Metaverse related stocks dropped, but I hung on. However, AI exploded onto the scene and gave Nvidia a huge boost. I sold off 60% of my NVDA holding to take profit. That wasn’t very smart because the stock rocketed up even more. Fortunately, I knew enough to hold on to some shares. Anyway, the 1,000 Nvidia shares in my dividend portfolio have $126,480 unrealized gains. Jackpot! The 60% I sold off was in my Roth IRA. META also did very well recently. It is in my Roth IRA as well.

Only 2 losers left – U and INMD

I got rid of many losers over the years and only have 2 left – Unity and InMode. I probably should get rid of these stocks too.

30 yrs bonds

I have $2,000 of 30-years U.S. Treasure bond at 4.125%. I figured I’d sell these off once the rates drop. We also had a bunch of 1-year bonds that matured earlier this year. I moved the money into the Total Stock Market Index Fund, VTSAX.

2024 clean up – INTC, LEG, NLY, WU, EMN, and DIS

Finally, I sold off all my INTC stocks. I should have sold them off when they were $60/share. I guess I held onto them for sentimental reasons. I also got rid of LEG, NLY, WU, and EMN. All these companies had some problems.

As for Disney, I purchased them in 2019 when they paid good dividends. Unfortunately, Disney cut dividends during the pandemic and performed badly over the last few years. They got a pop last week so I sold off some shares.

I Bonds

We have about $70,000 in Series I Savings Bonds at the US Treasury. This will be our cash cushion when Mrs. RB40 finally retires. I plan to build this position to about $200,000. If the market crashes, we can dip into I bonds as needed. In 2024, we’ll receive about $2,150 in interest from I bonds. The I bonds aren’t included in the dividend portfolio above. Next week, I’ll transfer all the money market shares to I bonds, about $30,000.

Going forward

Going forward, I plan to avoid individual stocks. According to Vanguard, my rate of return is 12.3% annually. That’s pretty good, but it was all luck. If we remove NVDA, I’d be underperforming the index fund. My dividend portfolio had quite a few stinkers. Namely, I held on to INTC stocks 24 years too long. I should have sold them off a long time ago.

The problem is I don’t follow the stock market anymore. Some dividend stocks degraded over the years and aren’t good companies anymore. I usually miss the problem until much later. One such company is Leggett & Platt, LEG. They paid good dividends when I purchased the stock years ago. However, the business struggled recently. If I kept track, I would have known to sell the stock earlier.

From now on, I’ll channel everything into index funds and I bonds. At this point, I need to simplify our finances. Mrs. RB40 will need to take over at some point and I don’t want to confuse her with individual stocks. Anyway, I’m pretty happy with our dividend portfolio so far. Everyone looks like a genius when the stock market is going up, right?

Do you invest in dividend stocks? What’s your strategy?

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Joe started Retire by 40 in 2010 to figure out how to retire early. After 16 years of investing and saving, he achieved financial independence and retired at 38.

Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!

Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.