2 Ways I Get Free Stock Trades and Peace of Mind

I’ve found two ways to buy stocks commission free.  I’m always looking for ways to cut costs and maximize my investments.  Here is how I do it:

 

#1.  LOYAL3

If you’ve been following my blog, you should be familiar with LOYAL3. They provide commission free trades and allow you to purchase fractional shares starting as low as $10.  For example, McDonald’s (MCD) is currently $100 per share.  With LOYAL3, you can buy as little as $10 worth of MCD which would you give 0.1 shares of MCD.  Not a bad way to go if you can’t execute large trades or don’t want to see your money go to fees.

 

#2.  Dividend-Paying Trick

Technically, this isn’t a free stock trade unless you can handle delayed gratification.  What I do is purchase enough shares of a stock so that my first dividend payment will cover the commission fee.  I use OptionsHouse because they only charge $4.75/trade which helps me recoup my money quickly.

Here’s an example:

1 share of MCD is currently $100.  Its quarterly dividend is currently $0.81.  To earn enough money from its next dividend payment to cover the commission I need at least $4.75 in dividends from MCD.  Some simple division of $4.75 by $0.81 gives 5.86.  I need to round 5.86 up to 6 to determine how many shares of MCD I need to buy.  If I buy 6 shares of MCD, my first dividend payment will be 6 x $0.81 = $4.86 which covers the commission fee of $4.75.

Like I said, technically this isn’t free but I look at it as a rebate that I have to wait for in order to be repaid for my trade costs.

 

Using these two methods, I can trade with peace of mind and not have to worry about getting raked over the coals by fees.

Ten Spot Friday – 3 Reasons for Wal-Mart (WMT)

After writing about how I wimped out during a recent opportunity to be frugal, I decided to set a small, achievable goal this week.  I cut out spending on energy drinks, convenience store snacks, and iced coffees this week.  To reward myself, I’ll drop a Ten $pot at Loyal3 today.  I have 3 stocks on my radar: K, MCD, and WMT.  I’ve recently added some K and MCD so I’ve decided to give WMT a $10 boost.  Here’s 3 reasons why:

 

#1.  Buffett’s Advice: Understand the company and find an economic moat

I understand Wal-Mart because I’ve dropped uncountable sums of $$$ there over my lifetime.  Wal-Mart also has a huge “moat”.

Here’s a quick snippet from Wal-Mart’s website to back it up:

“Each week, more than 245 million customers and members visit our nearly 11,000 stores under 71 banners in 27 countries and e-commerce websites in 10 countries. With fiscal year 2014 sales of approximately $473 billion, Walmart employs 2.2 million associates worldwide.”

Wal-Mart was also ranked #1 on the 2014 Fortune 500 list.  I suppose I could go on about Wal-Mart and Sam Walton’s success but I won’t.

 

#2.  Dividend Aristocrat

WMT is a Dividend Aristocrat that has increased its dividend payout for 39 years!  The current yield is about 2.5%.

 

#3.  It’s a deal?

Determining if a stock is a good deal seems to be a little bit like black magic with some stats behind it.  I’m trying to learn how to evaluate stocks but I’m not a professional so take this with a grain of salt.

– Current P/E is 15.7 versus a 5-year average of 14.3.  This is higher than I’d like to see but WMT’s P/E is still below the industry average of 17.3 and S&P’s 18.6. (Stats taken from Morningstar)

– Its current payout ratio is between 30-50% depending on where you look.  Still a good range for me.

– WMT’s stock price is almost 6% below its 52-week high.  Not necessarily a clearance price, but still decent given that many stocks are at or near high points right now.

 

So there you have it.  3 reasons I dropped $10 on WMT using my Loyal3 account.  Have a wonderful 4th of July for those of you in the U.S.

Value Stocks at Loyal3? How about Kellogg’s?

Loyal3 has a decent offering of quality, dividend-paying companies.  However, the stock market is hitting new highs which means a lot of stocks are also near all-time high prices.  When searching for a “good” price, it is it difficult when stock prices keep climbing.  So how does an investor find a well-priced stock that is available on Loyal3?

While there are many data points to look at when researching a stock, a common indicator for relative price is the P/E ratio.  Currently, many stocks have high P/E ratios due to the high prices.  Finding a quality company with a low P/E ratio is a hard find but they do exist.  On Loyal3, Kellogg Company (K) touts a P/E of 12.9.  That is less than the industry average of 20 and the S&P 500 average of 18.3 according to Morningstar.  Also, K’s 12.9 P/E is lower than its 5-year average of 16.1.

Looking further at K, it pays a 2.7% dividend with a 5-year average of 3%.  While K isn’t a dividend aristocrat with consistent annual dividend increases, it has been paying dividends since 1925 according to Kellogg’s investor relations website.  K’s payout ratio is also at a 10-year low at 34%.  Additionally, K has relatively low volatility with a .53 beta.

While Kellogg’s is well known for its breakfast offerings, it also sells snack foods such as Keebler products, granola bars, cracker chips, fruit snacks, veggie burgers, and Pringles chips.  Here’s a link to the Kellogg Company Brand Portfolio:

http://www.kelloggcompany.com/en_US/brandportfolio.html

If you’re looking for a safe, value, dividend-paying stock on Loyal3, K may suit your needs.

Top Dividend Yielding Stocks on LOYAL3 (part 3)

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.

 

Top Dividend Yielding Stocks on LOYAL3 (part 2)

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.

 

Top Dividend Yielding Stocks on LOYAL3 (part 1)

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.

Hungry for Dividends? How about some McDonald’s?

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.

 

My Investments (that pay dividends)

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.

Some Investing Links

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.

https://www.loyal3.com/

 

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.

http://etfdb.com/

 

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!