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Dividend growth does not take place in a vacuum. Dividends grow because a company is able to grow its earnings over time.
It is those increasing earnings that flow into increased dividends. A side benefit of this cycle, of course, is that stock prices rise when earnings rise. So the icing on this finely built cake is the total return in capital appreciation that flows from it.
We are actually able to have our cake and eat it too!
A Tool To Focus On Dividend Growth
As a way to keep my focus where it needs to be, and reduce any herd instinct to sell when others are panicking, I use a digital tool I created to monitor dividend income, and growth of that income in my portfolio and the public Fill-The-Gap Portfolio I manage on Seeing Alpha, as well as the portfolio I manage for subscribers.
I have constructed a Dividend Growth and Income Spreadsheet that allows me to monitor the accumulation of dividends and the growth of those dividends.
In order to monitor the FTG Portfolio, I've inserted the ticker for each company in the portfolio, how many shares we've bought, the price per share paid and the quarterly dividend amount.
Since inception on December 24, 2014, we've made multiple purchases at different price points in several of the names. To simplify monitoring, we've combined these multiple purchases by adding the total invested in each, then dividing by the total shares to come to an average price paid per share.
The stage has been set- Now the fun begins
The spreadsheet uses the algorithms I've built into it to do the rest of the heavy lifting for us.
It automatically computes the annual dividend amount for me, my starting annual income from each position, and the current yield based on the price we paid.
In addition, it adds up the total amount of our FTG investments made and automatically calculates for me the total annual income and overall portfolio yield on all of our positions.
When I receive an increase in my dividends, I simply enter the new annual dividend amount in the New Annual Dividend column on the right hand side.
The spreadsheet, using my formulas, then automatically calculates our new annual income, the increase in annual income and the increased percentage of new annual income and new yield on cost for each position.
Finally, at bottom, it shows us the new total portfolio yield on cost. As our dividends increase, we see this most important number march upwards.
Hundreds of Seeking Alpha readers and my subscribers use this tool to stay focused on building dividend income.
Now, I'm offering it to you, too!
If you'd like to improve your investing performance as so many thousands of readers and subscribers have done, this digital tool is available for you to add to your investor's bag of tricks.
Brought to you by Seeking Alpha's #1 ranked author in the retirement category.