Dividend Tree Investment Goals

If I do not know where to go, how can I start the journey? This seems to be a very simple question we face day-in and day-out. But when it comes to investment plans, in general, most of the individuals fall short in identifying the defined final destination. In this post, I will discuss what is my vision and what would I like to achieve in my dividend portfolio. I have started planting the dividend seeds. Only time will tell whether I can reach that goal, and grow the tree with dividend fruits।

Since the name of this blog spot is Dividend Tree, here I will focus on my goals for my dividend-based portfolio. It is to use my savings to generate a stable and sustainable stream of passive cash flow. So why not just use savings, CDs, and/or other fixed income vehicles? Well, a $100K invested in CD’s and/or savings will generate at the most 4% or 5% interest income. Additionally, it does not have potential to increase the value of my capital. Instead, if I make investments in fundamentally strong companies which consistently pay and grow (y-o-y) dividends, then I will not only have an “increasing” passive cash flow but also have a potential for capital appreciation।

To begin with, I am targeting to have an annual dividend-based cash flow of $30,000 by year 2020. I came up with this number after analyzing and modeling some of the past historical data for few blue chip companies (e.g. JNJ, PFE, GE, BAC). While I plan to discuss this model sometime in future post, the model showed that with consistently growing dividends and by continuously reinvesting it, this level of cash flow is an achievable target। Since this is based on past historical data, I acknowledge that it may not be possible to repeat such scenarios in future। However, I have identified a tree that I want to grow, so that I can plant the seeds now.

Time will tell whether I can grow my tree of dividends. For now, I have started planting the seeds, and have started my efforts to grow it.

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