May 2016 Dividend Update

I follow a dividend-growth investing strategy. I started investing for the long term in the stocks of companies that not only pay dividends, but consistently increase their dividends from year to year. Almost every single week there is a small deposit in my brokerage account, I transfer more money and buy more shares. I reinvest the dividends and invest new funds I save from my job income. My ultimate goal is to create a sustainable, rising stream of dividend income that will eventually exceed the income from my job and allow me to be financially secure in retirement. I have been working to achieve this goal by building and maintaining a compounding machine that has three key parts: dividend growth, dividend reinvestment, and investment of new funds.

Any spare change or amount that is left over at the end of the month plus any automatic contributions are transferred to my Robinhood account, because it doesn’t charge commissions to buy stocks, I am able to buy shares and add to the pile on a weekly basis.

The final tally for May 2016 in Dividend Income was $18.16

Start Investing Now

The key to getting started is getting started. If you have a few hundred bucks laying around, that’s OK. If you signup with a brokerage such as Robinhood, your commissions are basically free so the few hundred bucks you have laying around can be used to its entirely to buy stocks. Once you have your account opened, transfer the money and just do it. Get your feet wet by investing in a company that you already understand and buy products from. The best way to learn to invest is to get started.

Think long-term, dividend investing should not be seen as a fad nor something to jump in and out of. It’s a get wealthy eventually strategy. This means you need to find established companies that have paid dividends for decades, if not generations; buy those companies at reasonable prices, and then hold those companies for income, for the long-run. Over time, you will need to diversify your holdings, across sectors and across countries. Plan on holding those companies for years, decades in fact, and buy more stock when possible. You can take your time with this approach to build up a portfolio of 20-30 dividend payers (spanning many industries) that, with some luck, can fund part of your retirement without the need to sell your stocks until you want to.

Always pay yourself first. Put aside a automatic transfer from your salary each time you get paid. Regard it as the most important bill you need to pay. All things considered, you need to eat tomorrow, isn’t that so? What’s more, the future you will thank you for perseveringly setting a little aside. Even if you’re on minimum wage, still do it. Simply exchange a little sum and utilize the least expensive investing service you can find, for example, Loyal3 or Robinhood.

The stunning thing about profit development stocks as time goes on is that the arrival from value gratefulness turns out to be less and less critical over the long haul. A stock with a 3% yield and a 7% profit development rate more than 20 years will have a 176% aggregated return exclusively because of profits. This implies the cost of the stock could drop by a third amid that time and the speculator would at present see a yearly rate of return of 4.5%.

Dividend Growth Model

The Dividend Growth Model, otherwise called the Gordon Model, is a technique for deciding the estimation of a stock or business. This model is utilized as a technique for venture taking into account the current yield. It values an organization in view of the profits at present paid and also the example of profit development that the organization has shown for the future. In spite of the fact that not all financial specialists are alright with this procedure, it is a critical idea for profit speculators to get it.

Organizations with sensible payout proportions are considered as dependable and safe speculations that offer pay and in addition an open door for capital development. The profit development model reflects how an organization has performed previously.

Since it is only a pointer of past execution, it won’t ensure how an organization will do later on. Notwithstanding, we can just utilize the data that we need to settle on an educated speculation choice. In this way, in making a speculation, the profit development model is an extremely valuable apparatus for the development of your arrangement of ventures that try to give a developing pay stream. Notwithstanding, it is not the most important thing in the world of due ingenuity that ought to be performed on an organization.

Obviously, as with any valuation model, there are dangers connected with contributing in view of simply the profit development model. It does, in any case, give a decent information point to your speculation investigation.

To know whether the profit development rate development can be supported for a long time, one can likewise assess the business development and overall revenue patterns. As economic situations transform, it is helpful to keep on running potential speculations through the profit development model, representing changes in profit development rate and the profit payout.

Recent Buy: Hormel Foods Corporation (HRL)

Hormel Foods Corporation produces and markets various meat and food products worldwide. The company currently operates in five segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, Specialty Foods, and International & Other.

It provides various perishable meat products, including fresh meats, frozen items, refrigerated meal solutions, sausages, hams, wieners, and bacon; and shelf-stable products comprising canned luncheon meats, shelf-stable microwaveable meals, stews, chilies, hash, meat spreads, flour and corn tortillas, salsas, tortilla chips, peanut butter, and other products.

The company also offers poultry products, such as turkey products; and nutritional food products and supplements, sugar and sugar substitutes, dessert and drink mixes, and industrial gelatin products. It sells its products through sales personnel, as well as through independent brokers and distributors.

Hormel Foods Corporation was founded in 1891 and is based in Austin, Minnesota.

Years Paying Dividends: 27

DGR3:16.09%
DGR5:16.12%
DGR10:13.65%
DGR20:10.33%

Initiated a position at $34.20

Current Brokerage

Update: 02/22/2017

I have since moved from Robinhood to Merrill Edge.  I still save on commissions.

Most of the Cons have turned into pros with the move and I am happy with the transition thus far.

Robinhood

I started using Robinhood early this year for all my stock purchases and just recently got access to Instant, since I am starting with only a little bit of money every month, Robinhood is the perfect fit.

Pros of Robinhood.

  • Free Trades – allows me to buy small amount of shares without starting from a loss.
  • Money Available Instantly – Up to $1000, it is credited instantly and allows me to buy the stocks. If you are invited to Instant
  • Intuitive interface, easy setup, no commission fees. The UI is the best I’ve seen in awhile.
  • Save Money – An investor following sound investing principles will save about ~$100-200 per year on trades which can be used towards buying more stocks.  Specially if you are a starting out with limited capital.

Cons

  • App-only version, wish there was a nice web client also.
  • No integration with Personal Capital
  • No Automatic Dividend Re-investment.

Since they are still relatively a new brokerage, features like charting and web client will be added later as they are more focused towards the millennial users.