Dividend growth investing has been incredibly kind to me.
It’s radically changed my life for the better.
I’ve discussed at length how to use dividend growth investing to become financially independent in both of my best-selling books: The Dividend Mantra Way and 5 Steps To Retire In 5 Years.
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.
I built my FIRE Fund and achieved financial freedom at only 33 years old.
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!
Yes.
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!
There is nothing like extremely simple numbers to outline the marvel of compounding.
Then you can compare that dividend income list with your regular income list at the Social Security administrator and realize that what we collect in wages might start out a lot better, but for most of us a very slow curve upward – and in some cases it curves downward.
The dividend curve, with a decent portfolio, will always curve upward.
Rob,
The numbers speak for themselves. That first time frame includes a lot of aggressive investing. I was saving over 50% of net income and investing thousands of dollars per month. The second time frame includes none of that effort. Yet it more than doubled in less than half the time. Incredible stuff.
I stopped trying years ago, but the dividends don’t stop trying. Those golden geese keep laying more eggs, which I’m very pleased with. 🙂
Best regards.
Very impressive, Jason. Especially since you started with just about nothing. I started with a lump sum of savings to invest in the market and fast forward 6 years and I have received about $450k in dividends. I couldn’t be happier.
Take care over there and keep enjoying life while compounding!
-Mike
Mike,
That’s awesome, man. A lot of people out there might never see that much money throughout their entire lives, even/especially when they’re actually working for it. Pretty crazy stuff.
I imagine I’ll remain productive in some capacity for many more years to come, which means I’ll continue to make money (reducing the real-life necessity of the passive income). But working because you want to, not because you have to, is a world of difference. 🙂
Best wishes.
Love reading about the compounding results you have and also which stocks you’re buying, as you only buy a few shares of stuff and are not dropping an insane amount on stocks every month. When you began, were you reinvesting the dividends? What percentage are you reinvesting now, if any? I started my Roth IRA account a few years ago and my brokerage account last April so about a year ago. Up to about $1,355 in the brokerage and $1,186 in the Roth for dividends, so seeing how yours compounded and grew keeps me very motivated! Right now I’m putting every spare cent I have to work at these ridiculously low valuations in dividend growth companies plus a few high yielders.
Thanks for all the articles and work you do, I check the blog every day for new content! Can’t wait to see what you’re buying at these prices!
-Ben
Ben,
Hey, that’s great. Sounds like you’re well on your way over there. 🙂
I’ve always tried to inspire regular people. I don’t have a college degree. Grew up poor. Never had a high-paying job. But I wanted to show the path to FIRE for someone like that. If you have the high-paying engineer job or whatever, that’s great. However, that’s not really applicable for most people. I wanted to show something that was more approachable and repeatable. I’m proud of that legacy.
As for reinvesting dividends, I’ve always chosen to selectively reinvest (versus a DRIP). I discussed my rationale for that in 2014:
https://www.dividendmantra.com/2014/03/selective-dividend-reinvestment-vs-drip/
Keep it up!
Cheers.
Hello Jason
Thanks for all of your information about investing I have recommended 13 people to your website to teach them about dividend investing. While everyone is panicking about The Coronavirus. I have been picking Up amazing deals at prices I have not seen since 2008 🤑 I remember starting out with $2 per month in dividends and now my minimum is $120 and maximum is $375. You are a true GOD send for me in my journey to a better retirement I have two rental properties in California that provide a total of $3700 per month income. I will have both properties paid off in 5 years and then I will invest that money in dividend stock and use 1/2 of my work income into my 401K. I found you in my Later years. But introducing me to warren buffet and your teachings has inspired and empowered me. Now no one understands me when I only buy what I need and invest the rest of my money and talk about financial freedom.
Sincerely
Fon Fon
Fon fon,
Thanks for recommending the blog. Means the world to me. I hope they find the content inspirational and actionable. 🙂
Glad to hear you’re doing so well over there. That kind of passive income allows for so much flexibility and freedom in life, which is wonderful. Having that power and autonomy – it’s truly priceless.
Make the most of that freedom!
Best regards.
Sounds like the power of compounding has really been a wonder of the world. Makes me smile knowing one day I’ll be collecting dividends that are growing day in and day out. Great post as always Jason.
Mitchell,
Compounding is powerful stuff. Gotta make it an ally early in life. Will do wonders. 🙂
Cheers.
The dividend looks great. I’m sure it’ll double very quickly. The power of compounding can work for you or against you. People needs to understand that. Nice job.
Joe,
Absolutely. Compounding is one of those things you want working for you. 🙂
Thanks for dropping by!
Best wishes.
Hi Jason! Just curious if you’d still feel secure and comfortable with the dividends as your only income – 1000-1500 USD/month?
I’m very tempted to quit my job before 40 but also to let my freelance job go cause it is simply boring to the point that it’s almost brain damaging.
I’m also aiming to get that kind of money from dividends following your 5 year strategy.
Cheers!
Fredrik,
That’s a great question.
Yes, I would feel comfortable. I actually live a pretty nice lifestyle over here, which includes covering Oh’s way whenever we go out. This lifestyle could easily and quickly be pulled back, creating a sizable margin of safety between passive income and total expenses.
However, I simply don’t think the idea of living solely off of passive income at a very young age is necessary or realistic. Anyone who’s driven enough to achieve FIRE is almost certainly not going to be content to be unproductive for the rest of their life. They’re gonna do stuff and make a little money. It’s practically inevitable.
Best regards.
Hey Jason,
I love seeing the power of compounding. In my first full year of investing I made around $650 in dividend income, which was 2016. This year I’m on track for $6500 in dividend income, a 10x growth in 5 years.
Meanwhile my next year’s projection have me around $9500. It’s really picking up steam!
DGX Capital
DGX Capital,
That’s it right there. Compounding working away, turning a snowball into an avalanche. 🙂
Keep it up!
Cheers.