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As many of my readers know, I love dividend stocks and believe dividends provide a great source of passive income. Quarterly, I provide updates on my dividend income, dividend goals and if I buy dividend stocks.

Using ‘The Dividend Report‘ section of my blog, I share the progress of my goals. I also share dividend growth stock ideas and thoughts. Additionally, I will share the rationale behind any future purchases or sales. Dividends are truly a wonderful thing.

The Dividend Report

For over four years, I have been working towards the same goal. I want my monthly dividend income to average $1,500/month and provide 25-33% of my monthly retirement income. This goal may be revised upwards over time. I track my dividend income with Personal Capital and store the data on a Google Sheet.

In case you were wondering, real estate will provide the rest of my retirement income.

Q1-2020 Dividend Income

The S&P experienced a wild ride this quarter. The market was volatile and had a number of swings up and down. COVID-19 increased the intensity of the stock market rollercoaster.

The market shot to all-time highs in February before falling more than 30%. The S&P closed the quarter down by 20.67%. Not a great way to start the year, but the increased volatility presented some great buying opportunities.

2020 marks the 8th year of tracking dividend data. It’s been wonderful to watch my passive income streams grow annually. I continue to make great progress and hope to reach my dividend income goal soon.

The graph below shows my dividend income history since 2013:

The table below shows my dividend history since 2013:

As you can see from the chart and graph, my dividend income continues to grow. The increases are quite sizable at times. Regular income that increases above the rate of inflation is one of my favorite reasons to invest in dividend growth stocks. You can also see the presence of exponential growth in my dividend income.

Q1-2020 vs Q1-2020

Last year’s Q1 dividend income was $1,288.85. This quarter I earned $1,945.39. This is $656.54 or 50.94% more compared to the same time period last year. Imagine if your job paid you 50% more this year.

There are two main reasons for the large increase in my dividend income. First, I have more money invested. Second, most of my stocks keep increasing their regular dividend payments. I also DRIP (dividend reinvestment plan) some of my dividend stocks. This means each quarter I own more shares of the same stock and collect even more dividends.

This quarter vs. last quarter

My Q1-2020 dividend income was $1,945.39. Last quarter (Q4-2019), my income was $3,862.46. This is a $1,917.07 or 49.63% decrease from last quarter.

The extreme decline is a bit misleading. A few of my funds do not pay dividends in the third quarter. Likewise, I received a couple of extra dividend checks in the 4th quarter and also had more capital invested. The 4th quarter always produces more distributions. I am not concerned with this ‘drop’ in dividend income as it is seasonal and occurs every year during the first quarter.

My average monthly dividend income is now $759.78 ($9,117.40 / 12 months = $759.78), which is 50.65% of my goal of $1,500/month. Previously, I was at 47.00% of my goal. I hope to build off this success and reach my goal by the end of the year. I will continue to offensively build wealth and invest regularly. I cannot wait to see how compounding continues to work in my favor.

New Purchases

I was an active buyer of stocks given the wild drop and swing in the markets. Below is a list of stocks I either bought for the first time or added to an existing position. Yes, I bought 10 different stocks during the first quarter. This is not normal but there were screaming deals.

Pfizer -$PFE (new position)

Disney – $DIS (added to existing position)

Home Depot – $HD (new position)

Raython – $RTX (added to existing position)

AT&T – $T (added to existing position)

Corning – $GLW (added to existing position)

Dominion Energy – $D (added to existing position)

Johnson & Johnson – $JNJ (added to existing position)

Exxon Mobile – $XOM (added to existing position)

Microsoft – $MSFT (added to existing position)

As many of my readers know, I love dividend stocks and believe dividends provide a great source of passive income. Quarterly, I provide updates on my dividend income, dividend goals and if I buy dividend stocks.

Using ‘The Dividend Report‘ section of my blog, I share the progress of my goals. I also share dividend growth stock ideas and thoughts. Additionally, I will share the rationale behind any future purchases or sales. Dividends are truly a wonderful thing.

The Dividend Report

For over three years, I have been working towards the same goal. I want my monthly dividend income to average $1,500/month and provide 25-33% of my monthly retirement income. This goal may be revised upwards over time. I track my dividend income with Personal Capital and store the data on a Google Sheet.

