2020 has finally come to a close and the results are in!

I began my investing journey in January 2019 with the ultimate goal of achieving financial freedom through dividends.

After landing my first job out of college in September 2019, I finally had enough money to start seriously investing on a consistent basis.

My investing strategy was clear from the beginning.

  1. Invest for the long-term
  2. Diversify holdings
  3. Don’t let emotions take over
  4. Invest frequently
  5. Prioritize great dividend stocks

Before I share my results, it’s obvious 2020 has been such a difficult year for everybody around the world. Covid-19 has taken its toll on millions of people’s health and financials. For those of you who have been deeply affected, I sincerely wish you well and hope 2021 is brighter. I urge you to reflect on the good things and block out the negative.

Let me take you through this first-year journey on a monthly basis by sharing how much I invested, the amount in dividends earned, and general news about the month.

January

Portfolio Value: $2,965.76

Dividends Earned: $0

Money Invested: $3,000

Net Gain: – $34.24

No dividends were recorded in January because I invested later in the month so I had missed the ex-dividend date.

I spent most of the month research what investing platform I wanted to use. It was pretty close between M1 Finance and Robinhood. I ended up choosing M1 Finance because they offered fractional share investing.

I’m glad I chose M1 Finance because it’s a great platform that offers automatic dividend reinvestment and dollar-cost averaging.

If you are curious about M1 Finance, you can check out my full review here. I spent a lot of time thinking about what holdings I wanted to add to my portfolio and ultimately I chose a mix of blue-chip companies, ETF’s, and some riskier growth companies.

February

Portfolio Value: $3,130.89

Dividends Earned: $4.45

Money Invested: $500 ($3,500 total)

Net Gain: – $369.11

I woke up on February 13 to my first dividend notification, it was from Apple (AAPL). I received 50 cents and was so happy to see cash flow.

Albeit small, the snowball effect for investing always starts small. As long as you can reinvest the dividends back into the stock, the future value will increase exponentially.

I received a few more dividends the next day and by the end of February, my total received was $4.45. This is where I want to tell you to not be discouraged by small returns. Even one cent is better than none, you have to start somewhere.

While I was satisfied with the dividend cash flow, I was admittedly worried about the capital gains of the overall portfolio. Little did I know the world was headed for a pandemic and the markets would crash.

March

Portfolio Value: $3,079.62

Dividends Earned: $12.82

Money Invested: $500 ($4,000 total)

Net Gain: – $920.38

Pandemic time!

Around March, China was blown up with Covid-19 and it started making it’s way to the USA.

At the time I was working out of the office in Minneapolis, MN and we received a handful of cases. I never thought the situation would get as bad as China but boy was I wrong.

After a few local cases, my work sent everybody to work from home, and to this day I haven’t been back to the office. I packed my bags and moved back with my parents in Wisconsin because I figured I would rather be with family during this time.

Not long into March, the markets crashed heavily and my portfolio was down almost $1,000 or 25%. Despite the downturn, I stuck to my guns and continued to invest.

Many people get scared and run away from the market during recessions. Not me, I was all in because I wanted to get some nice discounts!

March was the first month I received double digits of dividend income coming in at a massive $12.82. I had almost tripled the amount from February!

April

Portfolio Value: $3,911.52

Dividends Earned: $6.38

Money Invested: $500 ($4,500 total)

Net Gain: – $588.48

April certainly wasn’t as action-packed as March in terms of dividends. I received $6.38 and quickly realized the dividend payment schedule.

Most companies in the stock market pay dividends once per quarter in the last month (i.e. March, June, September, December).

As it turns out, a majority of my holdings pay in the last month of the quarter as well so naturally I can expect lower dividends in other months.

Either way, I was happy because something is better than nothing and Summer was just around the corner!

May

Portfolio Value: $5,687.28

Dividends Earned: $11.04

Money Invested: $1,500 ($6,000 total)

Net Gain: – $312.72

A few months into the Covid-19 pandemic now and the market is starting to rebound.

In order to capitalize and get stock for cheaper than pre-pandemic levels, I made the largest investment yet. I injected $1,500 into my portfolio through dollar-cost averaging. Based on what % of each holding I have allocated in my portfolio, any money invested will be the same respective proportion.

As an example, I set Apple (AAPL) to comprise 5% of my entire portfolio. Theoretically, for every $1,000 invested about $50 would go towards Apple.

June

Portfolio Value: $6,228.12

Dividends Earned: $19.48

Money Invested: $500 ($6,500 total)

Net Gain: – $271.88

Summer finally emerged from the cold spring of Wisconsin and I was loving life.

The best part about June is that it is the last month of the quarter meaning more dividends!

I came so close to the $20 mark but fell just shy at $19.48 in dividends. I got paid out from 16 different companies with the largest payment coming from the Vanguard Total Stock Market Index (VTI) ETF.

As VTI takes up 10% of my portfolio, I wasn’t surprised. I normally stick to a rule where I don’t let any single stock take up more than 5% of my portfolio, regardless of how it performs.

This is to keep me disciplined and not let my emotions take over. VTI; however, is a fund comprising of thousands of stocks meaning it is extremely diversified and I am okay going over my 5% rule.

July

Portfolio Value: $7,465.22

Dividends Earned: $13.39

Money Invested: $1,000 ($7,500 total)

Net Gain: – $34.78

The market really started to pick up in July all losses from the pandemic almost came back!

