With 2014 wrapped up, I can fully assess my dividend income matching experiment, where I made regular cash transfers into my brokerage account that matched the previous month’s dividend income. So here are the results of my year-long experiment in matching. It’s been interesting.
My matching program wasn’t a perfect dollar-for-dollar match, but it was in the ballpark at least. Some months my match was almost the same, and a couple months it fell short. As mentioned in an earlier post about my matching strategy, this experiment has shown its upsides and downsides.
With a regular monthly infusion of capital and regular stock buys, I was able to grow my dividend income at a brisk pace. At the start of the year, my projected monthly income was approximately $423/month and by year’s end it was $532/month. That’s a 25% increase in 12 months. Not too bad. But to be fair, I also had cash infusions from a few sales of my employer’s stock grants, which boosted my available capital. However, if I can continue to maintain an annual growth rate of at least 20%, then earning over $1000 per month in dividend income doesn’t seem so far-fetched an idea.
The improved growth in dividend income has come at a price. My savings account, severely depleted by my house purchase in late 2013, has not recovered very well. Money that would have gone towards rebuilding savings instead went towards matching my dividend income every month, and as a result my savings account barely grew in 2014.
So that’s it for 2014, but what about the new year? I would like to grow my savings a bit, so I may throttle back my matching program a little. Instead of $1.00 of capital for every $1.00 in dividends, I may only contribute $0.75 for every dividend dollar.
Because I re-invest 100% of my dividend income, the matching program effectively doubles the cash I have available to invest with (excluding cash from stock sales). Before I started my matching experiment, I gave my account cash transfers very irregularly. This program has helped to impose a degree of regularity and discipline in my cash transfers that was previously lacking. While this approach may not work for others, it has worked nicely for me.