Your goals may vary and probably are based on your timeline and how much wealth you wish to accumulate. This 5-step plan aims at the following 2 goals:
1. Annual dividend yield of 3% on your portfolio
2. Stock appreciation of 6% per year
Here is your 5-step plan:
Step 1: Save $200 per month and add it to your dividend growth portfolio.
Step 2: Increase your annual contributions by 25% each year.
Step 3: Reinvest all dividend income back into your dividend growth portfolio automatically.
Step 4: Select high-quality stocks to invest in to achieve an annual 6% growth rate in your equity value.
Step 5: Repeat steps 1-4 until you’ve achieved your end goal.
In the first year, you should have $2,400 of contributions. Assuming you follow the five steps as outlined, your portfolio will hit the $1 Million mark by year 16. At a 3% annual dividend yield that works out to around $31,000 in dividend income.
If you continue to follow the plan, your nest egg grows to $3 Million by year 20. Your dividend income grows to over $99,000.
The driver of this growth is compound interest. Depending on your goals you can or must adjust your monthly contribution or the increase percentage every year to fit your unique financial goals.
Sven Franssen
You need help or coaching in your 5-step plan? Feel free to contact me.