Live off Dividends – Planning to live off Dividends & Blog Full-time | Detailing the stages of my plan to live off dividends and blog full-time
My ultimate dream is to be financially independent through a combination of dividend investing and blogging.
Ideally, I want to live off dividends entirely, but I also want to become a full-time Blogger.
This post will add a time frame for this plan, and it will provide more specific details on about how I will achieve financial independence through blogging and dividend investing.
Live off Dividends – Planning to Live off Dividends & Blog Full-Time
The first stage — Create a $2,000 annual cash flow stream within 5 years (2017 to 2022).
The dividend investing journey started in 2017, so I’m roughly 3 years into this plan.
In this time frame, the dividend business has grown to over $600 in annual income.
Although I am slightly behind my original targets, I am still aiming to earn $2,000 annually from dividend investing by 2022.
To reach my target, it’s important to be patient and consistent. It’s important to view each step as a contribution to the end goal.
Related Post: Investing in Dividend Stocks – How to Build a Dividend Income Stream
Investment Philosophy and Stock Selection.
As for the portfolio philosophy, it is being optimized for tax purposes, and the investment objective is to purchase high quality Canadian and U.S. equities that pay and grow dividends. I will not buy a stock unless it pays a dividend.
Stocks are selected after a period of analyzing important figures. Typically, I will find potential investments through a stock screener.
The most important information I screen for is book value, P/E ratio, dividend yield, and earnings per share growth.
In short, I am a value investor that prefers dividend growth investing. I try to buy stocks at or below their book value.
To be certain that the dividend will not be cut, I look at dividend payment history over a 10 year period minimum. I analyze how often the dividend has increased, how many years it has increased for, and the rate of dividend growth. Another important figure is dividend payout ratio, because it determines if the company can afford to pay its dividend.
In addition, I focus on acquiring strong brands with high profit margins. But I have to understand the company or I won’t buy it.
Most of my core positions are the largest companies in their respective industry. For core positions, I am willing to buy at fair value. Frankly, unless there’s a stock market correction, it’s not likely that the best companies will be on sale for less than book value.
Overall, there are about 30 to 50 stocks I plan to purchase in total. I use a combination of my broker, morningstar.ca, and the company’s website to analyze each stock.
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How Blogging ties into the dividend investing plan.
On the blogging side, I am focussed on learning more to set myself up for a future blogging career. My goal is to become a full-time Blogger. I want to build a community, and I want to start looking at ways to provide value.
In addition to building a community, I am building up a foundation of content related to Blogging and Dividend Investing. There are approximately 225 posts published right now, and there are about 150 in draft mode. At 60 blog posts per year, I could have approximately 550 blog posts published in 5 years.
Overall, the chief aim is to have an established blog in the dividend investing/personal finance/FI/blogging community by 2022.
Long term, I am building an outlet to market a product or service. To be perfectly honest with you, my main challenge during early retirement will be entrepreneurship. One of the main reasons for pursuing financial independence is to become an entrepreneur.
I plan to supplement my dividend income through an online business during “retirement.” And that online business just happens to be blogging.
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Why not blog full-time now?
First off, making money from blogging is not easy. I already took a year off to blog and trade full-time—there’s a lot of pressure. I’d feel a lot safer if a passive income stream was supporting me first.
And second, if I knew the exact answer of how to earn $50,000 per year blogging, I’d already be doing it. Simply put, I don’t know how to make enough money from blogging to afford to do it full-time yet. However, I do earn an income from blogging, and I have figured out my preferred method to make money from blogging.
Early on in this process, I was more focussed on building a cash flow machine through dividend investing. But now that I have started to earn income from blogging, and now that I’m working part-time, my focus on the blogging side has increased.
My vision is that dividend income will provide a basic income. I will keep my expenses low and have no debts. In turn, I will be able to pursue blogging full-time, but I won’t experience the same pressure to earn money I did during my year off. I will have the choice to earn side-hustle money from blogging at the pace I want to pursue it at.
Stage 2 — Create a $10,000 dividend income business by year 10 | Create a sustainable side hustle (2022 to 2027).
By this point, the foundation for the RTC portfolio will be established.
Most of the investing will be buying shares of existing positions, and through DRIP shares being reinvested.
During stage 2, I will have no debt and my income will (hopefully) be higher. This could lead to a possible lifestyle change sooner than originally projected.
For example, a low cost lifestyle with no debt could lead me to finding a part-time job to support myself (I ended up going part-time in 2019 – earlier than planned) . Since I will have money in the bank and a blogging platform to become an entrepreneur, I might be tempted to try another mini-retirement. Because of this possibility, I have become more aggressive with saving money.
Moreover, I expect to earn at least $2,000 in annual dividend income by stage 2. The position will lead to more money being added to the dividend portfolio per year. I estimate that $1,000 to $1,600 worth of annual dividend income will be added per year after 2022.