I was a little worried from a dividend perspective because of potential dividend cuts.  Some industries were decimated from the pandemic and in my portfolio, the energy sector performed the worst.

Exxon Mobile (XOM) was down 40% at one point and the remaining stocks such as Dominion (D), DTE Energy (DTE), and Consolidated Edison (ED) were each negative 10-20%.

Energy stocks are great dividend payers but they certainly hurt during the Covid-19 pandemic.

It was in July I heard the news of a dividend cut from a holding in my portfolio. Dominion Energy (D) announced a dividend cut of 33%. I wasn’t too concerned as the yield was a healthy 3% after the cut but it had me on high alert for the other stock in my portfolio.

Thankfully my holdings were strong because there were no other dividend cuts. I finally brought in double-digit dividends during the first month of the quarter meaning I could expect at least $10 per month in dividends going forward.

August

Portfolio Value: $8,870.63

Dividends Earned: $18.57

Money Invested: $1,000 ($8,500 total)

Net Gain: $370.63

Summer is coming to a close and the market is performing better than ever.

In fact, August was a milestone month because it’s the first time my portfolio turned green.

Yes that’s right, I had gone 7 straight months with negative returns. Had I not known any better, I would have taken my losses and ran away. Luckily I followed rule #1 and #3 very closely. Invest with the long-term in mind and don’t let emotions take over.

Being the second month of the quarter, the dividends were middle of the pack. My highest dividend was $5.51 from National Retail Properties (NNN). I believe NNN is an underrated company as they have been increasing dividends for 30 consecutive years with a 5% yield.

September

Portfolio Value: $9,652.54

Dividends Earned: $35.12

Money Invested: $1,000 ($9,500)

Net Gain: $152.54

I made some changes to my portfolio at the beginning of September. The major change was adding Broadcom (AVGO) and Tesla to my technology pie.

I also increased my Tech pie to 10% and decreased my energy pie to 5%.

Apple was killing it and technology was the one sector that was thriving during the pandemic so I wanted to reap the rewards. I kept all the energy holdings but just scaled them down to mitigate the risk in the lagging sector.

The most interesting move was adding Tesla. I was always skeptical of Tesla because it seemed too volatile.

I finally became a believer in Tesla and Elon Musk. I truly believe what Tesla is doing in the EV industry is ahead of its time and it will be a while before another company can match their business.

Even though Tesla doesn’t pay dividends, it’s one of a kind and I had to add it. Currently, Tesla only makes up 0.5% of my portfolio.

October

Portfolio Value: $10,383.72

Dividends Earned: $14.78

Money Invested: $1,000 ($10,500 total)

Net Gain: – $116.28

Oh boy, here we are again in the red as the market took a slight downturn.

October was rather boring in all honesty. I did hit $14.78 in dividends which was a new record for the first month of the quarter but not as much as I was expecting.

I added STAG Industrial (STAG) to my real estate pie and scaled back National Retail Properties. STAG is a monthly paying dividend with an attractive 4.5% yield and overall a good performing stock.

I couldn’t pass up the monthly cashflow STAG offers.

November

Portfolio Value: $12,367.98

Dividends Earned: $28.16

Money Invested: $750 ($11,250 total)

Net Gain: $1,117.98

What a rollercoaster the market is! Down, up, down, up!

The S&P 500 had record returns in November 2020 and put me back in the green.

Moving from negative $116 to positive $1,117 is a really nice gain overall. I was quite surprised by the dividend income as well. Most of the dividends in November paid me over $2.00 for a grand total of $28.16.

Going forward I expect the second month of each quarter to bring me over $20. Looking back in February of the first quarter, I have come a long way. With just $4.45 in dividends in February to $28.16 in November feels amazing.

December

Portfolio Value: $14,165.80

Dividends Earned: $53.70

Money Invested: $1,250 ($12,500 total)

Net Gain: $1,665.80

I never thought I would have a $50 dividend month in 2020.

When I look back at the first few months making less than $10 to hitting over $50 in December is remarkable in my eyes.

2020 ended on a high note with my most dividends in December and the highest my portfolio has ever been. The biggest surprise was Costco (COST) paying a special dividend of $10 per share.

The other major change was I removed Dominion Energy and replaced it with Enterprise Products Partners (EPD). The reason behind the change was the sub-par performance from Dominion and the 33% dividend cut.

EPD on the other hand pays a 9% yield and has increased dividends for 21 consecutive years. I believe EPD is fairly valued at around $25 per share and I picked it up for less than $20 so I think it was a good deal.

 

Conclusion

Saying 2020 was a rollercoaster would be an understatement. The markets were so volatile early on and uncertainty filled the financial world.

Despite the downturn, I stuck with my investing strategy and ended the year with a 24% return on my entire portfolio. How does this compare to the S&P 500?

The S&P finished the year over 16% meaning my portfolio beat the market by 8% this year. I am happy but I really don’t care about capital gains in the short term. I am a long term investor so I will care in about 30 years.

For now, I am only concerned with the dividend cash flow.

Achieving financial freedom early on and living my dream life is what I truly care about. Moving to Thailand and marrying my girlfriend is next on my list and the dividend cash flow from 2020 certainly helps me move closer to that goal.

The intent of this overview isn’t to brag by any means. My intent is to give all new and young investors inspiration to begin investing and stick to a strategy. Even starting out with minimal dividends can lead to great things.

jacobpippenger

Author jacobpippenger

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