I bought 20shares of the American auto parts company Genuine Parts Company (GPC) at $77.06per share. The total purchase amount was $1,546.25 and represents roughly 1.4%of the full portfolio.
GenuineParts Company distributes automotive replacement parts, industrial replacementparts, office products, and electrical/electronic materials in the UnitedStates, Puerto Rico, the Dominican Republic, Mexico, and Canada. The companydistributes automotive replacement parts for imported vehicles, trucks, SUVs,buses, motorcycles, recreational vehicles, farm vehicles, small engines, farmequipment, and heavy duty equipment; and accessory items used in the automotiveaftermarket, such as repair shops, service stations, fleet operators,automobile and truck dealers, leasing companies, bus and truck lines, massmerchandisers, farms, industrial concerns, and individuals through 64 NAPAautomotive parts distribution centers and 1,100 NAPA AUTO PARTS stores.
The currentP/E amounts to 18.61 and the forward P/E is expected at 15.86. Earnings are forecastedto grow at rates of 8.9% for the next year and 8.9% for the next half decade.
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| Earnings and Dividend Payments of Genuine Parts (GPC) |
It’s veryinteresting and impressive to see how good the industry works for long-terminvestors. The autoparts wholesaleindustryis a very small niche and GPC is one of the leading companies. GPC is a Dividend Champion and King combined. It hiked its dividendsover 57 consecutive years.
The newstake will give me around $43 in yearly dividends. The total portfolio dividendincome is now expected at $1,377.55. I plan to increase this value to $3,000 -$4,000 by the end of this year. All I need to do is to find stocks with a yieldon cost of more than 3%. The recent stock buy of GPC could only fulfill this criterionwhen it hikes one of the next dividend payments by more than 8.3%. It’s still possiblebecause the latest hike was in December 05, 2012.
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| Dividend Yield Portfolio (click to enlarge) |
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| Lastest Portfolio Transactions (Click to enlarge) |
But myproblem is still present. Yields go rapidly down because of higher stockprices. If the companies don’t hike their dividends, investors need to acceptthe new price levels and lower yields from equities.
It'S also possiblethat we are in a new situation where investors couldn’t expect higher returns from theincome of their assets. The current yield-curve goes to zero and the nationalbanks flooding the markets with cheap money. The result is a very low interestlevel and exploding asset prices.
I’ve noidea how it could end. I don’t think that chaos or a crisis is coming - but wheninflation comes and lending rates are more expensive, something will be happen.People will realize that they have paid too high prices for low yieldingassets. I could only hope that this will no painful bubble. As of now, itlooks still solid and reasonable.
The current portfolio is up 3.16% since the date of funding October 03, 2012. Because of the high cash amount (61.4% is still not invested) and the slow buying process which is part of my strategy, the performance underperforms the market but has also a much lower volatility.
The stock holdings alone delivered a return of 7.3% or $2,836.60. That's better than the performance of the Dow Jones, Nasdaq and S&P 500.
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| Portfolio Performance (Click to enlarge) |
Here is the income perspective of the portfolio:
Sym | Name | P/E Ratio | Dividend Yield | | Buy | # Shrs | Income | Value |
TRI | Thomson Reuters C | 12.76 | 4.04 | | 28.90 | 50 | $64.25 | $1,589.50 |
LMT | Lockheed Martin C | 11.41 | 4.51 | | 92.72 | 20 | $86.00 | $1,890.60 |
INTC | Intel Corporation | 9.92 | 4.19 | | 21.27 | 50 | $44.25 | $1,047.00 |
MCD | McDonald's Corpor | 18.77 | 2.92 | | 87.33 | 15 | $44.10 | $1,521.30 |
WU | Western Union Com | 8.69 | 3.07 | | 11.95 | 100 | $45.00 | $1,432.00 |
PM | Philip Morris Int | 18.28 | 3.55 | | 85.42 | 20 | $67.18 | $1,854.40 |
JNJ | Johnson & Johnson | 21.35 | 2.96 | | 69.19 | 20 | $48.80 | $1,640.80 |
MO | Altria Group Inc | 17.08 | 4.92 | | 33.48 | 40 | $69.20 | $1,393.60 |
SYY | Sysco Corporation | 18.88 | 3.2 | | 31.65 | 40 | $44.00 | $1,375.20 |
DRI | Darden Restaurant | 15.58 | 2.94 | | 46.66 | 30 | $45.00 | $1,516.20 |
CA | CA Inc. | 12.6 | 4.04 | | 21.86 | 50 | $50.00 | $1,230.00 |
PG | Procter & Gamble | 17.83 | 2.86 | | 68.72 | 25 | $56.20 | $1,955.75 |
KRFT | Kraft Foods Group | 18.85 | 3.90 | | 44.41 | 40 | $80.00 | $2,049.60 |
MAT | Mattel Inc. | 19.49 | 2.98 | | 36.45 | 40 | $51.60 | $1,705.60 |
PEP | Pepsico Inc. Com | 20.27 | 2.7 | | 70.88 | 20 | $43.00 | $1,571.80 |
KMB | Kimberly-Clark Co | 22.28 | 3.08 | | 86.82 | 15 | $45.45 | $1,489.65 |
COP | ConocoPhillips Co | 8.76 | 4.51 | | 61.06 | 20 | $52.80 | $1,170.80 |
GIS | General Mills In | 17.96 | 2.02 | | 42.13 | 30 | $29.70 | $1,462.20 |
UL | Unilever PLC Comm | 21.1 | 2.98 | | 39.65 | 35 | $43.89 | $1,467.20 |
NSRGY | NESTLE SA REG SHR | 20.57 | 2.88 | | 68.69 | 30 | $63.15 | $2,176.80 |
GE | General Electric | 17.86 | 3.12 | | 23.39 | 65 | $46.80 | $1,490.45 |
ADP | Automatic Data Pr | 22.57 | 2.56 | | 61.65 | 25 | $41.50 | $1,594.25 |
K | Kellogg Company C | 23.97 | 2.73 | | 61.52 | 25 | $43.75 | $1,591.00 |
KO | Coca-Cola Company | 20.58 | 2.58 | | 38.83 | 40 | $41.80 | $1,603.20 |
RTN | Raytheon Company | 10.56 | 3.5 | | 57.04 | 20 | $41.00 | $1,163.60 |
RCI | Rogers Communicat | 15.13 | 3.23 | | 51.06 | 30 | $48.69 | $1,501.20 |
GPC | Genuine Parts Com | 18.72 | 2.61 | | 77.06 | 20 | $40.44 | $1,541.20 |
| | | | | | | | |
| | | | | | | $1,377.55 | $42,024.90 |
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| | | | | | | Average Yield | 3.28% |
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| | | | | | | Yield On Cost | 3.53% |
FAQs
As concerns regarding delayed rate cuts amid looming geopolitical threats pile on, investing in dividend stocks might be the best move for investors seeking passive income. These investments not only provide a steady stream of income but also offer a cushion against market fluctuations.