On the other hand, preserving capital will become more of a priority during this stage. I will diversify more by adding index funds.
The goal will be to surround the dividend portfolio and myself with liquid assets. I will begin preparing myself for financial independence in stage 2, because I might opt for early retirement at any point.
At the same time I will begin investing more money into the blog. This is when I will begin to treat it as a full-time business. Of course, the entrepreneur inside me could get anxious and look for a way to make this happen sooner. But for now, the foundation is dividend investing – blogging branches off that.
Stage 3 — Live off dividends | Have a personal online business | Reach FI (2032 to 2035)
Year 15 to 18 is the longest I will last before I switch to living off dividend income. There is absolutely no way I will work past year 18. No f@$king way! I will make whatever sacrifices are required.
In stage 3, dividend income will reach $15,000 to $20,000 (it will also be adjusted yearly for inflation). And through a combination of other side hustles, I will consider myself financially independent. Although I aim to live off dividends and blog full-time, I will consider a part-time job if I have to (Part-time jobbing is the route I took in 2019).
Related post: Why Pursue Barista FIRE?
On the low end, the portfolio will be valued at $250,000 in stage 3. It will most likely be higher (probably more than $350,000). Sorry for the variance, but it’s challenging to calculate how much I will save monthly in 5 years from now.
Through a combination of dividend raises, consistent savings, and reinvesting dividends, it is very feasible to assume that the portfolio will be worth $250,000. More importantly, even if I’m able to increase cash flow by $500 per year, that’s $9,000 annually by 2035. And that’s without factoring in dividend raises or dividends reinvested.
On the blogging side, ideally, the blog will be set up for an easy transition to full-time blogging. Blog traffic will be consistently higher, Social media networks will be larger, and I will have a clear business model.
Related Post: Marketing a Blog – How to Market a Blog on Social Media – Daily Checklist
To sum up my thoughts on stage 3, it will be like having 2 small businesses that can no longer afford to be managed on a part-time basis.
At a certain point my dream will become an inevitable truth
Every two weeks my dividend income has increased and more RTC content has been published.
As the dividend income rises, and as my net worth increases, and as content piles up, it becomes more and more inevitable that I will become a full-time blogger and dividend investor (in my mind I already am).
Moreover, opportunities will open up if I keep working hard and stick to the plan. Even after the first stage in 5 years, I will have options.
The point I’m trying to make is there are multiple ways that financial independence can work out.
For example, with even $10,000 of annual dividend income, I could prematurely reach a version of financial independence by working a part time job and blogging as a side-hustle.
(Editors note from April 2020: I prematurely opted for a high paying part-time job in 2019 before reaching stage 2. The reason I jumped to stage 3 early is because I found a part-time job that still allows me to invest while providing more time to blog now. I am still growing my dividend income at a slower pace. I call this slow FI. Ideally, my income from blogging will continue to increase).
Another possibility is that blogging becomes a more prominent way to earn income. 5 years down the road, I could decide to market a product or service through the blog, and maybe I will have learned enough by then to blog full-time through blog income. Imagine that? If that happened, I would be dividend investing to escape blogging full-time.
Not. Because I plan to invest and blog full-time regardless of what scenario works out. After reaching the dream, though, the challenge turns to seeing how successful I can be with it.
I would obviously be happy to blog and invest full-time while maintaining a simple lifestyle. But after reaching that point, I’d be lying if I said I’m not interested in finding out how much I can earn. What if I can blog and invest full-time while travelling?
Live off Dividends – Concluding Thoughts
Ultimately, there is a tremendous chance that I will achieve financial independence sooner.
I mean, I could live off rice and beans to save more, or I could pick up a part-time job (I did in 2019). However, I am trying to maintain a level of balance in my life.
There are many things I am willing to sacrifice: owning a car, owning a home, dining out, having a traditional family, and keeping up with the Joneses. But I can’t sacrifice everything because I wouldn’t be happy. And frankly, if you’re not happy, what’s the damn point? Life is too short to be wishing days away.
Hence why I am focussed on balance and incremental improvements. I’m not able to change my lifestyle over night, but I can shift my habits by goal-setting and improving each month.
So in the meantime, I am pursuing financial independence through dividend investing first.
By paying myself first and building a cash flow machine to create my own basic income, I am building a system to support my dream hobbies!
In conclusion, this is my escalating plan to live off dividends and blog full-time. The more I expand on the framework, the easier it becomes to view each step as a contribution to the end goal.
Readers, what do you think of this plan? Do you see any areas of opportunity? Any cracks in the plan? Too slow of a pace?
I am not a licensed investment or tax adviser. All opinions are my own. This post contains advertisements by Google Adsense. This post also contains internal links, affiliate links, links to external sites, and links to RTC social media accounts.
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