Sunday, May 5, 2013


I've always been a big proponent of investing in individual stocks over mutual funds, mostly due to the fees and tax consequences of owning funds.  Recently, however, I've decided a mixture of the two types of investments works out pretty well for me.  

During the rebuilding phase of my investment portfolio, I added positions in five funds paying monthly dividends with the goal of increasing cash flow and speeding up the rate of compounding.  While this has worked out much as planned, I've made an amazing discovery along the way.

While reviewing my dividend income spreadsheet I noticed that even though I'd made small initial investments in the five funds, they were paying a decent amount in dividends.  So I did a "what if" scenario in which I had the same amount of money I had before I had to pay out so much for medical expenses, however, instead of the investments I held back then I figured the amount of money I would have earned on a monthly basis by having it evenly invested in 4 of the five funds I currently own.  I was shocked by the difference.  I would have been earning nearly 75% more in dividend income on a yearly basis had I invested in these 4 funds.  What's even more embarrassing and eye opening is that all 5 funds I'm currently investing in have been around and paying dividends for the past 25 years.  Which means that I could have invested in them from the very beginning.  While they did cut their dividends in 2008 due to the "Great Recession", they have paid continuous monthly dividends for the past 25 years.

O.K., so hindsight is 20/20 and you have to go from where you are now.  With that in mind, I've revised my investment plan to make it a priority to concentrate on building my positions in these monthly dividend payers first.  Once I've built substantial positions in all five funds I'll work on building my holdings in my other investments.

You may be wondering about the names of these 5 funds.  I intentionally left them out, although I've written about my purchases in past posts, so it would be easy enough to find them.  However, the real reason I didn't list them is that it was so easy to find them that anyone could do it.  I used the paid search on and searched for monthly dividend paying stocks.  When I found a starting list, I did further searches for dividend histories of each fund/stock listed.  Then I did a final search to discover each funds investment portfolio and see whether it matched up with my own investment goals.  During the whole process I was marking off the stocks that didn't meet my investment criteria until I ended up with the 5 I own now.  So, there you have it.  If you're looking to boost investment returns through dividend yields, you could follow the same path I took and you might just be amazed at what you find.

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