Featured Post

Hi. Please choose to view talks I've given during my time on the Greeley Stake High Council (GSHC), or my posts on investing (INV), or b...

Wednesday, June 6, 2018

Starting to Invest

On November 20th, 2017 I opened an account with Robinhood and executed my first trade, buying 1 share of Entravision (EVC). Thus began my pursuit to earn $1,000/month in dividend income by the time I retire in May 2042. 
Over the next month I bough four more shares, and earned $0.20 in dividend income. Hardly a princely sum, but I was on my way. 



On reflection, I'm not sure how I picked EVC as my launching point. I can't imagine that it would've been mentioned in a trade article; I don't know what search parameters I might've used; it's a mystery that I am comfortable to leave unsolved.
Flush with my very first success, my next task was learn something about how to effectively pick stocks for income. Learning something wasn't too hard because I knew nothing. Well, next to nothing. I had some experience in the market....
In 2000 I bought 1 share of Palm, maker of the Handspring Personal Data Assistant and other tech devices. A week or so later I sold it for a loss. So I did know something: I knew how to lose money in the market. It is, perhaps, no surprise that I brought that lesson forward to my dealings with EVC. I lost $0.46 on that deal. 
I determined to be better, so I decided on five sectors into which I could invest, sectors that were largely orthogonal. I chose Real Estate, Entertainment, Health Care, Technology, and Energy. Sure, there are some dependencies between them (particularly real estate and entertainment) but I think it's a pretty diversified list.
I made a spreadsheet and developed some criteria so that I could rank each stock I came across.



I considered the dividend payout frequency, awarding more points for monthly payout, whether the stock increased its payout, awarding more points for ongoing growth, and how well the stock aligned with its sector's payout.  Here I wanted to give more weight to a company that beat its competitors but not those that far outpaced them. As for scoring, there isn't a minimum score that any stock needs to clear (I'll get to outright rejections in a moment), the plan is to simply pick the best from those five sectors.
The sites I used (and use) to support my research include:
I mentioned that there are some immediately-rejected stock candidates. The motivation for this entire exercise is to provide retirement income, yes, and there are some qualifiers to that. One stipulation is that the portfolio yield must exceed a 3% return on my investment. My wife and I have the option to pay more on our mortgage each month, but that extra money isn't always 1/12th of a mortgage payment. Our mortgage has a 3% interest rate, so if we can invest that extra money each month, and earn more that 3% (after taxes) then we're making out ahead in the long run. If we can get to $1,000/month doing it, all the better.  

No comments:

Post a Comment