Trades – No-Cost Dividend Growth Portfolio Purchases: KO and UL

Trades – No-Cost Dividend Growth Portfolio Purchases - KO and UL - Stacks of Lumber

As each month goes by, I am getting more and more excited about my dividend growth portfolio with Loyal3. There are plenty of solid options for a dividend growth investor and the ability to invest with as little as $10 per transaction with NO transaction costs is pretty awesome. Given such a low minimum for a transaction, it enables those looking for instant diversification the ability to take $100 and spread it across ten different companies! Of course the kicker to all of this is the ability to utilize your credit card to make the purchases and pick up the credit card rewards as you arbitrage the system.

So what is my goal for this portfolio? My current plan is to put $300 per month to work every month in whichever equity or equities that provides the best value, in my opinion, at the time of purchase throughout 2014. This goal serves two purposes: 1) It allows me to regularly put cash into the market in smaller batches without worrying about the expense of transaction costs, and 2) Tests out Loyal3 as a service provider so that down the road I can utilize it for larger purchases once I’ve fully vetted the system. So far, so good!

As I mentioned above, Loyal3 allows investors to invest with as little as $10 dollars, per transaction, in 56 different companies. Of the 56 companies, 25 of them appear either on David Fish’s Champions, Challengers and Contenders (CCC) list or are near additions to the list. For those unfamiliar, David’s list tracks those companies who have raised their dividends in excess of 25, 10, and 5 years, respectively.

For the month of March, I made two purchases in this account just over a week ago, both of companies I already held in my Loyal3 account.

March Loyal3 Trades

Trades – No-Cost Dividend Growth Portfolio Purchases: KO, MCD, and UL - coca-cola-logoPurchased Coca-Cola (KO): A long-time dividend growth stock, KO has raised their dividend payment for 52 years in a row, with a recent increase of 2.5 cents per quarter back in February. This increase adjusted their annual payout from $1.12 to $1.22 per share. During this latest purchase, I allocated $80 of my $300 monthly contribution to KO, picking up 2.0942 shares at a cost basis of $38.20 per share. Given the increased dividend, my yield on cost is 3.19% and adds $2.55 to my forward 12-month dividends.

Trades – No-Cost Dividend Growth Portfolio Purchases: KO, MCD, and UL - unilever-logoPurchased Unilever (UL): While UL is not quite on the CCC list, but does have a nice history of dividend increases and is a “near” member of the list. One thing to note is that the dividend is paid in Euros, so currency variations can affect how large those dividends look to those of us in the States and elsewhere around the world. Compounding Income did a wonderful piece on the showing the increasing dividend for UL over the last ten years, so be sure to check that out.  With that being said, I utilized the remaining $220 of my $300 monthly Loyal3 investment, and purchased 5.5852 shares of UL at a cost basis of $39.39 per share. Given the approximate dividend of $1.46 per share, my yield on cost is 3.71% and adds $8.16 to my forward 12-month dividends.

March Loyal3 Purchase Summary

As with my previous transactions, these took two days to process from the time I put the order in till the time the transactions occurred. Both transactions were made with my credit card and did not receive any additional fees, thus successfully arbitraging the process for credit card rewards. March’s purchases resulted in a total increase of $10.71 to my forward 12-month dividends and carried an overall average yield on cost of 3.57%.

My total no-cost Loyal3 dividend growth portfolio now consists of four holdings with a forward 12-month dividend total of $31.13. The full details of this portfolio can be seen on my Dividend Growth page.

If you are interested in checking out Loyal3 and have questions, feel free to let me know!

What purchases are you looking at making in the near future?

Flickr: theenmoy

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  1. W2R,

    Great buys here!

    Glad to see you leveraging your Loyal3 account to maximum use. Fantastic.

    KO and UL are both fantastic companies. UL remains extremely high on my watch list. I actually completed my final equity purchase of the month earlier today, and, unfortunately, it wasn’t UL. But soon I’ll own a chunk of that company.

    Keep up the great work.

    Best wishes!

    • Maximize the usage and explore my ability to generate some consistent income, even on a small scale. The nice part about Loyal3 is that as soon as $10 accumulates in the account, you are able to reinvest however you see fit.

      I like both (obviously) and think over the long haul they will both turn out to be great investments. Looking forward to having you join me down the road when capital and opportunity line up!

      Appreciate your support DM!

      • Hey W2R,

        I just wanted to let you know.that I received dividends from Kellogg’s and McDonald’s ($.25 combined) on 3/19. My monthly investments took place on the next day and used the combined dividends first to purchase one of my stocks before applying the rest on my credit card. So Loyal3 will use whatever funds you have in your account first prior to applying the rest of your purchase on your credit card.