How to make money with dividend yield? ›
One way to start receiving dividends is to buy stock in a company that pays them. Many companies pay dividends and several have long histories of raising payouts annually. For example, Walmart announced in February 2024 that it was raising its annual dividend for the 51st consecutive year.
How much dividend income from 1 million? ›
Stocks in the S&P 500 index currently yield about 1.5% on aggregate. That means, if you have $1 million invested in a mutual fund or exchange-traded fund that tracks the index, you could expect annual dividend income of about $15,000.
How to build a dividend income portfolio? ›
To create your dividend portfolio for now and the future, it helps to incorporate the following features into your investment strategy.
- Taxable vs. Retirement Account.
- Individual Stocks vs. Mutual funds/ETFs.
- Consistent Track Record.
- Sector Investing in Your Dividend Portfolio.
- Diversification.
Setting Up Your Portfolio
- Diversify your holdings of good stocks. ...
- Diversify your weighting to include five to seven industries. ...
- Choose financial stability over growth. ...
- Find companies with modest payout ratios. ...
- Find companies with a long history of raising their dividends. ...
- Reinvest the dividends.
For purposes of defining a business enterprise as the active conduct of a trade or business, it is important to distinguish gross income from active conduct of a business from income derived from passive sources. Gross income from passive sources includes: Dividends, interest, and annuities.
How to make $1000 a month in dividends? ›
As Benzinga explained, to calculate your estimated investment value you need two variables: your desired annual earnings target ($12,000) and the dividend yield of the stock (0.73%). Here's the formula: $12,000 / 0.0073 = $1,643,835.62 to generate an income of $1,000 per month.
How much does it take to make $1000 a month in dividends? ›
In a market that generates a 2% annual yield, you would need to invest $600,000 up front in order to reliably generate $12,000 per year (or $1,000 per month) in dividend payments. How Can You Make $1,000 Per Month In Dividends?
How much to make $1,000 a year in dividends? ›
About $11,900 spread evenly among these stocks is enough to secure $1,000 in annual dividend income. Moreover, there's a good chance they will be able to raise their dividend payments, and your income stream, for many years to come.
How to earn 10% interest per month? ›
Here's my list of the 10 best investments for a 10% ROI.
- How to Get 10% Return on Investment: 10 Proven Ways.
- High-End Art (on Masterworks)
- Invest in the Private Credit Market.
- Paying Down High-Interest Loans.
- Stock Market Investing via Index Funds.
- Stock Picking.
- Junk Bonds.
- Buy an Existing Business.
If you are considering a dividend-focused strategy, you should carefully assess your income needs and risk tolerance. For example, if you require an income of 100,000 per year and were looking at a dividend yield of 10%, you would need to invest 1,000,000.
Can you become a millionaire from dividend stocks? ›
Dividend investing can indeed be a path to building wealth over time.
Can you live off a dividend portfolio? ›
Dividends are particularly valuable in retirement because they provide a consistent stream of income that can help cover living expenses. And, unlike bonds, dividend stocks offer the potential for capital gains as well as income. That means your portfolio can continue to grow even as you withdraw money from it.
How to make $5000 a month in dividends? ›
To generate $5,000 per month in dividends, you would need a portfolio value of approximately $1 million invested in stocks with an average dividend yield of 5%. For example, Johnson & Johnson stock currently yields 2.7% annually. $1 million invested would generate about $27,000 per year or $2,250 per month.
How many stocks should I own in a dividend portfolio? ›
Assuming you do go down the road of picking individual stocks, you'll also want to make sure you hold enough of them so as not to concentrate too much of your wealth in any one company or industry. Usually this means holding somewhere between 20 and 30 stocks unless your portfolio is very small.
What is the best stock for passive income? ›
Top Wall Street analysts like these 3 dividend stocks for passive...
The Risks to Dividends
9 In other words, dividends are not guaranteed and are subject to macroeconomic and company-specific risks. Another downside to dividend-paying stocks is that companies that pay dividends are not usually high-growth leaders.
How much stock would you need to live off dividends? ›
How Much Money You Need to Retire on Dividends. As a rough rule of thumb, you can multiply the annual dividend income you wish to generate by 22 and by 28 to establish a reasonable range for how much you need to invest to live off dividends.
What is the downside of high dividend stocks? ›
In some cases, a high dividend yield can indicate a company in distress. The yield is high because the company's shares have fallen in response to financial troubles. And the high yield may not last for much longer. A company under financial stress could reduce or scrap its dividend in an effort to conserve cash.
