Robinhood App Tutorial – Investing the Free Way

I’ve been meaning to sit down and write a Robinhood App Tutorial for awhile now. The Robinhood App is alluring to a lot of beginner investors due to it’s no-fee stock trades. If you have no idea what that means because you’re a complete Noob–don’t worry, we all were there at one time.

Almost every stock broker (Schwab, TradeKing, TDAmeritrade) charges a fee anytime you buy or sell a stock. The prices can differ between brokers, but it’s usually around $9.99+ per trade. When you’re just starting out, a lot of times you don’t have a lot of capital (money) and you end up taking a big chunk out of your money every time you buy/sell. Once you get rich and can start doing trades in increments of thousands, the price doesn’t effect you as much but when you’re just starting out, it hurts. That’s where the Robinhood App comes in:

First things first. You have to have a smartphone. The Robinhood App currently supports Iphone and Android devices. It currently doesn’t have a web app, so you’re going to have to do the ordering on your phone. There’s also some Account requirements below:

  • Be 18 years or older
  • Have a valid Social Security Number (not a Taxpayer Identification Number)
  • Have a legal U.S. residential address
  • Be a U.S. citizen, U.S. permanent resident, or have a valid U.S. visa*

You can read all the requirements here.

Step 1: Download the App – Yep, you should have known this was coming. Go ahead and open the Apple or Play Store on your phone and download the Robinhood – Free Stock Trading App.

Step 2: Follow the Steps and Enter Legal Information –  Enter a username or password to login with along with your real First, Last Name and phone number. From here, more secured answers will be asked such as your Social Security Number (tax purposes), Address, Citizenship and Employment information. There’s some additional questions you’ll have to fill out truthfully as well.

Step 3: Fund your Account – You’ll have to link either a checking or savings account in order to deposit/withdrawal funds to Robinhood. For instance, I hooked up my main savings account that I have from Capital One 360 (affiliate).  Before you can transfer money into your Robinhood account, they’re going to make two small deposits into your checking/savings account in order to verify the information is correct. This process takes a few days, so come back once that’s been done. Usually it’s a few cents for each of the two deposits. Confirm the amounts in the App and you’re good to go. Go ahead and make your first deposit in to your Robinhood account.

Question: How much should I deposit?  That’s entirely up to you but the rule of thumb is only invest the money that you’re willing to lose. While most of the stocks I talk about here on Dividend Noob are safe long term, nothing is guaranteed and stocks can go up and down for any reason. With that said, make sure you did your budget and have an emergency fund for those times when you need spare cash. There’s also making sure you fully fund your Roth IRA and contribute to your work 401k, where applicable, but that’s outside the scope of this post. For more details, check out my post on How much Money Do I Need to Get Started Investing.

Question: What should I buy first? Slow down partner. Go ahead and read up on the stocks that interest you and make sure they’re right for you. There’s a plethora of sources to pull information from. I will say this though: Make sure you do your own research before buying a stock. Don’t rely on some random internet person. Trust but Verify goes a long way. If you’re entirely new, read up on the Dividend Aristocrats, Champions and Challengers.

Question: Why is this scary? The idea of losing money is always scary. You’re not exactly paying for something tangible that you can hold in your hands. Our goal here is simple: Buy High Quality Dividend Stocks that not only make us money in growth over the years, but also pays out a healthy dividend to us each and every quarter. Double-dipping like an ice cream, twice the fun.


If you’re interested in Robinhood (affiliate link to support the site), give it go. Hopefully this was helpful. See you guys next week.


 

DRIP with Robinhood App – The Manual Way

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Does the Robinhood App allow investors a chance to DRIP? If you’re looking for the Robinhood App to provide a dividend reinvestment plan, you’re out of luck. At the time of this post, Robinhood does not provide any way to do it. They also don’t allow partial shares, so if they are going to implement it in the near future, they’ll have to radically change their overall design for Robinhood. Hopefully they’re working towards adding it in the future but until then, what do we plan on doing with our dividends from our high quality dividend growth stocks?

What I’m going to start doing is manually reinvesting the dividends back into the company. Yep, a manual DRIP so to speak. Every time I get a dividend from a stock in my portfolio, I’ll take that money and apply it to an additional share(s) in the company. While not quite the definition of DRIP, it’s the closest thing we can do with the Robinhood App. And considering it’s free trades, it sort of acts the same.

There’s a few cons to this approach, let’s go ahead and discuss them.

