Well, my incoming dividends are still quite small but May was higher than the first 4 months of the year. Again, I’m just getting started and I expect some higher payouts as I add more dividend paying stocks to my portfolio.
LOYAL3 ACCOUNT
– AAPL = $0.06
– HAS = $0.08
– SBUX = $0.03
ROTH IRA
– ATVI = $0.20
– PG = $0.64
Grand Total for May = $1.01
Small return but it is better than nothing. It just means I have more work to do.
My interest in investing has led me to online research of the likes of Warren Buffett, Peter Lynch, and Benjamin Graham. Graham’s book, The Intelligent Investor, is commonly referenced as one of Buffett’s most recommended investing books. I haven’t read the book yet but started listening to some of it in audio format. I don’t think it has any silver bullets in it but it appears to provide some sound principles for the defensive investor.
Being a new investor, I found the concept of value investing interesting. After hearing about the idea, it seems like an obvious approach but it isn’t something I had really put much thought into before listening to a few chapters of The Intelligent Investor. While I don’t know how to evaluate the price of stock which is a talent Buffett has become famous for, I like the idea of buying good stocks but only at a good price. This has piqued my interest even more which means I have still have a lot to learn.
In my last entry I discussed building a foundation with a moat around it. One of my “foundation” companies listed was Disney. While Disney is a strong, proven company, the more I think about the low, annual dividend the more heartburn I have with the idea of making DIS a cornerstone of my foundation. I’d still like Disney to find a home in my portfolio someday but I’m leaning towards moving DIS from my foundation and replacing it with PG. PG pays quarterly and is currently yielding 3.2%. With that said I am not saying “goodbye” to DIS but I am saying “see you later”. Hopefully, I see DIS before Star Wars VII hits theaters in December 2015.
I’ve been researching stocks/ETFs where I’d like to invest money within my Roth IRA and there are a lot of appealing stocks and ETFs out there from which to choose. Some stocks are already a small part of my current portfolio while others are on my ever-growing watchlist.
Lately, I’ve been watching several Warren Buffett and Charlie Munger interviews on YouTube and it is amazing how much free advice is out there just by listening to these investing gurus. They’re investing strategy seems to boil down to a handful of basic tenets:
1. Find a company that is understandable to you
2. Find a company with a lasting competitive advantage (or as Buffett puts it, companies with “moats” around them)
3. Find a company with talented and trustworthy leaders
4. Find a company that is well-priced
I’m quite certain that besides these four factors, Buffett and Munger employ other detailed analysis but these factors provide an initial basis for selecting investments. For an average person, knowing a company’s managers or if a stock is well-priced may not be easy. I do think the first two tenets can be applied by almost any investor although none of these are foolproof.
I also heard Buffett talking about finding 6 good investments and that investors which are too diversified are better off sticking to index funds. Based on this, I’m looking for some solid stocks in which to build my portfolio upon. I’d still like to pick some interesting stocks beyond my foundation but my portfolio’s core will be stocks that I feel are safe, solid, long-term performers with dividends.
To start, I have my sights set on three stalwarts that I feel are historically proven leaders in their respective industries. The first three building blocks of my foundation will the following:
1. McDonald’s (MCD)
2. Coke (KO)
3. Disney (DIS)
These aren’t very exciting like Apple or Google but they’ve withstood the test of time. MCD and KO have been steady quarterly dividend payers for decades with ~3% yields. DIS isn’t a strong dividend payer with a yield around 1% and only an annual payout. However, I feel confident in Disney and the moves they’ve made to grow beyond Mickey Mouse and princess movies.
For me, MCD, KO, and DIS are safe choices but I still need to research another 2-3 companies to finish the foundation of my Roth IRA. Some of the candidates are already on my watchlist or are small parts of my current portfolio. More research is needed but PG, CLX, JNJ, and KRFT are on the short list. I’d like to possibly add in an energy company such as CVX or COP but I haven’t made up mind on those yet. More to come.
SFZ from StartingFromZeroBlog.com asked a valid question about Hasbro that made me think about this investment. In short, he asked about Hasbro’s outlook versus a future riddled with smartphones, iPads, and other tech gadgets that kids are swarming towards. This really is a great question that deserves some research. And by research I mean quick internet searching. Hasbro’s first hit toy in the 1950’s was Mr. Potato Head. Find a picture of the first Mr. Potato Head and try to imagine wrapping one of those up and giving it to a kid for his birthday in 2014. He’d probably have nightmares after seeing the first Mr. PH. The original MPH bears a slight resemblance to Leatherface from Texas Chainsaw Massacre.
