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October 2016 Passive Dividend Income

Well, another month is nearly in the books. We’re now at the end of October, and now less than two months from Christmas. The market has been up and down over the course of the year, but most people have been able to make money if they’ve stayed invested in dividend-paying stocks. This is the type of investment that I’ve decided upon, as these companies actually pay me to own a part of them.

October was a pretty good month for me, going well in excess of my dividend income from the same month last year.  My dividend income should go up over time, but in the short term, it will probably go down a bit, as I’ve decided to sell most of my taxable holdings. I’ll probably explain this further in another post at a future date. I’ve rolled over a tax-deferred account from a previous employ into a traditional IRA, and I will be putting more money toward that in the future year after reading some really good information on tax-deferral from the Mad Fientist’s web site.  You can look at some cool stuff from the Mad Fientist regarding taxes and super charging your retirement portfolio here and here.  Basically, the less that you pay in taxes means more capital for saving for retirement. Therefore, I’m going to shift my focus up a bit and use my taxable account as more of a (hopefully) growing emergency fund that pays out a growing stream of dividends while I wait to need the money while leaving my IRA (and possibly other tax-deferred accounts) to grow until retirement.

Overall, I had four great companies that paid me over the course of October. Three of these should continue to pay me into the future. I trimmed Coca-Cola, but I completely sold out of Bank of Nova Scotia, although it will be on my radar for future purchases in a tax-deferred account. I’ve decided to utilize Loyal3 for my taxable purchases because of the low (i.e., free) transaction costs. I will also up my average purchase through TradeKing, which charges only $4.95 per purchase, to between $500 and $1,000 per transaction to keep the fee below 1%. You can sign up for TradeKing here and possibly get a $50 bonus after meeting some funding and purchasing requirements. I use TradeKing for my non-Loyal3 purchases.

Without stringing you along, here are the great companies that paid me during the month of October. I’ve broken them down by taxable and retirement accounts.

Taxable Accounts

Coca-Cola (KO)                                       $4.19

Kraft-Heinz (KHC)                                $0.34

Bank of Nova Scotia (BNS)               $5.11

Retirement Plan Dividends

General Electric (GE)                            $4.60

TOTAL Dividends for October       $14.24

These dividends bring my total dividend income for 2016 up to $116.17, and my $14.24 for the current month showed a 144 percent growth rate on a year-over-year basis. I should be ahead of this next year at this point again, if all goes as planned and I am able to continue putting more capital to work over time. Because of the stock sales that I noted earlier, my estimated dividend income for the coming year dropped to $130.31, but again, this should go up and exceed where it was as I make periodic purchases within my IRA. I plan to purchase between $500 and $1,000 a month until my transfer amount runs out. If the market crashes and burns before that, I’ll accelerate the purchases, as the best time to purchase stocks is the same as most as just about any other purchase–when they are on sale.

How did your dividend income look in October? Let me know in the comments.

If you’d like to keep up with my dividend income over time, feel free to go to the top of the page and follow me. You’ll only get emails when I actually make a new post, which is usually around five times in a month. In other words, your inbox will not get inundated with random emails.

Disclosure: I am long all stocks mentioned with the exception of BNS, which I sold in October.

Disclaimer: I am not a licensed financial professional. Be sure to do due diligence before investing in securities. This article is not a recommendation to buy a specific company. It is only for educational/entertainment purposes.

 

 

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April 2016 Passive Dividend Income

Another month has come and gone. Today is the first day of May, and on this past Friday, I got my last dividend notification for the month of April. I’m now about nine months into the dividend growth investing journey. My goal is to build up passive income over time so that I can enjoy a reasonable retirement in a couple of decades. I believe that long-standing dividend payers who have solid cash flows should be reasonable investments for the long term.

I added a couple of small positions over the past month, but neither of these has paid out a dividend yet. I started pooling my dividends in my Loyal3 account in January, and I reached $10 early in April. I then immediately put that $10 to work in a very small starting position in Unilever PLC. My hope is that my growing stream of dividends will enable me to add to this small start each quarter to start with. As my core positions add more in dividend payments, I plan to increase the frequency of these purchases in UL.

