I got a belated birthday present this week. It was $20, and I decided to put it to work in my Loyal3 account, which allows for stock purchases with as little as $10. I also had a little over $2 in the account from some passive dividend income that I’d made earlier. This meant that I had $22 to put to work this morning (Loyal3 only allows purchases in whole dollar amounts). WalMart has been hit pretty hard lately, and it’s going for a relatively low P/E ratio that’s less than 14. Its dividend yield is around 2.9 percent at this point, which is well above its historical average. Since I’d already started a position in WMT, I decided that it was a good place for my money.
Therefore, I decided to purchase $22 worth of WalMart stock. This small amount added 0.3332 shares at a cost of $66.02. This also adds a bit of income to my estimated dividend income. While $0.65 might not seem like much, the $0.65 here and $5 there of additional that dividend growth investing provides can really grow to a substantial amount over time. This admittedly small addition brings my estimated 12-month forward dividend total to $58.58, although I’m guessing that this should go up in relatively short order as WalMart and a few other companies that I own should be raising their dividend payments. I should also start to DRIP the stocks that are in my TradeKing account. Frontier Communications is the only company that DRIPs in the Loyal3 stable, and I don’t anticipate initiating a position in FTR at any time in the near future.
Today, I had the opportunity to put some more capital to work toward some more passive dividend income that I can earn while in pajamas. I had $150 in additional capital that went into my TradeKing account this morning, and I decided to put it to work. My only regret is that I had to put the money to work on a day that saw a big uptick in stock prices. Of course, prices could go up tomorrow too, and there’s no guarantee that they won’t be 5 percent higher by the end of the week or the month. Prices are volatile, so I decided to put the money to work today and lock in some dividends that should pay off early next month.
In September, I purchased 5 shares of telecommunications giant AT & T. I saw where the ex-dividend date was in two days. I was hoping to add to this position in the near term, so this made my decision a bit easier. Royal Dutch Shell PLC was the other stock on my radar today, and I might try to buy a bit more before their next ex-dividend date if I have some capital to put to work. I had enough to purchase an additional 5 shares of AT & T. My total cost for this transaction was $171.20 with the $4.95 TradeKing transaction fee added in. This purchase brings an additional $9.40 to my annual dividend income based upon the current dividend of $1.88 per share ($0.47 per quarter). I now own 10 shares, and I plan to DRIP the dividends into more shares of T at this point. If the price stays where it is, this should pay of in about 1/7 of another share in early November.
This is nearly $0.80 per month, and it brings my total dividend income to nearly $58 on an annualized basis–nearly $5 per month. This might not seem like much, but it’s a start. If I go based upon an estimate of earning $20 per hour (which is not what I make, but it’s near the average hourly wage for an average American with the favorable tax treatment that dividend payments for middle-class people receives). That means that I can take about 15 minutes off each month, or about 3 hours at the end of the year. Every $20 dollars of dividend income earns me another hour of freedom. And the best part of this income is that I have to do absolutely nothing more to earn it. This is passive income at its finest, and as I’ve noted before, passive income is the best income.
DISCLAIMER: I am not a professional investor. Please consult one before investing in securities. You can lose money on stocks. Past performance is no indicator of future results.
I’ve been putting capital to work over the past couple of months in an attempt to really earn money in pajamas. Stock pay dividends on a regular basis no matter what I do. I could watch TV, sleep, and eat all day long, every day, and the ownership stakes that I’ve paid for in my companies would still pay out. Last month, I gave my first dividend earnings report. I earned a whopping $0.64 from a small dividend from Apple (AAPL). This month, a couple of great companies paid me for owning a small sliver of their operations. My dividend earnings for September were:
WalMart (WMT): $0.69
McDonald’s (MCD): $1.29
These companies paid me $1.98, which adds up to just more than $0.03 per day. That might not seem like much, but with any luck that will add up to a dollar per day over the relatively near future. That $1 will then multiply to $2, and then $10 each day. All that’s needed is time and more capital to put to work. The best thing about this money is that it comes in without my doing any additional work than the work that I put in to get the initial capital to invest. It’s like a snowball that’s adding a little bit each quarter going forward.
With my earnings from August added in, I’ve now reached $2.62 in dividends this year. I’ve already earned my first dividend for October, as Coca-Cola (KO) has already paid out their third quarter dividend. I should also get a dividend from the Bank of Nova Scotia at the end of the month. October should be another record-breaking month, even though I’m not likely to pay for much more than the dollar menu at McDonald’s with my earnings. From this point forward, my income should start really picking up, though. Passive income is the best income.