May has come and gone, so it’s time to post our monthly dividend income in order to help keep us on track. May was a good month, and June should be even better. If you compare last month’s results to May’s, you’ll see some income streams creeping up ever so slowly. Two different companies provide our IRA services, therefore we have two options for dividend reinvestment: DRIP (Direct Reinvestment Program) and FRIP. For example, MAIN produced $28.88 of income last month. We hold this stock in both IRA’s, but only one of them automagically reinvests (DRIP). So a portion of the dividends goes into a selective pile while another percentage goes directly back into the stock, purchasing fractional shares. This caused the income stream from that one stock to rise by 11 cents month over month. Next month’s income will creep up a little more, and then again the next. This is the power of reinvesting your dividends! The snowball will get bigger and bigger, albeit right now it is doing so at a relatively slow pace.
Selectively reinvesting dividends (FRIP) is a good way to use your dividend capital to be picky about what your dividend income will go and how much of it goes! If you are overweight in a company, having the option to put the dividends to use elsewhere can be a nice bonus. Scottrade provides a free, Flexible Reinvestment Program (FRIP) that allows customers to trade using dividend income for free, with no transaction fee. This can add up over time, boosting returns by eliminating the $7 flat fee that Scottrade charges for normal trades. Customers identify which dividend paying stocks they own that they would like to have participate in FRIP. This money will accumulate in a separate segment of your account, which can then be used to trade in a majority of the stocks listed on the major exchanges. For example, this month we bought 2 shares of W.P. Carey (WPC), a triple net-lease REIT, using the FRIP program. We’ll let the FRIP portion of our account build up before making another purchase of one of the stocks on our watch list.
So how did we do? Our income stream increased by 210% compared to May of 2014. Right now we are 76% of the way towards matching our 2014 dividend income of $736 (which does not include Mutual/Closed End Fund dividends). Later on this month we’ll show what our Funds have distributed for 2014 and for 2015.
May 2015 Dividend Income:
AT&T (T) – $11.75
Wayside Technology Group (WSTG) – $8.50
Main Street Capital (MAIN) – $28.99
Realty Income Corp (O) – $9.30
Apple (APPL) – $46.80
How’s your year going? Leave us a comment below and thanks for stopping by!