  1. No Partial Shares – With the Robinhood App not allowing partial shares, we’re going to have to provide the transaction with extra equity in order to round it up to a full share. While this is true, I always keep a percentage of cash in my account and I can cover the single share with no problem. I know this might not be the case for everybody, so the cash dividend will have to sit in your account until you accumulate enough to do a transaction.
  2. Not Automatic – The beauty of a DRIP is that it’s automatic. That means you can go about your life and not worry about the money that your stocks pay out to you. For those hands off investors, this is a god send. That just means we’re going to have to do a little extra work. This comes with some added benefit though–if we believe a stock is way overvalued, we can put their dividends to use in a separate stock that we feel is undervalued. Again, this might not be for everybody, but its something to think about.

While not perfect, I believe this is a decent way to get started with doing a Robinhood DRIP. Let me know in the comments if there’s a better way!

You can always check out my current portfolio here. You can also follow me on Twitter.

2016 Dividend Portfolio – Year in Review

The year has finally ended and I thought it would be a good to take some time and look back at the dividend portfolio to see exactly how it performed; if there were any big clear winners or clear losers and if there are any lessons to be learned from it all.

Let’s first start our look at the overall market indexes. The S&P 500 had a positive 10% increase for the year with The Dow up over 13%. Even if you remove the post-election surge in November, the market still has a positive return for 2016.

Portfolio wise, my return has been 14.72% for the year with the majority of the returns coming from stock growth. I was lucky enough to purchase a lot of high quality dividend paying stocks on some dips and they have rebounded and have went even higher. The bulk of my return has been since the Trump rally in November however. Before that, i was up about 5%. The following image shows the graph in the Robinhood App on the yearly scale.

2016 dividend portfolio return

Let’s take a look with how much of the return is from dividends vs stock growth. The following image is just a spreadsheet where I keep track of dividends paid out on a monthly basis.

2016_dividends per month

At almost $1k in dividends being paid out to my account, this accounts for over 20% of my yearly return.  Not too shabby for passive income.

The biggest winners, growth wise, of my portfolio are MAIN, STWD, T and JNJ.

I first started my position in MAIN in December of last year and have been collecting their monthly dividends ever since. They pay 18 cents a share normally, but add on top of that they also paid a special dividend in June and December of this year, then we can see why MAIN is a fun stock to own. They have had a big year in growth as well since I’m up 26.17% on it.  At the time before this is posted, I have sold my position in MAIN to lock in the growth. I hope to maybe get back into it once it’s closer to it’s fair price.

STWD is another stock that I didn’t realize would perform so well when I first bought it in March 2015. It still has a dividend yield over 8% and I’ve received three dividend payments of 48 cents a share. On top of that, it’s also returned 21.3% growth. STWD is another stock that I need to revisit because I’m not sure if the dividend is sustainable. Most analyst have STWD as a hold right now and I believe I will follow that advice for the time being.

T is a telecommunications giant that’s been a dividend champion for 33 years. What’s also impressive is the 25% total return I have as well as the three dividend payments I received since owning it back in January 2015. The stock still has a PE Ratio under 20 and gives a dividend yield of 4.5%. My only regret is not buying more. Hindsight.

JNJ is another monster in the dividend champion list that has been raising dividends for 54 years. Since I’ve purchased them in January 2015, they have given my portfolio a 19.7% return, as well as four dividend payments. Right now, I believe they are fairly valued and I’m looking to buy more if it happens to dip on any amount. A lot of people have been talking about JNJ being one of the “Always Buys” and I can’t find any fault with that.

The biggest lost of the portfolio came from when I finally sold off my position of CSIQ. It had dropped radically and before I pulled the trigger to dump it, I had lost over 1k. This was before I was committed fully to the DGI brotherhood. But it was definitely a lesson that I needed to learn.

 

Overall, I’m happy with my dividend portfolio. I managed to cobble together a collection of stocks that have beaten the index for the year, which is no easy feat. I have a lot planned for Dividend Noob in the next year, so please stay tuned!

The Great 2017 Dogs of the Dow Experiment

The 2017 Great Dogs of the Dow Experiment

Introduction:

The Dogs of the Dow is a pretty popular investment strategy built around selecting the ten stocks whose dividend yield is the highest out of the thirty stocks that comprise the DJIA. You can read all about it on the wikipedia page if you feel so inclined. This strategy has been heavily debated in the past and I’m not here to talk about the pros and cons. I’m only here to talk about the THE NOOBS GREAT DOGS OF THE DOW EXPERIMENT.

What is the Great Dogs of the Dow Experiment? It’s where I put $500 dollars down on the dogs and see how it fairs at the end of the year— with one caveat.

  1. I already own KO and won’t be buying more. I’ll be picking the 11th place Dog of the Dow stock in its place!

You might be asking: Why only $500? It’s true that $500 doesn’t give you many shares of some of these companies but the idea will be the same. The challenge is to see if they will beat the index for the year. They’re all good quality stocks, so I’m not too worried about it on the long term. At the end of the year, I’ll see how they progressed and add  positions to the stocks that are in the new Dogs of the Dow list. I debated on swapping them out versus keeping them and decided that I’ll just keep them in the portfolio. Sounds Easy enough.

