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The following is a paraphrase of a recent conversation my wife and I had:
"Honey, we just got a raise!"
"You did? Congratulations!"
"No, not me, we."
"But I didn't get a raise."
"Sure you did. We both did."
"What are you talking about?"
"Kinder Morgan [Management] just raised its dividend again."
"Yeah. Again."
"What's it up to, now?"
"I think it's $0.71 a share - but you know how it works, we don't get the cash, we just get more stock."
"So why did we get this raise?"
"'Cause we're owners, and when the company makes money, we make money."
"But what'd we do to earn it?"
"Nothing, except hold on to it."
"Well go us. I like getting raises for doing nothing."

My wife is making plans to take an extended leave from the workforce to raise our soon-to-be-born child and any that may follow. Her paycheck will cease around the time of the child's birth, so the only 'raises' she will get for quite some time will be dividend hikes from the companies she owns in her accounts - companies like Kinder Morgan [Management].

My future work schedule is a bit different than hers. Depending on the whims of congress, the outsourcing plans of my employer, my deftness in avoiding the corporate axe, the benefits rules in place in the future, and our investing returns over time, I likely have somewhere between two and four decades of work left before I will be able to leave the workforce and retire. Personally, I'm hoping for a number closer to the early end of that range, but if it takes a while longer, so be it.

What we both have going for us, however, is a portfolio primarily based on dividend growth investments. Although it will be decades before we can live off the fruit of our investments, like emiller8988's walnut trees ( ), we have already started planting the seeds that could get us there. Our hope is that our portfolio can grow its dividend payments every year, with each year's organic payouts hopefully rising faster than inflation. Add in the contributions that both work and we add to our accounts, and we hope that our passive portfolio income eventually grows enough to allow it to cover our costs.

After that conversation with my wife, it struck me that she was absolutely right. Our entire retirement strategy revolves around getting raises for doing nothing. It's somebody else's great idea. It's somebody else's blood, sweat, and tears. It's somebody else getting chewed out for no good reason. It's someone else brownnosing the boss... All we have to do is put up a few bucks every month and watch for financial signals that indicate whether or not the companies we're partially buying appear to have the ability to continue giving us our raises.

Thus far, the strategy seems to be working. Across our entire portfolio, including retirement accounts where we don't actually 'see' the dividends, we expect the organic growth in our dividends in 2004 to provide about 9%-10% (plus or minus - it's not an exact count) more income than 2003's dividends. Add in the income produced by our 2004 investment contributions, and the actual payout should exceed 2003's levels even further.

Even with inflation looking to come in at about 5%-6% this year (including food and energy), our portfolio looks well positioned to provide an 'income' that should beat last year's, even adjusting for inflation. Ironically, if the trend continues, our "raises for doing nothing" look to be beating out our "raises for working our butts off".

So we'll keep up our strategy of investing in companies that pay, have grown, and look likely capable of continuing to pay and grow their dividends. As a family, we expect our salary income to drop dramatically in 2005 when my wife stops working. We expect our dividend income, however, to continue to grow. If that keeps up, retirement can come early, and in addition to getting raises for doing nothing, I can look forward to making a complete living for doing nothing. It's a beautiful thing.

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When Life Gives You Lemons
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