Trades – September No-Cost Dividend Growth Portfolio Purchases

Trades - September No-Cost Dividend Growth Portfolio Purchases - MAT and MCD - Hot Wheels Car

Let the snowball grow! Just a month and a half after deciding to up my monthly capital infusion into my Loyal3 portfolio to $500 per month for the remainder of the year, I was thisclose to putting in $700 this month and carrying that forward. Investing regularly is addicting, especially when it is as simple as Loyal3 makes it. With plenty of solid options, and more coming as time goes on, for a dividend growth investor, the ability to invest with as little as $10 per transaction and NO transaction costs is just sweet. 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.

So whether or not I put $500 or $700 in per month, my goals for this portfolio remain the same. Find whatever I view as the best values each month and invest in them, effectively dollar-cost averaging into a variety of position.  By doing this, I benefit not just by putting money into the markets regularly, but by building a portfolio with smaller investment amounts without worrying about bigger buys due to transaction costs.

As I mentioned above, Loyal3 allows investors to invest with as little as $10 dollars, per transaction, in 60 different companies. Of the 60 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 September, I made purchases of two different positions, both of which I already held in my Loyal3 account. As a bonus, I was able to purchase an extra $25 this month as a result of dividends earned during the month, giving me a total of $525 of newly invested capital.

September Loyal3 Trades

Trades - September No-Cost Dividend Growth Portfolio Purchases - MAT and MCD - Mattel_logoPurchased Mattel (MAT): A dividend growth stock with five consecutive years of increases, MAT most recently raised their dividend by 5.6% back in February.  This increase adjusted their annual payout from $1.44 to $1.52 per share. During this latest purchases, I allocated $275 of my $525 to MAT, with most of this being invested in the first week of the month. I picked up a total of 8.0276 shares at an average cost basis of $34.26 per share. Because MAT has seen some significant weakness over the last couple of months, these purchases were below my existing cost basis of $36.57 per share. Given the current dividend, my yield on cost for these additional shares is 4.44% and adds $12.20 to my forward 12-month dividends.

Trades – No-Cost Dividend Growth Portfolio Purchases: KO, MCD, and UL - Mcdonalds_logoPurchased McDonald’s (MCD): A true Champion in every sense of the word, MCD has been raising their dividends for 38 consecutive years. MCD is a truly global company with more than 35,000 restaurants in over 100 countries around the world serving millions of people each and every day. Recently, the stock has seen some weakness as same store sales have struggled and earnings projections have been adjusted. However, given their strong track record and ability to dominate the fast food industry, I am still looking to build out a position. Utilizing the remaining $250, I purchased 2.6855 shares at an average cost basis of $93.09 per share. Including the recent 4.7% increasing from $0.81 to $0.85 per share, my yield on cost for these additional shares is 3.65% and adds $9.13 to my forward 12-month dividends.

September No-Cost Dividend Portfolio 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. September’s purchases resulted in a total increase of $21.33 to my forward 12-month dividends and carried an overall average yield on cost of 4.06%.

My total no-cost dividend growth portfolio with Loyal3 still consists of seven holdings, but now with a forward 12-month dividend total of $121.81. 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: Peter Miller

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Comments

  1. Awesome job w2r! I haven’t bumped up my purchase amounts yet and still do just $25 increments but I’ve started to increase the volume of purchases. I’m still working out whether it’s better opportunities in KO/PEP where I have larger positions in my regular account or if I should just allocate capital there every month because those companies are extremely strong and shareholder friendly. Thoughts?

    • Given the regular means of investing for no cost and the added benefit of juicing your first year return by 1% or more, I think it makes sense to utilize Loyal3 for your KO and PEP positions. Timing the market more than the two-day process Loyal3 takes doesn’t make sense with stalwarts like KO and PEP, so one more reason to utilize them.

      Hope that answered your question!

  2. I just opened a Loyal3 account yesterday and bought $10 for MAT just to see if my credit card will be charge for a cash advance. I’m excited for my new project, can’t beat a freebie plus accumulating credit card rewards. Thanks for sharing W2R! :)

    • Congratulations on opening your account! I have seen no impact from my credit card when it comes to any charges from my credit card company, so I would hope you wouldn’t either. Hopefully, you find as much success as I have with Loyal3.

