End of the month and time for my purchase update for my Loyal3 dividend growth portfolio. As with every other update over the last 14 months, nary a dollar has been spent on commissions or fees. Over the course of the past year, there have been many changes with Loyal3, including the elimination of purchasing by credit card. The most recent change is the improvement of speed in purchases. Previously, it would take two business days to process a transaction from the time of order. This past month my transactions all occurred within one business day of initiating the purchase.
Faster is better, but always remember that Loyal3 is a batch-trading entity. This limits their trading costs and helps them remain a viable no-cost option for investors like myself.
Interesting enough, the timing of purchases was a huge topic of discussion after my Loyal3 purchase update post last month. In one of the most commented posts in the history of this site, the main driver of that conversation was a back-and-forth discussion between Jason at Dividend Mantra and me. There were a lot of points made in that discussion and Jason brought up a couple of things that are important to remember.
- Just because you aren’t paying commissions, doesn’t mean that you’re buying a stock at fair value. Commissions and the fair value of a position are mutually exclusive, and are not dependent on one another.
- Batch-trading is just that, orders filled in a group trade. There are no real-time or limit orders as you would see at a traditional brokerage.
There are limitations to investing with Loyal3, however the value-add isn’t completely negated by either of the points above, however they must be taken in consideration. Know your fair value limits and goals with any purchase. Understand that the price you pay will go up or down after you hit the ‘Invest’ button. If you’re someone who is a pro at market-timing, I can understand the challenge with batch trading, but for me, outside of rare outliers where a company gains or loses 5% or more in a day, it doesn’t matter. If you’re investing in a high quality company, such as Coca-Cola, no one will remember the 1.2 shares you bought when the price was $41.30 versus $41.15 or $41.45. Especially when they are consistently rewarding shareholders with fantastic dividend raises (courtesy of My Dividend Pipeline).
To summarize, Jason wanted very clearly to express that Loyal3 isn’t the bargain or deal that I lay it out to be. In some ways, he is absolutely right. You have no control over the exact price you pay for a stock. This is absolutely a sacrifice to make when using their service. However, for me, this is a great opportunity to build positions in companies at prices I believe to be fair, without paying commissions on top of those prices. I tout the no-cost nature of Loyal3 quite regularly, but implicit in the no-cost nature is there is a risk of paying more (or less) than the price of a position when ordered, and costing me money. At the end of the day, it is a matter of control. I sit squarely on both sides of the fence as I have a traditional AND side portfolio for my dividend growth investments.
With the risks appropriately stated, let’s circle back to the purchases of February in my Loyal3 portfolio. Over the course of the month I invested $300 dollars into new positions, with a small piece of this coming from available cash due to dividends in the account. This will be the case for pretty much every month for as long as I hold this account. Loyal3 automatically combines your new capital with dividends received that aren’t reinvested directly (thus far only KRFT).
February Loyal3 Trades
I’ve gotten more into showing things around here in a nice chart because I love the simplicity of visuals. Below you will find the overall totals for each position and related purchase information for the last month.
None of the positions above represent a new position in my Loyal3 portfolio. As you can see, Nike is the largest pickup of the month, as their price dipped nicely a couple of weeks ago. I took the opportunity to pick up shares and build my small position with them a bit larger. As you can see in the table above, both NKE and VF Corp represent a long-term dividend growth play as they both have lower initial yields but hold the potential for higher growth.
Loyal3 Portfolio Summary
As you can see in the chart above, February’s purchases resulted in a total increase of $5.46 to my forward 12-month dividends and carried an overall average yield on cost of 1.82%. This is well below the average yield of the portfolio, but offers greater long-term growth and greater increases to my dividend income.
Containing 14 different positions, my Loyal3 portfolio has a forward 12-month dividend total of $239.37. Amazing the power of regular investing! Now finishing the 14th month of investing in this “side” portfolio, it has grown to be its own dividend producing machine. Below is a snapshot of some of the portfolio details.
The full picture of this portfolio can be seen on my Dividend Growth Portfolio page. If you’re interested in seeing what dividends this portfolio actually generates in 2015, check out my 2015 Dividend Calendar.
Go check out Loyal3 and let me know what you think.
In the short month of February, what were you buying?