Hard to believe its already been a month since my last net worth update but alas, here I am. I hope the summer is treating you well; its certainly been flying by for us here in Ottawa.

This month, Im going to change things up a bit. You might know from previous posts, I wrote about our net worth progress in terms of letter-grades (A, B, C, etc.) and overall percentage increases. For example, if we put lump sum payments on the mortgage we got an A, if we bought a netbook (and didnt save as much as planned), we got a C. (Although I like the netbook!) Assets over liabilities equated to net worth growth; 0.5%, 1% or even higher on good months. That was all fine and good. Still is. However, net worth is only one measure of financial progress. This month and going forward, I intend to write about our financial (independence) progress by measuring our passive income, specifically dividend income.

While net worth is interesting, achieving a significant level of passive, dividend income is really the underlying goal for us. More about what “significant” means in a bit.

My wife and I have modest RRSP investments and we’re fortunate to have defined contribution and defined benefit pension plans at work, which is great. But that’s just part of our financial equation. We’re anticipating we’ll need more than that to retire on and if we want to retire early, that’s another need altogether. To do the latter, we’ll need income replacement, significant amounts. Our plan is not to work 40 hours per week for the next 30 years, so we’ll need to ween ourselves off the Monday to Friday thing and replace our existing employer income with something else, as much as we can. This is where our dividend income journey begins. Something on the order of $30,000/year is our unofficial goal – assuming we’ve paid off all our debts (house, other loans) before we retire.

Right now, we both work because we have to (I’m sure this sounds familar to you). Freedom, the ability to choose, is “where we want to be”. That’s our motiviation. Work now; invest well now, so we dont have to work later on. Although our RRSPs and pension plans will fund part of our retirement, it probably won’t be enough and it certainly won’t be enough to retire early with. Month by month, increasing our dividend income will be our key vehicle to drive down the financial independence road.

It would be remiss of me not to state that passive income can come in many shapes and forms. Investors certainly have other options. For one, it could be rental income from property (we got outta that last year). Secondly, it could be from royalties or creative licensing (Im not too creative . Thirdly, it could come from an online business; advertising or affiliate programs (Im not there yet). There are other means for sure. For us, until I find a better way, passive income will come from our dividend-paying stocks.

That brings me to this months dividend income update hopefully the first of many you’ll enjoy reading.

As of this month, were on pace to earn almost $4,200 in dividend income this year. I say, on pace, since our 2010 dividend income will likely increase between now and the end of the year thanks to participation in many dividend reinvestment plans (DRIPs). Im a big fan of compounding so the longer our dividends are working for us, well, the better.

Our dividend income come from two taps flowing into one bucket:
i) From full DRIPs with Share Purchase Plans (SPPs) and,
ii) From synthetic DRIPs in my brokerage account.

Full DRIPs allow partial shares to be purchased with the dividends paid and SPPs let me make optional cash purchases (for the price of a stamp) for any stocks I hold plans for. Synthetic DRIPs allow whole shares to be purchased with the dividends paid. In this regard, I feel like I’m getting the best of both worlds. Reinvesting the dividends with each plan, taking advantage of dollar-cost averaging and compounding to create more DRIPs in the bucket. Over time, I hope to not only increase the number of DRIP taps over the income bucket (owning more quality dividend-paying stocks) but also increase the volume the tap DRIPs (increased dividends from each stock I own).

Stay tuned for my dividend income update next month, including any transactions I make to accelerate our passive income stream.

What are your thoughts about dividend income?
Does this make sense to you? I’d like to hear from you.

Some interesting facts about Russia:

1. Russia is the largest country in the world by area.
2. Russia is the ninth largest country by population.
3. Russia has the world’s largest reserves of mineral resources.
4. It also has the world’s largest reserves of energy resources.
5. It is the world’s largest energy superpower.
6. It has the world’s largest forest reserves.
7. It has about one-quarter of the world’s fresh water.
8. It has a literacy rate of 99.4%.
9. More than 80% of Russian exports are from oil, natural gas, metals, and timber.
10. It has one of the lowest foreign debts among major economies.
11. It has the fourth largest amount of farmland in the world.
12. It has the world’s largest natural gas reserves.
13. It has the second largest coal reserves in the world.
14. It has the the 8th largest oil reserves in the world.
15. It is the 5th largest renewable energy producer in the world.

The following are some of the companies that are based in Russia that trade in the United States, that were turned up by WallStreetNewsNetwork.com.

Mechel Open Joint Stock Company (MTL) is a mining and steel production company. The stock has a PE of 13, a forward PE of 5.8, and a PEG of 0.76.

Mobile Telesystems OJSC (MBT) is a provider of cellular telecommunications services in Russia, Ukraine, Uzbekistan, and Turkmenistan. The stock has a PE of 14, a forward PE of 9.7, and a PEG of 1.21 .

Vimpel-Communications (VIP) is a provider of wireless telecommunications services in Russia, Kazakhstan, Tajikistan, Ukraine, Uzbekistan, Georgia, and Armenia. The stock has a forward PE of 7.9 , and a PEG of 0.27.

Wimm-Bill-Dann Foods OJSC (WBD) is a food, dairy, and beverage products company. The stock has a PE of 24, a forward PE of 12.9, and a PEG of 0.55. The stock even pays a yield of 1.0%.

You can find information on a dozen Russian stocks that trade in the US at WallStreetNewsNetwork.com.

Author does not own any of the above. Picture is courtesy of the Kremlin Presidential Press and Information Office.

By Stockerblog.com

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