  3. I just stopped by the Loyal3 site. There aren’t a lot of stock choices, but I see 8 or 10 companies that could be considered core holdings. The idea of free trades is certainly intriguing. Like you mentioned, credit card purchases are the way to go as long as people don’t get in over there heads. The potential for overbuying could be a problem for some.

    Thanks for sharing.

    • You’re exactly right, the options are too expansive right now, but there are some really solid options that most dividend growth investors would love to have in their portfolio. Given the ability to juice your returns with credit cards, if used responsibly, it can turn into quite the portfolio. Of course, the key is responsible usage. I only purchase with funds designated to investing, just add the step of using my card.

      Appreciate your thoughts and for stopping by!

  4. WYOR,
    I’m up to contributing to 5 holdings per month at Loyal3, $50 each, once a month. I haven’t been making extra purchases recently because I’ve been buying in other accounts. But it’s nice to not pay any fees this way, and I get 1.5% cash back from my CC. Sweetness. I would add to MAT if I was making extra payments. I’m considering doubling down on MAT and selling the first half I bought for tax loss purposes.
    -RBD

    • It is really nice to purchase without adding any fees. The account is actually set up extremely well for tax-loss harvesting, and MAT is a prime candidate. Simply sell now, transfer the cash out, and repurchase in 31 days with a credit card again, and you are good to go. Not only do you get the losses, but you get to pick up the extra rewards to pay for your month on the sidelines.

      Thanks for your comment and glad to have you as a fellow user of Loyal3!

  5. Very solid buys. Loyal3 is a way great to build up your dividend portfolio.

  6. Thanks for sharing your recent L3 purchases with us. I like the MCD purchase from the two made. Not sure what’s happening with MAT though. I know it is becoming popular in recent days among the dividend blogging community as the stock slide has given rise to a very, very attractive yield. Congrats on achieving over $120 in forward divs in such a short time. Dividend investing is addicting!

    • I agree, I think MCD is the better of the two given the current toy market, however, I believe both will be successful in the long term. Of course, it would have been nice to get all of my MAT purchases in at the low 30’s, but I certainly didn’t anticipate this much of a hammering in the marketplace. Either way, I am very happy to have gotten to the $120 mark already with this account, and can really see the future benefits of this environment to build a portfolio.

      Appreciate your thoughts and support.

  7. I’m lovin’ the MCD trade, and I hear you on investing being addicting! I get legitimately antsy if I can’t make my monthly purchase. Just keep it reasonable, so you’re not forsaking other expenses :)

    • Thanks Developer! It certainly is addicting, however, I adhere to strict limits within the confines of my cash flow. Certainly not interested in going into debt to fund my growth at this point.

      Appreciate you stopping by and commenting.

  8. I think you are really doing well for yourself. I am liking the Loyal3 setup. I am going to give it a lookover because it may be very useful for a few of my friends and family. Good job.

    Keep cranking,

    Robert the DividendDreamer

    • Loyal3 if perfect for those new to investing or those without a lot to invest. By taking away the market timing and commissions, you eliminate some of the emotional and financial hurdles for those new investors. I hope some of them check it out. And if they have questions, feel free to send them my way.

      Thank you for the support!

  9. W2R,

    Nice purchases. I’m not quite sure about MAT, and I passed up on HAS for similar reasons (concerns about traditional toys) a while back. But MCD appears pretty solid. Even with continued disappointing SSS results, it should still be a solid long-term holding based on existing sales, buybacks, dividends, and new stores.

    Best wishes!

    • As of right now my plan is to build a position of about $1,000 or so in MAT before waiting and seeing what will happen from here. MCD is a core, long-term hold, even with their struggles. I think they will rebound, find a way to move forward, and continue to increase their dividends. While this last raise wasn’t all that great, I trust they will be a solid position in my portfolio.

      Appreciate your comment and support DM!

