Active Versus Passive Forward Dividends – A Chart

I touched on a new metric in my last monthly dividend update (thanks to Engineering Dividends). I’ll include this metric on monthly income updates from now on.

What else could I do with this data?

I realized this is a visualization of my future income stream and divided it into two parts:

Active Forward Dividend Income

Active Forward dividends come from new investments and contributions. I work to make money, and then buy future dividends with via shares of stock. This is active because I have to work for it.

Passive Forward Dividend Income

Passive Forward dividends come from reinvested dividends as well as from dividend growth. I reap the rewards of previous investments I have made with no additional work on my part. This is passive because I don’t have to work for it.


First, I went back through all the data I have (back to October 2016). I counted up every single cent of forward dividend income starting with my first investment. Everything had to come from new purchases, reinvested dividends, or dividend raises.

Next, I charted this data. To simplify it, I combined my two passive sources of forward dividend income (reinvested dividends and dividend raises). I plotted my Active versus Passive Forward Dividend Increases next to each other by month. As a backdrop, I plotted an area chart of my Cumulative Contributions at the end of each month.

Conclusion

It is easy to see I made large contributions October 2016 through November 2017 and have since leveled off. I hope to get back on that upward slope soon.

As time goes on, I want the passive income (red bars) to go higher and eventually surpass the active income (gray bars). This will represent the dividend snowball and the power of compounding taking off.

For now, it doesn’t look like much. I may break it down quarterly at some point in the future. It may take years and years before I see a clear upswing in my red passive income each month. That’s what I’m working toward though! As I add more data, I hope a clearer picture of dividend growth investing emerges.

2 thoughts on “Active Versus Passive Forward Dividends – A Chart

  1. Hey Dozer. The new chart looks good. It will be good to see it transform over time!
    It was great that you were able to go back and collect all the data to fill out the yearly tables. I may try to do that myself, but it’s certainly much easier to do it as the months come and go, as opposed to after the fact.
    I see you already have more in dividend raises for 2018 than you had in all of 2017. What a year it’s been for raises thus far.

    1. Thanks ED! Once I figured out how to export my entire purchase history from Morningstar, I created some sumifs() in Excel to fill in the tables. That was only possible because I’ve been entering purchases in Google Finance / Morningstar all this time. I did still have to go back and enter the announced dividend at the time of each purchase, but I sorted by ticker and knocked them out pretty easily by hand.

      It has been a crazy year for raises! Those have kept me going while I eased off the contributions a bit this year.

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