So how does Hasbro keeping selling Mr. Potato Head 60 years later? They adapt with the times. Check Amazon and see all of the different Mr. PH’s out there. They have Darth Vader, Iron Man and other variations of MPH. Just a plain MPH is currently the #77 selling toy on Amazon. How can it be after 60 years and advances in technology that a plastic MPH is the #77 selling toy? I really don’t have an answer for that one but the fact that this toy is still popular after all these years is nothing less than amazing.
Of course Hasbro can’t survive alone with the immortal Mr. Potato Head. They also have licensing with Disney which now owns Marvel and Star Wars lines. How long can Marvel, Star Wars, G.I. Joe, and Transformers be popular with kids and adults alike? Let’s just say a long time. In fact another Transformers movie is about to hit the theaters and will undoubtedly rake in gobs of money. Disney will be pushing new Star Wars movies soon and I’m sure Hasbro will have the toys to match.
Besides toys, Hasbro has a long list of board games that have been around for years and are still doing well. The #2 board game on Amazon is Connect Four. I was a little dumbfounded when I saw that. It is 2014, where you can pick up a tablet and effortlessly launch Angry Birds (licensed with Hasbro by the way) at mean, green pigs. Still, somewhere out there kids are playing a game where you drop checkers into a vertical rack until you get four in a row.
The more I look at Hasbro the more I’m amazed at what they’ve been able to pull off after all these years. They’re still tricking little kids into playing with plastic potatoes and frustrating adults with the Rubik’s Cube. People still even find it entertaining to spell words with a game called Scrabble.
Hasbro has really built a huge line of products that have found themselves in peoples’ homes for decades upon decades. You can check out the rest of Hasbro’s products at this link:
I don’t think I fully answered SFZ’s original question yet. We can’t expect board games and action figures to be popular forever. You’d think someday kids would tire of Play-Doh. But it looks like Hasbro isn’t resting on its laurels. I found an article talking about Hasbro’s interest in 3D printing. I find this intriguing and it really displays Hasbro’s desire to stay relevant. I’m picturing kids in the not too distant future outgrowing their Play-Doh set and designing their next creation with their Hasbro 3D toy printer. Should be interesting.
DISCLAIMER: I don’t work at Hasbro. I do own stock in HAS which should be obvious after reading this blog entry. I also have kids that like Hasbro stuff.
I’m down to 5 stocks in my search for long-term, LOYAL3 investments. It is getting really difficult to eliminate any of the remaining companies but I really want to focus on 2 companies for now and move up to 4 or so later. Eventually, I could invest in more companies but for now I’m keeping it narrowly focused. Out of the list of UL, HAS, MCD, TGT, and KO there is one clear winner in my mind based on dividend yield and historical growth. That would be MCD.
So I now have 1 of my top 2 LOYAL3 stocks picked. MCD stood out above the rest but selecting 1 more out of the remaining 4 isn’t as easy. To make it a little easier, I’m taking KO and TGT off of the list. While both have been solid over 20 and 30 year periods, their growth over the last 10 years is much lower than the other stocks on the list. Also, KO and TGT have the lowest dividend yield of the remaining 5 stocks.
This narrows the list down to MCD, HAS, and UL. Based on performance and my son’s intuition, I’m picking HAS over UL. Maybe someday he’ll be a millionaire by picking Hasbro’s stock as a kid.
So, there you have it. My current top 2 long-term picks on LOYAL3 are going to be McDonald’s and Hasbro.
Moving on with the LOYAL3 stock picks, I’m resorting to some help from a trusted financial expert. Well, not really a financial expert but an expert in toys. My current list of LOYAL3 stocks is down to 6 potential picks and 2 of those are toy/game companies. I want my final list to have a little diversification so either MAT or HAS has to go. Both companies seem to have respectable, dividend-paying stocks. I’m pulling in my son, an expert in toys/games, to help me make this difficult decision. Logo recognition is huge in the commercial world so I let my son pick which company he’d like to own by showing him a list of companies’ logos from LOYAL3’s website. He looked at the list thoughtfully and ultimately chose Hasbro over Mattel. Sorry Mattel, but you and your awesome 3.93% dividend yield have to go.
So, how did my son do with picking Hasbro? Is he a Warren Buffet in the making? Or has Hasbro’s marketing seeped into his brain better than Mattel’s? Let’s take a look at HAS:
– 7 stock splits since 1977
– Since 1977 they’ve paid dividends every year except 1980
– Current yield is just above 3%
– 10-yr growth of approximately 204%
– 20-yr growth of approximately 259%
– 30-yr growth of approximately 2425%
Overall, a very solid stock over the last 30 years.