  10. W2R,

    Congrats! Really liking these no cost loyal3 purchases. It’s cool to see them adding significant forward income with such iconic companies. I’m thinking about starting a super small account and liking WMT and DPS on their list right now. Thanks for all the loyal 3 inspiration over all these months, it’s been very fun to watch.

    • I’m glad to have inspired you to consider opening an account. I think it is a great way to dollar cost average into sound companies like WMT and DPS. Be sure to let me know when you actually open an account.

      Thanks for stopping by Ryan!

  11. Great buys, W2R!

    I wish we had something like Loyal3 over here, it seems like a great way to kickstart a diversified dividend portfolio. When my free transactions run out at the end of this year, I’ll probably be investing at least €1,000 in a single position every time to keep transaction costs to a minimum.

    Glad to be a fellow MCD shareholder!

    Keep it up,
    NMW

    • Haha well we can’t always be so lucky! :)

      I think investing with consideration for your overall fees is important. I know when I make purchases in my traditional investment accounts, I aim for a transaction sized between $1,200 and $2,000. Best of luck as you transition your investment style.

  12. Good buys Adam!

    My account with Loyal3 continues to grow also… I am considering adding Kellogg’s to my portfolio this month.

    I like the 1.5% cash back too! FYI, Citi just came out with a card that pays 1% on the charge, and 1% when you pay. So, you can collect 2% total – super easy. I may add this card and start to use it. It’s called the Citi Double Cash card…

    For now, Loyal3 continues to be a great place to invest.

    Ray

    • Thanks Ray! I’m glad you are continuing to build your account and are hopefully seeing the dividends (pun intended!) of doing so.

      I’ll have to look into that card, because that sounds like a terrific benefit for those who use credit wisely. Thanks for the heads up!

  13. Good purchases, I own MAT myself and it is being a dog in my portfolio. Though, I know when christmas hits that is going to be the quarter when it shoots up. Patience will prevail and dividends will keep on rolling.

    Good job buying on consistent basis!

  14. Hi WriteYourOwnReality,

    You guys are lucky to have access to the Loyal3 account and its possibilities… I’m jealous… really! In Canada we don’t have such a good option… at least none that I know of.

    I’ve been agressive this summer with MCD too. I more than doubled my position there. MCD is facing a lot of headwinds recently but it’s an incredible cash cow! They also plan to give back 20 billions to shareholders in dividends and stock buybacks over the next two years. ;)

    I also own 30 Mattel shares that I bought at 35,65$ during the first quarter of 2014… I almost pressed the button to buy more at 30-31$… but I finally decided to stay on the sidelines with Mattel… There is good upside potential but if the sales continue to drop like that quarter after quarter… The payout ratio is pretty high already… Will they keep rising the dividend? I can’t wait to see what kind of results they are going to disclose in october. I think over the long term it will be a rewarding purchase but… just my thoughts… I bought a lot of risky titles with high yield and low growth recently to get a higher global dividend yield and reach my 2014 goal and balance things out. I guess I’ll pass on Mattel this time and soon go back to lower yielding stocks with higher growth prospects and greater stability.

    Good job by the way! Keep investing my friend!

    • I am certainly not complaining about our luck to have access to Loyal3!

      I agree about MCD. A market leader and a total cash cow. And this is before you consider the true value of the company which is the underlying real estate. Some serious resources to be leveraged there if ever needed.

      I am about at my max for MAT right now. I will probably make one more small buy to have put $1,000 into them, but will hold off on more until I get a better sense of how they do throughout the holiday season. Dropping earnings and a tight payout ratio certainly call into question the sustainability of the dividend growth.

      I appreciate your thoughts and for stopping by!

  15. I know well researched on Loyal3 but what do you think the down sides of investing with them is?

    • At this point, the only downside is if they go out of business. If this occurs, there will be some hassle in getting my assets transferred to the broker of my choice. Otherwise, I see no real negatives considering that I’m investing in individual companies and am protected by SPIC insurance. If this were a ‘fund’ of some kind, like Madoff, I’d be a bit more concerned (and wouldn’t be investing!).

      Let me know if you have any other questions!

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