        Nice purchases. KO and UL are solid companies.

        • Thanks for the update Richie! I’ve received a couple of dividend payments myself. Oddly enough, when I made my last credit card payment, my dividends weren’t applied, however, this might have been a matter of timing as the first dividends I received were the same day I initiated the above buys. I should be able to see how this work this coming month as those dividends are now sitting in my account. For someone like myself, because I want to commit a full $300 of additional capital each month, I will have to see if that can be avoided, or just “gross up” my purchase amount.

          Appreciate your additional insight!

  2. I’ve been enjoying loyal3 (although I’ve only got $50 total in it). My biggest beef about it is that I can’t automatically sync with Personal Capital! I can do a manual holding, which works well. I set up a monthly purchase of a few stocks (WMT, TGT, MCD), but it’ll be a bit before I can really get dividends from it.
    Any chance you can write an article on how you compute your forward looking total?

    • I think setting up with a monthly purchase is a great idea, and a solid no-cost means of generating credit card rewards and dollar cost averaging into multiple positions. All three of those selections are great companies and over the foreseeable future should reward you as a shareholder.

      As for an article on the forward 12-month dividends, I’d be happy to add an article about that; I love the idea and thanks for the suggestion and stopping by!

  3. Strong looking buys and even better since you don’t have to pay any common fees. Your portfolio is coming together nicely. Stay on course and don’t loose the drive!

    • Appreciate the support DV! I’m happy with how it is coming together as well. A few more months and this account will be large enough to start seeing dividends accumulate quick enough to start reinvesting every quarter or so.

      Thanks for stopping by and commenting!

  4. Nice buys w2r. I have UL on my watch list but had reservations regarding the dividend growth. I checked out the Compounding Income article you linked to and now knowing the uneven growth is because of currency exchange rates rather than dividend cuts, I feel a lot more comfortable with the stock as a potential investment.
    Best wishes,

    • Compounding Income’s post was a phenomenal post for those who are concerned with the growth in UL’s dividend. Well-written and very well laid out explanation of how they’ve grown their dividends over the last decade. I’m certainly happy to be a shareholder of this great company.

      Appreciate you stopping by SFZ!

  5. I have looked into Loyal3 and it seems to be a great service for those of us just starting out with limited funds. I have also been looking at Motif investing lately. It seems like you are setting up your own etf. I was wondering if you had looked into it and had any insights?

    • I think Loyal3 is an awesome place for those without a ton of capital to initiate investments in a solid core of equities. As for Motif, I have not looked into them a ton, but can appreciate their overall concept. My biggest challenge is that in order to justify the $9.95 commission, I’d want to make at a minimum $2,000 buys. Since people starting out tend to have less than that, I’d think Loyal3 would be a better option given the lack of transaction fees (both buying and selling). provided you are comfortable with the more limited equity options. Now, for those with a bit more capital to put to work each month, it could be a fairly cost-effective way to quickly build a diversified portfolio, regardless of your investment goals. For example, during a dip in the market, Motif would be a great option to jump into a bunch of positions with on commission. Since it’s fully customizable, you can simple tweak it to fit whatever matches your buy criteria.

      Appreciate your comment and stopping by Josh!

      • After looking some more it seems like the $9.95 commission is in regards to the entire created fund and would be only $4.95 for each individual issue within it. You can currently have up to 30 positions in whatever customizable fashion you wish. They also offer IRA options while loyal3 does not at this time.

        • The individual stock commission of $4.95 isn’t too prohibitive, as I’d look for a $1,000 minimum transaction at that level. Since I’m currently with TradeKing and have that exact same cost per trade, to me that isn’t really a benefit. However, as you’ve said, the customizable portfolio is an intriguing option, especially if someone can invest $2,000 or more per transaction and interchange the ETF during additional buys to whatever appeals to them during that purchase. Of course, having an IRA is a tremendous benefit without a doubt.

          Thanks again for the extra information and for reading Josh!

  6. Nice work on the KO addition. I still believe it looks reasonable value at these levels. How does Loyal 3 actually make money through the free trades? Any idea on their business model?

    • My understanding is that their primary revenue sources are from business to business dealings, both with their IPO services and management of social stock purchase plans. If you look at their list of individual stocks, you can see the companies in which Loyal3 has a financial relationship with currently or previously. Considering the extremely limited number of trades they have to make because they batch everything once per day, their overall trading costs shouldn’t be all that tremendous.

  7. I started using Loyal3 a couple months ago and I love it! I started investing with $10 every Sunday and a couple of monthly automatics, just to see how it worked. I have since increased that amount. UL has been my stock of choice as of late. Any other stocks that you think are undervalued at the moment?

