Almost exactly two years ago I stumbled upon dividend investing when I noticed deposits of money into my Roth IRA that I did not actively contribute. I thought the deposits were some type of “mutual fund” activity but researched further and found out they were dividends.
I was intrigued by these deposits and researched daily. This led me to an investment technique called “dividend capture”. My first dividend capture stock purchase was a financial stock called White Horse Financial which I still own to this day.
WHF has a great yield but the dividend has not increased since my purchase. I did not sell after receiving the dividend because the price dropped under my purchase price. The price drop combined with the $7.95 buy and sell commission would have caused me to lose money.
WHF’s price has just now exceeded what I originally paid, almost two years later! 🙂 (Speaking of commission, about a month ago Fidelity changed their commission price to $4.95!!! Unbelievable!!! And the same day they announced their changed, Charles Schwab did the same, offering a $5.95 commission!)
I was hesitant about the dividend capture method so I continued researching other investment strategies. It was at that point that I discovered the old Dividend Mantra blog. This blog opened my eyes to see that I could just simply continue to hold onto the stock and receive future dividend income from it without the fear and stress of losing money from buying and selling. As long as the market did not crash, it sounded like a win-win! So far that little stock has earned me $246.06!
So I abandoned dividend capture and embarked upon dividend investing. This is funny because I was always told to NEVER buy single stocks, opting instead to invest in mutual funds. But at the age of 41 I decided to take a risk and buy single stocks.
This method appeals to me because it is simple and easy to understand.
All mutual fund distributions arise from dividends. However one can lose money through mutual fund fees. By purchasing single stocks I bypass the “interference” of managed funds which enables me to receive the whole dividend in its entirety. Plus, I do not have to sell off portions of my mutual fund to obtain income in retirement and cut off part of my “tree”. 🙂 If you have not yet perused the Dividend Mantra site, I highly recommend it, are the remnants still out there???
Along with all of the great concepts (for ex. “A Dollar is not a Dollar”, a “Year is not a Year”) I learned from the site, there is yet one more. It offered a real live glimpse of a stock portfolio.
Up until that point in time the main financial guidance I received was that if I placed “X” number of dollars into a mutual fund at age 20, and contributed annually, I would accumulate “X” amount of dollars by age 60.
I basically had to contribute and wait passively until 60. Some estimates predicted the earnings to be 1 million dollars; the problem is that I never saw evidence from the financial advisors who advised this, no one ever presented proof, I never saw real numbers.
Seeing the dividend mantra’s portfolio through the power of the internet was very, very helpful to me. I saw a much more active investing process. Because I was helped I decided to post my portfolio as well and offer that same help to others who may decide that dividend investing is for them. You can also see the accumulative effect of the dividends here: History.
These are some pictures of things that I was up to in early spring. Most of the pictures are from a small and old town that I like to visit. Can anyone guess what happened to the tree? 🙂