Tax Refund Portfolio Update #6

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

Earlier this year, we decided to take our tax refund and invest it into dividend stocks instead of using it for our kids 529 college savings plans. While my wife and I want to help our children out as they go off to college, we are also trying to grow our future income.

This year we decided to invest $5,000 of our tax refund into dividend stocks and track our progress.

Tracking Our $5,000 Investment

Each month, we track our $5,000 investment (from our tax return) to show the power of investing in dividend stocks. This month gave us a lot to look forward to from the tax return portfolio compared to recent updates.

Regardless of how high or low the value of this portfolio gets, the results are only on paper. We are much more interested in the amount of income this portfolio produces each year and that it is constantly growing.

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

  • 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

This past month, we received three dividend payments from shares we own in the Tax Refund Portfolio that totaled – $29.96.

  • $19.84 – BHP Billiton Ltd. (BHP)
  • $4.23 – Emerson Electric (EMR)
  • $5.89 – Realty Income Corp (O)

These recent payments pushes our total dividend income earned up to $70.43 for the tax return portfolio.

The cash balance in our portfolio and recent dividend payments allowed us to purchase 1 additional share of BHP stock for $35.09 through Robinhood. This gives us a total of 17 shares of BHP.

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 – $601.46 (17 shares @ $35.38) – down 16.0%
  • CAT – $850.56 (12 shares @ $70.88) – down 18.4%
  • EMR – $430.02 (9 shares @ $47.78) – down 18.9%
  • O – $1,555.89 (31 shares @ $50.19) – up 8.7%
  • OHI – $1,333.08 (36 shares @ $37.03) – up 5.9%
  • Cash Balance – $2.77

Note – Keep in mind the value of these stocks is at a point in time from the past and is already outdated.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 (October) – $4,771.01

Increase/Decrease = -4.6%

The total decrease of (4.6%) is much better than what we reported two months ago at (11.6%). Remember these capital losses are only on paper. The future dividend income is what we are really focused on here.

Increase in Future Dividend Income

While it certainly was nice to see a big jump in the value of our portfolio, the value is still below our original investment amount. So instead of worrying about share prices and portfolio value, we are more interested in increasing our future dividend income with this portfolio. And we did just that this past month!

By purchasing the 5 companies listed above, we have increased our 12 month forward dividend income by over $200!

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

  • BHP – $42.16 (17 shares @ $2.48) – up 6.3%
  • 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) – no change
  • OHI – $80.64 (36 shares @ $2.24) – up 1.8%

12 Month Future Dividend Income = $247.67 (up 1.6%)

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 4.95%!

YOC = $247.67 / $5,000.00 = 4.95%


Even though our tax refund portfolio is down by almost 5%, we are still earning a hefty 4.95% 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.

In addition, anytime a company raises its annual dividend (like OHI this past month), our future dividend income increases.

Instead of worrying about which way the market turns, we are focusing on consistent (and growing) income streams 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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