My list now has 5 stocks left: UL, HAS, MCD, TGT, KO. Honestly, I could probably randomly pick any 2 of these remaining stocks and do well in the long-term.
Time to continue my quest of finding 2-4 reliable, stable, long-term, dividend paying stocks on LOYAL3 that I can periodically invest in over time. This round of cuts will not be based on numbers, performance, or any quantitative criteria. This time I’m going off of my gut feeling and following some of Warren Buffett’s advice. I heard Buffet say in an interview that in order for him to invest in a company it has to be understandable to him. There are two companies here that I know of but other than that I don’t feel comfortable selecting them as long-term investments. That said, I’m taking LB and AEO off the list. I might throw a little money into LB because it has impressive numbers but other than that I don’t intend to make continued, periodic buys of LB stock.
The stocks still on my LOYAL3 list are: MAT, UL, HAS, MCD, TGT, and KO. Not a bad lineup.
Previously I listed 13 stocks at LOYAL3 with 3% yields or higher. It is time to whittle down this list further. Because I’m currently looking for frequent dividend payments that I can reinvest, I’m removing from the list any stock that doesn’t pay dividends at least quarterly. That scratches BUD and NOK off of my list. That takes me down to 11 stocks. I’d still like to narrow it down to 2-4 stocks that I can invest in with small, monthly purchases. So let’s continue.
My next somewhat arbitrary criteria is to look at the stocks’ overall growth for at least the last decade. If any stock has a negative growth it is coming off of the list. I’ll go to the easy-to-use Google stock price chart to check this out. After some quick stock symbol searching, I’m able to scratch more stocks that either have a negative return over 10 years or 36 years (as far back as Google’s stock charts seem to go). Also, if the stock is less than 10 years old it is coming off my list. So here are the next stocks to be removed:
– FTR (less than 10 yrs old; this is fine because I know nothing about this company)
– WWE (negative 10 yr return; this is fine also because my gut feeling is to not invest in WWE)
– INTC (negative 10 yr return; too bad because I somewhat wanted this stock to be around after my little exercise here)
So, I now have 8 stocks left to research: LB, AEO, UL, HAS, MCD, TGT, KO and one wildcard with MAT. Google doesn’t show a 10-yr history for MAT but from what I can tell from other research this stock has been around for awhile so I won’t scratch it off just yet.
Some articles and interviews out there talk about it being difficult to beat the S&P 500 index. A solid recommendation for most casual investors is to stick with a mutual fund or ETF that mimics the S&P 500. I like that advice and have an ETF on my research list that follows the S&P’s returns but there are also some solid dividend-paying stocks out there that have beat the S&P over the last 30 years. Just by using a quick search on Google’s stock charts revealed several that I’m going to research further: CLX, MCD, KO, PG, and JNJ. I’m going to dig deeper into these but I was surprised by how well these stocks have done over the long-term. MCD was the most surprising of them all.
Out of curiosity, I decided to find out which of LOYAL3’s stock offerings had the highest dividend yields. While yield percentage alone isn’t the only factor I’m interested in, I do take it into consideration when looking to invest.
First I sought stocks with 2% or higher yields. I came up with 25 stocks. To further narrow it down I looked at stocks with 3% or higher yields which turned out to be 13 stocks.
Here’s a list of stocks with 3% or higher dividend yields at LOYAL3:
1. LB (9.45%)
2. FTR (6.97%)
3. AEO (4.64%)
4. WWE (4.44%)
5. MAT (3.93%)
6. BUD (3.62%)
7. UL (3.51%)
8. INTC (3.44%)
9. NOK (3.37%)
10. HAS (3.2%)
11. MCD (3.16%)
12. TGT (3.07%)
13. KO (3.01%)
I’d like to do some other research on these stocks because these are impressive yields. This list contains some solid companies but also a few of which I’m not too familiar.
There are several resources on the internet for researching a stock or ETF’s dividend history. The one I find myself using the most is NASDAQ.com. Once you search by stock symbol, click on “Dividend History” for a great breakdown.
If you look up the definition of “dividend” in the Merriam-Webster Dictionary you’ll find various meanings. This blog is focused on the financial meaning but I really like some of the more generic definitions such as:
– a resultant return or reward
or
– bonus
My hunger for dividends continues to grow so I decided to make a tiny buy of McDonald’s (MCD) with LOYAL3. I really like being able to periodically buy $10-$20 of a company’s stock without having to pay a commission. Hopefully, LOYAL3 will come up with a Roth IRA option someday.
