My DCS Journey began with my first meeting with my financial planner on this topic of creating passive income in the month of November 2019. It is also during the meeting when my financial planner shared about Dividend Capture Strategy, DCS. There’s a few important points that I retained till today
20% Annual Dividend Payout Rate, ADPR
Self-Funding my 10-years regular investment plan in 3-4 years
Increasing Dividend Payout (Passive income)
Increasing Investment Account Value (Cash Value / Capital)
Increasing Insurance Coverage
In December 2024, I made up mind to invest and embark on my DCS Journey on 16 Dec 2019. Since then, I never look back. Let me share with you more.
On November 2019, I was exploring using a regular investment plan to grow my passive income and at the same time manage my growing insurance needs in difference phases of my life. After some discussion with my financial planner, I decided on a regular investment linked plan.
Table 1: Self Funding Illustration
I have set aside $300,000 as an initial budget and target to self-fund a 10 years regular investment-linked plan after 3 years, based on a 20% Annual Dividend Payout Rate. (My annual premium is $100,000.) However, I reserved some extra funds for standby purposes, in case of unforeseen market turbulence.
On 16 December 2024, my regular investment linked plan is incepted. Like most of the regular investment linked plan, they come with some bonus investment units. After some discussion, my financial planner and I decided to take those extra units as a buffer for market fluctuations and not to include those them for our projection. Perhaps, I was just being my usual cautious self.
Below are my actual results in Oct 2024… …
Chart 1: Actual Accumulated Dividend vs 20% Projected Dividend
20% Annual Dividend Payout Rate, ADPR
In the above chart, the red line represents the actual accumulated dividend collected and the green line represents the 20% accumulated dividend projection. As you can see the 20% projected accumulated dividend as of 16 Sep 2024 is clearly outperformed by my actual accumulated dividend collected. The projection of 20% of the accumulated dividend is supposed to be $283,333.33 but the actual dividend collected was $314,717.67 which is 11.07% above projection.
((314,717.67 – 283,333.33)/ 283,333.33) x 100% = 11.07%
Table 2: Actual Dividend Collected to Self Fund with an initial amount of $300,000
(A) is my bank savings account which I deposited the initial $300,000; (B) is the dedicated bank savings account set up for collecting the dividend from my DCS Investment; (C) is the premium I paid to the financial institution I invest with.
The dividend is updated as of 16 Sep 2024. There’s another 3 months of dividend to 16 Dec 2024 not factored in yet. From just the current amount of dividend collected of $114,717.67, we can see that Self-Funding of my investment is already achieved.
Chart 2: My increasing Dividend since Dec 2019
I collected $39,188.31 in the first 12 months. In the next 12 months, I received $50,545.97. On the subsequent 12 months, I collected another $69,365.95 and by the 48th month, I have another $82,406.57. As of 16 Sep 2024, I have already collected $73210.87. With another 2 more months of dividend to be collected, breaking the previous year (Yr 2023) dividend is definitely on track. Therefore, for the past 5 years, increasing dividend is as well achieved in my investment.
Chart 3: Monthly Dividend from Dec 2023 to Sep 2024
For the past 5 years, I have always been looking for to the monthly dividend. Typically 2-3 payments per month.
Chart 4: Increasing Cash Value of my investment in the past 5 years
Chart 5: Cash Value with premium (Yellow Box) paid for Year 6
Increasing Cash Value is noticed in my investment year on year. The overall cash value in the my regular investment linked plan, excluding dividend collected is on an uptrend based on Chart 3.
Based on the bar chart of the Cash value in Chart 5, we can also see an increasing Cash value year on year since Dec 2019. The premium to be paid in Dec 2024 is already currently in My Local Bank Savings Account 2 ($114,717.67) in Table 2. Once the payment of premium, the cash value will be $361,160.92
Table 3: Increasing Insurance Coverage
While growing my passive income for my retirement and legacy planning, I am also increasing my insurance coverage, thus increasing protection for my love ones as part of my estate plan. In the past 5 years, I used $300,000 to self fund a 10 years regular investment linked plan to build an increasing capital, increasing passive income and increasing insurance coverage. Now, I have an insurance coverage of $505,000 in event of death.
Chart 6: Projected Dividend in 20 years
The above is charted based on the actual dividend collected in the first 4 years of my investment. This is basically for illustration sharing purposes only.
That’s all for my DCS Journey. I hope that you find my sharing above useful. I wish you all the best and success in your DCS investment journey.
Disclaimer:
Do note the above is for educational and sharing purposes only. They are not meant to be investment advice. For any investment or financial planning advice, please approach your financial planner or investment specialist.