December Dividend Income – How to go about building a dividend machine as a beginner

If 2016 has taught me anything, it would be that dividends are king. Throughout the volatility, political shocks and market turbulence, one thing has remained certain – great companies that I have shares in have paid me an increasing stream of dividends. Make no mistake, this is no accident. The truly great companies make profits no matter the market environment

Take Royal Dutch Shell (RDSB) for instance. It has paid out an ever increasing dividend for over 60 years now. This means that it has not cut its dividends during times of war, political upheavals, recessions, revolutions, oil embargoes, financial crises all that has happened in between. It is a truly wonderful company that produces copious amounts of free cash flow and its management know how to treat shareholders well.

And RDSB is only one of the company’s I own. My portfolio is full of corporations that throw ever increasing wards of cash at me. To think that just over a year ago I had zero exposure to the greatest wealth building mechanism in human history – the stock market. Today, I ave ownership stakes in oil conglomerates, defence companies, beverage giants, agricultural powerhouses, healthcare organizations, consumer champions and technological innovators. In total, these companies have paid me £1,050 in cold hard cash over the past 12 month.

In December alone I made £211.66 in my ISA portfolio. It is amazing to think that this time last year I had dividend income of only £36. This as now increased five fold! It just goes to show that by persistently saving money and buying shares in companies when they become attractive, it is really easy to start reaping the rewards in a short amount of time.

The companies that paid me a dividend in December are: (Capita and Dunedin paid the dividend at the back end of November but are included here)

  • Royal Dutch Shell – £95.12
  • BP – £42.67
  • Whitbread – £10.16
  • Coca Cola – £5.93
  • Goldcorp – £1.84
  • Exxon Mobil – £1.50
  • Visa – £0.34
  • Telefonica – £4.14
  • Imperial Brands – £17.85
  • Gilead Sciences – £4.50
  • Dunedin – £8.52
  • Capita – £19.09 (Even though the price of Capita has dropped in recent month, the company still continues to pay a dividend as it has the free cash flow to do so.
    Sometimes a company’s underlying performance does not correlate with its hare price. I will be writing more on this during my December monthly stock purchase post as I bought more shares in Capita this past month in order to average down on my price.

In addition to the above, I also received £28.77 in dividends in December from me high yield portfolio. RDSB paid me £18.20 and UIL Ltd paid me £10.57.

Tips on looking for which stocks to buy – How beginners should assess stocks

Beginners starting out in the world of stocks and shares are usually quick to jump the gun by buying stocks they think will double in value overnight. By having this type of ‘quick gain’ mentality, you are bound to get burnt. Just look at what happened to the investors in GTAT.

If you are interested, look at every purchase I made to get dividend income of £1000 within a year. Apart from this most, have a look at the my journey section to see my rationale behind each purchase.

Before buying any stocks, you need to rigorously research the company. Analyzing potential buy candidates is the name of the game in the stock market. What should an investor look for in a stock?

  1.  Consistency, meaning low volatility. I have no o interest in a stock that is £50 one year, £15 the next year, and £65 the following year. I prefer stocks that slowly and consistently rise in value. Examples would be, Coca-Cola, Unilever, RelX, Imperial Brands and Reckit Benkiser.
  2. Consistently rising dividends. 10 years is good. 25 years is even better. 50 years is great.
  3. Low PE ratio. I prefer PE ratios of 20 or lower. Sometimes you need to pay up to attain quality. A case in point in Visa. High PE ratios with no underlying rationale are a disaster waiting to happen.
  4. Consistently rising earnings. At a minimum, the earnings should at least double every 7 years.
  5. Strong balance sheet. I like to see low debt and lots of cash. In some instances where the stock becomes so beaten down, this criteria can be relaxed. Case in point is my purchase of Royal Dutch Shell.
  6. Valuation matters.  It is generally better to buy when the stock market is low rather than when it is high. The stock market is very high now. Not many stocks worth buying. That is why it is now more crucial than ever to think for yourself and find attractively valued stocks instead of following the heard and mindlessly putting your money in index funds.

6 thoughts on “December Dividend Income – How to go about building a dividend machine as a beginner”

  1. I think the first paragraph summarizes the single best attribute of being a dividend growth investor. One has to remember that some of these companies have been paying dividends through World Wars and other market upheavals. Dividends help tune out the noise of market volatility and uncertainty. Thanks for sharing your recent dividends. Looks like a tidy sum from not that many companies. Nice to see some familiar names listed as well as some new ones. Look forward to a strong ’17!

  2. Great blog! Been following you for around 6 months now and you have consistently flagged up great stocks to add to my watchlist. I have been going for a more growth oriented portfolio rather than focusing on dividends but I am certainly warming to the idea! In total, roughly how much have you invested into your ISA to generate this income so far?

    • Thanks Matt. Nothing wrong with Growth investing – the best stock picker in recent history was a growth investor; Peter Lynch. The most important thing is to pick an investment style that suits your own personal needs and then stick to it.

      I currently have an annual dividend income in my ISA portfolio of about £1,400 and I have had to invest close to £30,000 to get there. Have a read of my post titled ‘ my journey to £1,000 in annual dividend income’ to see the purchases I made to get there. You will see that I invested in BP and Royal Dutch Shell at the time of maximums pessimism in these shares and have been rewarded in doing so by getting healthy dividend yields on my purchases of these shares.

      • Thanks for the reply! I am following a very similar approach to yourself, pumping the stocks and shares ISA as full as possible each year by spending much less than I earn.

        My goal is to focus on growth in my portfolio up until a point where I can switch from growth to income this will hopefully be when i’m 35 (currently 24). Thanks to the ISAs huge potential for tax free income I think it is a safer bet for future income than relying on a state or managed company pension, although all three would be nice. I think that the state pension will no longer exist time we reach retirement age and if it does I don’t want to be in work into my 60’s and 70’s!

        That was probably the post that led me to becoming a regular visitor. Unfortunately missed out on those great buying opportunities but I did manage to bag some nice cheap stocks in the days following Brexit. I only wish I had more money available at the time to invest!

        Now I’m thinking of allocating a portion of my portfolio to great dividend stocks as a hedge against poorer growth years. Also I’m keeping a good portion of my ISA as cash due to the markets being high at the moment. Hopefully some events/news will cause things to wobble and present some nice buying opportunities in the near future.

        • Matt, turn your favoritism for growth stocks into dividend stocks and we could be the same person.

          It’s good the lesson of not having enough cash has hit you early enough in your investing career and you can learn from it. Most people think of cash as earning 0%. As an investor, you need to think about it in terms of the opportunity to purchase bargains when they appear. Here is another post you will appreciate ‘’.


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