In case you were wondering, real estate will provide the rest of my retirement income.

Q4-2019 Dividend Income

The S&P experienced a wild ride in the past quarter. The market was volatile and had a number of swings up and down. The S&P notched a 10.4% gain for the fourth quarter of 2019. Year-to-date, the S&P 500 has advanced 28.9%, which is an exceptional performance.

This is my 7th year of tracking dividend data and I continue to make great progress.  I cannot believe I’ve been tracking my progress for so long. It’s true what they say, what gets measured gets improved. It’s fun to watch the progress I’ve made over time.

The graph below shows my dividend income history since 2013:

The table below shows my dividend history since 2013:

As you can see from the chart and graph, my dividend income has slowly and gradually increased over time.  Regular income that increases above the rate of inflation is one of my favorite reasons to invest in dividend growth stocks. You can also see the presence of exponential growth in my dividend income.

Q4-2019 vs Q4-2018

Last year’s Q4 dividend income was $2,458.38. This quarter I earned $3,862.46. This is $1,404.08 or 57.11% more compared to the same time period last year. Imagine if your job paid you 50% more this year. There are two main reasons for the large increase in my dividend income. First, I have more money invested. Second, most of my stocks keep increasing their regular dividend payments. I also DRIP (dividend reinvestment plan) some of my dividend stocks. This means each quarter I own more shares of the same stock and collect even more dividends.

This quarter vs. last quarter

My Q4-2019 dividend income was $2,458.38. Last quarter (Q3-2019), my income was $1,641.76. This is a $2,220.70 or 135.26% increase from last quarter. The extreme growth is a bit misleading. A few of my funds do not pay dividends in the third quarter. Likewise, I received a couple of extra dividend checks in the 4th quarter and also had more capital invested.

My average monthly dividend income is now $705.07 ($8,460.86 / 12 months = $705.07), which is 47.00% of my goal of $1,500/month. Previously, I was at 39.20% of my goal. I hope to build off this success and get even closer to my goal next year.

I hope to build on my dividend success in 2020 and finally reach my goal of $1,500/month by the end of 2020. I will continue to offensively build wealth and invest regularly. I cannot wait to see how compounding continues to work in my favor.

New Purchases

I purchased another 100 shares of AT&T in Q4-19. The company continues to execute on its plan which includes paying down debt and increasing free cash flow. I expect the company will introduce a share buyback in the coming months. Additionally, I expect a very modest dividend increase. Furthermore, I like how the company is positioned in the 5G space, the streaming wars, and legacy business. The company provides a great yield and I’ve enjoyed strong capital appreciation.

I purchased another 100 shares of KMI. The company continues to deliver on its plan, generates great cash flow, and has the capability to continue increasing the dividend.

Last year, I introduced the concept of why you should consider buying a home with an FHA loan. In the original post, I outlined the ‘base case’ for this series based on historical data. We also discussed the merits and disadvantages of using FHA loans. Additionally, we covered the requirements for an FHA loan.

Some object to FHA loans because of Private Mortgage Insurance (PMI) The base case assumed annual property appreciation of 5.4%, which is the historical average over 40 years. Under the base case scenario, new homeowners could refinance their loan and get ride of their PMI in less than three years. The homeowner’s financial wellbeing also exceeds the renter.

Part II – Modest Inflation

In Part II of this series, we are going to look at what happens if property values increase at a slower rate than the historical average. In the base case scenario, we assumed a 5.4% annual appreciation which was the historical average over 40 years.

Today, some may argue that property values increasing by 5.4% annually is too aggressive. This scenario will assume a more modest assumption of an annual appreciation of 3.0%. We will assume the same purchase price, down payment, and monthly PITI (principal, interest, tax, and insurance) payment as the base case. Additionally, we will keep our monthly rental assumption of $1,492 in place.

As of March 2017, the US Existing Home Median Sales price was $236,600. Buying a home with an FHA loan requires a 3.5% down payment.  A prospective homeowner would need $8,281 for a down payment if they were buying a home with an FHA loan. Yes, I know its 2019 but we are using the same data for each scenario. This makes things more apples to apples.

The table below breaks out the down payment, loan amount, and monthly mortgage expenses associated with buying a home with an FHA loan. The FHA loan interest rate is lower than a conventional mortgage by 0.25% to 0.50%. This is because of PMI.

