I'm planning two posts here. The first will be my sharing some numbers from 2021 with some brief comments. The second will have a couple of graphs related to my dividend income.
I'll apologize in advance for one thing. I didn't realize I'd be managing my Roth differently from my Taxable Account until May and didn't start tracking them separately - for many items - until September. So I don't have separate account information for everything, particularly related to dividends. This post is mainly about my taxable account but I'll note when it includes information from my Roth. Beginning in 2022 I'll be tracking the IRAs separately from my taxable account.
Some quick numbers:
2021 Portfolio Value Gain:
1/1/22 Portfolio Dividend Yield:
Current "organic" Taxable Account Dividend Growth Rate: 8.98% - this up from 8.48% on 1/1/21 but I'm not sure this means anything. That number included the Roth which was mainly REITs and BDCs which have slow to non-existent dividend growth. If I were comparing apples to apples I'm not sure this represents an improvement in my taxable account alone.
Account Activity:
This was my busiest year based on number of transactions since 2017, the year I opened my accounts. For the year I had 48 buys and 28 sells for a total of 76 trades. Trades by year since I opened my accounts:
Taxable Account Positions opened: None (8 positions opened in the Roth, plus 3 stocks I also owned in the Taxable Account)
Discussion:
Changing the Roth Account Objective: I'll not talk about the Roth, or the IRA once I fire it up, much on this forum as they are not strictly DGI accounts though 11 of the 14 Roth stocks pay dividends and I suspect a similar proportion may make up the IRA. But it's important to share this to provide some context for the weak dividend growth over 2020.
Phase 1 - Conversion to traditional Dividend Investing: Prior to COVID my Roth was for RICs. I had mostly REITs along with three BDCs. When COVID hit several of my REITs cut or completely suspended their dividends. I decided then that I should get out of REITs and invest in more "traditional" DGI/Income stocks. So beginning in late 2020 but really picking up steam through March, 2021 I sold my REITs in favor of income stocks.
Phase 2 - Conversion to a Total Return Account: In May I seriously crunched numbers for retirement for the first time. I had always thought late 2022 would be a good time to hang it up. But this spring was the first time I checked to see if I could afford it. I won't go into details but will just say that COVID had a lot to do with this. I liked my pre-COVID job where I met with people and groups to work on things. I didn't like my COVID job where most meetings were over a computer screen and when we did meet in-person I had to keep people separated and masked.
So I ran the numbers and as part of this I ran through several scenarios using the IRS1040-ES worksheets to calculate my expected taxes. I would be generating about 80% of what I needed to meet my budgeted retirement expenses from Taxable Account Dividends. Until running the tax projections I thought I would make up this "gap" using dividends from my IRA. However it makes more sense to use stock sales from the taxable account which will be taxed at 15% rather than through IRA withdrawals which would be taxed at income levels, mainly 22%.
Once I realized this, using the IRA to generate dividends to live on made no sense. So I did a second conversion of the Roth to more of a TR account though I still do like dividends. I did not begin tracking this separate from my Taxable Account until September but my Roth dividends are roughly 60% less than they were at the start of the year.
Retirement: I took a little while to think it over but in June I began prepping as if I'd retire at the end of the year. I didn't make a final decision until September but started leaning that way. So beginning on July 1, I stopped doing two things; adding new money to my accounts and using dividends received to buy more stock. 1.22% cash may not seem like a lot but it is to me. When it comes to building income, my motto has been that cash is lazy money doing nothing for me. So I tried to make my money work by staying fully invested. No longer buying dividend-payers had some impact on my dividend growth though far less than the Roth moves.
Here is an image of my taxable account with stocks sorted by % dividend income contribution. I'll add a couple of explanatory comments at the bottom.
I have no idea how my value gain did compared with the S&P. I suspect OK but I will not be comparing the Taxable Account to the market next year as I will be making some withdrawals from it, including through stock sales.
For next year my one main goal is to increase dividend income by 6% in my Taxable Account. I will be selling some AAPL from time-to-time but it's a small income contributor.
I have no imminent plans to sell anything but what I do with T remains an open question. I could decide to lock in my $3k in tax losses early, wait until after the spinoff or do something else. I'm reasonably happy with everything else I own.
The biggest investing concern for 2022 will come after 2/19 when I rollover my 403b to an IRA. But that won't be a DGI account so I won't discuss it here much and will try to minimize Roth discussion as much as I can.
I'll apologize in advance for one thing. I didn't realize I'd be managing my Roth differently from my Taxable Account until May and didn't start tracking them separately - for many items - until September. So I don't have separate account information for everything, particularly related to dividends. This post is mainly about my taxable account but I'll note when it includes information from my Roth. Beginning in 2022 I'll be tracking the IRAs separately from my taxable account.
