Why I have a 100-company portfolio
When I started my dividend-growth portfolio seven months ago, I had no idea how many companies I’d end up investing in. I knew I wanted to start with a healthy handful — 10, 15, maybe even 20 or so — but wasn’t sure how many I’d want once things really got rolling.
Well, now I know: 100.
Yup, 100. Sounds like a lot, I know, but you can never have enough of a good thing … like padding the most passive of passive-income streams by, well, doing next to nothing.
I’ve been eyeing 100 for a few months now and, after purchasing a share of MasterCard (MA) earlier this week, I hit the magic number. I can’t say I’m in love with all the companies in my portfolio — it’s hard to love 100 of anything — but I certainly like ’em. Either way, like or love, I have a good reason for owning each and every one of them. Some have high dividend yields without a ton of room for growth while others, most of them, have low to medium-range yields with plenty of operating room to bump them up in the future.
I’m pretty excited, guys. Most of the positions are a single share, which I know the more experienced investors out there would argue is an awful way to build a portfolio, but it’s just a start. The positions will grow as the dividends do and, since I use Robinhood, I never have to pay a fee.
That’s the key.
Until Robinhood came along, no one built a portfolio with single shares of 100 different companies. It wouldn’t make any sense. If you used a traditional broker, like Fidelity, you’d pay $795 in commissions ($7.95 x 100). Buying and selling stocks with Robinhood is absolutely free, though, which came in handy during phase 1: starting positions in 100 companies. It’ll come in handy in phase 2, too, which will be adding to those positions through future deposits into my account and reinvesting all the dividends I’ll be receiving. Instead of dumping large amounts of cash into my account, cash which I don’t have, I can continue my march at a comfortable pace. Similarly, since I have small positions right now, the dividend payments, while frequent and dependable, will be small for a little while.
Oh, and speaking of frequent a dependable, I structured the portfolio to create a steady stream of dividends. How frequent, you ask? How about 33 payments a month.
That’s another key.
I want my portfolio to be like an ATM machine, spitting cash my way on a daily basis. I know it would be next to impossible to build a portfolio that could do that, but, as it is, I’ll at least average more than one dividend payment a day. All but one of the companies in my portfolio pay quarterly dividends, which will get me 396 dividend payments per year. The other company pays twice a year, so I’m looking at 398 payments in all.
Of the 99 quarterly payers, 33 pay their first dividend in January, 33 pay in February and 33 in March. Once April rolls around, I’ll be getting paid from the 33 that paid me in January again and, well, so on and so forth.
Now that I have the 100 positions, the plan is to strategically add to them. I’m thinking I’ll try and start by buying more of the undervalued stocks (P/E ratio less than 15) and aim to make purchases as close to the ex-dividend dates as possible. By doing that, I figure I have a better chance of appreciation and, at the very least, I’ll get my hands on the dividends that much faster.
Here are a few facts about my journey to 100:
First purchase: 2 shares of At&t (T) for $84.92 ($42.46 each) back on July 11, 2016.
Last purchase: 1 share of MasterCard (MA) for $110.46 on February 23, 2017.
Highest yield: EVA (7.64%).
Lowest yield: MA (0.80%).