The first dividend income update for 2018 is finally here, and I’m highly satisfied with the development of my “dividend income project.” Let’s summarize the results:
- Total Dividend Income for January landed on $57.90 or 445.95 NOK
- Last year’s dividend income for January was $12.86 or 99.04 NOK
- Quadrupled the dividend income
- 7 companies sent me checks
The following companies paid me in January
- CSCO, $6.12
- KMB, $11.17
- PEP, $0.85
- OMC, $11.29
- O, $9.39
- VER, $12.64
- CAH – SOLD
The result is I received $57.90, which is four times larger than the amount in 2017. Being able to quadruple your income isn’t something normal, and the main reason is that I previously owned a few companies that paid their dividend in January. Also, The Monthly Company or Realty Income Group helps a lot.
Pure Dividend Growth
The following diagram illustrates pure dividend growth, meaning the growth I get because management increased their dividend payout.
2017 vs 2018
Accumulated Dividend Income
- Bought 50 shares of Realty Income Group (O)
- Bought 200 shares of Veidekke (VEI)
- Closed my position in Cardinal Health (CAH) after thinking and talking with friends about it since October.
Projected Dividend Income
The projected dividend income is now around $2,400, and with 6% CAGR for the portfolio. I’m going to break $2,500 this year. I might have to increase my goal to $3,000 already. Damn. What happened to the days when I was struggling hitting $1000? Good times.
Nordic Dividend vs US Dividend
I don’t track the dividend growth of my Nordic stocks, because they aren’t as strict when it comes to cutting the dividend. Is it bad? Good? Well, it’s two-sided: You want your dividend income no matter what, right? Maybe especially when the market crashes. Your favourite stocks will become much cheaper. Getting a stream of cash each month will help you on your quest to achieve more shares.
However, a company’s balance becomes weaker when they pay their dividend. When the payout ratio is about 40% and the company has a credit rating of BBB+, one shouldn’t worry. But Nordic stocks can often have payout ratios around 80%-100%. Forcing them to pay a dividend while having negative EPS growth means that they might have to increase their debt in order to pay you (Statoil did this in 2016 when the oil price crashed). That’s not good either, right?
I think about it like this: I’m happy with the high dividend that I get now (5%-7%) from many of my Nordic stocks, but I’m fully aware that they might cut the dividend in bad times. Therefore I’ve created my portfolio so that solid US-based companies are the core of the portfolio, and Nordic stocks are more like jokers. Some will cut their dividend, but I’m sure that they will return with strong force.
Thanks for reading,