Tax Refund Portfolio Update #5

We may earn money or products from the companies mentioned in this post.

Several months ago, we decided to take our tax refund and invest it into dividend stocks. For years, we had always just put our tax refund into 529 college savings plans for our kids.

While that wasn’t a bad option for investing the money, we decided to try and grow our dividend income instead by investing $5,000 of our tax refund into dividend stocks.

Tracking Our $5,000 Investment

We plan to track our $5,000 investment (from our tax return) here each month to show the power of investing in dividend stocks. This month was the second bad month in a row for the value of the tax return portfolio.

The good news is that these losses are only on paper. We still own quality dividend paying stocks that will take good care of us years down the road.

All of the shares that are bought or sold with these funds will be tracked and highlighted each month. The goal is to show the progress over time (years not months) of how $5K can grow if invested properly in quality dividend stocks.

Here are all of the initial purchases we made with the $5,000 investment –

  • BHP Billiton Ltd. (BHP) – 16 shares @ $44.76 = $716.18
  • Caterpillar Inc. (CAT) – 12 shares @ $86.82 = $1,041.84
  • Emerson Electric (EMR) – 9 shares @ $58.94 = $530.46
  • Realty Income Corp (O) – 31 shares @ $46.19 = $1,431.93
  • Omega Healthcare Investors (OHI) – 35 shares @ $35.96 = $1,258.70
  • Cash Balance – $20.89

We received two dividend payments this past month from shares we owned in the Tax Refund Portfolio that totaled – $25.14.

  • $5.89 – Realty Income Corp (O)
  • $19.25 – Omega Healthcare Investors (OHI)

These most recent payments pushes our total up to $40.47 in dividends to date. This past month we used a portion of this cash balance to buy 1 additional share of OHI stock for – $32.57 through Robinhood.

This gives us a total of 36 shares of OHI.

The remaining $7.90 from dividends will stay in our cash balance until we have enough funds to buy additional shares of stock.

At the time of this writing, these are the values of each stock that we have purchased along with the percentage increase or decrease.

  • BHP – $525.60 (16 shares @ $32.85) – down 26.6%
  • CAT – $860.16 (12 shares @ $71.68) – down 17.4%
  • EMR – $401.85 (9 shares @ $44.65) – down 24.2%
  • O – $1,461.34 (31 shares @ $47.14) – up 2.1%
  • OHI – $1,266.84 (36 shares @ $35.19) – up 0.6%
  • Cash Balance – $7.90

Note – Keep in mind the value of these stocks is at a point in time from the past and is already outdated.

Total Starting Balance – $5,000.00
Total Updated Balance (September) – $4,523.69

Increase/Decrease = -9.5%

The total decrease of (9.5%) is a little better than last month (11.6%) – despite 3 of our stocks in the portfolio losing ground. That is why diversification is so important.

Are we concerned about the (9%+) loss so far? Not really at all. While it does hurt a little reporting these numbers, we are still focused on buying great companies at a discount during this downturn in the market.

The capital losses are only on paper. The future dividend income is what we are really focused on here.

Increase in Future Dividend Income

Instead of worrying about share prices and portfolio value, we are more interested in increasing our future dividend income with this portfolio. By purchasing the 5 companies listed above, we have increased our 12 month forward dividend income by $243.75!

The breakdown of stocks is shown below with any changes from last month –

  • BHP – $39.68 (16 shares @ $2.48) – no change
  • CAT – $36.96 (12 shares @ $3.08) – no change
  • EMR – $16.92 (9 shares @ $1.88) – no change
  • O – $70.99 (31 shares @ $2.29) – up 0.4%
  • OHI – $79.20 (36 shares @ $2.20) – up 2.9%

12 Month Future Dividend Income = $243.75 (up 1.0%)

Note – It is important to point out that these calculations are no guarantee of future income. The numbers are estimated on the current dividend yield of each company.

Based on our projected dividend income, our yield on cost for these investments is 4.875%!

YOC = $243.75 / $5,000.00 = 4.875%


No matter how panicked you may feel, just remember that the best time to build a foundation of dividend stocks is when the market drops. Even though it may hurt to look at our portfolio in the short term, the benefits of buying and holding quality dividend stocks will eventually pay off.

Even though our tax refund portfolio is down by almost 10%, we are still earning a 4.875% return in the form of dividends. With each dividend payment, additional stocks will be purchased and added to this portfolio which will allow us to compound our earnings.

The market may rebound tomorrow and our worth of the portfolio would increase. Or the market may drop or stay the same. Who really knows?

What we can count on is the consistent (and growing) income stream of dividends these stocks will produce.

Are you a buyer or a seller in this market?

Full Disclosure – At the time of this writing, we owned shares in the following stocks noted in this post – BHP, CAT, EMR, O, and OHI. The material above is not a recommendation to buy. Please do your own research on a company before deciding to invest.

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