2014 in review

2014 was a very productive year. 

 

I managed to achieve all of my goals for 2014 and then some. This was the first full 12 month year of dividend growth investing since I started in the spring of 2013 and what a year it has been. So in this post I will talk a bit about the goals I had set myself and how they turned out.

Dividend Income:
I started January 2014 with an average monthly dividend income of around $250 and finished the year with an average monthly dividend income of around $600. I am quite pleased to finish the year on a high note, almost breaching the $1k a month in dividend income.

My goal was to collect $4,000 or more and I collected $4,777. I overshot it partially because I underestimated the 'growth' component in dividend growth investing. Out of my current 52 positions, 50 pay a dividend and 48 increased their dividend by 5% to 10% on average, with small increases like the 2.2% of T or large increases like CBRL (33%), DIS (33%), KSU (30%), WDC (33%). Only ARCP suspended the dividend temporarily and ESV kept the dividend the same. So which are the 2 positions that don't pay a dividend? One is Amazon (AMZN) and the other is Gilead (GILD). Gilead has had huge growth and I expect Gilead to eventually start paying a dividend. And Amazon, well... that might have been a mistake to buy it as that company just doesn't align with the strategy of the portfolio, so I might replace it.


Max Roth IRA and 401k:
I added the full $5,500 contribution to my Roth IRA which I used to buy some REITs as there are tax advantages to holding REITs in a Roth IRA.
I also managed to max out my 401k this year which was a little tricky because: the contributions are percentage based, there is a delay for me of about a month between the time I change the contribution rate and the time it actually affects the contribution. I got a raise at work so my calculated percentage needed to be adjusted. Luckily they cap it when you reach the contribution limit, so you don't risk problems with the IRS. I also partially front loaded my 401k, but not to the extent that I would lose the company match in case I hit the $17,500 cap earlier in the year.I hit the cap on my last paycheck in December, maximizing my contribution and the company match.


Data management:
I've expanded the amount of tracking over my various accounts since the summer, including tracking of income and expenses as this will give me insight in my spending habits and my financial requirements for financial independence.
Here are some stats:

• Average monthly saving rate: 63% (goal was 50% or more)
• Average monthly expenses are around $2,000.
• Contributed around $90k to dividend portfolio, $50k fresh capital, $40k transfers
• Not counting transfers I contributed around $4k a month to the portfolio (goal was $3k)
• Net worth climbed from $177,000 to $284,000
• Forward yearly projected dividend income is around $7,500 (goal was $5,500)
• Portfolio yield is around 3.31%, yield on cost is 3.46%
• Dividends are dripped or fripped as I have multiple brokerage accounts to spread broker risk. This reinvestment boosts income growth by $250 a year.

 
Reading:
I've read a few books on dividend investing this year, but the best book I read this year was: 
 
Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger
So much wisdom in one book! For those not familiar with Charles Munger, he is a really smart investor and is the business partner of Warren Buffet. This book is full of references and wisdom in regards to finance, but also plenty on life, work ethic and mental models. Truly a gem!


Conclusion:
I've had a great 2014 and I am happy with the progress I have made and the things I have learned, from books as well as from the great community of financial bloggers out there! I turn to 2015 with an eager excitement to continue on this path to financial independence and want to learn more and also hope to share more of my own thoughts.
Best wishes for a great 2015!