My First Stocks

Everyone says Step 1 is always the hardest in anything you do, but I always find step 2 the most challenging.  Anyone can start something. Step 2 is where things get tricky.

I started off my portfolio with around $1,200 that I made through “side hustling” aka website design and affiliate sites through the last 2 years. It’s definitely not much, but everyone starts somewhere. Warren Buffet (I’ll likely reference him a lot) invested $228 in 6 shares of Cities Service (now called Citgo) when he was just 11 years old. Well, I’m 28 and I have some catching up to do. PS. What kid knows to invest when their 11?

Now, I took the most amateur approach to selecting my first stocks. You’ve probably done this too. I went around to the blogs/sites that I thought provided the best financial know-how and selected from their top performing stocks. This isn’t the worst idea ever, but I figured how much trouble could I get in with only $1,200 with stocks picked by the professionals. It wasn’t money I earned through my “real” job so it wouldn’t hurt so bad if I lost it. Right?

I’m making not recommendations, but I stared investing through the Robinhood App. There are a lot of great brokers out there that let you buy and sell stock, but since I’m trading so few stocks at a time I wanted the cheapest broker. Most of them cost between $7 -$10 a trade. I personally think that sucks A LOT. With the Robinhood App I pay $0 for each trade. It’s pretty awesome. Trading fees are one of the most important factors when selecting a broker. Fees take a major cut of your profits.

I started with:

  • DCP Midstream (DCP) – 4 shares @ $28.10
  • Realty Income Corporation (O) – 2 shares @ $44.27
  • Coca-Cola Corporation (KO) – 2 shares @ $39.17
  • Johnson & Johnson (JNJ) – 2 shares @ $93.58
  • Aflac Incorporated (AFL) – 2 shares $57.77
  • The Walt Disney Company (DIS) – 2 shares $104.52
  • Omega Healthcare Investors (OHI) – 3 shares @ $32.33
  • The Procter & Gamble Company (PG) – 4 shares @$68.06
  • DCP Midstream (DCP) – 1 share @ $30.06

Now here’s why:

Some of these reasons may seem silly, but if I’m to be honest with you, this is how it went. DCP Midstream (DPM) I have heard of before. I knew they were a transporting company for natural gas and oil through their vast system of piping. Much like a toll road, they get paid just to pass through their system. Plus they paid a 13.42% Yield. That’s incredible for a stock to pay that much to shareholders. (CAUTION: companies that pay an extremely high dividend usually have something wrong with them, proceed with caution). I thought this was awesome until I realized how in debt they were a couple weeks later when learning how to read finances. I use normally use Yahoo Finances for this. That’s when I realized I needed to sell, but at the time their stock was around $23 which I would sell for a loss. So I took a risk and waited until it came back up. Luckily another week later as soon as it broke even I sold for $29.14. In the end I made $3.24 and a great life lesson about looking before you leap. Most people aren’t that lucky.

I was thrilled when I purchased Realty Income Corporation (O) otherwise known as the monthly dividend company. They are a REIT, or real estate investment trust which invest in real estate. What makes them great is that they pay their dividend each month. Technically if you had $1,000,000 invested in them at their Yield of 4.69% (and it keeps growing). You could receive a monthly paycheck from them of $3,908 for an annual salary of $46,900, before taxes of course. I don’t recommend you put all your eggs in one basket, but it sounds cool, right? Plus another thing I like about them is they are regularly rated at the top of every REIT list as a reliable income. They invest in buildings with tenants that have long leases so that maintain a steady stream of income for their shareholders.

How could I resist in investing in Coca-Cola Corporation (KO)? Nearly everyone compares Coca-Cola as the horse to beat since their stock is constantly climbing and dividend paying. Plus people love soda. Hell, I used to drink four bottles of Coke a day and that’s normal for the type people I hang around with. In a world where there is so much to do, caffeine is needed to get it done, so I’m happy to buy into this business model. However I would love for them to stretch a little more out of the soda business for more opportunities to grow. Like how Pepsi also operates Frit-Lay which produces Lays, Doritos, Cheetos, etc.

Johnson & Johnson (JNJ) is where I didn’t know a lot about, but EVERYONE was talking about this stock. It pays 3% dividends and has so much control on healthcare, which is growing because all the baby boomers. It seemed like a good stock to add to my initial portfolio. This is a stock that I will like to add more to, but since I usually only invest $100 at a time, I usually have to save up a bit more just to buy 1 stock since it’s at $102 now. Baby steps right?

