Dividends never stop working!

I’m currently waiting at Starbucks for someone, and until she gets here, I have finally a moment to dash out a quick thought.

Today is Saturday so most Belgians don't have to work. Hopefully, most of you are enjoying your day off. And if you are working, hats off to you as well—I think Henry Ford ( or was it John D. Rockefeller) once said his secret to success was being able to work when no one else was.

Now, let’s take a moment to reflect upon the whole passive income from dividend investments thing. Statistically speaking, a lot of Belgians( and Europeans) live paycheck to paycheck. For all intents and purposes, it means the following: if you do not work, no money comes in. Barring some kind of special work compensation arrangement, if you don’t work today, you don’t get paid today.

But things get much more interesting once you get some productive assets under your belt. Picture a €150.000,00  portfolio stuffed with all the usual suspects in the blue-chip universe. You’ve got oil money coming in from Shell and Exxon. You’ve got soda and snack money coming in from Coca-Cola and Nestle. You’ve got healthcare dividends coming in from Johnson&Johnson and Sanofi. Maybe you have some insurance dividends coming in from Munich Re and some holding dividends coming in from Sofina and GBL.

If your portfolio yields 3% on total, what does that mean? In the annual sense, it means you are generating €4.500,00 this year just for being a business owner.
It means you are making € 12,32 today just for being alive. That profit that enters your pocketbook is generated on weekends. It is generated on the 21st of July(Belgian national holiday). It is generated on Christmas. And yes, it is also generated today .

And the best thing is, that number is not static. If you collect your € 12,32 each day, it should grow to € 13,18 next year, without you doing absolutely anything. And if you choose to reinvest the dividends rather than collect them, that figure will grow to € 13,55 instead.

The fun thing is that you have a base of wealth working for you. If you add €10.000,00 worth of investments to the pile in the next two years, you will immediately be increasing the amount of passive income generated by €300.

And if you don’t want to add to it anymore, then you have to let the hands of time do its work. If you are someone who does not reinvest the dividends on that € 12,32 each day, it should hit € 25 per day within ten years, and be € 50 per day within twenty years. If you choose to reinvest, you should be hitting € 25 per day seven years from now, and € 50 per day fourteen years from now. And keep in mind, that means every day. Most of us are trained to think of money generation in terms of a five-day workweek. The figures I calculated account for money coming your way every day of the year.
Fine out where you want to be, and break it down into the basic math steps. If you want a lot of passive income now, then it will take a big whallop of an initial investment now. If you are investing in terms of 100-300 per month, then you need to let that money grow undisturbed for decades to get to a similar spot. It’s all about growth rates, time, and initial deposits. But as you start to acquire 100 shares here, 100 shares there, and build a portfolio, you will begin to notice that not insignificant sums of cash deposits are coming your way, even when you are not working.The money will finally become a full time employee that never calls to say he is sick or never takes a holiday.




Full disclosure: Long RSDB,XOM, JNJ, KO, SOF & GBL

Reacties

  1. Let the people say "Amen". I always dream of the day when our dividends can cover our expenses, but for now it sure is nice seeing our forward dividends up over $7,600 now and set to keep on growing.

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    1. Hi PIP,

      I'm sure it is nice to see so much dividend coming in, and it certainly gives a safer feeling then living paycheck to paycheck. All portfolio's start small, but once it gets rolling it keeps speeding up.

      Cheers,
      TLTI

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