Now, back to MCD. I’ve been overlooking their stock because I don’t eat a lot of fast-food but I will occasionally make a stop at McDonald’s. What I didn’t realize is how successful their dividend-paying stock has been. Using a common sense approach I guess it shouldn’t be much of a surprise considering their worldwide footprint. According to their website, McDonald’s is in more than 100 countries which is quite impressive considering there is a food product that is so popular on a global scale.
I did a quick review of MCD’s stock info on their company website and found a couple of tidbits that caught my eye. As of the date of this posting, MCD has increased its dividend every year since 1976 and has split 12 times since 1965. This sounds like a fairly safe bet with a history of growth. I can’t wait for the first dividend to show up in June. It will be quite small because I made a small buy but it will be a dividend payment nonetheless.
I plugged in “MCD” at StockSplitHistory.com and a $10K investment 10 years ago would be worth $53K+ today. Not a bad investment in my opinion.
I tend to buy stocks in companies that I patronize because I figure if I’m spending money on a company’s products or services then I ought to see something in return financially. One stock where I’m bending this rule a little is with Apple (AAPL). While my household has an Apple product or two, I’m not an Apple loyalist and really don’t consider myself an Apple customer. However, it is difficult to ignore the success of Apple’s stock and I know many people that are entwined into the Apple devices’ ecosystem. Also, with the upcoming 7:1 stock split, I made an impulse buy on 1 share of AAPL. For me, that is a rather large stock purchase because I have a limited investing budget. Also, the dividend yield is currently just above 2% which isn’t jaw-dropping but combined with the stock’s return I hope this pays off. It will be interesting to see what happens after the split.
My initial dividend returns are not very impressive but I’m just starting out and expect this to increase over time. Here’s what I received in dividends during the first 4 months of 2014.
| DIS | 0.12 |
| HAS | 0.08 |
| SBUX | 0.03 |
| MSFT | 0.15 |
| NKE | 0.03 |
This is a GRAND TOTAL of $0.41. This is measly but it is only a start. I’m looking forward to watching this grow.
Happy investing!
Here’s a quick list of my dividend paying investments (stocks & ETFs). Not all of these consistently pay dividends and some of these I invested in prior to my love of dividends.
LOYAL3 Account
– Disney (DIS)
– Hasbro (HAS)
– Coca-Cola (KO)
– Nike (NKE)
– Starbucks (SBUX)
– Apple (AAPL)
– Wal-Mart (WMT)
– Microsoft (MSFT)
– Anheuser-Busch (BUD)
– Intel (INTC)
Roth IRA Account
– Activision/Blizzard (ATVI)
– Apple (AAPL)
– Direxion Mid Cap Bull 3x Shares (MIDU)
– J.C. Penney (JCP)
– Procter & Gamble (PG)
– ETRACS Monthly Pay 2x Leveraged Mortgage REIT (MORL)
In the future I plan on investing more in stocks/ETFs that have consistent quarterly or monthly dividend payouts.
To help build up the usefulness of this blog, I’m adding a few links to sites I like to use.
LOYAL3 Fee-Free Investing – No fees and you can start investing with only $10. This site allows you to buy partial shares of select stocks. For example, if you don’t have $600 to buy a share of Apple (current price) then you can buy $10, $20 or whatever you can afford of Apple (AAPL) stock. LOYAL3 isn’t my main source of investing but I use it for smaller buys.
StockSplitHistory.com – This site is more for “what if” investing scenarios. You can plug in a stock symbol and this site will show you how much you would’ve gained/lost if you had invested $10,000 ten years ago.
http://www.stocksplithistory.com/
ETF Database – An excellent ETF screener. Very useful if you want to search ETFs by dividend yield or other attribute.
One final note here. I don’t have any connections to any of the sites linked here and can’t vouch for their accuracy or reliability. I use these at my own risk and you should too. If you have any links you’d like to share with me, please do so (NO SPAM PLEASE).
Happy investing!
“Someone is sitting in the shade today because someone planted a tree a long time ago.”
– Warren Buffet
I found this quote by Warren Buffet to be a fitting way to start my dividend journey. Recently, I’ve become deeply interested in dividend stocks and ETFs. I wish I would’ve had this craving years ago but it is better to start late than never. I envy people with the vision to start investing at an early age. I didn’t have that vision and that can’t be reversed. My goal now is to create a decent dividend cash flow for the future and to instill investing habits into my children and eventually my grandchildren.
I am not an investing expert but a “regular” person if there is such a thing. Please follow me, encourage me and exchange ideas with me on this journey. I’d like to wrap this post up by saying “Welcome” and “Thank you” for stopping by.
Happy investing!
Dear Dividend... 