Limited Cash? You Can Still Invest Regularly In A Variety Of Dividend Growth Stocks

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Includes: ATVI, BBY, BUD, DIS, DPS, GPS, HAS, K, KO, MAT, MCD, MSFT, NKE, PEP, RL, SBUX, TGT, TWX, VFC, VIAB, WMT, YUM
by: Norman Blue

Summary

Let’s take a look at what happened to $230 invested in January 2015.

Purchases included stocks that were undervalued, fairly valued, and overvalued at the time.

The investment beat the S&P 500 over the same time period.

Current dividends are 10% higher than they were one year ago.

These results came about with no commissions.

Dividends Since 2014 I have been using Loyal3 (www.loyal3.com) to purchase a variety of dividend growth stocks because it gives me an opportunity to save money on commissions and get more variety than I would get otherwise. I have a monthly order of $10 set for each stock on David Fish's CCC list that Loyal3 offers. As companies are added to the CCC list (like Macy's (NYSE:M) last year), they are added to my order list. As companies are taken off the CCC list (like Mattel (NASDAQ:MAT) last year), they are taken off my order list.

Based on current dividend rates, I am poised to earn about $142 per year on the $6,000 that I have invested so far. Every month the anticipated dividend amount increases as I buy more shares in very small amounts and as my stocks declare higher dividends.

Below is a look at the purchases that I made on January 15, 2015 as well as the results I have had so far. I purchased 23 stocks that day. Let's start with the change in value of the shares. Nine stocks increased in price in the past year and 14 stocks decreased. My biggest gain was 86% with Activision Blizzard (NASDAQ:ATVI) and my biggest loss came from The Gap (NYSE:GPS) at -43%.

Shares

Invested

Value

Purchased

1/15/2015

1/15/2016

Change

Activision Blizzard

0.5330

$ 10.00

$ 18.61

86%

Best Buy (NYSE:BBY)

0.2905

$ 10.00

$ 7.88

-21%

Anheuser-Busch InBev (NYSE:BUD)

0.0876

$ 10.00

$ 10.19

2%

Walt Disney (NYSE:DIS)

0.1055

$ 10.00

$ 9.91

-1%

Dr Pepper Snapple (NYSE:DPS)

0.1329

$ 10.00

$ 11.85

18%

The Gap

0.2441

$ 10.00

$ 5.68

-43%

Hasbro (NASDAQ:HAS)

0.1918

$ 10.00

$ 13.82

38%

Hershey (NYSE:HSY)

0.0924

$ 10.00

$ 7.70

-23%

Kellogg (NYSE:K)

0.1487

$ 10.00

$ 10.51

5%

Coca-Cola (NYSE:KO)

0.2363

$ 10.00

$ 9.81

-2%

Mattel

0.3632

$ 10.00

$ 9.33

-7%

McDonald's (NYSE:MCD)

0.1098

$ 10.00

$ 12.65

26%

Microsoft (NASDAQ:MSFT)

0.2193

$ 10.00

$ 11.18

12%

Nike (NYSE:NKE)

0.2148

$ 10.00

$ 12.36

24%

Pepsico (NYSE:PEP)

0.1036

$ 10.00

$ 9.73

-3%

Ralph Lauren (NYSE:RL)

0.0587

$ 10.00

$ 5.91

-41%

Starbucks (NASDAQ:SBUX)

0.2506

$ 10.00

$ 14.53

45%

Target (NYSE:TGT)

0.1308

$ 10.00

$ 9.17

-8%

Time Warner (NYSE:TWX)

0.1218

$ 10.00

$ 8.48

-15%

Viacom (NASDAQ:VIAB)

0.1503

$ 10.00

$ 5.99

-40%

V.F. (NYSE:VFC)

0.1367

$ 10.00

$ 7.52

-25%

Wal-Mart (NYSE:WMT)

0.1146

$ 10.00

$ 7.10

-29%

Yum! Brands (NYSE:YUM)

0.1382

$ 10.00

$ 9.27

-7%

Total

$ 230.00

$ 229.17

0%

S&P 500

1992.67

1880.33

-6%

Click to enlarge

I came close to breaking even over the course of the year. This is perhaps not so very impressive, but it happened while the S&P 500 was down 6%.

Now, let's take a look at the changes in expected dividends. The 1/15/2015 column represents the value of dividends for the upcoming year based on the most recent dividend announcement at the time, while the 1/15/2016 column represents the value of dividends for the upcoming year as of now. The Change column contains some rounding errors because my numbers are rounded to the nearest cent from more precise calculations in the previous columns.

1/15/2015

1/15/2016

Change

Activision Blizzard

$ 0.11

$ 0.12

15%

Best Buy

$ 0.22

$ 0.27

21%

Anheuser-Busch InBev

$ 0.28

$ 0.34

21%

Walt Disney

$ 0.12

$ 0.15

23%

Dr Pepper Snapple

$ 0.22

$ 0.26

17%

The Gap

$ 0.21

$ 0.22

5%

Hasbro

$ 0.33

$ 0.35

7%

Hershey

$ 0.20

$ 0.22

9%

Kellogg

$ 0.29

$ 0.30

2%

Coca-Cola

$ 0.29

$ 0.31

8%

Mattel

$ 0.55

$ 0.55

0%

McDonald's

$ 0.37

$ 0.39

5%

Microsoft

$ 0.27

$ 0.32

16%

Nike

$ 0.12

$ 0.14

14%

Pepsico

$ 0.27

$ 0.29

7%

Ralph Lauren

$ 0.11

$ 0.12

11%

Starbucks

$ 0.16

$ 0.20

25%

Target

$ 0.27

$ 0.29

8%

Time Warner

$ 0.15

$ 0.17

10%

Viacom

$ 0.20

$ 0.24

21%

V.F.

$ 0.17

$ 0.20

14%

Wal-mart

$ 0.22

$ 0.22

2%

Yum! Brands

$ 0.23

$ 0.25

12%

Total

$ 5.38

$ 5.93

10%

Click to enlarge

In January 2015, I was expecting $5.38 in dividends over the following year, which was 2.34% of my investment. Currently the expected dividends over the coming year are $5.93, a 10% increase over a year ago.

My purchases through Loyal3 have resulted in a current yield that is lower than the current yield in my regular brokerage accounts, but the annual dividend growth rate is higher than what I have achieved in my regular brokerage accounts.

The best thing about using this plan is that it involves paying no commissions while purchasing a variety of stocks with small investments. The biggest problem is that I am purchasing stocks that are overvalued as well as stocks that are fairly valued or undervalued.

Whereas I outperformed the S&P 500 over the past year, the information here really only analyzes a very small slice of my overall investment. I plan to monitor the progress of my Loyal3 purchases compared to the rest of my portfolio in the future. I look forward to seeing how things work out.

Have you used Loyal3 to make small purchases as well? If so, I would love to hear what your experience has been.

Disclosure: I am/we are long ATVI, BBY, BUD, DIS, DPS, GPS, HAS, HSY, K, KO, MAT, MCD, MSFT, NKE, PEP, RL, SBUX, TGT, TWX, VIAB, VFC, WMT, YUM.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.