I love companies that have subscription services or companies like Aflac Incorporated (AFL). I hate insurance myself because you’re paying a company that on the off chance something may happen to you, hoping insurance will cover the cost. I’m sure everyone has a horror story of a particular company not covering something you needed help with. Their entire business model is to keep paying them until you die. As an investor I love that, but as an decent person it is the worst. Although I didn’t know to much more about Aflac than they do insurance, I just took the leap and invested. So far I haven’t been disappointed, but I would like to re-exam this once I learn even more about how to compare insurance companies.

The Walt Disney Company (DIS) oh what a stock. This company is huge! It has ESPN, Marvel Studios, Star Wars and SO much more geared towards kids (most adults are still kids). With the new star wars movies coming up, new theme parks and sports in general, I was happy to get in when I did. I think this company has so much growth opportunities and is so large, I am pretty confident in this company’s growth. Maybe because I’m a big fan of the franchise myself. Unless I see something drastically evil from the imagination company I’ll keep reinvesting.

I mentioned before with the Baby Boomers that healthcare is a great sector to invest in. So when I did my initial rush of investing I took a shot in the dark with Omega Healthcare Investors (OHI) who invest in long-term healthcare facilities to take care of the aging population. This makes total sense to invest in right? Well what I forgot to do is look at all their competitors and see if this is the right one. To be honest, I still have no idea which healthcare company to invest in besides Johnson and Johnson but I had a bit of a scare when I realized I knew nothing else about this company and sold my entire stake in them a few weeks later. Again always investigate thoroughly any company you’re considering investing in. I was lucky and made $8.07 off my sale when I exited, but it could have gone the other way.

My final company I jumped into bed with was Proctor & Gamble Company (PG). What doesn’t this company make? Well, there is a lot they don’t make, but they make so many solid consumer goods such as Beauty, Hair and Personal Care, Grooming, Healthcare, Fabric Care and Home Care. This business model is great because even when the economy tanks, people will still buy toilet paper and that will keep my dividends coming. I personally am a huge fan of consumer staple stocks, so this is just a must have for me.

You’ll notice all these stocks have dividends that they pay to shareholders. Pretty cool right?

Disclaimer: I don’t personally recommend any stocks, I am just sharing my personal story.

6 replies
  1. DivHut
    DivHut says:

    Nice to find a blog with someone just starting out their dividend growth journey. You have quite a few solid names in your list which I can definitely get behind. It’s important not to chase yield rather solid dividend growth and sustainability. Too often newbies get sucked into the double digit yields only to find major cuts in their future. Of course, nothing is guaranteed and even dividend stalwarts like GE and WFC have cut in recent years. I guess your DCP is tempered but other high quality names like AFL, KO, JNJ, PG and the like. For my investment dollars I do not wish to speculate on any high yield, small cap companies. For the most part, just proven long term payers and raisers. Thanks for sharing.

    Reply
    • Andrew
      Andrew says:

      Thanks DivHut! That means a lot coming from you, I love your journey and look forward to continuing to track your progress. I’m in the same boat with high yield companies. I’m finding myself sticking to large brand names I can trust or that I feel will be around for 50 or so years. Any kind of double digit high yields scare me right now.

      Ps. sorry for the delay getting your comment posted, still working on tweaking the way comments get processed. Hopefully, it will get more automatic like Jason’s at Dividend Mantra (or used to be Jasons).
      -Andrew

      Reply
    • Andrew
      Andrew says:

      Thanks Investment Hunting! I went on a limb to try the Robinhood app and love it. The only downside is the 3 day processing time it takes for funds to get into or out of the account but I think it’s worth it considering the no trading fee. Currently, I’m only buying a few shares every two weeks so the zero trading fee has been perfect for me.

      I look forward to following your site more as well!
      -Andrew

      Reply
  2. Money Grower UK
    Money Grower UK says:

    Congrats on starting the journey to financial freedom Andrew! I have also recently purchased my first dividend paying stock and subsequently received my first dividend payment. It certainly feels great receiving money from companies rather than having too pay them all the time.

    You’ve picked some good solid dividend paying companies there. I have recently been looking at JNJ and will be looking to add it to my portfolio at the right price.

    Reply
    • Andrew
      Andrew says:

      It’s great to hear you’re also starting this journey at the same time. I agree, the first time I received my dividend payout was insane. I just sat there thinking, my money will increase and they will pay me for this. Why have I not been doing this for ages?

      I am hoping to pick up more JNJ soon. With the recent downswing, I’ll likely pick up another share or two if JNJ goes below $100.

      Thanks for finding me and I’m looking forward to following your journey as well.
      -Andrew

      Reply

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