Tag Archives: dividends

Switching to Drips

For the last two years I’ve been dripping only stocks in my Roth IRA. In the taxable brokerage account I’ve been taking them as cash and combining them with fresh capital every few months to make a separate stock purchase or use it towards paying off my credit card bill by buying stock through Loyal3.

Well that changed a few days ago as I’ve decided to start dripping all my dividends in both my Roth and taxable brokerage accounts. Due to the service being unavailable, dividends received from Loyal3 will continue to be selectively reinvested.

So why the change?

First off, I haven’t been making as many regular large purchases as I originally planned on doing so, meaning it sometimes goes several months between even touching my taxable account. Since I prefer to keep my commission costs less than .5%, I like to save up around $1400 before I buy more stock. By automating how I handle dividends and choosing to drip all of them, this puts the capital to work instantly, buying more shares which in turn will produce more dividends. Nice way to keep growing the account even when fresh capital for purchases is limited.

Second, I’ve been reading a lot of articles and blog posts recently that show just how much of a stark difference there is in total returns when you take dividends as cash vs. reinvesting them in the stock. Dividend growth is also accelerated a lot as well. Granted, I’ve always reinvested dividends by doing so selectively but it usually took a long time to do so. Looking through my Roth IRA transactions I can see that when I initially bought 15 shares of Realty Income I was earning $2.73 a month in dividends. Now, fast forward to today, I am earning $2.86 per month. There has been a few small dividend increases (less than 1 cent) from Realty since then. Everything else has been the result of dripping. Now that’s a small increase on a pretty small position in that account. Not a big deal, right?

Now imagine if I had done this with the 109 shares of O I have in my taxable account. The $19.92 I am currently earning each month in that account could buy almost another 1/2 share per month. Over the course of the year, that is almost 6 additional shares that I didn’t have before.

But what about valuation?

Looking through the stocks in my portfolio there isn’t a single one that is so overvalued that I wouldn’t consider buying more shares out right, if those were my only investing choices. With a long-term investing timeline, I’m comfortable overpaying a bit for shares in quality companies like those in my portfolio since there is plenty of time for earnings to increase and “grow into the valuation.” Besides paying up for at most, half a share in a company per month isn’t that big of a deal. It just allows the compounding snowball to grow that much quicker.

Simplifying Things

Dripping dividends and automating that part of your investing activity also makes it much simpler. No more transferring money around to take dividends from one account to use in another account toward a purchase. Just let everything run on autopilot and add more stock through fresh capital when it’s available. It also takes away the temptation to spend those dividends as you can’t spend money you don’t have.

Going Forward

Like most things, I imagine my thoughts on this topic will change as the years go by. That’s all right and what makes this fun. Can’t just do the same thing all the time, right? Gotta mix it up every once in a while and try new ways of doing things. I could see myself switching back to selectively reinvesting dividends, combining them with fresh capital each month to make a purchase once (1) I have the income necessary to make a normal sized purchase each month and (2) once my account is producing a significant amount of dividends. An extra 50 bucks or so doesn’t really help me out getting the required amount to invest each month. Once that figure climbs to be several hundred, maybe I’ll rethink this strategy.

 

Disclosure: I am long O. Please see my portfolio page for a complete list of my holdings.

So what are your opinions on the subject of dripping vs. selectively reinvesting? Or do you not reinvest dividends and simply use them to supplement your current income? Sound off in the comments and let me know what you think! 🙂

Monthly Dividend Income: July 2014

My favorite post to write each month. 🙂 This is when I get to share all my dividend income for the previous month. These dividends are what I’ll eventually use to live off of when I become financially independent.

I share these figures along with monthly income/expenses to not only track my progress towards financial independence but also to hopefully show others that it is possible to get started with dividend growth investing with a low income. The hardest part is weathering the first few years of small dividend payments and allow the compounding snowball to get rolling.

Here is July’s dividend income from my 3 stock investment accounts: Roth IRA, Loyal3, and Taxable Brokerage. I automatically reinvest all dividends in my Roth and selectively reinvest dividends, combining them with fresh capital every month or two, in my other accounts.

Roth IRA

Coca-Cola (KO): $4.37-reinvested into .103 shares @ $42.25 per share.

Realty Income (O): $2.85-reinvested into .062 shares @ $45.49 per share.

General Electric (GE): $5.86-reinvested into .226 shares @ $25.88 per share.