I also cashed out some more funds from Swagbucks and started with a $25 position in Starbucks (SBUX). My hope is to alternate Swagbucks payments and build up some smaller positions. Starbucks does not pay a huge dividend at this point, but the company has been increasing its payout rapidly over the past few years. Additionally, the company is still in the growth phase, so I’m hoping that my eventual yield on cost is much higher than my current ~1.4 percent.

I received three dividend payments during the month of April, so without further ado, here they are:

Coca-Cola (KO):                         $2.95

Wal-Mart (WMT):                       $2.48

Bank of Nova Scotia (BNS):     $3.47

Total dividend payments for March:   $8.90

Dividend income for 2016:                      $33.28

My payment from BNS was subject to a 15 percent withholding tax, so only $2.95 went into my DRIP. This purchased another 0.057 shares of BNS, and it will add about $0.12 to my annual dividend income, although this will vary because of foreign exchange rates. I put the other dividends toward the aforementioned  purchase of Unilever. My current forward dividend income for the next 12 months should be right around $131.67 (although this is possibly a slight bit off because of the BNS forex issue). This way more than the grand total of $0 that I expected in yearly dividends at this same time last year. Earning dividends is truly earning money in pajamas. I do no more work after earning the capital. Then my capital goes to work for me.

If you want to keep up with my progress or learn about my other life hacking achievements and goals, be sure to sign up to follow the blog.

Disclaimer: I am not a licensed financial professional. Please use the information on this site for educational/entertainment purposes only. Be sure to check with a financial professional before purchasing equities.

Disclaimer 2: I may receive compensation if you decide to sign up for any of my affiliate links. This post mentions Swagbucks. I usually get $25 worth of PayPal cash each month from this site, and I use it to buy more stocks that then earn me more dividends that can then go and buy more stocks that then pay more dividends…and so forth. Should you choose to sign up, I thank you for your support.

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January 2016 Passive Dividend Income

The first month of the year ended yesterday. I’m working on building up a passive income stream that can provide additional funding when it comes time to retire in addition to Social Security and any pension funds that I’m able to get. Dividends that consistently grow are a good sign that a company has adequate income to build their business and provide monetary benefits to its shareholders.

In the past six months, I’ve been able to build small positions in eight different companies that pay dividends each quarter. In January, two of my companies paid out dividends to me. I own a few shares of Wal-Mart (WMT) stock in an account with Loyal3. I also own a few shares of stock in the Bank of Nova Scotia (BNS) in a TradeKing account. The former pays cash into my account, while the latter allows me to automatically reinvest my dividends. This means that my BNS dividends should grow each quarter (at least in Canadian funds) without my doing anything else. I earned infinitely more in dividend income this month than I did at this time last year, as I was not investing in dividend-paying stocks. Any income whatsoever is an improvement over last January’s total of a big, fat goose egg. Without further ado, here is my dividend income for January 2016:

Wal-Mart (WMT)                            $1.48

Bank of Nova Scotia (BNS)          $3.00

TOTAL for January:                    $4.48

My BNS dividend purchased an additional 0.065 shares of stock in the company, which should add approximately $0.14 to my dividend next quarter given a similar exchange rate. I’ll be looking to add additional shares as funding comes available.

My $4.48 is not a massive amount of money, and it would allow me to take about 15 minutes off if I were to try and use my passive income to replace active income at this point. However, it’s a start, and as it’s been said many times before, the journey of a thousand miles begins with the first step. I’ve taken more than the first step, but I’m early in the journey and hope to add shares and passive income going forward. At this point, my forward dividend income is nearly $109. Hopefully, this will grow to $250 or more by the end of the year.  I’ve added this income summary to my monthly dividend income page.