Purchase Price	$236,600
Down Payment	$8,281
Loan Amount	$228,319
Interest Rate	4.00%
Amortization	30 years
P&I	$1,090.03
PMI	$133.19
Taxes	$177.45
Insurance	$50
PITI	$1,450.67

For comparison purposes, a prospective homeowner would need $47,320 for a 20% down payment. That’s $39,039 MORE than what it would cost to buy a home with an FHA loan.

Ask yourself, how long would it take you to save an additional $39,000?

Saving Per Month	# of Months Required	Years
$100	390.4	32.5
$250	156.2	13.0
$500	78.1	6.5
$750	52.1	4.3
$1,000	39.0	3.3

Depending on your savings rate, it may take you between 3 years and 3 months or over 30 years to save up for a 20% down payment. Buying a home with a low down payment is starting to seem more attractive, right?

That’s because it is. But this is not the only factor to consider. While saving for your 20% down payment, more of your income is going towards rent. Time does not stand still while you are renting. As time passes by, property values are generally appreciating.

Using the same assumption as before, the table below illustrates how much you may spend on rent while saving for a down payment. The rent calculation assumes today’s median rent of $1,492/month. This figure does not include any rent increases or account for inflation; you will likely pay more given rents go up over time.

Saving Per Month	# of Months Required	Years	$ Spent on Rent
$100	390.4	32.5	$582,462
$250	156.2	13.0	$232,985
$500	78.1	6.5	$116,492
$750	52.1	4.3	$77,662
$1,000	39.0	3.3	$58,246

Property Values Continue to Increase

Likewise, property values generally increase over time. In this scenario, we assume property values will increase by 3.0% each year.

Let’s assume you have enough money saved for a 3.5% down payment based on today’s median home price. However, let’s also assume you wanted to put 20% down instead of buying a home with an FHA loan. Today you have $8,281 but you would need $47,320 to avoid PMI. This means you are short $39,000.

Let’s also assume you can save $500/month towards your down payment. At this pace, you will accumulate $47,320 in about six and a half years. A lofty goal, but not unreasonable if you are dedicated.

But, during the same time property values continued to grow. The median home price is no longer $236,600. While you were saving for the past six years the median home price increased to $282,513.

A 20% down payment is now $56,503.  You are now $17,464 short of having a conventional downpayment and still cannot avoid PMI. This means if you wish to avoid PMI, you’ll have to save even longer, and continue paying rent. Meanwhile, property values are probably still increasing.

The table below shows how much more you’ll need to save based on your savings rate:

Saving Per Month	# of Months Required	Years	New Home price	New 20% Down Payment	Gap
$100	390.4	32.5	$609,265	$121,853	-$82,814
$250	156.2	13.0	$347,455	$69,491	-$30,452
$500	78.1	6.5	$282,513	$56,503	-$17,464
$750	52.1	4.3	$266,295	$53,259	-$14,220
$1,000	39.0	3.3	$258,539	$51,708	-$12,669

Now, let’s take a look at what would have happened if you bought a home today instead of waiting for a 20% Down payment. The table below shows how much principal, interest, PMI, taxes, and insurance were paid for each of the first four years.

Year	Total P&I	Interest	Principal	PMI	RE Tax	Insurance	Total	Loan Balance	Property Value	LTV
1	$13,080	$9,060	$4,021	$1,598	$2,129	$600	$17,408	$224,298	$243,698	92.0%
2	$13,080	$8,896	$4,185	$1,598	$2,129	$600	$17,408	$220,114	$251,009	87.7%
3	$13,080	$8,725	$4,355	$1,598	$2,129	$600	$17,408	$215,759	$258,539	83.5%
4	$13,080	$8,548	$4,533	$1,598	$2,129	$600	$17,408	$211,226	$267,494	79.0%

The table also shows the loan balance decreased while the property value increased over time. Based on this scenario, the homeowner would achieve 20% equity somewhere between years three and four.

The lower inflation scenario, compared to the base case, suggests it will take the homeowner an additional 12-months to get rid of their PMI. Upon doing so, the homeowner would experience $133/monthly savings.