    • Couldn’t agree more with enjoying the ease and simplicity of investing with Loyal3. UL is a buy for me under $40, and KO is a buy as long as it yields greater than 3%. As for other Loyal3 offerings, TGT and MCD are two potential opportunities at a reasonable value in my eyes.

      Appreciate you stopping by and commenting Lori!

  8. Awesome that you don’t have to pay the fees considering which allows you to have small transactions. I tend to purchase a few thousand dollars at a time because of the fees.

    • I’m in the same boat as you Charles in that I tend to purchase in larger amounts. Going forward, this will continue to be the case, however I am going to continue building a portfolio through Loyal3 as a supplement to my primary dividend growth account.

      Thanks for stopping by Charles!

  9. Congrats on more great buys. The loyal3 account is picking up momentum! This is going to be a very fun account to watch grow. Thanks for the fun read and update!

    • It is definitely picking up momentum and will be a fun account to continue to track as it grows. I am looking forward to the end of the year when it will be churning out enough dividends to regularly add to the monthly $300 investment.

      Appreciate your support Ryan!

  10. Wow, I had never heard of Loyal3 before, but it seems like an awesome concept.

    I see Starbucks is an option (they’ve always intrigued me). So is Berkshire Hathaway, one of my largest holdings.

    In case anyone is wondering, here is how they can offer the service without fees:

    “How can it provide this fee-free service? Loyal3 does it by getting brands to pay whatever transaction fees are associated with the trades. For them, giving common investors ownership is another form of brand marketing, and it creates greater affinity between the purchaser and the company itself. According to Schneider, people spend more, refer their friends more, and shop more often with companies they have direct ownership in.”

    • Definitely an awesome concept, and ideally remains cost free with the primary revenue sources being the companies themselves and not the investors.

      I like Starbucks, especially for the growth potential, however the current valuation is just a bit rich for my blood, especially as a dividend growth stock. And I couldn’t agree more with you on Berkshire. Truly a phenomenal way to dollar cost average into a great holding company with outstanding leadership. With a cap of $2,500 per month per equity, you really aren’t too limited in what investments you’d like to invest in regularly.

      Thanks for the additional information and support!

  11. Great buys. I heard about Loyal 3, but I guess it is not available to Canadians :(. I have KO in my retirement portfolio and I will buy UL once I have some money to invest. Happy Investing.

  12. I am pretty happy with both KO and UL. I hold both in my Loyal3 Account and am seriously looking into purchasing more.

    Loyal3 recently said you can do same day transactions with money in your account. Do you feel that is more appealing than using your credit card? Personally, I will invest the cash once I accumulate enough, but will keep using my credit card for the discount.

    Keep up the good work!

    • UL has taken quite the jump over the last week and a half, and is a bit rich for my blood now, but KO and possibly PEP are still reasonably attractive. Either at a greater than 3% yield hold value.

      For me, I’m not worried about same day transactions. When my dividends accumulate, I will take advantage of that opportunity, but any additional capital will be put through my credit card for the rewards. No sense losing that benefit in favor of purchase timing, which is generally a tough game to play.

      Appreciate you stopping by and thanks for the comment ILG!

    • I have noticed that Loyal3 buys much quicker with dividends already in the account. For me it has been next day. Credit card and checking are about 3 business days.
      I have just received their financial statement, anyone check it out?

      • The increased speed goes for any funds in the account, either deposited or from dividends. It is possible to invest same day with these funds from my understanding if the order is placed in the morning.

        As for the financial statement, I reviewed it but was pretty disappointed that it only included balance sheet information. My biggest concern is their cash burn rate and the nature of their revenue sources. Unless I were able to get the past few financials, it would be tough to put all of that information together without the income statement. I will say they have a pretty robust balance sheet for a small company, but given the fact they are a service business, their need for capital assets is limited and for inventory, non-existent. Your thoughts Ed?

  13. walletengineers says:

    I thought about adding more KO at the current valuations. It looks like a pretty good buy right now, although the P/E ratio is a bit high for me (>20).
    For whatever unbased reason, I just don’t feel like buying UL. I know if I did my research I would change my mind!

    • Unfortunately, KO always tends to trade at premium, so I’m willing to buy in slowly and dollar cost average over time. Ideally it would be cheaper, but given the limited options at Loyal3, it appears to be one of the better values for a DG investor.

      As for UL, to each their own. Certainly the beauty of investing is the ability invest in what you’re comfortable with and what fits your criteria.

      Thanks for stopping by WE!

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