When I started investing in stocks and shares just over 3 years ago I didn’t make much in my first calendar year – just 57p.
Then in 2022 I stepped up a little bit and earned a princely £14.39
By 2022 I realised that if I worked hard, made money for other people but didn’t get a fair increase myself, then I’d just have to do something even more painful – start to commit even more of my paltry wages towards earning a little bit extra.
So in 2023 I manage to squirrel away just enough to earn me an extra… £25
That was still a shortfall of between £4,000 and £9,000 per annum, so I needed to be even more drastic.
It was around this time that I found the Trading 212 app and so I decided to have an explore. I love Freetrade but it doesn’t have a great range of stocks in the basic plan – some are tucked away behind their paid version, and I’d need to make £60 a year in profit to start to pay for that. Sod that.
Almost Daily Dividends
Whilst investigating T212 it had this concept of “pies” and I found one called “(Almost) daily divs”. Now these “pies” are made up of slices of many stocks. For just £50 you can have this “pie” made up of 50 slices, each of a different investment. These are fractional shares, so you only own £1 in Apple when it’s a $227 stock. For some stocks you get nothing but many at least pay a penny. Every little helps, right?
The T212 user who made this pie really was right – I had a look at the associated spreadsheet and there was indeed an (almost) daily dividend. In fact there were something like 260 pay dates in a 365 day year, or at least one every weekday.
After 9 months of using T212 I spotted some patterns. Some of the stocks were paying out more regularly than I was used to. Some stocks, like Wetherspoons, don’t pay out at all. Others pay just once a year. I’m used to interim and final divs from most of my investments. But monthly divs were new to me.
Now I like monthly interest payments on savings accounts, and some (Moneybox) even pay daily. But the monthly interest is great because you see it compounding – every month your interest earning just increases.
With this T212 account I was seeing monthly divs. Now with a small £50 pie this wasn’t much just 0.01p per share. But buying more of these shares and also in Freetrade, I was starting to see relatively significant amounts start to roll in. These aren’t ground breaking and they’re not yet ready to supplement the huge gap in my income, but I can see the path ahead.
There is risk associated with these monthly paying stocks but if I watch them daily, invest regularly, and continue to diversify my portfolio, I can keep winning. But monthly divs are a really nice addition to my fairly conservative portfolio of mostly British stock.
With these mostly American investments, I’m hoping to earn enough each month to reinvest in more monthly paying stocks and hopefully start to see the snowball effect kick in. By that I mean that I hope to see my stock returns compounding too.
For example, PSEC (Prospect Capital) is trading at just over £4 and paying over 13% divs – Around 100 stocks in PSEC will buy another stock every month so the first year after getting to 100 stocks will see another 12 added to the pot, thus increasing the principle by 8%
Of course, if I could get to 1,000 stocks that would see 120 more brought every year, provided the price stays the same, and that still would bring in 8% more. Now we’re talking about making a dent in that loss of earnings.
It’s either that or get a better paid job.
So consider putting some monthly dividend stocks in your portfolio. Waiting six months or a year is OK for big sums, but at my current level, seeing that drip drip effect of tiny amount of cash constantly coming in is really cool.
Leave a Reply