On November 15, 2023, I passed a key milestone from a dividend perspective. On that date, the dollar amount of dividends and dividend-like income (typically return of capital or capital gains distributions paid by REITs) that I received calendar year to date surpassed the dollar amount of dividends and dividend-like income that I received in all of 2022.
There are three key factors that drove this milestone:
Dividend increases. I tend to seek out companies that have paid and increased their dividends and that look capable of continuing to do so. While it’s never a guarantee, the reality is that it is a lot easier to find companies with decent dividend growth prospects if it’s something you’re actively looking for than if you’re not looking for it.
Reinvestment. I’m still employed and not currently living off my portfolio. Thanks to priorities made and set in late 2022 ( These Are My 5 Highest-Conviction Stock Market Moves for 2023 | The Motley Fool ), I have been able to fully keep dividends invested this year, either through auto-reinvestment in my 401k or through pooling as cash and then opportunistically investing in other accounts.
New contributions. Thanks to those same priorities, I was able to continue contributing to both my Roth IRA and my Roth 401k for 2023.
Looking forward to 2024, as much as I would hope for continued dividend growth, I think it will be a tougher bar to cross next year.
With a second kid likely headed to college next year and not quite as nice a bonus maturing next year as this year, I’m forecasting higher costs and lower earned income. That combo makes new contributions and reinvesting existing dividends more challenging goals to achieve.
On the dividend health side, inflation-related cost pressures have made some of my investments a bit more cautious in their dividend practices. That makes me a bit more worried about what near term future increases will look like.
Although question marks surround all three of my key 2023 dividend-like income growth drivers, I remain cautiously optimistic for the possibility of continuing dividend-like income growth in 2024. The carryover effect from finishing 2023 strong should at least help a bit.