In 2012, I retired from my engineering job and my household income dropped by 65%. Wow! Most homes can’t handle this kind of downsizing, but I was prepared. We were already living on savings and I increased our passive income. I invested in dividend stocks, leased, and worked on other side hustles. I was lucky because everything went very well for the last 12 years. Our FIRE income has grown beyond our expenses.
It’s been a few years since we shared our taxable account. Today, I would like to give an update on our profit portfolio.
Dividend income is my favorite form of income because it doesn’t just work. I don’t have to do much and the benefits will keep rolling in AND grow up. I loved the rentals, but they are a lot of work. These days, I don’t have time to be a DIY landlord. This is why I invest in Real Estate Crowdfunding. I can benefit from real estate investment, but there is no need to fix the toilet. The only problem with real estate crowdfunding is taxation. Some sponsors are late with K1 forms and I have to file tax every year. Annoying, but not a distraction. Also, the pandemic and high interest rates are causing problems for many donors. Some projects did not work out as well as expected. Anyway, let’s get back to the equity portfolio.
The evolution of the dividend portfolio
Before I retired, our taxable account was invested in index funds and growth stocks. When I retired, I wanted to increase our income to focus more on dividend growth stocks. These companies are consistently raising their dividends. At that time, I thought that Mrs. RB40 wanted to retire in a few years.
We have tentatively set his retirement date at 2020. However, it didn’t work as I thought. Mrs RB40 is one of those people who want to produce and contribute to society. He can retire if he wants to, but he prefers to work. After I understood his point of view, I stopped investing in stocks. Dividend income is good, but you have to pay tax every year. That’s why I’ve returned to growth stocks over the past few years. Fortunately, lately they have done very well.
Budget money
Here is a chart of budget revenues from 2012.
It grew slowly from 2012 and peaked in 2019. If I had kept my focus on profit, it would probably be much higher today. I get jealous every time I read Bob’s dividend report. Their budget portfolio makes over $4,500 every month! That’s incredible. But we also did well.
Portfolio growth
Here is the value of our dividend portfolio.
I got lucky a few years ago and our portfolio grew quite a bit. Since 2019, I haven’t added much money to this portfolio because I wanted to increase our income by investing more in real estate. That worked very well too. You can see RE crowdfunding in action here.
Individual stocks
Here is the spreadsheet.
In 2024, the total yield is 1.81%. That is very low for a dividend portfolio.
Performance looks better than it actually is. I dumped some losers over the years due to tax withholding. Anyway, let’s look at the highlights.
Best earning percentage – Eli Lilly
I bought LLY in 2011. It was my first dividend stock. Since then, LLY has gained 2,044%! They have had some setbacks this year, but LLY is still our best dividend investment. Most recently, the amount of dividends received ($3,683) exceeded the amount we paid for the stock ($3,481). It’s all gravy from here. The dividend yield is very low at 0.7%, but that’s because the stock price has increased significantly in recent years.
Best value for $ – Nvidia
In 2020, I stopped buying new dividend stocks because I realized that Mrs. RB40 wanted to continue working. I also focused on growth stocks and had great luck. At that time, Facebook changed its name to Meta to enter the Metaverse. I was on board and bought Nvidia, Meta, and Unity. Unfortunately, the Metaverse didn’t pan out as Mark Zuckerberg envisioned. All Metaverse related stocks went down, but I held on. However, AI burst onto the scene and gave Nvidia a huge boost. I sold 60 percent of my NVDA for a profit. That was not very smart because the stock went up a lot. Fortunately, I knew enough to hold on to some stocks. However, the 1,000 shares of Nvidia in my dividend portfolio have unrealized gains of $126,480. Jackpot! 60% of what I sold was my Roth IRA. META has also done very well recently. It’s in my Roth IRA too.
Only 2 losers left – iU and INMD
I’ve dumped many strays over the years and only have 2 left – Unity and InMode. I should probably dump these stocks again.
30 yrs bonds
I have $2,000 of 30 year US Treasury bonds at 4.125%. I thought I would sell these when the prices dropped. We also had a number of 1-year bonds maturing earlier this year. I moved money to Total Stock Market Index Fund, VTSEX.
2024 cleaning – INTC, LEG, NLY, WU, EMN, and DIS
Finally, I sold all my INTC stocks. I should have sold them when they were $60/share. I think I caught them for good reasons. I also dropped LEG, NLY, WU, and EMN. All these companies have some problems.
As for Disney, I bought them in 2019 when they paid good dividends. Unfortunately, Disney cut dividends during the pandemic and performed poorly over the past few years. They got a pop last week so I sold some shares.
Bonds
We have approximately $70,000 in Series I Savings Bonds with the US Treasury. This will be our financial cushion when Mrs. RB40 finally retired. I plan to build this position to $200,000. If the market crashes, we can dip into I bonds as needed. In 2024, we will receive $2,150 in interest on the I bonds. I bonds are not included in the above dividend portfolio. Next week, I will transfer all the money market stocks to my bonds, about $30,000.
Move forward
Going forward, I plan to avoid each stock. According to Vanguard, my rate of return is 12.3% per year. That’s good, but it was luck. If we remove NVDA, I will be performing below the expectations of the index fund. My dividend portfolio had a few stinkers. That is, I have held on to INTC stock for 24 years too long. I should have sold them a long time ago.
The problem is I don’t follow the stock market anymore. Some dividend stocks have been devalued over the years and are no longer good companies. I often miss the problem until it’s too late. One such firm is Leggett & Platt, LEG. They paid good dividends when I bought the stock years ago. However, the business has been struggling recently. If I kept track, I would have known to sell the stock earlier.
From now on, I will put everything in index funds and bonds. At this point, I need to simplify our finances. Mrs. RB40 will need to take over at some point and I don’t want to confuse him with each stock. Still, I’m very pleased with our dividend portfolio so far. Everyone looks like a genius when the stock market goes up, right?
Do you invest in dividend stocks? What is your strategy?
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A minimum wage is the key to early retirement. This year, Joe is investing in real estate with CrowdStreet. They have many projects all over the USA so check them out!
Joe also highly recommends Personal Capital for DIY investors. They have many useful tools to help you achieve financial independence.
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