OCTOBER SECOND HIGHEST MONTH FOR DIVIDEND INCOME IN 2016!

Just collected the last nine dividends for the month of October and it came in as the second highest month for dividend income this year, only behind July, with it's 2 special dividend payments from MAIN and HWBK!  Income from CLM more than doubled with recent purchase of stake for my Roth account!  As exciting as all this is, I should see another increase in monthly income in November with AGD's first monthly dividend, although with only 22 dividend payments for November, it's sure to lag behind July and October.  However, I'm looking for December to set an all time record for a single month with a whopping 30 dividend payments!

To start 2017 off right, I'd like to buy stakes in two more monthly dividend funds before the end of the year.  Given I don't really have the cash right now, this is a pretty ambitious goal.  But I think it's possible, with some tight budgeting and taking advantage of extra cash from my Christmas bonus and cash balances from dividend payments.  I've been pretty happy for the past three years with the advances made from reinvesting dividends, but I'd like to take some of the money I've built up recently and purchase one stock entirely with cash earned from dividends.  Something about buying a monthly stream of income with no money out of pocket really appeals to me.

DISMAL STOCK PRICE PERFORMANCE, BUT CASH BALANCES GROWING NICELY

The last few weeks haven't been good to stock prices, but it only serves to bolster my decision to convert dividend payments to cash for the time being.  Yes, I want to buy shares at lower prices but how much lower are prices going to go?  At this point, I have no idea, so I'm collecting cash and taking a wait and see approach.  If this sounds crazy to most dividend investors, I would point out my last post which referenced all the cash Warren Buffet has built up with Berkshire Hathaway this year.  There's a reason Buffet has accumulated so much wealth, he's very smart at buying stocks at the right price.  So if I'm accumulating cash waiting for better prices at the same time as Warren Buffet, I figure I'm in very good company.

Going forward, it looks as though I'll have enough cash from earned income to buy stakes in AGD and SPLV before the end of this year.  So I'll be able to boost dividend income for the last two months of 2016 and it will add another 24 dividend payments towards my goal of 365 per year.  Buying the stocks before the first of the year will also have a significant impact on total dividend income for 2017 and bring me much closer to my goal of doubling income for the fourth year in a row.  I've done the math and it is doable, but we'll just have to wait and see how things go.  Regardless of who wins the presidential election or how well the stock market performs in 2017, I still expect to continue growing dividend income as well as accumulating bigger cash balances in my investment accounts.  So far, the balance of my 401k account is minimal compared to my other accounts, but I expect that to change by the end of 2017.  It may eventually become my largest account, but whatever it ends up being, it will add to passive income during retirement.  

IF BERKSHIRE HATHAWAY IS PILING UP CASH THEN SO AM I

Last month I posted about not reinvesting dividends for a while, while I waited to see where the market was headed and to see what the Feds were going to do with interest rates.  I figured I could get a better price if the market drops and that it's never a bad thing to have a big pile of cash.  

If I had any doubts about my decision, they were quickly squelched after reading an article from the Associated Press this morning about Warren Buffet's company, Berkshire Hathaway.  They were talking about how Berkshire had amassed nearly $73 billion in cash by mid summer and were generating an additional $1.5 billion per month.  There was speculation as to what Warren Buffet planned to do with the cash, whether he'd buy out another company, or purchase millions of shares of stock in one of the companies in which he already owns shares.  Whatever he decides to do with the money, I'm sure he'll eventually put it to good use, he always does.

At any rate, my takeaway from this is that it's not always necessary to reinvest dividends in the same company from which you received them.  I do believe it's good to continue reinvesting that money, but my plan is to build up cash and reinvest it in new stocks and funds to create additional streams of income.  I currently own shares in 27 different stocks and funds and would like to increase that to 35 by the end of next year.  By purchasing the additional stocks and funds in 2017 I'll boost my total number of cash dividend payments to around 371 per year, more than a dividend per day!  Collecting most of my dividend payments in cash will help me reach this goal as quickly as possible, since I don't have to come up with all the cash from earned income.  

OCTOBER OFF TO GOOD START WITH 8 DIVIDEND PAYMENTS!

Although we've been whip sawed by the stock market for the past week or so, October is off to a good start with 8 dividend payments for the first week!  This includes the first dividend from monthly dividend payer EAD, added last month to my ROTH account.  Cash balances are up from collecting dividends as cash rather than reinvesting.  This has helped to stabilize my accounts to some extent.  I plan on continuing to collect cash dividends for the remainder of 2016.  We'll see how things are going after the first of the year and I'll decide whether to start reinvesting dividends again. 

