Reaping Dividends: June 2016 report
July 6, 2016
Philosophically speaking
Building up a portfolio that throws off anything like real income in annual dividend income is challenging. We need a lot more capital invested.
To add to that challenge, as I shared at the Jolly Ledger recently, I have some rules.
- I’m a long position investor, otherwise known as buy and hold.
- It cannot be built on blood money. Companies need to conduct their businesses in a way that would make me want to work for them. Disclaimer: I aim to invest in ethical companies as far as is practicable – I’m not an expert and don’t have an army of researchers at my fingertips to confirm that all my choices are good but I’m doing my best.
- I won’t invest in tobacco or gun companies. Even though I do not disapprove of gun ownership in principle, the way this country is unduly influenced by the NRA and gun lobby isn’t acceptable. There’s a difference between short term mistakes and long term wrongdoing or simply being harmful and the gun lobby has long ago crossed over to the dark side.
I wouldn’t feel comfortable working for any of those companies as a direct employee, no matter how nice a salary I could pull down, so I’m not sure how I’d justify owning it in my portfolio. It’s much like how it doesn’t make sense to me that the University of California system was holding stock in the prison system in their portfolio.
And now, the updates!
Year to Date Dividends: $231.00, Fees: $9.90, Net: $221.10
My brokerage is TradeKing, I’ve been very happy with their low fees and service.
The first half of 2016 has been all kinds of volatile. The recent Brexit Leave vote made for an extra bad week globally. I wish I’d moved sooner but I was mesmerized by all the bad news and watching the stocks plummet. I can’t decide if it’s worth sharing specifics of my portfolio or if that’s a bad thing, so for now, I’m going to be general. Let me know if you think it does or doesn’t have value to you as a reader. I’m not recommending stocks, mind you, and don’t want to give that impression.
- My Financial Services Stock #1 dropped more than 10% from my previous purchase price so I bought more. Reminder: dollar cost averaging is a good thing. I have confidence in the company in the long-term and this lowers my average purchase price by $5 per share.
- In a departure from my usual strategy, I picked up an automaker stock. There was a time I wouldn’t have touched an auto stock, like an airline stock, but this was a spontaneous Buy based on the company’s recent moves to be more flexible with their suppliers, and moving with the times on technology. This surprised PiC, and honestly me too, but I thought I’d see what comes of it in 2 years. We’ll see if my instincts pan out or if the Brexit vote tanked that experiment.
Income Replacement
For perspective, I like to think of the dividends investing project in terms of how much of our income it can replace, or how much of our fixed expenses it can cover.
At a whopping $221.10, this year’s dividends can pay 20% of one month’s mortgage.
:: How do you invest? Have you peered at your portfolio this quarter?
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*Part of Financially Savvy Saturdays on brokeGIRLrich, Disease Called Debt and Little House in the Valley
I invest in ETFs, never single stocks. I consider myself a long term swing trader but do not recommend it to others (buy and hold is a much better strategy). I don’t try to invest ethically in part because it would be onerously complicated.
I don’t think I’d have the nerve or the attention span for swing trading 🙂 I’d love to hear more about it though.
I like buy and hold. I like dividend stocks and a dividend reinvestment strategy (though I go with index funds as well).
I also really like big tobacco as a holding, because it performs so well. I understand your reluctance. I had it for a while as well. Ultimately, I decided to go with it anyway when I realized i was holding MO and RAI in mutual funds already. Not the best excuse, I know.
We do reinvest all our dividends right now too.
It’s a personal decision to care. Since my dad is likely to get sick and die from smoking all his life sooner rather than later, I just don’t feel like giving big tobacco more money / support. I know it’s not easy to separate out all the time, though.
I love that you don’t invest in the “dark side” companies. I was dismayed to learn that our index funds include gun manufacturers, but without changing our entire investment strategy, which we’re not comfortable with and certainly don’t have time for, I’m not sure what we can do. I was even more horrified to learn a few years ago that “socially responsible” funds often include defense contractors, junk food makers, oil companies and pretty much every sector you can think of that is the exact opposite of socially responsible. Sigh. Oh, and they charge you like 2% in fees for the privilege!
Yes, it’s complicated when you have mutual or index funds. I know I can’t shake down my whole portfolio but I can choose not to pick them for my dividends portfolio at least. I wonder how well a mutual fund that was truly socially responsible would perform!
Love that upward trending line…so beautiful!
Like your ethical leanings in the investment department, too. There are funds you can buy into that supposedly choose investments along various righteous lines. But it’s unclear to me that choosing squeaky-clean enterprises for ALL your investments is the best strategy.
Big tobacco, though: no. In my no-longer-even-slightly humble opinion, everyone who is associated with the production of tobacco products is a murderer, from the CEOs down to the grunts in the field. This is a product that has been known to kill people in a variety of ways since at least the late 1950s. So there’s been plenty of time for the people who enrich themselves by peddling nicotine — a drug more addictive than heroine — to see the light.
I have asked my investment managers to disinvest in one or two companies that I didn’t like for ethical reasons. But by & large, I just let them do their thing: they manage to return an average of 9% a year, which I expect is better than I could do on my own.
I’ll do the best I can with the dividends investments, that’s where I can directly control them. I don’t have time to dig them all out but if I could, I would!
Crikey, your mortgage payments are tiny!!!
Just sent off to start investing in dividend funds. $500 to start with. Kinda excited, though can’t imagine it’ll return much.
Mortgage: combination of making several massive payments to principal and then also refinancing!
Most of my investments are in my Roth IRA, but I try to buy at least $1,000 additional stock – either index funds or individual stocks – a year. The first stock I picked by myself when I started this was Hillenbrand, a large mortuary company, because I figured people are probably going to keep dying. So far… I’ve been right.
Now there’s a solid bet!
I set up a new investing account last year with the strategy to buy & hold dividend paying stocks. So far I’m happy with my investments, but I wish that I had made some buys while the market was down.