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I like Realty Income and I would definately buy realty income shares if it traded at a bargain price. That’s the problem, I don’t like the idea of buying shares in good companies when they’re expensive. Even if they are solid companies if they are highly priced you won’t see a good annual return because the company’s strong market position is already baked in to the stock price. I’m not going to spend anytime talking about the effective market theory in this article but I am going to talk more about this subject in a future article.

Back to realty income. What do they do? They own commercial properties and rent it out and reward their shareholders with monthly dividends. They have a growing and relatively secure income from their properties. The main reason for that is that they own commercial properties in central spots around in the US and they negotiate deals for the long term. The leases are almost always several years long.

Realty Income, key statistics:

Price per share: $31.08.

Dividend: 5.60%.  $0.143 Dividend per month.

I would buy if it dropped below $25 without a doubt, in my opinion it would be undervalued if hit dropped below $25 per share. I’m fairly certain with some market worries Realty Income will drop quite fast. It’s in the real estate sector so the drop will be harder because of the media bashing. Beware realty income investors. However, Realty income is a great long term dividend stock with a fairer price.

I really hope coca cola drops below $50 per share. I am a buyer at <$50. You can always count on coca cola generate a safe and growing income. Income investors should put coca cola on their stock watch list. It just might tank below $50.

It does feel like with this market anything can happen. All it takes some bad news about the unemployment, gdp and dow jones will drop 10-15% very quickly. Hopefully coca cola will follow the market mood so I can buy cheap coca cola shares!

My dividends are coming

 End of march and beginning of april is going to be fun. My dividends are coming! Pepsi’s dividend date is 31st march, $0.45 per share. Coca cola’s dividend is $0.44 per share and they are handing it out 1st April.  Note that dividend investing isn’t the ideal strategy to get rich. I have a stable DRIP portfolio because I like having a growing income. My drip portfolio isn’t my main plan to achieve my million dollar goal though.

 Current DRIP portfolio:

Berkshire Hathaway Inc B             1.11327
Coca Cola                                  16.23005
Kraft Foods Inc                             26.70562
McDonalds                                   12.24261
Nestle N                                      4.27856
PepsiCo                                        14.78645
Procter&Gamble                            3.35264
Lloyds Bank                                  1 098.12333
Tesco                                            81.00704

 I’m mostly interested in coca cola right now. I’m waiting for it to go down a few dollars so I can add more shares. I will start buying more shares below $50 a share.

Have a nice dividend.

When it comes to investing, starting early as possible is the best way to go. Let me show you the importance of investing early. Let’s say person A is a dividend investor that starts putting away $100 a month in the stock market when he is 20 years old.

If we use the average market return roughly 10% he would have:

Start: $0

After 10 years: $20 484.

After 20 years:  $75 937

After 45 years, when he is retiring he would have:  $1 048 250.

Let’s say person B is a person that wants to invest later. He thinks he has plenty of time to do that later.

He starts when he is 30 years old putting away the same amount, $100 a month.

After 35 years when is ready to retire he would have: 379 664 $. See the significant difference?

There’s an easy answer to this. Wealth grows exponentially in the stock market. Start as soon as possible.

Even if he would put away twice the amount as person A he would still have less.

After 35 years, $200/month, 10% average return: $759 328

Shocking huh? There’s a lesson to be learned from this, start investing early. I would recommend DRIP investing, let the investments go on autopilot. There are several good reliable blue chip companies that will most likely continue raising their dividends. Coca cola, pepsico, mcdonalds etc are good choices for the long term investor. I strongly recommend to reinvest all dividends in the beginning so you get a snowball effect.

I hope the numbers from this article taught you I-will-do-it-later-people a valuable lesson.

Hello everyone!

2010 won’t be a disappointing year for income investors. Atleast not for me.

Here is my current dividend portfolio:

Berkshire Hathaway Inc B             0.77309
Coca Cola                                    16.23005
Kraft Foods Inc                             26.70562
McDonalds                                   12.24261
Nestle N                                        2.89255
PepsiCo                                        14.78645
Procter&Gamble                            2.26402
Lloyds Bank                                  1 034.84909

Coca Cola raised its dividend 7.3% to 44 cents per share. So I will receive 0.44*16.23005 = $7.141222 from coca cola. Nestle raised its dividend 14.30% to $1.477 ( with the current USD/CHF exchange rate ) per share. I am surprised by the big raise in dividend from Nestle. I didn’t think it would be above 10% in dividend increase. My stake in nestle is ridiculously small so I am not so excited by the dividend raise.

