Dividend Account results – 2nd Qtr 2021

Well, July is here, and we’ve gone halfway through the year. If you’ve been reading my story, you know that this is an inherited IRA from my father, that I set up as a sort of “experiment” for an old-time dividend paying account, which would generate regular income – something a person could use once they retire.

I’ve had some ups & downs with it, and it has generated roughly 4% in dividends annually – but it hasn’t grown very much. Thus, in this era of growth fund investing and low interest rates, it hasn’t been able to generate the sort of returns necessary for someone to live off of in a long-term retirement. Still, its an interesting experiment, and good to know.

I started it back in 2016, and the fund was setup with 50% bonds, 25% dividend stocks and 25% REITs. After 2-1/2 years, I decided to divest from bonds, because with the low interest rates, they were only paying about 2% in dividends and dragging down the performance of the whole fund. Since then, its been a roughly 50/50 split.

In 2020, I started a “dog of the dow” investment strategy, where you purchase the 10 stocks with the highest yield on the Dow (i.e. their price vs. the dividend they are paying is lower). Its an old time strategy, and I’m not sure how its going to pay off long term. 2020 was a bad year for dividend stocks, but they’ve bounced back.

Now for the 2nd quarter, we generated a significantly larger amount of dividends, which is fairly typical for 2nd and 4th quarters. The value of the fund on July 1 was $138K, so we’ve regained all the ground lost from Covid back in March 2020. For the 2nd quarter, we coming in around 3.58% with a significantly higher stock valuation. I still don’t think this is a valid strategy for 100% of your retirement funds, I do believe the dividends can provide some value, especially with a solid tax strategy.  

stockDetailsInvestment valueYieldDividend
CVXChevron Corp$5,237.005.12%$67.00
HRHealthcare Realty Trust$15,100.004.01%$151.25
KOCoca Cola Company$5,411.003.10%$42.00
MMM3M Company$9,931.502.98%$74.00
MRKMerck & Company$3,888.503.34%$32.50
ORealty Income Corp$13,348.004.23%$141.00
PFFIshares Preferred$9,207.544.74%$109.10
SVCService Properties TR$7,560.000.32%$6.00
UMHUMH Properties Inc$24,002.003.48%$209.00

I believe the “jury is still out” on whether the shift to stocks & REITS was a good decision or not. With the current US Fed and its interest rates, I don’t think Bonds will be a good return any time soon – unless you are willing to go into some very risky bonds. If I had additional capital, I might invest more here, as I think these dividend stocks are undervalued.

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Mr. 39 Months

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