So just last month I wrestled with increasing my Loyal3 contributions even just a couple of months after increasing them for the first time. Well the time is now. Not only did I increase my monthly purchases over September’s, I doubled them! Going forward my goal is to invest between $500 and $1,000 per month in Loyal3. I am projecting building this account to approximately $6,000 by the end of the year, all without commissions AND juicing my yields with credit card yields. Love it! The reason I leave myself a dollar range for future investments is that some months viable investments through Loyal3 will be more compelling than other months. I will say that I see no reason why I will not continue adding to this account going forward and build it into its own dividend generating machine!
For those newer readers, Loyal3 is a startup investment brokerage offering retail investors the opportunity to invest into individual equities with as little as $10 per transaction at no-cost per transaction. In addition to offering these no-cost trades, investors can make purchases with a credit card in the amounts of $10, $25, and $50 per equity at one time. By making multiple transactions, it is possible to purchase more than each of those amounts per day. There are some other limitations, such as not being able to purchase more than $2,500 per equity per month, but the intent is to really benefit the small individual investor. It seemed like a great opportunity to build a portfolio at no-cost while leveraging credit card rewards.
It isn’t just individual stock trades, it is also the ability to invest like an institution, and get in on IPOs as they happen, and before they go to market. Of course, this is a slightly different investment track than I normally discuss here at WYOR, but you can bet I signed up to get notified of each IPO in advance. You never know what company you might be able to get into on the ground floor! A couple of popular and recent companies that had an IPO with Loyal3 were Dave & Busters and GoPro. It is super simple to stay on top of their IPO offerings, just go sign up to receive email notifications prior to each IPO. I’m hopeful that the Lending Club IPO is offered through their platform!
How is this possible? Loyal3 is a business-to-business company, generating revenues through IPO offerings and the management of social stock programs for several companies. Since they aren’t focused on monetizing their retail clientele at this point, we get the great benefit of investing at no-cost! Of course the icing on the cake is the ability to utilize your credit card to make the purchases and pick up the credit card rewards as you arbitrage the system.
Now, for the month of October, I made purchases of four different positions, two of which were new to me in my Loyal3 portfolio. As a bonus, I was able to purchase an extra $10 this month as a result of dividends earned during the month, giving me a total of $1,010 of newly invested capital during the month. Being able to selectively reinvest the dividends earned is a nice perk, similar to the FRIP program at Scottrade.
October Loyal3 Trades
Purchased Kraft Foods Group (KRFT): A newer dividend generating position and a new position in my portfolio, KRFT has been paying a dividend since its formation in 2012 when it was spun off of Kraft Foods, now known as Mondelez, which is the international distributor of Kraft products. With a limited dividend history, KRFT has already shown a desire to grow the dividend, with two increases already, with their latest being 4.76%, growing their annual payout from $2.10 to $2.20 per share. I invested $200 into KRFT in the first half of the month, picking up 3.5892 shares at an average cost basis of $55.72 per share. Given the current dividend, my yield on cost is 3.95% and adds $7.90 to my forward 12-month dividends.
Purchased McDonald’s (MCD): A true Champion in every sense of the word, MCD has been raising their dividends for 38 consecutive years. As with September, MCD continued to struggle in the first half of October after the recent struggles. During October, I purchased $160 of MCD, picking up 1.7471 shares at an average cost basis of $91.58. While not quite the bottom of the dip, this lowered my overall cost basis to $93.76. Even more spectacular, MCD became my first $1,000 position in Loyal3. Amazing when you consider the slow and steady rate in which I’ve been investing in this account!
This latest purchase, including the recent dividend increase of 4.7% from $0.81 to $0.85 per share, is at a yield on cost of 3.71% and adds $5.94 to my forward 12-month dividends.
Purchased Unilever (UL): Do you go grocery shopping? Yes, than you’ve seen UL’s product lines. Do you watch TV? Then you are likely familiar with Axe, one of their more prominent brands in TV advertising. A massive consumer goods producer, UL has tremendous global reach and exposure to emerging markets. A great company to own and as a shareholder, I’m looking to expand my current position significantly over time. Thank goodness Loyal3 offers me this flexibility! This month, I doubled my position in UL by purchasing $450 worth of shares and picked up 11.2743 shares at an average cost basis of $39.91. With an approximate dividend of $1.52 per share due currency fluctuations, my yield on cost is 3.81% and adds $17.14 to my forward 12-month dividends.
Purchased YUM Brands (YUM): As a compliment to my MCD position, YUM is a new position for my Loyal3 portfolio and provides some diversification in the fast food space, owning the Taco Bell, KFC, and Pizza Hut brands. As with most stocks at the early part of October, YUM dipped and provided an opportunity to pick up some shares. With the remaining $200 of purchases, I picked up 2.9256 shares at an average cost basis of $68.36 per share. With 11 years of dividend growth, YUM most recently increased their dividend by 10.8%, raising their annual dividend from $1.48 to $1.64 per share. Given the current dividend, my shares have a yield on cost of 2.40% and add $4.80 to my forward 12-month dividends.
October 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. All transactions were made with my credit card or dividends received in the account. For those that utilized the credit card I did not receive any additional fees for the transactions, thus successfully arbitraging the process for credit card rewards one more time. October’s purchases resulted in a total increase of $35.78 to my forward 12-month dividends and carried an overall average yield on cost of 3.54%.
My total no-cost Loyal3 dividend growth portfolio now consists of nine holdings, and has a forward 12-month dividend total of $157.59. The full details of this portfolio can be seen on my Dividend Growth Portfolio page. If you’re interested in seeing what dividends this portfolio has generated so far this year, check out my 2014 Dividend Calendar.
Go check out Loyal3 and let me know what you think.
Flickr: Tom Hart