The whole reason I started my journey towards financial independence stems from when I was laid off in January 2009. At the time it was unexpected and came out of nowhere, but I thoroughly enjoyed the time that I was out of work and set out to learn as much as I could about investing and strategies to not be reliant on "the man" to decide if I get to eat that week or make my house payment. That led me to dividend growth investing and it's been a great ride so far. With every dividend payment, dividend increase, and new purchase I can see how much closer I am to the ultimate goal of dividend investing which is to be able to cover all of your expenses through dividends.
There were times when I was first starting out that it didn't seem like the dividends would ever really amount to much. In January 2012 I received a whopping $0.64 in dividends. That's not even enough to buy most songs on iTunes. But as I continued to make new purchases and the companies I owned increased their dividends, the snowball that is compound interest started to pick up steam. By July of 2012 I received over $20. By the end of that first full year of following the dividend growth investing strategy I was up to over $300 dollars in December and just under $800 for all of 2012. Now I try my best to live very simply and keep my expenses low, but $800 per year won't exactly let me live a luxurious lifestyle.
Fast forward to the end of 2013 and in December alone I received over $500. That's almost as much I received in my whole first year of dividend growth investing. For all of 2013 I received $2,546.79 in dividends and if I make no new purchases and all the companies I own keep their dividends flat I can expect to receive over $3,600 in 2014. Now we're getting somewhere. That $3,637.82 works out to $303.15 per month or $9.97 per day in income that I don't have to work for. Based on my average monthly expenses from 2013, that $303 per month would cover my water bill. And my natural gas bill. And my electricity bill. And my cable/internet bill. And my monthly gasoline bill. And still leave me with enough money to buy about 4 songs off of iTunes (because we all need to have some fun every now and then). That's not one month each year, that's every month from now on as long as those companies continue to do what they do best.
Dividend growth investing is by no means a get rich quick scheme or even the best route to amass the largest portfolio balance. However, the best thing about investing in companies that continue to pay increasing dividends is that there comes a time where your dividends received surpass your expenses. At that time you officially become financially independent. I wouldn't recommend you call it quits right then, because a little margin of safety never hurt; but you've officially made it to the promised land.
If you're just starting down the path of dividend growth investing with the hopes of reaching financial independence, don't get discouraged by the small initial amounts. If you stick to the plan and continue to invest in some of the greatest and most well run companies in the world the wealth and passive income generation will build month after month, quarter after quarter, year after year, until eventually you no longer have to work to provide for your lifestyle.
I can see the end game already and I'm still years away, but the goal is in sight and the drive to reach that crossover point gets stronger with every dividend I receive.
What monthly bills can you cover with your dividends?