One of the main goals of my life is to achieve financial freedom as soon as possible and retire early. And to attain that happiness, we will have to make sure that the passive income cash flow never stops.
There’s a famous saying by Warren Buffet – “If you don’t find a way to make money while you sleep, you will work until you die”.
One of the best passive incomes that I have learned is Dividend Income. That’s why my plan is to invest Rs. 5+ Crore in the stock market and keep earning at least Rs. 15+ Lakh Dividends per year for life.
Disclaimer: I am showing you my Stock Market Dividend Portfolio through which I am earning Passive Income but remember, I am not a Financial Manager and all the stocks I have bought is purely based on my research. I do not intent to sell them any time soon as my plan is only to earn Dividend Income.
Here’s the list of Stocks I have in my Portfolio –
(If you are on Phone then Rotate & Refresh The Page to see the Spread sheet properly)
Here are the Dividend Payments I have received so far in 2020 –
Updated Every First Week of the Month.
Received only 1 Dividend in January, 2020 from TCS.
Received 5 Dividend Payments in February, 2020 from Page Industries, Hero Motocorp, Star Cements, Rites & Godrej Consumers.
Received 11 Dividend Payments in March, 2020 from SJVN, IRCTC, Havells India, Motherson Sumi, NALCO, Vedanta, TCS, Relaxo, Ashok Leyland, Tech Mahindra & Coal India.
Received 1 Dividend Payment in April, 2020 from GRSE only.
Received 3 Dividend Payment in May, 2020 from Britannia, Hindustan Zinc & Tata Consumer Products.
Received only 1 dividend from TCS.
Received 4 Dividend Payment in July, 2020 from TCS, Tata Chemicals, HUL & Tata Consumer Products.
Received 4 Dividend Payment in August, 2020 from Tech Mahindra, Hero, HUL & Alkem Lab.
Quick Summary of My Portfolio –
No. of Shares
Annual Dividend Income
Although, I am really very happy that my Dividend payments are flowing but I don’t think I would want to depend solely on it forever yet. Yes, it is indeed a very effective way to keep earning some passive income but I consider these Dividends as my add-on money on top of my other Passive Incomes for now.
Don’t get me wrong, a person can definitely live off his life with Dividend payments in India considering the cost of living in India is more affordable than other countries.
But one of the reasons why I don’t depend on Dividend Payments completely yet is because of its inconsistency. Unlike United States of America, where you can earn Dividend money every month, Indian Stock Listed companies work a bit differently.
If you have noticed, then most Indian companies pay Dividends once per year. Some pays twice per year and only a few pays more than twice per year. So, first I would like to build up my portfolio to Rs 5+ Crore so that even if I receive dividends once or twice per year from a company, it would still average out my monthly income to a decent amount.
However, I am saying all this by my own experience only, so do not believe what you read. You might completely have a different and better experience than me.
But I would also like to add that definitely, once my portfolio grows big enough, it could generate a significant amount of Dividend money for sure. Whatever happens, I will keep you guys updated in this article, so keep checking it every month and enjoy this journey together.
Why am I building a Dividend Portfolio?
Well, I am tracking the Indian Stock Companies and the Market for a long time. I truly believe that in future, India will emerge as one of the richest countries in the world. Moreover, if you want to be a part owner of Hindustan Unilever or TCS or Reliance then the process is very simple: Just open a demat account, search the company you want to buy, enter the number of shares and buy it with its current price. That’s all. You now own a piece of that company.
So, my Dividend investment strategy is very simple, I prefer investing in companies for a long long term. Literally, I search for companies that I believe would survive for at least next 10 years, then I buy them and keep enjoying the dividends.
I mean I always wanted to be a part owner of the companies that I am a consumer of. For example, which individual in India doesn’t use a product of Hindustan Unilever or Britannia or Dabur or Nestle India or Godrej Consumers or Tata Consumers and so on and so on and so on.
But imagine, if anyone in India or World buys a product of that company, you now own a piece of its profit as well.
I know that this journey is not that easy, I mean investing Rs 5 Crore for a middle-class man like me is not easy at all. But is it impossible? Heck NO!
Why? Because we have a plan and we are sticking to it. Even if I will have to invest only Rs 10,000 per month, I will do it but I do believe little by little, we will achieve our goal.
