This article was previously published for members of The Dividend Kings.
You know how the saying goes… another month, another step towards financial freedom.
And oh, what a wonderful month it was.
During December of 2021, my portfolio generated its best all-time mark for monthly dividends. It was great to end the year off on a high note! Nick’s Dividend Growth The dividend income that I generated during December was up 20.30% on a year-over-year basis. And, it’s so amazing to see the compounding process here continue to play out.
Regardless of what the market throws at me… short-term volatility, taper tantrums, irrational valuations, a 100-year type of global pandemic, etc., etc., etc., my dividends continue to grow higher.
This provides a great deal of solace throughout periods of market volatility and allows me to stay calm, cool, and collected, which in turns, helps me to avoid many of the common pitfalls that many irrational investors face in the market which are ultimately inspired by fear and greed.
This 20.30% y/y growth rate during December pushed my overall y/y dividend growth rate up to 14.99% (I was hoping to get to 15% on the year, but I’m not going to sweat that 0.01% short-fall).
Therefore, 2021 as a whole was a pretty wonderful year as well.
My portfolio has produced 20%+ y/y monthly dividend growth results during 5 out of my last 7 months and moving forward, I expect to see this trend remain in place (due to my continued plans to put monthly savings to work, growing my income stream in an inorganic manner).
These savings, alongside the continued re-investment of dividend and the organic raises that they holdings provide me (every single company that I own which pays a dividend raised its dividend in 2021 and looking at fundamental outlooks and dividend safety metrics across my portfolio, I expect that trend to remain in place moving forward into 2022 as well), combine to result in strong, reliable double digit growth.
This is so great so see because my long-term retirement plans are based off of a more conservative 10-12% annual dividend growth rate.
Every year that I’m able to produce results which exceed that range, I’m accelerating my journey towards financial freedom.
And with that in mind, the 14.99% passive income growth that I generated during 2021 was a big step in the right direction.
As you can see on the chart below, the compounding trajectory at play within my portfolio continues to – slowly, but surely – result in a steepening upward trajectory. Nick’s Dividend Growth The potential for compounding to turn exponential is one of the biggest long-term benefits of the dividend growth strategy.
With 2021 completely in the books, I took a look back at my long-term dividend data spreadsheets and saw that my 2021 dividend income was more than 4x the size of my 2014 passive income (the year in which I began tracking data for these spreadsheets).
Looking forward, if I’m able to generate 18% annualized dividend growth over the next 8 years, I will see my dividend stream go 4x again.
While this isn’t my primary goal, I think these types of results are possible (largely due to my expected savings rate) and while I don’t have plans to change my strategy and/or increase my risk threshold in an attempt to bolster returns in the near-term, I look forward to what the next 5-10 years hold as I continue to follow the dividend growth path towards financial freedom. Nick’s Dividend Growth Total Returns
In 2020, I posted total returns north of 24%, meaning that I beat the S&P 500 by roughly 8%. I was hoping that this positive momentum would carry into the new year, but due to the market’s rotation out of growth and into value throughout much of 2021, I underperformed on a relative basis to the broader averages.
I’ve highlighted this throughout much of 2021 – my portfolio was producing relatively rare underperformance (coming into the year, I had beaten the S&P 500’s annual performance during 7 out of the last 9 years) very early in the year due to the fact that I remained overweight sectors like technology, consumer discretionary, and healthcare, which were relative underperformers, compared to the winning sectors of 2021 (energy/finance/real estate) and I’ve been playing catch up ever since.Unfortunately, much of the capital that I put to work throughout 2021 was focused on buying beaten down blue chips and I didn’t see an immediate mean reversion on those investments throughout the second half of 2021 (though, I should note […]
source Nicholas Ward’s Dividend Growth Portfolio: 2021 Full Year Update
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