Dividend growth investing has been incredibly kind to me.
It’s radically changed my life for the better.
Before I was an investor, I was part of the worker class. I was broke, powerless, and without freedom.
I suppose I used to think that capitalism was something reserved for those who knew some kind of secret password or handshake, where you’d then get access to a back room somewhere. Only then could you buy stocks and become part of the investor class.
Well, that’s obviously not true at all. Capitalism doesn’t require a secret handshake.
But it does require some personal accountability.
I started to take accountability for my station in life just before turning 28 years old. Determined to achieve financial freedom and retire very early in life, I started living well below my means and plowing my savings into high-quality dividend growth stocks.
The rest, as they say, is history.
The market value of the Fund is, of course, more or less irrelevant to me. I don’t ever sell stocks. Other than designs on a major philanthropic gift toward the end of my life, the value of the Fund has no impact on me or the world.
However, the growing dividend income that the Fund generates on my behalf has a major impact on me. This growing passive dividend income covers my wonderful lifestyle as an early retiree expat in Thailand.
Dividend growth investing is the gift that keeps on giving. Except the gifts get bigger year in and year out.
Imagine having a flock of golden geese that continually lay more golden eggs.
This is dividend growth investing. I keep those golden geese fat and happy, living only off of the ever-growing pile of golden eggs.
Being able to live off of dividends at a young age is a dream come true. It’s something I’m eternally grateful for.
But seeing those dividends rise like clockwork makes the whole thing that much better, as life only gets easier and easier. And this happens without any input on my part. It’s organic. The dividend raises that my companies routinely announce puts more money in my pocket without any effort from me.
In addition, this is all compounding.
A 7% increase in passive income is fantastic in and of itself. But a 7% increase this year that comes on top of a 7% increase last year means the income piles up. It starts to become a runaway snowball of wealth and income. It starts to become a dividend growth snowball.
To show the power of dividend growth investing in terms of tangible cash flow, I wrote an article back in May 2017 titled “What Could You Do With An Extra $35,000?”, showing how I had collected a total lifetime amount of $35,000 in dividend income.
That goes back to when I first started investing in the spring of 2010.
So that was $35,000 in completely passive income in about seven years.
Not too shabby.
But the snowball is… well, snowballing.
And as snowballs tend to do when they’re rolling downhill, it’s accelerating.
The seven years that the aforementioned article references includes a period of time in which I was aggressively investing so that I could achieve FIRE.
From March 2010 to March 2016, I was putting every spare dime I had into high-quality dividend growth stocks. FIRE was an all-consuming goal of mine. And I wasn’t going to stop until I hit it.
However, once I did hit FIRE in March 2016, investing became less of a priority in my life. I began to see financial freedom as more of a beginning than an end.
Thus, I’ve slowed way down on the investing in the succeeding years. The inescapable nature of compounding will probably turn me into a billionaire – even if I never invest another penny.
Now, I still invest some money here and there. Investing remains a passion of mine. However, most of my dividend income growth over the last four years has been completely organic in nature.
Yet that $35,000 has since doubled!
Actually, more than doubled.
Check this out.
It took seven years to get from $0 to $35,000 in lifetime dividend income.
And six of those years involved blood, sweat, and tears. 60-hour workweeks at the car dealership. Ramen noodles every day for lunch to save money. Waiting for the bus in the pouring Florida rain. Early mornings. Late nights. More hard work than I can accurately put into words.
It took less than three years to more than double that amount, putting the lifetime dividend income at over $70,000.
And the last three years includes none of the blood, sweat, and tears I was just talking about.
Let me repeat this.
It took less than half the time to more than double the money.
This happened even though the early mornings and long slogs at the day job are nothing but a distant memory. I stopped actively trying to build wealth and passive income four years ago. But the money now works harder and faster than I ever did – quite literally!
I’ll show you what the cumulative dividend income looks like since I first started investing in March 2010:
- 2010: $269.33
- 2011: $1,202.06
- 2012: 2,602.58
- 2013: 3,926.12
- 2014: $5,631.60
- 2015: $7,503.01
- 2016: $10,616.40
- 2017: $11,316.00
- 2018: $12,788.52
- 2019: $14,096.55
- 2020: $2,068.74 (thus far)
If we add these numbers up, we get a cumulative total of $72,020.91.
That’s over $70,000. And I collected it for doing absolutely nothing. I get paid simply to exist.
Wake up. Get paid. It really is that easy.
That was always the case. But it’s especially true nowadays.
There’s no alarm clock blaring at me in the morning. I wake up when my body feels like it and then go about my days doing precisely and only what I want to do. I basically live like Bill Murray’s character in the movie Groundhog Day. Every day is practically a mirror image of every other day. Except I’m not trying to (hilariously) escape my fate. This is the fate I chose for myself. I imagined what my “perfect day” would look like, then created it and set it on repeat. Each day is filled only with the activities and people I love the most. If there’s something or someone I don’t like, I quickly dispense of it.
This is the power of financial independence.
This is the power of growing dividend income from dividend growth investing.
The golden geese will continue to lay ever-more golden eggs. And I’ll keep those geese fat and happy, only removing the eggs for my personal use.
I can’t wait to see how fast the next $35,000 in dividend income comes. At that point, I will have crossed over six figures in lifetime dividend income.
Perhaps even more exciting will be seeing how fast this $70,000 doubles once again. It’s an inevitability when compounding is your friend.
Make sure to cozy up to compounding. It’s a lifelong partner that will make your life so much easier.
The compounding dividend snowball is starting to turn into an avalanche. Look out below!
What do you think? Does this real-life evidence of the power of compounding and dividend growth investing inspire you?
Thanks for reading.
P.S. If you’d like to use dividend growth investing to achieve financial independence, check out some fantastic resources I personally used on my way to becoming financially free at 33!