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As inflation continues to decline and the Fed’s rate-cut cycle is rolling, investors are looking for reliable dividend stocks to grow their wealth. But making decent money with dividends on a limited budget is not easy. Let’s look at a success story where a young investor started with small investments and reached a reasonable income goal in just two years.
About two years ago, an investor shared his story on r/Dividends, a discussion board on Reddit with more than 580,000 members interested in dividend investing. He started investing during the pandemic with just $100 deposits.
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“Then I decided to take things seriously and started to invest a reasonable (percentage) from my income,” he said.
According to the portfolio screenshots he shared publicly, the investor made as little as $15 in dividends in 2020, and his annual income soared to $966 in 2022. In 2021 his dividend income stood at $305. This shows the power of compounding and letting money work for you.
The investor, who said he was 28 years old, was asked how much he invested to reach this income level. Here is what he said:
“50k invested, 2-3k per month in 2022, previous years less.”
While $1,000 a year is not much, it’s a nice start for those looking to get into income investing with small contributions from their salary or savings.
The Redditor also shared his stock portfolio with fellow investors. Let’s take a look at the biggest holdings in his portfolio.
Realty Income
Realty Income Corp (NYSE:O) was the biggest position in the Redditor’s portfolio, earning about $1,000 in dividends per year. According to the screenshots shared by the investor, Realty Income Corp (NYSE:O) accounted for about 9.9% of the total portfolio. Realty Income Corp (NYSE:O) yields about 5% and pays monthly dividends.
Apple
With over $160 billion in cash and over a decade of consecutive dividend increases, Apple Inc. (NASDAQ:AAPL) has become a significant dividend-paying stock investors pay attention to. The stock, however, yields just 0.44%. It has gained about 297% over the past five years.
Microsoft
Last month, Microsoft Corp (NASDAQ:MSFT) increased its quarterly dividend by 10%. It pays a per-share dividend of $0.83. Microsoft Corp (NASDAQ:MSFT) is one of the best stocks for dividend income and capital gains through stock price appreciation. MSFT is up 32% over the past year.
Stag Industrial
Stag Industrial (NYSE:STAG) is an industrial REIT that pays monthly dividends. Its dividend yield is about 3.6%. The Redditor said that about 7.5% of his dividend portfolio is allocated to this stock.
JPMorgan Chase
One of the biggest banks in the world, JPMorgan Chase & Co (NYSE:JPM) has a dividend yield of about 2.4% and has raised its payouts every year since 2009. It was among the biggest holdings of the Redditor, earning about $1,000 in dividends.
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Visa
Payments giant Visa Inc (NYSE:V) is another dividend stock that investors eye for both dividend income and share price gains. Visa Inc (NYSE:V) has increased its payouts for 16 consecutive years. The stock is up 21% over the past year. Last month, BNP Paribas upgraded Visa (NYSE:V) to Outperform, citing free cash flow and valuation.
Costco Wholesale
Costco Wholesale Corporation (NASDAQ:COST) is another low-yield, safe dividend stock in the Redditor’s portfolio. The retailer has increased its payouts for two decades in a row. It recently posted quarterly results with earnings beating estimates while revenue fell short of market expectations. Comparable sales rose 6.9% in the quarter, better than market estimates of 6.4%. COST is up 54% over the past year.
Johnson & Johnson
About 7.8% of the Redditor’s portfolio was allocated to Johnson & Johnson (NYSE:JNJ). The company has increased its dividends without a break for over six decades.
VICI Properties
Casino and entertainment REIT VICI Properties Inc (NYSE:VICI) was among the high-yield dividend stocks in the portfolio. The stock has a dividend yield of 5.3%. Last month, VICI Properties Inc (NYSE:VICI) raised its dividend by about 4%.
McDonald’s
Last month, McDonald’s Corp (NYSE:MCD) raised its dividend, marking its 48th consecutive year of dividend increases. The news was welcomed by investors amid growing concerns about slowing traffic at the fast-food chain due to rising inflation. McDonald’s Corp (NYSE:MCD) launched $5 meals to woo customers. BTIG analyst Peter Saleh recently noted that these initiatives are working as the company’s comparable sales moved into positive territory in August and September.
AbbVie
With over 50 years of consecutive dividend increases and a more than 3% dividend yield, AbbVie Inc (NYSE:ABBV) was an important stock in the portfolio of the 28-year-old Redditor. AbbVie Inc (NYSE:ABBV) accounted for about 7.1% of the total portfolio.
Wondering if your investments can get you to a $5,000,000 nest egg? Speak to a financial advisor today. SmartAsset’s free tool matches you up with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you.
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This article This 28-Year-Old’s Dividend Income Jumped from ‘$15 to $1,000’ in Just Two Years – Top 11 Dividend Stocks In His Portfolio originally appeared on Benzinga.com
