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  • Diary Of A Fledgling Dividend Investor 0 comments
    Aug 11, 2014 5:41 PM | about stocks: O, GIS, VNR, WFC, UNP, PSEC, ARR, WPZ, ROYT, CWT, NRP

    I began dividend investing earlier this year. My wife and I both have professionally managed retirement accounts that are doing well and are firm believers in "If it isn't broken, don't fix it." So, for now, those accounts will remain professionally managed until such time as I think I can do better.

    With the kids grown and having families of their own, for the first time in our lives we find ourselves with a little extra money that we can invest ourselves outside of our retirement accounts.

    I started with a little seed money to buy a few initial investments and then have put a little bit of cash into this endeavor on a monthly basis. From the get-go, I have wanted to have some diversification so my investments in any particular stock tend to be small.

    Early in this adventure, I am willing to take some risk to get higher dividends but eventually want to transitions to a portfolio of Sleep Well at Night (SWAN) investments that will supplement our retirement income ten years or so down the line.

    Because these investments are not tax-sheltered by a retirement account, stocks that offer some relief from taxes on distributions are attractive to me.

    To get started, I have divided my portfolio in two: one that is structured in company-sponsored Dividend Reinvestment Plans and Direct Stock Purchase Plans (DRIPs and DSPPs) and one at a discount broker. The idea is to DRIP and DSPP stocks that strike me as "forever" investments and to be able to exercise more flexibility with the stocks in the brokerage account.

    Choosing the stocks I have bought has taken a lot of reading and research. "Seeking Alpha" is often where I begin and I follow the roads to wherever they lead me. One article might get me excited about a particular stock and then I might read something on "Seeking Alpha" or elsewhere that causes me to question my original take on things. Eventually I determine if a particular stock is worth owning and put it in my lineup for consideration.

    I now have a number of stocks in my "bull pen" and buy them when they are a good fit for either of my portfolios. Sometimes I will buy more of a stock I own when I think it has dipped to the point that the price is too good to pass up.

    Since I am a novice, the purpose of this article is not act as a model for others to follow but rather as a journal of what I am doings and inviting seasoned investors to offer me some direction as I go forward.

    Here is where I stand as of now with stocks listed in by their relative value of the portfolios:

    DRIP DSPP Portfolio

    Realty Income (NYSE:O)

    General Mills (NYSE:GIS)

    Vanguard Natural Resources (NASDAQ:VNR)

    Wells Fargo Company (NYSE:WFC)

    Union Pacific Corporation (NYSE:UNP)

    Brokerage Portfolio

    Prospect Capital (NASDAQ:PSEC)

    Armour Residential REIT (NYSE:ARR)

    Williams Partners (NYSE:WPZ)

    Realty Income (O)

    Pacific Coast Oil Trust (NYSE:ROYT)

    California Water Service (NYSE:CWT)

    Natural Resource Partners (NYSE:NRP)

    The DRIP DSPP portfolio is pretty straightforward. My biggest investment is in Realty Income, which I have on a DRIP only. All of the others are both DRIPing and DSPPing until the catch up with my investment in Realty Income at which time I plan to turn off their DSPPing and add some other stocks to my DRIP DSPP portfolio.

    My plan for the brokerage portfolio is to use their Flexible Reinvestment Plan (FRIP) feature to purchase more shares of long term dividend growth stocks by utilizing the distributions of high dividend/distribution monthly paying (MoPay) stocks. That's not exactly how it is working yet but that is generally where I am aiming.

    My investments are too small and too new at this point to carve out any meaningful statistical information. For example, Realty Income is in both portfolios and currently represents nearly one-third of the total value of my investments. That obviously needs to change and the percentage of O to my total account is slowly going down as the total value of my portfolio goes up.

    My current contributions to four DSPPs will inhibit my ability to buy very many additional stocks in my brokerage account but I will add some new stocks fairly soon… probably another MoPay. I pretty well know where I am heading but I not totally committed to a single path to get there.

    I'm am obviously not seasoned nor sophisticated as an investor but I'm feeling pretty good about my progress so far. Comments, positive or negative, are always welcome as I'm definitely in the learning mode as a dividend investor.

    Themes: Dividend Investing Stocks: O, GIS, VNR, WFC, UNP, PSEC, ARR, WPZ, ROYT, CWT, NRP
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