How to start investing for less than $50
Since opening my Robinhood account, and starting this blog, I’ve met (and by met I mean via social media, not that old-school face-to-face nonsense my pops always talks to me about) some pretty awesome people (at least people who come across as awesome on social media).
Most, though … no, no, probably all, are already investors. That’s not a bad thing at all. It’s great, actually – I can bounce ideas off them, get some insights I wouldn’t otherwise stumble across and even find some serious inspiration – but one of the reasons I started this blog was to show people anyone – you, me, your cousin, that crazy neighbor of yours, the barista who hands you your coffee in the morning, your mail carrier — literally anyone can build wealth through investing.
If you’ve been following my journey, you know why I started. You also know I truly believe dividend growth investing is going to change my life in a major way. If you are among the uninitiated, I’m pretty sure it could change yours, too. If you’ve been investing for any meaningful amount of time, well, it’s probably already changed yours in one way or another.
With all that said, I wanted to write a quick post about just how easy, and inexpensive, starting a dividend growth portfolio can be.
For starters, get a Robinhood account (No, I’m not a spokesman, just a fan). Sign up, deposit $50 in your account and you’re literally almost done. I recommend Robinhood because it’s as inexpensive a brokerage as you’ll find. Inexpensive as in free. Buying is free (even single shares, which is how I’m building my portfolio), selling is free, there aren’t any account maintenance charges, nothing. It’s all free.
Once you do that, you can buy shares of three decent-looking companies in terms of dividends: Xerox, Ford and Enviva. If you buy just one share of each – Xerox for $7.49, Ford for $12.65 and Enviva for $27.55 (all prices as of close on Tuesday, Feb. 14) – your looking at a total investment of $47.69. Odds are you spent considerably more than that on your valentine … and I’m sure they were worth every penny. But, if you’re looking to do something for yourself, invest for your future. The dividends, which I’ll get into in a sec, will be pretty tiny at first, but the idea in dividend growth investing isn’t to get rich quick, it’s to get rich eventually.
OK, here’s why the above three stocks are solid starting points for your portfolio:
Xerox (XRX): Just one share of this baby will get you a cool $0.0775 each quarter, or an annualized dividend of $0.31. I hear you snickering, but that’s a yield of 4.14%. The company, which prints, copies and publish whatever you need it too, among other things, has been increasing its dividend for the past four years and I don’t see that changing anytime soon. It has a payout ratio of just 36.5%, which means it has a ton of room to keep inching it upward. It’s raised its dividend by 12.1% over the past three years.
Ford (F): Ford – you know, the car maker – is well off its 52-week high of $14.22 and has a price-to-earnings ratio of 10.92. In other words, it’s a good value right now. It also pays an annualized dividend of $0.60, which equates to a yield of almost 5% (4.78%). Ford hasn’t been known for raising its dividend of late, so it might not be great in terms of dividend growth, but it’s a low-risk place to start learning how this whole investing thing works.
Enviva (EVA): Enviva produces and supplies utility-grade wood pellets to power generators. It’s good for the environment and, in my nowhere-near-expert opinion, good for your portfolio. It was founded in 2013, so doesn’t have much of a track record, but the company has increased its dividend each of the last four quarters. That’s right, quarters. Three quarters ago, back on May 12, 2016, it paid a dividend of $0.51 per share. It paid $0.525 the quarter after that, $0.53 the quarter after that and will pay a $0.535 dividend Feb. 28. I wish every company raised its dividend each quarter. Anyway, the annual payout is currently $2.14, which gives Enviva a juicy 7.77% yield.
See, I told you … you can start a dividend growth portfolio for under $50.
Disclaimer: I am average at most everything I do. Making stock pics probably isn’t an exception, so don’t mistake anything you find on this blog as sound investing advice. simply put, it’s what I did/would do.