Some quick numbers:
2021 Portfolio Value Gain:
- Taxable Account: 32.27%
- Roth: 38.98%
- Total: 32.63%
- 2017: 16.2% (opened accounts on 3/8/17)
- 2018: 1.58%
- 2019: 31.63%
- 2020: 13.57%
- 2021: 32.63%
1/1/22 Portfolio Dividend Yield:
- Taxable Account: 2.52%
- Roth: 2.71%
- Total: 2.53%
Current "organic" Taxable Account Dividend Growth Rate: 8.98% - this up from 8.48% on 1/1/21 but I'm not sure this means anything. That number included the Roth which was mainly REITs and BDCs which have slow to non-existent dividend growth. If I were comparing apples to apples I'm not sure this represents an improvement in my taxable account alone.
Account Activity:
This was my busiest year based on number of transactions since 2017, the year I opened my accounts. For the year I had 48 buys and 28 sells for a total of 76 trades. Trades by year since I opened my accounts:
- 2017 - 237
- 2018 - 67
- 2019 - 47
- 2020 - 38
- 2021 - 76
Taxable Account Positions opened: None (8 positions opened in the Roth, plus 3 stocks I also owned in the Taxable Account)
Discussion:
Changing the Roth Account Objective: I'll not talk about the Roth, or the IRA once I fire it up, much on this forum as they are not strictly DGI accounts though 11 of the 14 Roth stocks pay dividends and I suspect a similar proportion may make up the IRA. But it's important to share this to provide some context for the weak dividend growth over 2020.
Phase 1 - Conversion to traditional Dividend Investing: Prior to COVID my Roth was for RICs. I had mostly REITs along with three BDCs. When COVID hit several of my REITs cut or completely suspended their dividends. I decided then that I should get out of REITs and invest in more "traditional" DGI/Income stocks. So beginning in late 2020 but really picking up steam through March, 2021 I sold my REITs in favor of income stocks.
Phase 2 - Conversion to a Total Return Account: In May I seriously crunched numbers for retirement for the first time. I had always thought late 2022 would be a good time to hang it up. But this spring was the first time I checked to see if I could afford it. I won't go into details but will just say that COVID had a lot to do with this. I liked my pre-COVID job where I met with people and groups to work on things. I didn't like my COVID job where most meetings were over a computer screen and when we did meet in-person I had to keep people separated and masked.
So I ran the numbers and as part of this I ran through several scenarios using the IRS1040-ES worksheets to calculate my expected taxes. I would be generating about 80% of what I needed to meet my budgeted retirement expenses from Taxable Account Dividends. Until running the tax projections I thought I would make up this "gap" using dividends from my IRA. However it makes more sense to use stock sales from the taxable account which will be taxed at 15% rather than through IRA withdrawals which would be taxed at income levels, mainly 22%.
Once I realized this, using the IRA to generate dividends to live on made no sense. So I did a second conversion of the Roth to more of a TR account though I still do like dividends. I did not begin tracking this separate from my Taxable Account until September but my Roth dividends are roughly 60% less than they were at the start of the year.
Retirement: I took a little while to think it over but in June I began prepping as if I'd retire at the end of the year. I didn't make a final decision until September but started leaning that way. So beginning on July 1, I stopped doing two things; adding new money to my accounts and using dividends received to buy more stock. 1.22% cash may not seem like a lot but it is to me. When it comes to building income, my motto has been that cash is lazy money doing nothing for me. So I tried to make my money work by staying fully invested. No longer buying dividend-payers had some impact on my dividend growth though far less than the Roth moves.
Here is an image of my taxable account with stocks sorted by % dividend income contribution. I'll add a couple of explanatory comments at the bottom.
- The column Cost/share is calculated using my total amount paid for a stock minus dividends received, divided by number of shares I own. It does NOT include the impact of any sales of that stock.
- I included YOC just to demonstrate a nice characteristic of DGI. I don't use those for a lot; mainly a reminder to stay on track and, as an example, to ignore any voice which might tell me to sell, say, MSFT to increase my income. Its YOC is nearly equal to ADM - do I want to own ADM over MSFT?
- I hope the column headings are clear. I thought about expanding them but think you can figure what they are and the numbers will be small enough as it is.
- I'm not crazy about how much of my dividend income comes from MO and ABBV - even LYB is at the edge of being too much. I'm not going to do anything about it but it's not ideal.
- DGR numbers come from Fidelity and may not be completely up-to-date. Whenever a stock I own increases its dividend I go and check the numbers in Fidelity so some have not been updated in several months.
- Once a company announces a freeze I apply a 0% DGR to it. T does have a DGR but I know it won't be increasing it so I give it a 0 both here and when calculating "organic" dividend growth.
I have no idea how my value gain did compared with the S&P. I suspect OK but I will not be comparing the Taxable Account to the market next year as I will be making some withdrawals from it, including through stock sales.
For next year my one main goal is to increase dividend income by 6% in my Taxable Account. I will be selling some AAPL from time-to-time but it's a small income contributor.
I have no imminent plans to sell anything but what I do with T remains an open question. I could decide to lock in my $3k in tax losses early, wait until after the spinoff or do something else. I'm reasonably happy with everything else I own.
The biggest investing concern for 2022 will come after 2/19 when I rollover my 403b to an IRA. But that won't be a DGI account so I won't discuss it here much and will try to minimize Roth discussion as much as I can.