What am I doing with the Dividend Money?
Honestly, at this position of my life I do not really need the money personally, so, I put all the money back to the stock market at the end of the month.
Currently, I didn’t cash out anything from the stock market at all and I do not intend to cash out any time sooner either. I want to first accomplish my goal to invest Rs 5 Crore in Stock Market and perhaps after that I will plan to enjoy with the dividend money.
Diversify Your Portfolio
This is definitely one of the important things to remember. If your goal is to generate enough Dividend income then diversification is the key. The reason I am telling this because suppose you have Investment in Hindustan Zinc and one year it didn’t feel like paying any dividend to its investor which happened in 2019. In that case, your dividend payment will be zero for that year if you only have 1 company in your portfolio.
That’s why if you invest Rs. 1 lakh in share market then make sure to divide them into 10 stocks or more so that even if 1 company misses the dividend, you can rely on others. The strategy here is really simple.
Does it Matter if the Stock Market goes up or down?
Definitely it Matters! I mean personally, I do not feel any emotional attachment with my investments because I do not forget the main goal of my Stock Investments and that is dividend income. But if the market goes down then it’s definitely a chance for you to add more so that your dividend yield is higher.
But for long term, I believe, it’s important to stick with strong fundamental companies with good Dividend Yield. That way, you can make sure the company won’t be closed in coming 10 years at least. In the mean time, I do monitor the companies I am invested in very closely.
However, it’s simple to invest in companies that are not complicated to understand. If you can explain a company’s operation to a 5 year old kid and that kid understands, it means it’s a good company for me. As simple as that. For example, if you buy shares of Britannia and a kid asks what does this company do then the answer is simple, it makes biscuits, bread and other bakery items. How hard is it to understand?
Can you live off of Dividend Income?
If I have to answer this question in one word then that word will be “YES”. Indeed, it’s possible to live your life with Dividend Income but this will highly depend on your lifestyle and expenses.
Suppose if your monthly expenses is Rs 30,000 per month which mainly involve rent, bills, groceries, petrol, dining out, traveling etc. then you will have to invest accordingly.
In this case, you need Rs 360,000 Dividend income per year. If I consider the dividend yield to be only 4% then by Investing around Rs 96 lakh can get you that amount of Dividend Payment every year. Now again, you will have to calculate several other factors and to be safe side, you may have to invest a little bit more.
But also, do not forget that your original investment also increases over time and with that, your dividend amount will grow every year as well. So, hopefully, if you can plan this out properly then it is definitely possible.
Honestly, my monthly expense is not more than Rs 30,000 and investing Rs 1 Crore should get me financial freedom. But I do consider living a good life with vacations and I do not wish to live a frugal life. That’s why, I am targeting to invest much more than 1 Crore.
Remember, when you start building your Dividend Portfolio, it will be very boring and eventually, you will realize that it cannot be attained. However, if you stay persistent and stay focused then trust me, this is possible. I mean, you will be watching me doing this beside you. The above portfolio of mine was not built in a day. It took years to got me there and it will take several more years to achieve my actual goal end.
Financial Freedom is the Ultimate Goal
One way or another, the main goal of my life is to achieve financial freedom. I do believe, Dividend Investment is one of the ways that could help me reach my goal. This is a perfect way to make money while I sleep. Secondly, it makes me feel proud when I buy products of my own company or if I see any Indian buying those products. You start feeling like an owner of the company.
In the end, I would only like to say that of course, we do not wish to work our jobs for the rest of our lives. So, it is important that we make our money work for us rather than we keep working to get it all the time. And, one thing is pretty clear that if your job was to become an option and if you don’t need it then our lives gets a new meaning in a whole new level.
I mean who doesn’t want to spend more time with their family, wife, kids and want to take some tension free vacations? How about freely chase our hobbies like writing, reading, painting, etc.? And this is exactly where our passive income from invested Dividend portfolio comes into play.
If you are working hard to earn money then your money should work even harder to get more money for you too. Also don’t forget to re-invest those dividend incomes until you achieve your desirable goal.
I am re-investing the Dividend Income actively until and unless I reach my goal as well. Although, my Dividend income is averaging around Rs 3,000 to Rs 4,000 per month so far but hey, the journey already started now!