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More Passive Income–Bank of Nova Scotia

I’ve been putting a bit of money to work when I’ve had the opportunity in recent months, as I’ve come to the realization that over time, with enough money, that money will start working harder than I can to make more money. Passive income is the best income because it truly allows me to earn money in pajamas. Making money while watching TV or sleeping is the purpose of this blog. My dividend income is not a massive river of income at this point, but I have eight small streams that are coming together to make a somewhat less small stream. My hope is to increase the water (dividends) flowing through each of the channels (companies) that I’ve carved out so that I’ll be able to replace a big chunk of my income when it comes time to retire.

This month, I decided to bring the third of my three companies in my TradeKing account (get $50 for signing up for TradeKing, funding an account, and making some trades) up to right around $300 in total capital invested in each. I made my first purchase of 3 shares of Bank of Nova Scotia stock back in early September. This company has already paid me a dividend, and I decided to increase the forward dividend income that I’ll get from BNS. I purchased another 3 shares at an average cost of $47.04 when adding in the $4.95 transaction charge from TradeKing. This latest purchase will add an approximate  $6.57 to my annual dividend income (the foreign exchange rate will cause this to fluctuate). This additional income brings my estimated dividend income for the next 12 months up to $80.11. While this is not a massive amount of income, it would buy me about 4 hours of freedom next year if I were to figure that my work pays me an average of $20 an hour after taxes are taken out.  Increasing my capacity for earning money while in my pajamas is something that I’m looking forward to achieving.

Disclaimer: I am not an investment professional. Please make sure that you consult an investment professional before investing in securities, as you can lose money on your trades. I may receive compensation when you sign up for the some of the programs promoted on this site. 

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October 2015 Passive Dividend Earnings

Another month has come and gone. The cool mornings of October are turning colder into November. Christmas is just around the corner. All the while, I’m earning money without having to work for it. I’m working, but a growing portion of my income is coming from passive income, which is the best kind of income. I work to earn money, and then I put a portion of the money to work for me to create more income that requires absolutely no more error that making a few clicks in my brokerage accounts. My earnings to this point have been quite small, but they are growing. And they should continue to grow over time. I find it really exciting when dividends hit my account. They provide additional capital that I can put to work that can add to the process of compounding over the next couple of decades. Hopefully, they will add up to quite a bit of income by the time I hit retirement age. So, without dragging on any further, I’ll give you the rundown of my income for the month of October.

Two companies paid me dividends in October. They were:

Coca-Cola (KO) $1.61

Bank of Nova Scotia (BNS) $1.60

Total for October $3.21

Total for 2015: $5.83

October set a record for my short dividend income portfolio history. My earnings from KO went into a purchase of WalMart stock in my Loyal3 account. My shares of BNS are held in a TradeKing account that allows for automatic dividend reinvestment. My DRIP bought me an additional 0.029 share of BNS stock that should add $0.06 to my dividend income (should the exchange rate between US and Canadian currencies remain the same. I was only able to purchase $1.24 in BNS stock after a 15 percent hit to my dividend for Canadian taxes. Regardless, my dividend income is taking an upward slant over time, and November promises to be even larger than the $0.64 that I earned from Apple in August because I’ve added 10 shares of AT & T to my portfolio that will pay out in November as well. My portfolio now holds a total of 8 stocks that have anywhere between around $40 and $330 invested in them. Hopefully, I have enough capital available in November to add to my portfolio and my expected passive income going forward.

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Stock Purchases

Last week, I wrote about the way I’ve earned money in pajamas with my first dividend in my passive income account. Passive income comes in whether I’m working or not. While I only earned $0.64 on my first earnings report, I’ve continued purchasing stock in some pretty strong companies the past week. I’ve been buying stocks through a Loyal3 account before this week.  I intend to continue buying the companies that Loyal3 services through their platform because of the fee-free structure. However, the biggest weakness with this broker is the fact that purchases are limited to the 65 companies that Loyal3 works with.

