Disclaimer: I’m not a professional investment advisor. The information on this site is for informational and educational purposes and should not be viewed as investing advice. Before investing in securities, you should check with an investment advisor.
As I’ve noted before, the best form of income is passive income. This is income that truly comes in while you’re at work, on the road, watching TV, sleeping, eating, or basically anything else. This is the ultimate method of earning money in pajamas. As I’ve just started buying stock in the past month or so, I decided to use some excess cash to buy a bit of stock via my Loyal3 account.
While my previous purchases were a bit larger, I did not have the access to a similar amount of money for this particular purchase (although I might be making a fairly sizable buy in the next week or so in an account that charges for trades). Although I did not hit the major drop well, I figured that time in the market is better than trying to time the market. Regardless, Loyal3 only makes trades in a couple of batches a day, so getting the absolute best price is unlikely.
I had already set up positions in KO, AAPL, WMT, and MCD. I figured that these are some of the biggest companies in the world. As I’ve noted, I’ve actually utilized a couple of these while outside the good ol’ USA. This purchase expanded my portfolio to 5 positions. I decided to put $25 toward Kellogg’s (K). The good news is that $0.64 of this was actually dividend income that I received earlier this month, which means that my dividends are starting to get put to use, albeit on a very small scale. I’ve eaten a number of Kellogg cereals, and I frequently eat Pop Tarts for breakfast. Like Coca-Cola and McDonald’s, Kellogg’s is basically available around the world. I’ve bought Pop Tarts to eat for breakfast while in Aruba and Honduras. Pringles potato crisps are also a brand that Kellogg’s sports that is popular in many parts of the world.
While $200 got me nearly 5 shares of KO, my $25 got me substantially less when it came to purchasing K. I now own 0.3741 shares of the cereal giant. According to NASDAQ, the P/E ratio is is estimated to be in the 17 range for the next couple of years (for what it’s worth). I’m hoping to add similar amounts to my recent purchase over the next couple of months to build up my position to $100 or $150, which would be close to my other positions. The dividend yield that I locked in for this purchase was just south of 3% at 2.97%, as the current annual dividend is $2.00 per share. My 0.3741 shares will add right around 75 cents to my annual estimated dividend income. With my previous purchases this year, my estimated annual dividend income should now be around $19.03. This is just more than a buck fifty per month. I’ll definitely need more than this to aid in retirement, but small steps can add up to big nest eggs over time. A couple of months ago, my estimated dividend income was a big, fat goose egg. $1.50 is literally an infinite improvement over 0 in my goal of earning money in pajamas.