Loyal3

Coca-Cola (KO): $7.31

Taxable Brokerage

Altria (MO): $3.36

Phillip Morris (PM): $5.64

Realty Income (O): $19.92

General Electric (GE): $1.76

July Total: $51.07. As expected July came in a little light compared to previous months. With seven months down I’ve now earned $439.00 so far this year.

 

Full Disclosure: I am long KO, O, GE, MO, and PM. This post is not intended to be a buy or sell recommendation for any stock mentioned and is for entertainment/educational uses only.

How was your July for dividend income (or portfolio gains for any growth investors)? Share below with a comment and thanks for reading!

Monthly Dividend Income: June 2014

My favorite post to write each month. 🙂 This is when I get to share all my dividend income for the previous month. These dividends are what I’ll eventually use to live off of when I become financially independent.

I share these figures along with monthly income/expenses to not only track my progress towards financial independence but also to hopefully show others that it is possible to get started with dividend growth investing with a low income. The hardest part is weathering the first few years of small dividend payments and allow the compounding snowball to get rolling.

Here is June’s dividend income from my 3 stock investment accounts: Roth IRA, Loyal3, and Taxable Brokerage. I automatically reinvest all dividends in my Roth and selectively reinvest dividends, combining them with fresh capital every month or two, in my other accounts.

Roth IRA

Aflac (AFL): $8.14-reinvested into .132 shares @ $61.33 per share.

Visa (V): $2.80-reinvested into .013 shares @ $211.80 per share.

Chevron (CVX): $10.97-reinvested into .087 shares @ $124.77 per share.

Realty Income (O): $2.84-reinvested into .065 shares @ $43.67 per share.

Royal Dutch Shell Class B and Class A (RDSB and RDSA): $13.51-reinvested into .171 shares of RDSA @ $78.90 per share.

Loyal3

Target (TGT): $5.55

McDonald’s (MCD): $2.51

Taxable Brokerage

Wal-Mart (WMT): $0.96

Chevron (CVX): $5.35

IBM (IBM): $9.90

Target (TGT): $0.86

Realty Income (O): $19.89

BP (BP): $9.95

June Total: $93.23. Getting so close to that $100 mark! Maybe in September when all these companies pay out again. 😉 At the half-way mark of the year I’ve now earned $387.93 for the year.

 

Full Disclosure: I am long WMT, CVX, IBM, TGT, O, BP, AFL, V, RDSB, RDSA, and MCD. This post is not intended to be a buy or sell recommendation for any stock mentioned and is for entertainment/educational uses only.

How was your June for dividend income (or portfolio gains for any growth investors)? Share below with a comment and thanks for reading!

Monthly Dividend Income: May 2014

My favorite post to write each month. 🙂 This is when I get to share all my dividend income for the previous month. These dividends are what I’ll eventually use to live off of when I become financially independent.

I share these figures along with monthly income/expenses to not only track my progress towards financial independence but also to hopefully show others that it is possible to get started with dividend growth investing with a low income. The hardest part is weathering the first few years of small dividend payments and allow the compounding snowball to get rolling.

Here is May’s dividend income from my 3 stock investment accounts: Roth IRA, Loyal3, and Taxable Brokerage. I automatically reinvest all dividends in my Roth and selectively reinvest dividends, combining them with fresh capital every month or two, in my other accounts.

Roth IRA

AT&T (T): $12.28-reinvested into .344 shares @ $35.67 per share.

Apple (AAPL): $6.75-reinvested into .011 shares @ $592.23 per share.

Realty Income (O): $2.82-reinvested into .065 shares @ $43.01 per share.

Kinder Morgan Inc.: $13.86-reinvested into .415 shares @ $33.36 per share.

Loyal3

No dividends this month.

Taxable Brokerage

AT&T (T): $18.86

Realty Income (O): $19.89

May Total: $74.46. A new monthly high! 🙂 Just by a couple bucks, beating March’s numbers. With 5 months down I’ve now received $294.70 for the year. I can probably now safely say I won’t be hitting my goal of $1000 in dividends this year but with projected annual dividends approaching 1k, I should be able to reach that figure for sure next year. Oh, well, as long as I am making progress. 😉

 

Full Disclosure: I am long T, AAPL, O, and KMI. This post is not intended to be a buy or sell recommendation on any stock mentioned and is designed to be used for educational/entertainment purposes only. Only you are responsible for your investing and I always encourage you to conduct your own research prior to investing. Please see mydisclaimer page for more information.

