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Thousands of dividend stocks trade on the market, and choosing specific stocks can be extremely overwhelming for novice investors looking to generate steady income. One way to know what works is to read success stories of dividend investors who started small and achieved success with patience and hard work.
About three years ago, a Redditor shared his success story in r/Dividends (now a community of 593,000 members) about how he threw “probably most of my savings” into dividend growth stocks and ended up with a portfolio that earned $13,470 per year.
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The Redditor said that before he got serious about dividend investing, he invested in growth stocks like Apple and waited a few months, only to lose patience and sell them at a lower price.
“This made me convince myself that the only people making money in the stock market were day traders,” the investor said.
However, once he decided to invest in dividend stocks for long-term gains, he continued to put small amounts of money into these stocks even when times were tough. The journey was far from smooth (remember, this experience was shared in June 2021, when the market was still reeling from the pandemic effect).
“In 2020, March through May were clearly a difficult period. My income dropped dramatically, but every penny I could get my hands on I bought for the dip. In the summer of 2020, when my income started to rise again, I used I used some of that money to buy growth stocks. It distracted from my overall dividend stock strategy, but it certainly helped me grow my money quickly. This past year was unlike any other, so I don’t really recommend it to buy growth/stocks, tech stocks the same way I did last year. I have since sold those things to put back into my dividend portfolio,” he added.
The investor said he generated $13,470 per year on about $350,000 invested, meaning the net return on his portfolio (with 69 stocks in total) was about 3.84%.
He shared his entire stock portfolio with fellow Redditors. Here you will find the top 12 largest holdings in his portfolio.
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AvalonBay Communities
Virginia-based REIT AvalonBay Communities Inc (NYSE:AVB) was among the Redditor’s largest holdings, earning about $13,000 a year in dividends. The stock is up about 18% so far this year.
Real estate income
It’s rare to find an impressive dividend income portfolio success story on Reddit that doesn’t include Realty Income Corp (NYSE:O). The monthly dividend REIT yields around 5% and has an impressive track record of increasing its payout for 30 consecutive years. Analysts believe Realty Income Corp (NYSE:O) is well-positioned to benefit from rate cuts as its tenants, especially retailers, are expected to see more traffic in the coming weeks and months.
ExxonMobil
Oil giant ExxonMobil Corp (NYSE:XOM) has been raising its dividends without interruption for about four decades. The share has a dividend yield of more than 3.1%. XOM gained about 17% this year.
Partners for business products
Midstream energy company Enterprise Products Partners LP (NYSE:EPD) has a dividend yield of about 7% and 26 consecutive years of dividend increases. The stock is up about 10% so far this year.
Chevron
Chevron Corp (NYSE:CVX) is one of the best high-yield dividend growth stocks in Redditor’s portfolio. Chevron yields about 4.3%, and the company has increased its payouts for about 36 years in a row. Chevron recently partnered with Honeywell to use AI-enabled technologies to improve oil refining.
Pembina Pipeline
Pembina Pipeline Corp (NYSE:PBA) is a Canadian midstream energy company. The stock has a dividend yield of approximately 5%. In August, the company announced a quarterly dividend of CAD 0.69 per share, payable on September 27.
Altria Group
Despite concerns about declining use of traditional tobacco products, Altria Group Inc (NYSE:MO) is among the top favorite high-yield dividend stocks of income investors on Reddit. The company has raised its dividends for more than five decades, and its shares yield as much as 8%.
Franklin Resources
Financial services company Franklin Resources Inc (NYSE:BEN) was among the highest-yielding dividend stocks in the $13,000 income portfolio. The stock yields about 6%, and the company has increased its payouts without interruption for more than four decades.
Capital of the street
Main Street Capital Corp (NYSE:MAIN) is a business development company that has never cut its dividends since 2007. It is a monthly dividend stock that yields more than 2%.
Verizon Communications
Telecom giant Verizon Communications Inc (NYSE:VZ) has a dividend yield of about 5.9%, and the company has increased its payouts for 18 years in a row. Goldman Sachs recently said it expects Verizon to post strong results in its upcoming quarterly report amid wireless execution. However, the company said lower-than-expected phone network additions could create headwinds for the shares through the end of the year.
Original parts
Auto parts company Authentic Parts Co (NYSE:GPC) has a dividend yield of about 2.9% and a track record of 67 consecutive years of dividend increases. Original parts were among the Redditor’s largest assets, contributing to his $13,000 annual dividends.
Wondering if your investments could earn you a $5,000,000 nest egg? Talk to a financial advisor today. SmartAsset’s free tool matches you with up to three vetted financial advisors serving your region, and you can interview your advisors for free to decide which one is right for you.
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This article An Investor Who Spent His Savings to Buy Dividend Stocks and Earns $13,000 a Year on Stocks in His Portfolio: Top 11 Stocks originally appeared on Benzinga.com