This was a nice beginning on my income investing strategy, hopefully coca cola & nestle willl continue raising their dividends for years to come.

I’ve been thinking about adding Tesco to my DRIP portfolio. It’s nice to hear that Buffett has a stake in Tesco, it makes my choice easier.  This is my DRIP portfolio at the moment:

Berkshire Hathaway Inc B              0.4225
Coca Cola                                     14.30654
Kraft Foods Inc                             23.16033
McDonalds                                    10.63966
Nestle N                                        2.89255
PepsiCo                                        13.17289
Procter&Gamble                        2.25718
Lloyds Bank                                  964.57166

Current Portfolio value: $4012

My DRIP portfolio as you can notice is a mixture of income stocks and risk. Lloyds bank is a risky move and the other stocks except Berkshire are income stocks. It feels nice having a income portfolio with growth. Going to sleep is alot easier, believe me!

I know that my DRIP portfolio is ridiculously small, I’m waiting for better opportunities to buy more shares. I’m looking intensely at the share prices of Coca Cola and Pepsico. Coca cola and pepsico are obvious choices for the income investor. I think the majority of dividend investors have pepsico and coca cola in their drip portfolio. But it’s important to get them at fair prices.

I’m looking to buy more shares at:

KO < $50

PEP < $55

Good luck fellow dividend investors! 

The company has strong brands and was punished for the cadbury-nonsense. Steady growth and reliable dividends makes this company a good DRIP. I like the fact the stock was lowered because of disappointment with the managment. But the facts remain that Kraft Foods is a strong company with growth and relatively low P/E of 16.75. Income investors should consider adding Kraft Foods to their portfolio.

Kraft foods hasn’t performed well since it’s IPO:

This is one disappointing graph for investors. The stock price is even lower today then it was since its IPO.

But the profit and the dividend of kraft foods has been on a steady rise during this period. The reason why Kraft Foods hasn’t performed well is because the P/E ratio when it first went public was relatively high, the profit growth was already priced in the stock.  Looking at historial performance for Kraft Foods can be a very misleading indicator on how the future will be. I think that Kraft Foods will perform way better than the past 10 years. I’m saying this because now it’s trading at a lower P/E than before and Kraft’s profit is still growing. With a divided yield of 4.10% and a yearly dividend growth between 7-10% makes Kraft Foods a good high dividend paying stock with growth potential. My estimate is that Kraft will outperform dow jones and S&P500 for the next ten years.

I have bought Kraft Foods shares for my DRIP portfolio. My plan is to regurarly buy more KFT shares every month, I believe it will be great DRIP stock.

Pepsi one of my most important DRIP stocks I have in my portfolio. One of the reasons I choose PepsiCo is because if its strong brand and yearly dividend raise. I assume there will be a dividend raise this year also, something in the $0.47-$0.50 range.

Good luck fellow DRIP investors :=) !

I finally got started with drip investing. My plan is to put away roughly $100 per month in:

Coca Cola

Kraft Foods

PepsiCo

Mcdonalds

Nestle N

Procter&Gamble

That’s $100 each so I’m putting away a total of $600 in to drip stocks. And Ofcourse all dividends are automatically reinvested.

I’ve already started my portfolio:

Conservative portfolio except lloyds bank. I think Lloyds Bank will be a good investment in the long run and I can afford one risky investment in my portfolio considering how safe the other companies are. Also note that reason it’s approximately 900 shares is because I bought the Lloyd shares on the london exchange where the price differ quite alot.  My first minor goal besides the obvious million dollar goal is to receive $100 in dividends every quarter. I will probably achieve that goal fast. My DRIP portfolio is worth $3200 at the moment.

Status:

Net Worth: $51000

Holdings,

Cash:

$12800 - I will invest it soon.

Stocks/Funds:

$4200 in emerging markets funds.

$3200 in DRIP stocks.

Real estate:

One apartment, market price = $105000

Loans:

$71583 real estate loan.

$800 cash loan.

Why do people keep posting beautiful graphs of performance when you reinvest dividend stocks versus no reinvestments and then point out the huge difference in return. People almost never mention the fact that when you get dividend and don’t it reinvest in the same stock you still actually have the money you received. Yes, it doesn’t disappear did you know that?

For example, if you have a stock A that pays 5% dividend and you chose to get the dividend in cash and invest the money in another stock. Than you have to calculate the return on the other stock you invested in to get the total return. Keep that in mind the next you read about dividend reinvesting. Getting dividend in cash and waiting for a market correction is not a bad idea either if you think there is a high chance that the market is heading south.