Projecting dividend income over 10, 15, and 20 years — Using 5 years of personal investing data, I will conservatively project annual dividend income. I am not a licensed investment advisor and this article is not investment advice.
Ideally, I am aiming to be financially independent from dividend investing within 15 years.
The best case scenario is that I will be financially independent in 10 years from now.
The worst case scenario is that I need to retire in 20 years from now.
Using the averages of the past 5 years of data I have from my dividend portfolio, I will conservatively estimate how much dividend income I will generate in 10, 15, and 20 years from now.
Let’s get started.
Projecting Dividend Income Over 10, 15, and 20 Years
Below is a very simple projection for how much dividend income will be generated in 10, 15, and 20 years.
I used three different models to estimate how much dividend income will be earned.
$215.31 Average Per Year Over The Past 5 Years
Over the past 5 years, my dividend income has increased by an average of $215.31. This is including 2021 to date.
Over time, this average should continue to trend higher.
The high amount during the 5 year stretch is $394.08 and the low is $53.89.
Based on my current situation, it is more likely that my dividend income will be closer to $400 per year going forward.
But for a conservative estimate, I will use $215.31 per year as the starting number.
10% Average Dividend Growth Increase Per Year
The lowest amount my dividend income ever increased by in one year is 10.59%.
In 2020, my year-over-year dividend growth was only 10.59% higher.
This was a result of my career choice and investing less in 2019.
Frankly, I don’t expect that low of dividend growth to happen again. For 2022, I expect around 47% dividend income growth.
But for the sake of this post, I will use a modest 10% growth rate on how much dividend income will be added per year.
$1,076.56 Is My Current Annual Dividend Income
My current annual dividend projection for 2022 is $1,076.56.
That’s the minimum in dividends I am expecting to earn in 2022.
As such, I will be using $1,076.56 as the starting figure for projecting dividend income over 10, 15, and 20 years.
Related Post: Forward Dividend Income Forecast December 2021
Projecting Dividend Income Over 10, 15, and 20 Years
Starting at $215.31 annual increase and 10% annual growth rate of dividend income
In 10 Years, I Would Earn $4,851.20 Annually
If I start with $1,076.56 annually and increase income by $215.31 per year, I conservatively estimate that I would generate $4,851.20 per year in dividends.
This works out to just over $404 per month, which is not enough to live on.
Simply put, if I want to retire in 10 years from now, I will have to add more than $215.31 per year.
In 15 Years, I Would Generate $8,601.59 Annually
If I continue to maintain the same pace with a modest annual growth rate of 10%, I would generate $8,601.59 annually in dividends.
This works out to $716.80 per month, which is still not enough to live on.
If I maintain a lower pace of growth, it will likely take 20 years minimum to be financially independent.
In 20 Years, I Would Generate $14,641.63 Annually
If I continue to maintain the same pace for the next 20 years, I expect to generate $14,641.63 annually in dividends.
This works out to $1220.14 per month, which might be enough to live on if a mortgage is paid off.
Still, this pace of adding $215.31 per year is cutting it too close.
Frankly, I think this is an extremely low ball scenario.
The more likely scenario is that my annual dividend income continues to increase by $400 per year.
Here’s what projecting dividend income over 10, 15, and 20 years looks like at $400 per year growth.
Starting at $400 annual increase and 10% annual growth rate of dividend income
In 10 Years, I Would Generate $8,089.03 Annually
A more realistic estimate of how much dividend income I will generate in 10 years in $8,089.03.
This works out to $647.09 per month, which is not enough to retire. However, it begins to put some more financial independence in my hands. For instance, it makes saving easier. It gives me another $647 per month to reinvest.
To be fully financially independent, I would still need to wait longer.
It’s good to know that I need to start contributing more to meet my goal.
In 15 Years, I Would Generate $15,056.45 Annually
If I continue a $400 per year plus 10% growth pace, I expect to generate $15,056.45 annually.
This works out to $1254.70 per month, which might be enough if you don’t have a mortgage payment. But it would still be tight.
So, I either need to add more per year or wait longer to retire.
In 20 Years, I Would Generate $26,277.56 Annually
If I can maintain the pace I did in 2021, my dividend income will be $26,277.56 annually.
This works out to $2189.80 per month, which is enough to retire.
So, at my current pace, I will be able to retire off dividends in 20 years.
Using Estimated Portfolio Value To Speculate On Dividend Income
The numbers above were generated by using personal investment data over the past 5 years.
However, the estimates above fail to factor in my annual portfolio growth and capital appreciation.
Using the current value of my portfolio, I estimated what my portfolio will be worth in 10, 15, and 20 years if it compounds at a 5% annual growth rate. This is an extremely conservative growth rate that is well below my average.
Then I will calculate a 5% dividend yield of the portfolio value at the time for projecting dividend income over 10, 15, and 20 years.
In 10 Years, My Portfolio Will Generate $6,098.15 Per Year
If I use my current portfolio’s value and estimate a growth rate of 5% per year, I estimate that I would earn $6,098.15 in dividends per year.
This is based on a 5% overall dividend yield on the estimated value of my portfolio in 10 years at a 5% compound growth rate.
In 15 Years, My Portfolio Will Generate $9,495.90 Annually
Based on a conservative 5% growth rate, my portfolio would be expected to generate $9,495.90 annually in 15 years.
This works out to $791.32 per month, which is not enough to live on. However, it would be enough to supplement my income or have more for investing.
In 20 Years, My Portfolio Would Generate $13,832.39 Annually
At a conservative 5% annual growth rate, my portfolio would be expected to generate $13,832.39 annually in 20 years.
This works out to $1,152.70 per month, which would only be enough to live if if the mortgage was paid off.
Of course, this is an extremely conservative estimate. It fails to factor in higher returns and also dividend raises.
Projecting Dividend Income Over 10, 15, and 20 Years — Final Thoughts
In summary, I used multiple methods for projecting dividend income over 10, 15, and 20 years.
Based on my extremely conservative estimate, I should earn between $4,851 to $8,089 annually in 10 years.
In 15 years, I expect to earn somewhere between $8,601 to $15,056 annually.
In 20 years, I estimate that my portfolio will generate between $14,641 to $26,277 annually.
Of course, I will push to get these numbers higher now I have a better understanding of what to do.
Similar Articles On Dividend Investing To Check Out
Forward Dividend Income Projection December 2021 – $1,076.56
Distribution Income Forecast November 2021 — $1,026.71
Dividend Income Forecast August 2021
Dividend Income Forecast October 2021
How To Invest One Million Dollars – Designing A 40 Stock Portfolio For Growth And Income
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