How was your May for dividend income (or portfolio gains for any growth investors)? Do you have any dividend income goals you are trying to reach this year?

Loyal3 Dividends

One of the more popular google search terms that have led readers to my site lately has been loyal3 dividends. I’m guessing people are asking what happens to dividends you receive from stocks you hold in your Loyal3 account. This isn’t made very clear on Loyal3’s website and it was something that I too wondered about until I received my first dividend recently.

Dividends received are collected in your cash account, which is the “Available Funds” portion on your account overview page. They are not automatically reinvested but with the $10 minimum purchase you could easily set an order to pick up some more fractional shares if your dividends total at least $10.

When you go to make a new purchase using your credit/debit card Loyal3 will automatically use the cash collected in your account from dividends first and then charge the rest from your card. For example if you have $5 in dividends in your cash account and you put in a order using your credit card for $100 of McDonald’s stock, the cash will be applied to the order and you will be charged $95 on your card.

You can also transfer funds out of your “Available Funds” to your checking account if you have it linked to your Loyal3 account if you want to spend your dividends or put them into a different account. You can also use this option to add money to your “Available Funds” if you don’t want to use your credit card. Personally I prefer to use a credit card so I can get cash back rewards for all of my purchases. With no commissions or fees to buy stock through Loyal3, it’s like getting paid to buy stocks. Awesome deal, right? 😉

Hope this helps!

Disclosure: I am long McDonald’s.

Monthly Dividend Income: March 2014

My favorite post to write each month. 🙂 This when I get to share all my dividend income from the previous month. These dividends are what I’ll eventually use to live off of when I become financially independent.

Here is March’s dividend income from my 3 stock investment accounts: Brokerage, Roth IRA, and Loyal3. I collect all dividends in my taxable brokerage account as cash and manually reinvest them along with new contributions each month either in the same account or into my Loyal3 account. All dividends are automatically reinvested in the Roth.

Dividends Received

Brokerage: $46.59

BP (BP): $9.69

Chevron (CVX): $5.00

International Business Machines (IBM): $8.55

Powershares Financial Preferred ETF (PGF): $2.63

Realty Income (O): $19.86

Target (TGT): $0.86

Roth IRA: $25.72

Chevron (CVX): $10.16-reinvested into .088 shares @ $114.42 per share.

Realty Income (O): $2.79-reinvested into .065 shares @ $42.41 per share.

Royal Dutch Shell Class B (RDSB): $12.60-reinvested into .177 shares of Royal Dutch Shell Class A (RDSA) @ $71.09 per share. This comes out to $12.58 so not all of it was reinvested as RDSB cannot be dripped back into its own shares, only the class A version. An almost equal amount of RDSA is purchased commission free if you choose to reinvest RDSB dividends. Not sure how they come up with the amount, both times I’ve received dividends from this stock its been within 2 cents, one way or the other. These fractional class A shares will also produce dividends which can be dripped into class A shares as well. Weird huh? 😉

Royal Dutch Shell Class A (RDSA): $0.17-reinvested into .002 shares @ $71.09 per share.

Loyal3: $0.36

Target (TGT): $0.36-used as part of purchase in McDonald’s (MCD). Loyal3 dividends are collected in a cash account and applied toward your next purchase automatically when you use a debit/credit card.

March Total: $72.67. March was officially “Big Oil” month for me with all of my oil majors-CVX, BP, and both RDS’s returning cash to shareholders. About a 10 buck increase overall from February which puts me at 171.12 for dividend income year to date which is 17.1% of my 2014 goal of $1000.

 

Full Disclosure: I am long CVX, IBM, TGT, O, BP, PGF, RDSB, RDSA, and MCD. This post is not intended to be a buy or sell recommendation on any stock mentioned and is designed for educational/entertainment purposes only. Only you are responsible for your investing and I always encourage you to conduct your own research prior to investing. Please see my disclaimer page.

How was your March for dividend income? Do you have any dividend income goals you are trying to reach this year?

How General Mills and Mad Money turned me into a Dividend Growth Investor

Back when I was starting to learn about investing, I spent most of my free time reading investing and personal finance books such as those by Peter Lynch, Robert Kiyosaki (Rich Dad, Poor Dad series), and Jim Cramer.

