I Reached a Milestone! Over $100 in PADI! Um, What Does PADI Mean in Investing?

I believe in celebrating milestones. Milestones are just another form of goals. And nothing keeps us motivated quite like reaching a goal we had set or surpassing a milestone that we’ve been aiming for. The milestone that I am celebrating is reaching over $100 in PADI. What’s PADI? What does PADI mean in investing?

Projected Annual Dividend Income.

Why do we care about PADI? Why do I consider $100 in PADI a milestone? What are future milestones for PADI?

I’ll do a mini-deep dive…a shallow dive…into PADI and why I am so excited about where I am in my investing journey. (Does this mean I’m no longer a Level Zero Investor??? hahaha)

What Does PADI Mean in Investing?

For you to know WHY I am so excited about reaching this milestone, I need to give you the background of what does PADI mean in investing.

PADI stands for, Projected Annual Dividend Income.

What this number will tell you is, based on how much you have invested into dividend-paying stocks, how much annual income you would receive from the dividends alone.

First off, we see this is specifically geared towards dividends and companies who pay them. If you invest in companies that don’t offer dividends, then you don’t have a PADI. It’s zero. Tesla is a good example. Currently, Tesla does not pay a dividend. Therefore, if you were to buy $1 million dollars in Tesla…well your PADI is still zero.

So say we do (and I do) invest in companies that pay dividends. How do we calculate PADI?

Calculating PADI

If you are familiar with dividends and their three pillar metrics (dividend yield, payout, and growth) this should be an easy calculation.

To make these numbers SUPER easy, let’s use Target (ticker symbol TGT) as an example. Target has an Annual Dividend Payment of $4.40 (or $1.10 every quarter). Based on the share price (as of November 2023, it’s around $131 per share) the Dividend Yield is 3.34%. If I were to buy $3,000 of Target shares, roughly 22.9 shares ($3,000 / $131 = 22.9) I would receive $100 every year in Projected Annual Dividend Income (22.9 * $4.40 = $100).

My PADI from investing $3,000 into Target would give me a projected $100 a year in dividends.

Why is it “Projected”?

The first letter in PADI stands for “Projected” because it’s not an “Actual”. Dividends change all the time, especially throughout a calendar year, so PADI is a great way to normalize what we currently think we’ll accrue in dividends.

There are 3 big changes that can affect a PADI.

1. Dividend Increases, Decreases, or Cuts
   • Companies can decide to change their dividend payments. If changes, good or bad, happen to a dividend then that annual payment will change, therefore the PADI will change.
2. Your normal investment activities: Buying and Selling
   • Just because you bought $3,000 worth of Target shares at the beginning of the year, doesn’t mean you’re done investing. You’ll most likely add more shares, or buy different companies/positions. You might even sell some shares. Adding and subtracting assets will change the amount of dividends you’ll receive.
3. DRIP Investing
   • Most dividends are paid quarterly, and one of the best uses for dividends is to be reinvested back into the company, aka DRIP (Dividend ReInvestment Program). As you DRIP, the number of shares will increase, which will lead to a higher dividend payment.

Why do we care about PADI?

So ultimately, I am celebrating hitting a milestone of $100 PADI. Why do I care? Why am I excited that I’ve reached this point?

The short answer; I have increased my annual income by $100…and the only thing I did to earn this income was to buy assets (shares of companies).

My favorite part about investing is at one point your money will start to make its own money. That is exactly what PADI represents. And to compound this, I will 100% DRIP invest. That $100 will buy me more shares, which will earn me more dividends, which will increase my PADI.

That is how you build wealth. That is how you earn financial freedom.

What’s my Next Milestone?

I know it might seem small. $100 isn’t a lot. But I’ve JUST started my investing journey. I will continue to invest. Buy more assets. Reinvest my dividends.

My next goal….double my PADI. Let’s get to $200 PADI!

The important part about investing is that you run your own race. Just because I’m at $100 PADI, and my friend is at $10,000 PADI…doesn’t mean I’m failing. I am buying assets that will help me in the future. One day I’d love to be at $10,000 PADI, but we all start at Level Zero.

What’s next? Dividend Growth to Reach My Goal.

Now you can answer, what does PADI mean in investing, what’s next? Go for that next milestone!

My next milestone will be reaching $200 PADI. This can be achieved in 2 ways: contribute more and dividend growth.

I will always continue to contribute, but dividend growth is an organic way my dividends will grow and compound themselves.

Not sure what dividend growth is or how it works? Dividends don’t stay constant. Sometimes they go up, down, or remain the same. But when they go up, it’s like you’re getting a raise…for doing nothing!

Read my article on Dividend Growth to find out how you too can earn a raise!

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Thanks for reading! How’s your PADI number look? Have you reached a certain milestone or have a goal in mind? Leave a comment, I’d love to know where you’re at!

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Disclaimer

Levelzeroinvestor.com is not a registered investment, legal or tax advisor or a broker/dealer. All investments / financial opinions expressed by Levelzeroinvestor.com are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.