To broaden my horizons and purchase stocks that are not offered by Loyal3, I decided to open up an account with TradeKing, which is a low-cost online broker that allows users to make straight-up stock purchases for $4.95. They also offer options, but I am not comfortable utilizing this service at this point. Many passive income bloggers advocate saving up around a grand to minimize the cost. This is a good idea, but I had just $500 to invest after cashing in some US savings bonds that were purchased for me more than 20 years ago.  If I were to throw all of the funds that I had available at one stock on Loyal3 or on TradeKing, that would have put all of the money at risk if the one company I bought into were to go belly-up. I try to invest in solid companies with solid earnings and solid track records, but changes in the market can lead to crazy things like Bear Stearns becoming a non-entity in really short order.  I wanted to diversify quickly to cut down on the risk that comes from having all of one’s eggs in a single basket.

I threw between $150 and $200 into all of my Loyal3 holdings, with the exception of my latest purchase in Kellogg, which I am hoping to build to that level. I wanted to move into three different sectors of the economy that I had no exposure to. I wanted the companies to have a strong history of paying dividends. I also wanted to see that I was able to get stocks at a relatively good price after the recent drop in the market. The price/earnings ratio of each of these stocks is attractive based upon the broader market and based upon their own P/E ratio from earlier this year.

Oil and energy stocks have been hit hard in recent months as the Saudi government has been trying to squeeze American suppliers out of the market. I went back and forth between a purchase of Exxon-Mobil and Royal Dutch Shell. I decided to go with the latter. Shell (RDS.B) has not cut a dividend since World War II, and this includes all sorts of market conditions. With my $4.95 brokerage fee, I bought 3 shares at a total cost of $156.72, or just over $52 per share. The current annual dividend is $3.76 per share. I do not expect this to increase this year because of the market conditions in the energy sector. However, I also expect oil prices to rebound in the coming year or so.

via Wikimedia Commons, Ralf Roletschek, CC BY 3.0
via Wikimedia Commons, Ralf Roletschek, CC BY 3.0

My second purchase was in the financial sector. I decided to go with a Canadian Bank that started paying out dividends more than 25 years before the US Civil War started. The Bank of Nova Scotia has been paying investors since 1833, and they just announced an increase of their dividend to $0.70 in Canadian dollars per quarter. From what I’ve been reading, Canadian banks are more conservative than American banks because of regulatory requirements. Despite this conservative bent, the banks are quite profitable, and the “Big Six” Canadian Banks (a group that includes BNS) controls about 90 percent of the banking industry in our northern neighbor. BNS held their dividend steady during the 2007-2009 financial crisis, but they’ve been steadily increasing their payments to shareholders in the years since. I was able to purchase 3 shares, and with my brokerage fee, the total cost was $140.31. My 3 shares should bring approximately $2.19 per share in terms of the dividend payout, although this is subject to vary with fluctuations in the currency exchange rate.

My final purchase was an American telecom giant. AT &T (T) has been increasing dividends each year for more than three decades. They just purchased DirecTV, and along with Verizon, they are definitely a leader in the telecommunications industry. I went back and forth between VZ and T, and finally decided upon T. I purchased 5 shares of T, and these shares set me back $171.35. The annual dividend that AT & T pays out is currently $1.88 per share.

These three purchases give me international diversification in three solid companies from three different countries (four if you count the Anglo-Dutch nature of RDS.B). These companies have a strong history of rewarding their shareholders. They also gave me exposure to three different sectors of the economy. I chose to enroll in dividend reinvestment in each. Although my dividends will be small in the short term, each payment will go toward buying additional shares of these stocks. These partial shares will pay dividends as well, which will supercharge the rate of compounding. I don’t expect Shell to yield more than 7 percent for long, but in the short term, that should help me build my position a bit quicker than usual.

Combined, at the current payout rate, I should earn approximately $27.25 in additional dividends over the next year. This brings my annual total for expected passive income from dividends to $46.27, which is just under $4 per month. This is obviously well below my budget, but I plan to put additional capital to work and anticipate these companies increasing their dividends over time. I figure that I’ll need to supplement my retirement accounts and Social Security, and passive monthly income from dividends will be a great way to do just that. I now have positions in eight different companies, and I hope to build upon this in the future.

DISCLAIMER: I am not a licensed professional advisor, and the information on this site is merely for informational and educational purchases. Make sure to consult a professional before investing in securities, as you can lose money.