Keep eye on dividends and ignore share prices

After a long bull market, everyone starts to talk about next market crash. A very few financial experts have been calling for a bear market for last couple of years, but U.S market is still in upward mood.

Canadian market has already experienced a bear market not long ago after the oil price crash- in 2015 and early 2016. It may experience a downward pressure again if U.S markets experience the selling pressure.

It seems like Canadian stock market is a sensitive one and it reacts for everything because of its poor diversification.

As an income focus dividend investor, share price fluctuation does not really matter to me, but dividends are matters.

Since I am still in the early stage of investing, I get excited when my favourite dividend stock gets hammered by a temporary bad news.

Over the last couple of years, I have been building a pure passive income streams using diversified high quality dividend growth stocks.

This dividend growth strategy worked well for so many investors in the past, and I continue to believe it will work well in the future too.

So far, this strategy works well for me.

Please do understand that past performance does not necessarily predict future results, so do your own research or discuss with a qualified financial advisor before consider using the information on this website.

I have been documenting everything on this website. This helps to me track my activities and performances, and at the same time inspire (I hope) people to start think about their own journey to become financially free.

As many of you know, I am a buy and hold investor. Therefore, I buy high quality stocks at reasonable price and hold them for long-term (most them forever) and collect growing dividend income.

This is one of the proven strategies to build wealth and create a growing cash-flow for life. In order to harvest the actual results, this strategy takes time, discipline and patience.

Again, this is not the only way to build wealth. There are so many other ways too. Some people prefer day or swing trading, some prefer option trading and some investors good with picking high growth stocks that double or triple in few years. And, some prefer to have online income.

But, I am a boring guy. I like the boring approach like slow, but steady growth.

I have over $200K portfolio with over 65 different companies in 10 different sectors. But, I don’t monitor them every day. I don’t have time to watch my stocks move ups and downs for every single minute. Even if I have some time watch them, I won’t do anything. So, I better spend my time with family and friends instead of adding unwanted stress in my life.

Some stocks perform well in some days, while others go down, and vice versa. Over the long-term, most of them do well.

If you look at my passive income report, my estimated yearly passive income has increased from $3432 in February 2014 to $7416 in February 2017, which is 116% growth in around 3 years period.

It translates to 38.67% annual growth.

The growth is combination of new capital, dividend growth and dividend reinvestment.

I may not replicate the similar growth for another three to five years, but I will get somewhere close to this number.

My goal is to increase this passive income stream by 20% annually. If I can successfully excute this plan, my estimated passive income will be around $30 000 per year in December 2024 – in 7 years. (My actual financial goal is have $25 000 dividend income per year by December 2024. I am just adding a margin of safety here.)

I strongly believe I can achieve this goal by investing in dividend growth stocks. Of course, I need to put new capital because the 20% growth is not realistic with just dividend growth alone.

Many people may think that 5-7 years is very long time, but it is not. Time will fly. And, whether you like it or not, time won’t stop for you.

Take a moment and just think what you were thinking about to achieve in March 2012. Can you believe we passed 5 years now (March 2017)?

Whether you like it or not, March 2020 will come in three years. Some of you may still be thinking about where to start and how to get rich quicker in one year or less. At the same-time, for those slow and steady growers will be passing the year with collecting growing dividends and allocating their cash-flow to accumulate more cash generating assets.

For sure, my investments assets will go through bumpy rides during bad economic periods. But, I believe my dividend income streams will be steady and grow year-over-year. This is what I experienced in the past, and I will experience this again in the future.

In 2015, some of my holdings (CVE, COS and KMI) reduced their dividend payments. And, so many other stocks had increased their payments. So, the dividend cuts did not impact my income growth during the bear market (Please note I sold COS & CVE with some capital loss, and added few shares of KMI after it had hit hard).

Therefore, my estimated passive income grew from $4172 to $6055 in 2015, even with three dividend cuts. But, the assets values were all over the place. In some worst days, my portfolios dropped over $6000 (in a single day). After the bad year, share prices came back to normal trend, and keep rising to match their long-term average dividend yields.

So, I keep eye on my dividend income growth and ignore share price volatility. For me, next market crash and bear markets are nothing more than opportunities.

Again, dividend growth is not the only strategy to build wealth and achieve your financial freedom. There are so many other ways to build wealth, and some of those methods may be much better and faster than dividend growth investing.

This strategy works well for me, but it may not suitable for everyone. If you are interested in achieving financial freedom, start educate yourself in your interested area, do your own research and find a best strategy that works for you. And, focus long-term and stick with your idea through thick and thin period.

If you already have one, please share your strategy in the comments section below; it may help other like minded people to sharp-up their journey.

Thank you reading!