Hook into Gains
My personal dividend investment journey
On the road to £1,000 per month in dividend income
My origin story:
I was born in 1984, and grew up on a council estate in North London. The surroundings looked very communistic (by design), ugly, prison style - concrete blocks where social deprivation lurked in the shadows. Whilst my upbringing was hard, it wasn’t all bad some of my best times and some of my greatest friendships were forged there, oddly most of us found solace within the struggle.
When I think about investing and anything financial was understood to be only reserved for the city of London, pin striped suits who rarely ventured outside of the square mile. Naturally, I wanted to make sure I could understand this gated wealth and try and understand if I could get a slice of it.
The breakthrough:
After a few lost years of working various jobs, which ended up mounting to nothing, I found a job worthy of sticking with. I found myself working in various buildings within the West-End of London, undertaking electrical and plumbing maintenance, during this time I also managed to go to college and get qualified in the trades too. I must say, the best investment you’ll ever make is the one in yourself that earns you money. If all goes away including financial markets, your craft you’ve learned will stay which means at the very least you’ll never starve.
I can say that with a degree of assurance, quite some time ago, I had no idea what a stock or share was, how to buy one or what a dividend was. My understanding of anything financial was very limited. Coming from a working class background, disbelief and discouragement was always nearby. As I got older though, I realised that a bit of hope and curiosity could help change things, simply changing thoughts and attitudes did wonders.
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The discovery:​
There was a moment during the late part of 2014, when something caught my attention. I won’t mention exactly where I was, but, I was at a globally well known university - working on campus. I overheard a professor giving a lecture on equities. He had touched on the power of compounding, which was intriguing to me. He also mentioned that he personally, never invests in companies which fail to distribute dividends.....this had me thinking- I must look into this investing thing. So I did just that. After several weeks of learning how the financial market operates, (specifically the equity space) I opened up my first investment account. I started out with a couple of index funds, indexing seemed to be the most cost effective option.
How and where I invest now:
I currently use Hargreaves Lansdown for my SIPP because, although Hargreaves Lansdown charge higher fees compared to alternative platforms, they offer a wide range of investment options which better suits my investment strategy and goals. I use InvestEngine and Trading212 for my ISA investments because of the zero to low fees associated. Over a long investment period there’s a much lower impact on investment returns compared to other platforms which charge fees.
2020 and beyond; individual dividend stocks:
Overall, factoring in dividend income with a small 7% capital appreciation, I’m roughly 11% up within the last 12 months (total return). Unfortunately a few of the higher dividend payers have been hammered. I have no plan to sell these, this account is a purchase and hold for the long haul. I haven’t managed to match or beat the index however, beating the global equity index isn’t the plan, the plan is to generate a decent amount of monthly income.
Dividend income so far:
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First year’s income, dividend 2020: £782.66 (£65.22 monthly)
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Second year’s dividend income, 2021: £1,348.55 (£112.38 monthly)
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Third year’s divided income, 2022: £2,133.02 (£177.75 monthly)
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Fourth year’s dividend income, 2023: £2,521.32 (£210.11 monthly)
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Fifth year’s dividend income, 2024 £2,844 (£237 monthly)
The dramatic effects of compounding:
Year after year the compounding process continues. Taking into account possible changes like dividend cuts, constant contributions with dividends reinvested should still produce a dramatic increase in overall returns. Obviously there are no guarantees and money left in the market will always be at risk, I still strongly believe my chances for success are considerably favourable.
The importance of dividend payout ratios:
The payout ratio is simply a metric displaying the portion of earnings in the form of dividends it pays to stockholders.
A payout ratio of 100% shows that the company is paying out more in dividends then it’s overall earnings can support. (This is considered risky) a payout ratio of less than 60% shows that the company is well equipped to keep paying those dividends out and at the same time reinvesting some of the profits into expanding its operations. ( This is generally considered a safer play)
I personally, will taking a few risks here and there. I’m not planning to be strict with the ratio rule, between 60 and 80% is safe enough for me and my timeline. Doing the unconventional and chasing higher dividend yields will help beef up the portfolio income. I’m a little radical and barely follow the crowd, at times this can also influence my financial decisions.
Portfolio breakdown:
I will be observing my top 20 investments roughly every six months to assure that I’m not overweight by more than 20% any given sector.
Here’s the breakdown of my top 20 holdings and sectors:
Stock Name | % Weight |
|---|---|
Canadian Natural Resources | 1.90% |
Southern Company (The) | 1.90% |
Altria Group | 2.00% |
Johnson & Johnson | 2.10% |
Visa | 2.10% |
Lockheed Martin Corporation | 2.20% |
Sun Life Financial | 2.20% |
Main Street Capital Corporation | 2.30% |
Abbvie | 2.40% |
Iron Mountain Incorporated New | 2.60% |
McDonalds Corporation | 2.60% |
Yum Brands | 2.70% |
Bank of Montreal | 2.80% |
Black Hills Corporation | 2.90% |
Global X NASDAQ 100 Covered Call UCITS ETF | 2.90% |
Investor AB | 3.40% |
Proctor & Gamble | 3.80% |
Enbridge | 4.30% |
Reality Income Corporation USD1 | 4.30% |
LTC Properties Inc | 5.60% |
Title | New Field | UK Equities | International Equities | Unclassified Funds | Property | Cash & Equilvalent | Other | Total |
|---|---|---|---|---|---|---|---|---|
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