# My 2020 dividend cash flow goal – A Simplistic View

In my invest

At end of year 2008 the dividend champion list has 128 companies. The annual dividends that these companies pay range from $2.80 to $0.20. The average dividend for all of 128 companies is $1.17 and the average price is $35.71. In addition, there are 75 companies that pay at least pay $1 annual dividend. The average dividend of these 75 companies is $1.53 annualized.

Let us assu

· with my end goal of $30000, we will have to buy 600 shares per stock [30000/50].

· total funds needed = [50*600*$35.71] = $1,071,419 i.e. we can have this cash flow today with one million dollar.

Now let us do empirical optimization and make it simple.

Looking at dividend champion list, the average dividend for 75 companies (with at least $1 dividend) is $1.53 annually. Assu

· number of shares needed per companies = [30000/(50*1.53)] = 393

· total funds needed = [50*393*$35.71] = $701,780 i.e. now need $702K.

In this calculation, we still need to include dividend growth (positive effect), dividend reinvest

Let us consider that at begin of 2009; we have 50 shares of one company stock in our portfolio and each stock costs us $35.71. Each share has an average annual dividend of $1.53. Therefore, the total invest

· we will consider dividend growth rate of 8% every year;

· dividends are reinvested only once at the end of each year; and

· at the end of each year, we will appreciate the price of stock by 8%.

Let us do the math:

· at end of 2009, total dividend received $76.5, price of share $38.57

· beginning 2010, number of shares [(76.5/38.57)+50] = 51.984

· end of 2010, total dividend received $85.9, price of stock $41.65

· continuing this until end of 2020 – number of shares 76.706, total annual dividend $273.6.

· on our initial invest

Extrapolating this for 50 shares each in 50 companies

· total invested capital [50*50*$35.71] = $89,275

· total dividend cash flow [$273.6*50] = $13,682

· we have still not reached our end goal of $30,000 dividend cash flow.

Solving this backward, to achieve $30,000 dividend cash flow, we get:

· 110 shares for each company [total 50 companies*110 shares].

· total initial invest

To summarize….

As of today, if we invested $196,405 in 50 companies from dividend champion’s list (and bought 110 shares for each), we should be able to reach our 2020 goal. The yield on cost would be 15.3% [30,000/196,405]. This assu

Our first calculation of one million dollar ca

The purpose in this empirical calculation is to show (1) the significance of dividend growth and dividend reinvest

i not only believe 8

i do believe 8% is achievable but i am shooting for 149%

5

This assumes dividend growth of 8%, annual dividend reinvestment, and share price appreciation of 8%.

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I don’t think those numbers are realistic considering the state of the US and world economies. I’d suggest at least halving that number.

You may also want to include in your analysis the effects of inflation and the purchasing power of 30k in 2020. I think it’s a very safe bet that in 2020 30k will not be able to buy what it buys today.

Another DI,

Regarding dividend growth and price appreciation, I believe those are very much achievable. I do not think one or two years (or what’s happening now) only makes sense. Even if US growth slows, there will be global companies or multinationals who will grow their dividends. And investing incorporates proper allocation to achieve that which includes foreign and emerging markets.

On value of 30K: yes inflation and purchasing power is an important consideration. But I don’t think I mentioned equivalent of 30K in today’s money!

Thanks for stopping by!

Best Wishes,