October was huge. After years of steadily saving, reinvesting, and making tough allocation decisions, Bert finally crossed the $30,000 mark in future dividend income. The number seems huge to type: $30,338 in projected annual dividends. I hit it, and I couldn’t be more excited. In today’s article, we’ll discuss the milestone, break down the numbers, and discuss how much capital is needed to reach the next goal.
The milestone – $30,000 in future dividend income
At the end of August I was at $29,847 in future dividend income. Two months later, at the end of October, I was at $30,338 – $338 above the $30,000 goal. Small steps and an increasingly higher cadence together formed an important milestone.
How I keep moving the needle
This dividend income target was not achieved overnight. Spending 15 years saving every dollar I could, investing as much as I could, and pushing the boundaries helped me get there. Here are some of the consistent actions taken recently over time:
- Weekly purchases of dividend funds and ETFs to add predictable future income.
- Reinvesting dividends so that each payout buys more shares and increases future payouts.
- Maximizing tax-advantaged accounts such as 401k and 403b, allowing contributions to automatically flow into investments.
- Reallocate zero or ultra-low dividend positions to names with higher yields and dividend growth, if necessary.
- Let dividend growth do the heavy lifting over time.
My year-end goal: aim for $31,500
Once you reach a milestone, it’s natural to reach the next milestone. My first-line goal for the end of the year is $31,500. Right now I’m $1,162 short of that goal.
These are the concrete actions I have already lined up for the next nine weeks:
- Nine weekly purchases from SCHD expected to add approximately $278 in future earnings.
- Nine weekly purchases of one share of VIG (at current forward earnings per share of approximately $31.68), which would yield approximately $32 in future earnings if I purchased nine shares.
These two actions together add roughly $310 in future earnings, bringing the remaining gap to about $853.
If I need to bridge that $853 gap with new money, here’s approximately how much capital would be needed at different portfolio returns:
These are simple calculations, but they help map out the scope of what is needed depending on the yield you can achieve without going too far.
Account allocation and portfolio returns
I keep track of where my dividend income lives. I intentionally build taxable accounts so that when I achieve financial freedom, I have accessible income:
Mixed across all accounts, the return on my portfolio is around 2.0 percent. The goal is to aggressively grow my traditional (taxable) account to build that accessible dividend income stream.
Strategy, tradeoffs and lessons learned
There are a few principles I’ll try to stick to as I chase these milestones:
- Don’t chase returns for yield’s sake. High returns can be tempting, but often come with greater risk. I prefer sustainable income with dividend growth potential, rather than just reaching for the highest yielding names to make a number.
- Redistribute away from dead weight. Removing holdings that produce little to no dividends and no meaningful growth frees up capital for income-producing investments.
- Small, steady purchases win. Weekly or regular purchases of ETFs and high-quality dividend names build faster than waiting for the perfect trade.
The first $30,000 is the hardest.
That line rings true. Once you build momentum – dividend reinvestment, regular contributions and dividend growth – the next milestones start to feel more achievable. But that doesn’t mean they are easy. It takes discipline.
Looking ahead: goals for 2025 and beyond
Now that I’ve surpassed $30,000, the natural questions are: what now? Is $35,000 the right goal for next year? Is $40,000 realistic? I’m throwing around numbers, and the math reminds me of scale: getting from $30,000 to $40,000 per year requires a lot of new capital or meaningful returns and growth. The following figure shows the amount of capital needed to invest to earn $40,000 in dividend income per return… Wow, that’s a lot of capital!
For now, I’ll call this the problem for next year. I set goals, draw up a plan and am willing to make adjustments. For the record: some quick thinking
Final thoughts
Achieving $30,338 in future dividend income is a milestone I’m proud of. I am motivated and am already mapping out the path to the next goals. Most importantly, I appreciate all the motivation that the great dividend investing community has given me on my journey to financial freedom. If you’re on a similar journey, keep saving, keep investing, and keep setting aggressive but realistic goals. There are two months left this year – make them count.
What are your dividend or passive income goals? Share your current totals and your next milestone. I want to hear what you mean.
-Bert
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