Dividend Driven Blog - Dividend Investing, Dividend Income, Dividend Portfolio, Dividend Yield. Dividend Driven is a 10-step methodology for investors who want to maximize passive income for retirement by purchasing quality US dividend paying stocks and reinvesting those dividends for a minimum of 20 years. Follow my journey to building wealth with Dividends.
After hearing from many of you in the dividend community, I've spent some time documenting what tools I use for my investment research and added a Resources tab on my Home page. Many of you will be familiar with most of these resources. I didn't want this list to reflect only what I use so it also includes resources that are recommendations by others. Thank you to those whom also share your resources on your personal blogs and continue to inspire newbie and seasoned investors.
I hope these resources will be of use to you as you continue to invest and support this strong bull market. Perhaps when you review your investment plan, you will see the benefits of these resources and how they will be able to assist you in meeting your goals. If nothing else, maybe this list will help you filter all the noise out there and provide a focused starting point for your own research. I will keep this list updated as I find more resources so please check back often and email me with resources not listed but you find valuable.
Last November I started investing in ETFs. Now I own 21 different ETFs and plan on purchasing many more, providing me with a diversified foundation of investments. In order to narrow my choices and focus on a few ETFs I have applied a new strategy. Here is my simple 5 step process:
Step 1 - Create an ETF Buy List of all the dividend paying ETFs you want to own for the long term. (My ETF Buy List)
Step 2 - Create an ETF Screen to narrow down the best of the best ETFs from your ETF Buy List. My Screen Criteria:
Dividend Yield > 1.50%
Morningstar Rating 4 OR 5 stars
Net Expense Ratio
5 Year Total Return > 15%
Annual Dividend > $1.50
Step 3 - Run your ETF Buy List through your ETF Screen to shorten your ETF Buy List. My ETF Buy List went from 48 ETFs to 9 ETFs.
Step 4 - List all ETFs that are in the same category and remove the competitors that have the lower market cap. Now my list has only 2 ETFs SPY and VTV.
Step 5 - Purchase your ETFs starting first with the one priced closest to its 52 week low. My full position for a purchase will be $15,000 per ETF.
I have been trying to estimate what my Net Worth will be at the age of 50 (5 years from now). I know that when I turn 50 I will be eligible for catch up contributions to my retirement accounts. While I have been looking over my numbers, my employer just sent an email to all employees with great news that has made me shift my investment strategy a little. They are now allowing employees to save up to $55,000/yr in their 401(k) Account whether it is a Traditional 401(k) or a Roth 401(k) like the one I currently invest in. I now have an extra bucket to hold money called an After Tax Account and it is inside of the 401(k) Account. Before I could only contribute a max of $18,000 every year. Now, along with an increase in the company match of $1,000, I can invest an additional $31,500 into this new After Tax Account bucket. There is a catch to be able to invest the full $31,500. I'm only able to deduct up to 50% from my paycheck. For example, I am not allowed to take my entire check and invest 100% of it into my retirement accounts. $55,000 is not 50% of my annual net income. Even with the new tax cuts, I'm not even close.
There are still good things about this opportunity and one is any money that I personally contribute will be tax-free when I withdraw it at retirement. I only have to pay taxes on the gains of the investments, not the initial capital invested. Being in the Roth 401(k), it's a protected retirement account and I don't have to pay the taxes on the dividends every year. For these two reasons, it makes sense for me to try to max out as much as I can towards the $31,500 contribution annually.
I have made the decision to delay my purchasing of Stocks directly in my taxable brokerage account since I want to use my Roth IRA and Roth 401(k) for ETF investments. After I max out my Roth 401(k) and After Tax Contributions, I will buy Stocks with any money that remains. Here is my investment strategy going forward:
Total Capital to be invested over 5 years:
Roth 401(k) & After Tax contributions: $152,500
Roth 401(k) company match: $25,000
Roth IRA contributions: $27,500
Current annual dividends: $43,323.70
Investments to be added:
11 ETFs to Roth 401(k) & After Tax Account
2 ETFs to Roth IRA
Items not accounted for:
Stock Price Appreciation
Additional Individual Stock Buys
Dividends From New Buys
Dividend Growth of All Dividends
Employment Raises & Bonuses
Limit Increases To Retirement Account Contributions
Financial Gifts & Inheritance
Total Invested Over the next 5 years: $248,323.70 Total Including Current Net Worth: $714,324.98
When I turn 50 years old, my Net Worth should be a minimum of $714,324.98. Stay tuned as I progress towards my new goal!
Every year I give myself the best birthday present. I maxed out my Roth IRA contribution and bought an investment that will keep on giving through dividend payments. This year it was easy for me to decide where to put my money because I had an ETF in my Roth IRA that I had not invested my full position of $15,000. So I put the $5,500 contribution into the WisdomTree U.S. Total Dividend Fund ETF. Now that I only have $10,388.08 invested, I will do the same for next years birthday gift.