I’ve made it a goal to focus on creating passive income this year. There are so many ways to do it and eventually, I’d like to have some real estate earning passive income, dividend stocks paying the majority of my bills, and who knows what else.
For now, I’m focusing on building up my portfolio of dividend stocks.
My current portfolio is very much DIY and based off of stocks that I am familiar with, that have a track record in business, and that show potential for growth. I invest using the Loyal 3 and Robinhood platforms (both are free and don’t cost anything to trade).
I currently own:
I would like to generate $250/month of passive dividend income to be apart of my octopus income strategy (more details to come on this later). So, since dividends are paid quarterly, I need varied stocks that are affordable ( for me, that means ideally under the $50/share range) and that pay out $750 for each quarter.
Dividend: 15 cents/share quarterly
Dividend: 35 cents/share quarterly
Dividend: 37 cents/share quarterly
Dividend: 49 cents/share quarterly
Dividend: 49 cents/share quarterly
Dividend: 58 cents/share quarterly
Dividend: 60 cents/share quarterly
I started this portfolio with companies that I personally have faith in (Coca Cola, Target, Intel) and in companies that have higher dividend yield like Verizon, HCP, AT&T. Honestly, Ford was sort of spontaneous because the stock is just so cheap and even with Ford’s performance as compared to other car makers (I had a Ford once), I see so many Fords on the road because they’re just so affordable.
I’ve got about $1,000 in at this point and am sitting at about $11 of quarterly income! It’s hardly close to that $750 goal but if you’re generating anything above 1% these days, it’s winning. I’m generating about 4% and that’s not considering reinvesting dividends, which I plan to do as well until I have substantially more coming in.
I’ve decided, though, to add a little more analysis as I continue to build the fund. I want to have a diverse list, I want there to be at least a few years track record of paying dividends, I want to have some idea about what the company does, and I want to get the most value for the money spent.
I decided to test my current holdings on a scenario based on $100. If I had $100, what would that get me with each of these stocks?
Ford: $100 would buy 8.14 share and yield a $1.22 dividend quarterly
Coca Cola: $100 would buy 2.42 shares and yield a $0.84 dividend quarterly
HCP: $100 would buy 3.33 shares and yield a $1.23 dividend quarterly
Intel: $100 would buy 2.74 shares and yield a $1.34 dividend quarterly
AT&T: $100 would buy 2.38 shares and yield a $1.17 dividend quarterly
Verizon: $100 would buy 2.07 shares and yield a $1.19 dividend quarterly
Target: $100 would buy 1.57 shares and yield a $0.95 dividend quarterly
So, interestingly, of my seven holdings – the mid priced Intel stock offers the highest dividend potential at the best price (of the options). If you had unlimited money, you could buy whatever had the highest yield but yield is determined based on the stock price. Higher stock price does not necessarily mean higher dividend payout. So, since I do not have infinite money, I play the game.
I specifically targeted my search for stocks under $50 that have at least 3 years of dividend history. My next buys will be:
New Residential Investment Corporation
3 year dividend history
$15.75 share price
$100 would buy 6.35 shares and yield $3.05 quarterly
10 year dividend history
$3.69 share price
$100 would buy 27.1 shares and yield $2.03 quarterly
17 year dividend history that fell in 2011, but has been steady/rebounding since
$25.51 share price
$100 would buy 3.92 shares and yield $1.49 per share
My future goals will involve purchasing many of the dividend aristocrats, as their stability is fairly guaranteed. $100 doesn’t take you very far with many of those, though. As my income increases and I see myself investing $300-$500 at a time, the dividend aristocrats will be more center stage.
I’ll continue to be on the lookout and post as I find more of these budget-priced stocks.