I also watched Jim Cramer’s Mad Money show almost every evening.* Although his investing style is a lot different than what I’m doing now with dividend growth stocks, I did learn a lot about stock investing that can applied to DGI such as maintaining proper diversification in your portfolio and how to value companies.

Although I hadn’t started investing any money yet, I researched stock ideas a lot, including many of the ones featured on the show. At the time, I was thinking I would eventually start a portfolio that was based only on total return, that is, capital gains. Basing a portfolio off of dividends never even occurred to me. On the show and in all the books I had read, dividends were always mentioned as sort of a bonus that stocks sometimes paid with investing for stock price appreciation being the main focus.

One day, Cramer spent some time discussing some potential investments in the consumer staples sector. I don’t remember all of them but both General Mills (GIS) and Kellogg (K) were mentioned with Cramer thinking that General Mills was the more attractive option at the time as far as valuation went. I researched GIS online and quickly discovered that the company had been paying out dividends for 113 straight years (at that time, now 115!) without ever cutting it. It had been kept at the same level for multiple years occasionally over the company’s history but never cut. That amazed me, especially with so much of the investing talk in 2012 still about recovering from the 2009 recession where so many companies cut or eliminated dividend payments due to the tanking economy. “How was GIS able to sustain and grow their dividend through this latest financial crisis and all the other ones over the last 100 plus years?” I asked. My research online eventually led to Seeking Alpha where I learned all about dividend growth investing from some of the great contributors on the site and from there began focusing most of my research activities to dividend paying stocks. I eventually started investing at the beginning of 2013.

Ironically, I still don’t own GIS in my portfolio (I valued stocks a little too conservatively when I started out and was trying to look for a better entry point), but it was the one stock that really started me on this journey to financial independence. It seems like dividend growth investing and early retirement seem to go hand on so many of the articles and blogs about the topic on the web and I soon realized that this strategy gave me a concrete and seemingly easy plan to be able to achieve my goal of financial independence. Well at least easier than becoming an expert stock picker of growth stocks. 😉 Dividend growth investing could provide me with a steady stream of income that I could live off of instead of trying to just build up a large portfolio and then gradually sell off stocks to fund my retirement, being completely vulnerable to the whims of the market.

 

*Wow, I sound like a huge geek, what kind of 20 year old watches Mad Money everyday? 😉

For all my fellow dividend growth investors out there, how did you get started with this type of investing strategy? Was it a particular stock like me or something else? Comment and share your story. Thank you for reading.

Monthly Dividend Income: February 2014

Each month I plan on sharing all of my income received from dividends. These dividends are what I’ll eventually use to live off of when I become financially independent.

Here is February’s dividend income from my 3 stock investment accounts: Brokerage, Roth IRA, and Loyal3. I collect all dividends in my taxable brokerage account as cash and manually reinvest them along with new contributions each month either in the same account or into my Loyal3 account. All dividends are automatically reinvested into the same stocks in my Roth.

Dividends Received

Brokerage: $41.35

AT&T (T): $18.86

Realty Income (O): $19.86

Powershares Financial Preferred (PGF): $2.63

Roth IRA: $21.12

AT&T (T): $12.11-reinvested into .374 shares @ $32.37 per share.

Apple (AAPL): $6.23-reinvested into .011 shares @ 540.21 per share.

Realty Income (O): $2.78-reinvested into .066 shares @ $41.70 per share.

Loyal3: $0. No dividends yet as this is still a fairly new account that I just opened in January.

February Total: $62.47. This was a good month as I received dividends from AT&T, one of my larger holdings and I got a nice increase from Realty Income as I purchased more shares in January. This brings my 2014 year to date total at $98.45 or 9.8% of my goal of $1000 in dividend income for the year. Although 1000 seems like an unreachable goal based off of these first few months, I remain confident I’ll be able to reach it (or at least come very close 😉 ). My dividend income should start increasing in the coming months as I start getting dividends from all my new KO purchases and once I get back to investing half of my take home pay once I get all my apartment money saved up.

 

Full Disclosure: I am long T, O, PGF, and AAPL. This post is not intended to be a buy or sell recommendation on any stock mentioned and is designed for educational purposes only. Only you are responsible for your investing and I always encourage you to conduct your own research prior to investing. Good luck!

How was your February for dividend income? Do you have any dividend income goals you are trying to reach this year?