Historically, the Dogs have been doing pretty good when compared to the overall index.

dogsofthedow_returnalltime

Courtesy: http://www.dogsofthedow.com/doggish.htm

The highest return of the chart is what they deem the “Small Dogs” or the bottom five stocks in the top 10.  

Below is the current list of DOGS as of 12/31/16. 

Current Dogs of the Dow

Symbol Company Sector Yield
VZ Verizon Technology 4.30%
PFE Pfizer Healthcare 3.94%
CVX Chevron Basic Materials 3.65%
BA Boeing Industrial Goods 3.60%
CSCO Cisco Systems Technology 3.41%
KO Coca-Cola Consumer Goods 3.37%
IBM International Business Machines Technology 3.36%
XOM ExxonMobil Basic Materials 3.31%
CAT Caterpillar Industrial Goods 3.27%
MRK Merck Healthcare 3.16%

 

As I said before, I’ll be swapping out KO with another stock – in this case it’ll be PG. I made the following purchases:

 

3 shares of IBM @ 165.90 5 shares of CAT @ 92.80
9 shares of MRK @ 58.80 15 shares of PFE @ 32.50
6 shares of PG @ 84.05 3 shares of BA @ 155.78
17 shares of CSCO @ 30.20 10 shares of VZ @ 53.40
5 shares of XOM @ 90.40 4 shares of CVX @ 117.65

These 10 stocks add $149.18 to my annual income.

Let’s see how the next year folds out with a new president as well as the market hitting all time highs. It’s always exciting for a new investor to get into new stocks and this experiment will be fun. I’ll be giving progress reports for the stocks quarterly as well as doing some basic due diligence on the 2017 Dogs of the Dow in the coming weeks.

 

Goals for 2017 – Learning to be S.M.A.R.T.

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Goals are important to help an individual grow in both their professional and personal lives. We hear about them everywhere: I want to lose weight, I want to get that promotion, I want to make extra money this year, etc. Some goals are easy to achieve and others are near impossible unless someone plans a course of action before stepping out to do it.

But what makes a goal reachable? There are different sets of rules to help you, and like all rules out there, there is a mnemonic acronym tied to each one. The one I like to use is the S.M.A.R.T. criteria.

  • Specific – target a specific area for improvement.
  • Measurable – quantify or at least suggest an indicator of progress.
  • Achievable– sanity check on if it can be done.
  • Realistic – state what results can realistically be achieved, given available resources.
  • Time-related – specify when the result(s) can be achieved.

There are different words that can be swapped in SMART but for the most part, it should help everyone create goals for themselves.

With the new year coming, I like to go ahead and spend some time and figure out what I would like to do. My actions are based on these goals, and using the SMART system, I make sure that I can do them. I divide my goals to fall under either Personal or Professional.

Personal

Pay off the Jeep:  At the time of this post, I owe about $8,400 on my car loan. I have enough to pay it off but I haven’t been in a hurry since the interest rate is pretty low.  The minimum payment on the loan is $450 dollars but I’ve already been paying $600 a month. I am financially able to pay it off this year if I add some extra cash on top of the extra cash I  already put on it. I will be adding an extra $100 dollars a month ($700) and my goal is to pay it off in 2017, which should free that $600 a month when its done!

Increase Deposits for 2017: I currently auto-deposit $300 dollars a month and put an additional deposit of 100-500 dollars depending on how the month goes. Some months are good while others I skimp on the extra deposit. My goal is to put at least an extra $250 bucks into the account. If I consistently do this every month, then my goal is to add an additional $3k for the year. This number is do-able I believe, even with the extra $100 going to the car loan noted above.

Get In Shape: I’ve been neglecting my health for the last few years and I need to make a change in order to get back into a healthy shape. Good health is the best investment that one can make. I will be enrolling in a local gym in my area. The cost should be around $15 dollars a month. An expense that I believe is worth it. I’m setting a goal to go three times a week.

Professional

Start Posting Weekly on DividendNoob – I like to build the website more and the way to do that is to post more quality content on a consistent basis. I’ve been posting weekly  for the month of December and have been getting good results from it.  For instance I’ve hit over 500 page views for the website and before that, I would be lucky to hit 50. Interaction on twitter and other dividend blogs should also help Dividend Noob grow as well.

Youtube – Sometimes information is easier to digest in video/audio form for some people. I would like to get a youtube channel up and going where I talk about my portfolio and bring up some potential investments that are on my watchlist and go through my thought process while doing my due diligence. The time requirement for this is pretty heavy at first but my goal is to start with at least one video every monthly portfolio update.

 

Those are my goals and I hope everybody has a good New Years and I’ll see you in 2017!