Speaking of 2017, I've decided to totally change my investment schedule to make 2017 the year I start collecting a dividend a day.  I'm up to 299 dividend payments a year now, so I only need to add 6 monthly dividend payers and I'll collect 371 payments per year!  I'm so excited about the idea of getting a payment for every day of the year, I'll probably make a few of the new stock purchases before the end of this year.  I should be able to complete this purchase plan by June or July of 2017, but even if it takes all year it will be worth it.  This new goal should also go a long way toward doubling total annual dividend income, which I'd like to do again next year.

We'll find out soon enough who our next President is going to be.  Which candidate wins probably won't have much to do with the performance of the stock market for the next year or two.  I'm not expecting to see any major gains during 2017 or 2018 as far as stock prices go.  But that's actually good news when you're a dividend investor still in the accumulation phase.  The less expensive the stocks, the higher the yields and the more shares you can buy with your investment cash.  Not sure yet what the new year will bring politically or economically, but I'm pretty sure it's going to be another great year for dividends. 

SEPTEMBER DIVIDENDS UP 130% COMPARED TO 2015!

The last of September's dividend payments came in today and I'm happy to report, income for September 2016 is up over 130% compared to September 2015!  While part of this increase can be attributed to rising dividends, the majority is from reinvested dividends and additional cash investments.  Still, it's a pretty astonishing increase in cash flow.

For the month of October, I'll see new dividends kicking in from CRF, EAD and CHI, so it promises to be another great month.  I expect to see a similar, if not even larger, increase in year over year monthly cash flow for October.  At this point, I'm really getting excited about December.  December has the most dividend payments of any month of the year and includes special dividends, so it should be a great month for income.

Yesterday's 200 point drop in the DOW just served to confirm my decision to withhold reinvesting dividends for the time being.  The problems with Deutche Bank in Germany, uncertainty over the Federal Reserve rate increase, OPEC agreeing to limit oil production and the election are all bound to affect markets one way or another.  I'm thinking it's going to be a downward spiral for a while.  So I'll keep parking cash on the sidelines and hold out for better prices on stocks.  

THREE REASONS TO STOP REINVESTING DIVIDENDS NOW

I have stopped reinvesting dividends on all individual stocks, stock funds and bond funds for the time being, for three very good reasons.  For one, we are nearing the November elections and a new president will take over at the first of the year.  Regardless of who wins the election, historically we will be faced with at least a two year period of a sagging stock market.  Reason number two, the Federal Reserve seems intent on raising interest rates which will adversely affect bond funds and rate sensitive stocks, at least for the short term.  The third reason has to do with the aging bull market.  Stocks are historically overpriced right now and some sort of correction is due any time.  So reinvesting dividends at today's stock prices seem contraindicated to me.

My plan is to collect the cash dividends until I see how everything plays out after the first of 2017.  Should we see a correction in the market, I'll have a cash reserve built up to take advantage of lower priced stocks.  Should the Feds raise interest rates, shares of the bond funds I hold will drop in price, also allowing for me to purchase more shares at a better price.  If none of these things should happen, then I'm left with a chunk of cash I can put to work however I see fit.  I'll still be building monthly cash flow through additional cash purchases between now and the first of the year.      

THERE IS NOTHING WRONG WITH TAKING SOME CASH OFF THE TABLE

When I was younger, my brothers and I used to meet for dinner at our mother's house on Friday nights.  We'd have a great home cooked meal and a nice visit and afterwards we'd have our Friday night poker game.  We never played for big money, it was more about visiting and having a good time.  But every time we played, if I won a hand, I would take half of the winnings and put it in my pocket and continue playing with the rest of the money.  When the money on the table ran out, I'd drop out of the game.  Taking money off the play table ensured that I never had a poker night that was a total loss.

It's the same when it comes to investing.  There is never anything wrong with taking some of your cash off the table.  In my case, I don't sell any stock, I just divert dividend payments to cash.  Of course I keep the cash in an FDIC insured interest bearing account, so it continues to work and earn more money, but it's no longer subject to the gyrations of a sometimes volatile stock market.  I don't do this because I need the money, I leave the cash in my investment account.  However, when the stock market is dropping, having a sizable chunk of cash in your account is a great stabilizer.  And when things start to look up again, you can always put that cash to good use buying in while stock prices are still low.