![]() ![]() Of course, how this works in reality compared to theory all really depends. Factor in even modest dividend raises from the other ~49 investments and my dividend income will likely not even miss a beat, or perhaps even increase. But owning 50 or so positions means that if one investment were to eliminate its dividend, I still have 49 or more other positions paying out dividends. I plan to eventually own 50 or so positions across my entire portfolio because my Freedom Fund will eventually fund my entire lifestyle, paying for all of my expenses via the dividend income it generates. I don’t weight my portfolio like this, but I can certainly see the merits of doing so because it allows you to see how your dividend income is spread out across the positions. This can be thought of as weighting your positions in terms of the dividend income they produce rather than how much the investments are worth. So this allows me to spread my risk out appropriately in terms of how much capital I can have committed to a company while still keeping an overall attractive dividend income profile across the entire portfolio. So I have less than half of the capital committed to ARCP than I do to KO, yet the income is about the same due to the yield on ARCP being more than twice what an investor can get with shares on KO. That means my 170 shares pays $170.00 per year in dividends. Their history isn’t quite as rich as a beverage company that’s been around for more than a century, and so I have less of my hard-earned capital committed to this company.īut what’s fantastic is that this hasn’t hurt my dividend income at all, since ARCP has a yield of 7.54% right now compared to KO’s 3.01%.Īnd this is how that plays out: Each share of American Realty Capital Properties pays a monthly $0.08333 dividend, for a total of $1.00 per year. ARCP has only been around a few years, and has grown tremendously over this time frame. I like the business, but I’m not quite as big a fan of ARCP as I am KO. (ARCP) worth a total of $2,255.90 based on today’s price of $13.27.ĪRCP is a REIT that acquires freestanding commerical real estate and leases these buildings out to credit worthy tenants. I currently own 170 shares of American Realty Capital Properties Inc. I’ve never made a lot of money in my life, but I’ve leveraged as much of my spare capital as possible over the last few years to build up investments in fantastic companies that pay rising dividends, which has in turn increased my passive income from $0 to more than $5,500 per year.īut what’s amazing is that a much smaller investment for me elsewhere in my portfolio produces almost the same exact dividend income. It’s taken me a number of years to amass a position of this size in Coca-Cola. That means my 140 shares pays $170.80 per year in dividends. As such, I have a good portion of capital invested in the company.Įach share of Coca-Cola pays a quarterly $0.305 dividend, for a total of $1.22 per year. They are a global beverage powerhouse with more than 500 nonalcoholic brands, 17 of them being billion-dollar brands. ![]() I currently own 140 shares of The Coca-Cola Company (KO) worth a total of $5,682.60 based on today’s price of $40.59.Ĭoca-Cola, in my opinion, is one of the best companies one can possibly invest in. I’ll show you how that works with a couple of holdings in my personal portfolio. However, the great thing is that just a sprinkle of high yield on top of a high-quality cake with a great foundation can really improve one’s prospects for generating more additional current passive dividend income. But that being said, current income is something I do think about because every additional dollar I’m able to generate from my investments puts me one dollar closer to financial independence. Every investment I make in a business is done so because I truly believe in that business’s prospects, I understand how they make money, I think they’ll be more and more profitable over time, and I believe they’ll share those rising profits with me in the form of increasing dividends. Now, it should be noted that I don’t consider current yield as the most important metric when deciding whether or not to buy a stock. One thing I’ve definitely noticed when constructing my Freedom Fund is that a little exposure to stocks with high yield can have a major impact on my overall dividend income. ![]()
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