Building Your Income Portfolio: Showing Patience

On 2011/05/16, in Blog, by Miranda Marquit

As I’ve started putting together an income portfolio that includes dividend stocks, I sometimes find myself feeling discouraged about the income that I receive. This frustration was further underscored when someone I know said that dividend stocks were a waste of time. “Getting 2 cents a quarter? What kind of income is that?” she scoffed. (Incidentally, she and her husband both plan to work for 30 more years in jobs they don’t particularly enjoy, relying on 401ks. This helped me get beyond her sneering remark.)

However, as I’ve kept with it, I’m becoming less frustrated. Sure, if you buy a few shares of a dividend stock, and then let it just sit there, you will never end up with anything approaching a stable income. A successful income portfolio often requires time to build up. Many of us don’t have the capital necessary to invest in dividend stocks and then enjoy a decent income.

Patience as Your Income Portfolio Grows

If you want success in your income investing efforts, you have to show patience. A portfolio needs to be built over time. Choose the investments you want in your portfolio, and then buy shares regularly in order to build it up. The more shares you have of a company, the greater your dividend will be when it is paid. Looking at statements, and watch my dividend rise, has been a great motivator.

Of course, you do need a plan. Right now, my income portfolio is growing rather slowly. This is because we have other obligations right now. However, it’s not as important to us to see big leaps and bounds in our dividend income. This is because we have a longer timeframe. I have my own home business, and my husband just finished his Ph.D. Up until this point, we have been expecting that our built up portfolio won’t need to provide substantial income for at least 15 more years. Now that my husband is done, though, we can start thinking about increasing what we put in, allowing us to speed up our timetable if we wish.

If you want income from your dividend stocks more immediately, you will have to increase what you put in now. Sit down and do the math. Decide if you can put more into building up your income portfolio now so that in five to 10 years you will be able to pay certain expenses with your dividend income.

Without a realistic plan, and a little patience, it can be tempting to just give up on your efforts to build an income portfolio. However, if you focus on the essentials, and stick with a good plan, you might be surprised at what you can accomplish.




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