I started my foray into dividend growth investing last July. In fact, I spent my birthday researching the words my dear friend told me about: "ex-div", "high yield", and "dividends". Then I made the plunge!
Being relatively risk adverse, I decided to use Robinhood to purchase stocks because there were no commission fees and I didn't really want to invest all that much. I started with $300.
I bought a couple shares in a few good stocks and some really crappy stocks. But every one of them was paying dividends! I made the cardinal sin of dividend investing and started chasing yield. I bought into a few MLPs and didn't even know what that meant, let alone any tax implications. I thought every dividend was a qualified dividend and would thus have great tax implications (lower tax rate!!).
By the end of 2016, I had invested $950 and earned $21.65 in 'dividends'. That's over a 2% return on my investment, in six months! The best I could find on CDs, which was the discussion that led to me discovering dividend growth investing, was about 0.6% for a 6-12 month CD.
I also withdrew about $75 at the end of the year, so maybe I was only $875 in the market... that's closer to a 2.5% return. Not really significant, but still leaps and bounds better than CD investments. I think I also made about $8 or $9 on the sale of a few stocks (those pesky MLPs). And my stock value was really crappy (nasty MLPs). So, I held onto those stocks, hoping against hope that the value would go back up.
By the end of March 2017, I had made another $18 in dividends and distributions, and bought another $100 worth of stock. I also bought and sold some other positions, so my total investment by the end of 1st quarter was just shy of $915. So, what was the return in 3 months? Almost 2%! That's almost like having a savings account that pays 8% interest. Again, tho, some of my stock values were really down. If I were to have cashed out, even with the dividends, I would've lost about $100. Good thing that I'm not in it for the market, but the dividends!
About this time, I started to realize the value of dividend investments and that the gross amount of cash sitting in my checking and savings accounts wasn't really doing much work. So, I upped the ante and deployed some more cash into my Robinhood account. A little too late, I realized the long-term value in having a DRIP option that could outweigh the cost of paying commissions. My goal is to sell these positions off while building a more long-term portfolio with my idle cash.
Actually, my goals are to:
So, for now I have the following in my Playground Portfolio (Robinhood account):
Being relatively risk adverse, I decided to use Robinhood to purchase stocks because there were no commission fees and I didn't really want to invest all that much. I started with $300.
I bought a couple shares in a few good stocks and some really crappy stocks. But every one of them was paying dividends! I made the cardinal sin of dividend investing and started chasing yield. I bought into a few MLPs and didn't even know what that meant, let alone any tax implications. I thought every dividend was a qualified dividend and would thus have great tax implications (lower tax rate!!).
By the end of 2016, I had invested $950 and earned $21.65 in 'dividends'. That's over a 2% return on my investment, in six months! The best I could find on CDs, which was the discussion that led to me discovering dividend growth investing, was about 0.6% for a 6-12 month CD.
I also withdrew about $75 at the end of the year, so maybe I was only $875 in the market... that's closer to a 2.5% return. Not really significant, but still leaps and bounds better than CD investments. I think I also made about $8 or $9 on the sale of a few stocks (those pesky MLPs). And my stock value was really crappy (nasty MLPs). So, I held onto those stocks, hoping against hope that the value would go back up.
By the end of March 2017, I had made another $18 in dividends and distributions, and bought another $100 worth of stock. I also bought and sold some other positions, so my total investment by the end of 1st quarter was just shy of $915. So, what was the return in 3 months? Almost 2%! That's almost like having a savings account that pays 8% interest. Again, tho, some of my stock values were really down. If I were to have cashed out, even with the dividends, I would've lost about $100. Good thing that I'm not in it for the market, but the dividends!
About this time, I started to realize the value of dividend investments and that the gross amount of cash sitting in my checking and savings accounts wasn't really doing much work. So, I upped the ante and deployed some more cash into my Robinhood account. A little too late, I realized the long-term value in having a DRIP option that could outweigh the cost of paying commissions. My goal is to sell these positions off while building a more long-term portfolio with my idle cash.
Actually, my goals are to:
- Keep dividend yield over 6% in the account
- Sell off all MLP positions for net 0 or gain (if possible)
- Keep 2017 ROI over 2%
So, for now I have the following in my Playground Portfolio (Robinhood account):
Deploying a strategy that involves purchasing stocks in chunks of $300 - $500 that will provide dividends equal to or greater than the commission fee during the first quarter, I have the following positions in a more long-term account:
My goals for this account are to:
- Purchase only stocks I hope to hold for 10 years or longer (No short-term investments!)
- Purchase chunks of $300-500 worth of shares that will pay back the commission fee in the 1st quarter of ownership (initial investments until my portfolio is more diverse and/or my income is higher)
- DRIP stock positions that yield over 4% and have a growth rate over 7% (focus on long-term growth)
- Never invest more than I will need to cover future expenses (keep liquidity until my income is higher)
- Have a semi-passive income stream where my dollars work for me to end the need for me to work for dollars (This is my future financial independence portfolio!)
- Choose debt repayment over dividend investment when debt interest exceed dividend returns. (currently my students loans and mortgage have an effective interest rate of 3.74%)
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