Week 8: Diversifying the Dividend Farm

Trading 6 companies for 30

A broad drop like we had at the beginning of the month can really make a person re-evaluate what they’re investing in.

It certainly made me think a little. Heck, I did more than think … I acted.

When August started, I had six or so positions. Now, a week or so later, I have 30. Why? The answer is pretty simple: I just wasn’t diversified enough. My portfolio was sinking considerably more than the market as a whole because of it and, while that’s not always a reason to sell, it was for me. It was pretty obvious I didn’t have my money in enough baskets. In fact, it was almost all tied up in three – financials (Fifth Third Bank), telecoms (AT&T) and autos (General Motors) – and three that were on the struggle bus to say the least.

The Fed’s rate cuts are not good for banks. It’s just that simple. The whole trade war thing, meanwhile, is putting a damper on the auto industry. That sucked for me, too. Fifth Third Bank and GM or Ford seem to be fine investments in general – the autos pay good dividends and are severely undervalued right now and the banks, well, most of them are pretty cheap as well … and they have been raising their dividends like crazy – but now’s not the time to limit your investing to those sectors alone. That was kinda dumb on my part.

I knew I had to diversify, and this past week was a great time to do just that. Everything was down. Everything. That said, I decided to sell what I had and buy my favorite three companies in each sector. I’m generally not an advocate of selling, but in this case I needed to because I didn’t have thousands of dollars to invest on top of what I’d already poured into my Robinhood account.

The new-look Dividend Farm

OK, so enough context. I wasn’t very diversified so, when the market dipped, I saw an opportunity to change that. I sold what I had and bought one share of 30 different companies – three from each sector other than real estate.

Here’s what I came up with:

Walt Disney Company (The) DIS Communication Services (Entertainment)
Verizon Communications Inc. VZ Communication Services (Diversified Telecommunication Services)
Activision Blizzard, Inc ATVI Communication Services (Entertainment)
JP Morgan Chase & Co. JPM Financials (Banks)
Allstate Corporation (The) ALL Financials (Insurance)
BlackRock, Inc. BLK Financials (Capital Markets)
Microsoft Corporation MSFT Information Technology (Software)
Apple Inc. AAPL Information Technology (Technology Hardware, Storage & Peripherals
Cisco Systems, Inc. CSCO Information Technology (Communications Equioment)
Starbucks Corporation SBUX Consumer Discretionary (Hotels, Restaurants & Leisure)
Nike, Inc. NKE Consumer Discretionary (Textiles, Apparel & Luxury Goods)
Lear Corporation LEA Consumer Discretionary (Auto Components)
Johnson & Johnson JNJ Healthcare (Pharmaceuticals)
Quest Diagnostics Incorporated DGX Healthcare (Healthcare Providers and Services)
AbbVie Inc. ABBV Healthcare (Biotechnology)
Eastman Chemical Company EMN Materials (Chemicals)
Vulcan Materials Company VMC Materials (Construction Materials)
Nucor Corporation NUE Materials (Metals & Mining)
Boeing Company (The) BA Industrials (Aerospace & Defense)
United Parcel Service, Inc. UPS Industrials (Air Freight & Logistics)
Caterpillar, Inc. CAT Industrials (Machinery)
Pepsico, Inc. PEP Consumer Staples (Beverages)
Costco Wholesale Corporation COST Consumer Staples (Food Staples & Retailing)
Procter & Gamble Company (The) PG Consumer Staples (Household Products)
American Electric Power Company AEP Utilities (Electric Utilities)
Artesian Resources Corporation ARTNA Utilities (Water Utilities)
Pattern Energy Group Inc. PEGI Utilities (Independent Power & Renewable Electricity Producers)
Exxon Mobil Corporation XOM Energy (Oil, Gas & Consumable Fuels)
Chevron Corporation CVX Energy (Oil, Gas & Consumable Fuels)
Phillips 66 PSX Energy (Oil, Gas & Consumable Fuels)

As you can see, I am pretty damn diversified now. Even within sectors, I have companies in different industries. I’m happy about that. I’m also happy to be an owner of Microsoft, Starbucks and Disney stocks – three companies I’ve always loved, but initially stayed away from because of valuation.

The next steps

Now, the plan is to add to these positions a bit … and try to do so while increasing my dividend income month over month. I’m locked in at $2.88 for July. Every cent of that came from Fifth Third Bank, which I no longer own. I already earned $5.10 from AT&T – another company I don’t own anymore – this month and should receive another small payment or two from one of my recent purchases. I have some time to add to my September dividends before ex-dividend dates start to creep into play, but the goal is to get somewhere between $8-10. After that, I’ll take a look at my October payers (Allstate, Cisco, Chase, Nike, etc.) and aim for $12-15 and go from there.

March with me

Looking to get started? Start with Robinhood: http://share.robinhood.com/benjams352

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