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I recently discussed how you can earn a double digit raise by investing in dividend stocks. For example, Microsoft (MSFT) just announced a 16% dividend hike which helped to increase our annual dividend income by over $10.
You may be thinking big deal – $10 is nothing to get that excited about. Sure, on its own it doesn’t sound all that glamorous. However, as part of a portfolio of 27 other stocks, it is a much bigger deal.
The recent dividend hike by Microsoft brings our 12 month forward dividend income up to $75.03, just from owning 52.1 shares of the stock.
So how did we come to accumulate over 50 shares of MSFT? We didn’t have the funds to buy all the shares at once, so we took advantage of free commission trades and started buying shares one month at a time.
Buying MSFT Shares One Month at a Time
All of our MSFT shares were purchased through the commission free broker – LOYAL3. The awesome thing about LOYAL3 (besides commission free trades) is that you can setup a monthly plan to automate your investments. Provided you invest at least $10 per transaction, you can start building a portfolio of dividend stocks one month at a time.
This is a great opportunity for new investors with little capital to get started. Almost 2 years ago, we setup our monthly plan at LOYAL3 to buy $50 worth of MSFT stock each month. At the time, that was the equivalent of about 1.3 shares of stock. Yes, you can buy partial shares of stock through LOYAL3, which is another way to put your investment dollars to work sooner rather than later.
We have since increased our monthly investments of MSFT to $100 for a while and now $150 per month. Now we are adding about 3.3 shares per month.
Here is a snapshot of our current MSFT holdings –
- Total Shares – 52.1041
- Average Share Price – $42.22
- Yield on Cost – 3.41%
- Forward Dividend Income – $75.03
- Total Dividends Earned – $61.47
In less than 2 years, we have built a sustainable income stream of $75.03 per year just from owning on of the best companies in the world. This assumes that the company will maintain its same dividend throughout the entire year.
We have also collected a total of $61.47 in dividends so far as we build our position in this company. All of these funds have been reinvested into additional shares of stock.
Our yield on cost is also a healthy 3.41%. This is so much better than the .75% our current savings accounts are earning.
As you can see from our results, it does not take a lot of money to start investing in dividend stocks. We have spent the last 23 months buying up small chunks of MSFT and will continue to add to our holdings for the foreseeable future.
Whether it be $150, $100, or even $10 a month – there is no excuse not to get started building your portfolio of dividend stocks.
Building a sustainable income stream of dividend stocks is quite simple really. All you need is a little money – in this case about $10 a month. Obviously the more money the better – but the barriers to entry are so low – $10!
You don’t need thousands and thousands of dollars to get started in the stock market. Free commission brokers like LOYAL3 (and Robinhood) make it possible for anyone to own dividend stocks.
By investing $50 to $150 a month for the past 2 years, my wife and I have built a sustainable income stream that will continue to pay us year after year. As each month goes by, we will continue to build our portfolio of stocks, which will help to compound our earnings and push us one step closer to financial independence.
Do you prefer to buy smaller lots of shares every month or buy larger lots with a lump sum investment?