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.
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.