The Economic Benefit

At the end of year four, the homeowner accumulated $56,268 of equity. This includes $8,281 from their down payment, $30,894 from the property’ value appreciating over four years, and $17,093 from paying down their mortgage

Property Value @ the end of Year 4	$267,494
Original Property Value	$236,600
Equity From Appreciation	$30,894
Down Payment	$8,281
Original Loan Amount	$228,319
Loan Amount @ the end of Year 4	$211,226
Equity from Principal Reduction	$17,093
Total Equity @ the end of Year 4	$56,268

After four years the homeowner would have paid their loan down to $211,226 and the property would be worth $267,494. The homeowner’s loan to value (LTV) is now 78.9%. This means the homeowner now qualifies for a conventional loan and can refinance to get rid of their monthly PMI payments. Heck, the owner could even refinance the closing costs into their loan and pay no out of pocket costs.

In this scenario, buying a home with an FHA loan now would have been better than renting.

The rental alternative

The renter would have spent $1,984 more on rent over four years than the homeowner spent on their mortgage payment (principal, interest, taxes, insurance, and PMI). The renter also missed out on over $30,000 in equity through appreciation. Additionally, the renter will never see their rent money again. The homeowner pocketed $17,093 by paying down their mortgage. After four years of savings, the renter still may not be in a position to make a 20% down payment on a home.

Buying a home with an FHA loan or low down payment has many benefits. In the future, we will continue to explore other scenarios.

Future posts will include the following scenarios:

The Base Case – Buying a home with an FHA loan or low down payment

Slightly more conservative approach:  Modest Inflation

The Flat Scenario: No inflation

Booming market: The Austin Housing Market

Making Extra Payments

House Hacking Scenario

House Hacking and Extra Payments

The Bust Case: When the housing market corrects

Doomsday Scenario

As many of my readers know, I love dividend stocks and believe dividends provide a great source of passive income. Quarterly, I provide updates on my dividend income, dividend goals and if I buy dividend stocks.

Using ‘The Dividend Report‘ section of my blog, I share the progress of my goals. I also share dividend growth stock ideas and thoughts. Additionally, I will share the rationale behind any future purchases or sales. Dividends are truly a wonderful thing.

The Dividend Report

For over three years, I have been working towards the same goal. I want my average dividend income to provide $1,500/month. As I solidify my path to financial independence, I want dividends to be 25-33% of my monthly retirement income. This goal may be revised upwards over time. I track my dividend income with Personal Capital and store the data on a Google Sheet.

In case you were wondering, real estate will provide the rest of my retirement income.

Q2-2019 Dividend Income

2019 is my 7th year of tracking dividend data! I’m making some huge progress this year. I cannot believe I’ve been tracking my progress for so long. It’s true what they say, what gets measured gets improved. It’s fun to watch the progress I’ve made over time.

The graph below shows my dividend income history since 2013:

The table below shows my dividend history since 2013:

As you can see from the chart and graph, my dividend income has slowly and gradually increased over time. This is one of the many joys of compound interest and dividend growth stocks. You can also see the presences of exponential growth in my dividend income.

Q2-2019 vs Q2-2018

Last year’s Q1 dividend income was $987.86. This quarter I earned $1,667.79. This is $679.93 or 68.83% more compared to the same time period last year. Imagine if your job paid you 60% more this year. There are two main reasons for the large increase in my dividend income. First, I have more money  invested. Second, most of my stocks keep increasing their regular dividend payments. I also drip (dividend reinvestment plan) some of my dividend stocks. This means each quarter I own more shares of the same stock and collect even more dividends.

This quarter vs. last quarter

My Q2-2019 dividend income was $1,667.79. Last quarter (Q1-2019), my income was $1,288.85. This is a $679.93 or 52.75% increase from last quarter. The strong improvement is partially from individual stocks increasing their dividends and continuing to regularly invest. I still buy an index fund every week and aggressively contribute to my 401k.

Progress towards my goal

My average monthly dividend income is now $538.88 ($6,466.57 / 12 months = $538.88), which is 35.93% of my goal of $1,500/month. Previously, I was at 32.15% of my goal. I hope to build off this success and get even closer to my goal this year. My stretch goal is to achieve $1,500/month by the end of 2019. Candidly, this will be near impossible. However, I will continue to offensively build wealth and invest regularly.

New Purchases

I made no new individual stock purchases in Q2-19.