Baby DivHut Dividend Income And Portfolio Update

With half of 2016 already in the books I thought it would be fun and interesting to see how baby DivHut’s dividend income progress has been moving along. I like to do these baby DivHut updates three or four times a year as not much changes in his portfolio on a month to month basis. I can honestly say that I feel very proud to be able to start a dividend growth portfolio from birth for my son. The real effects of compounding will be very noticeable in an account that was started so early in life. For now baby DivHut’s portfolio is still relatively small in terms of individual holdings with just eight different dividend paying stocks currently. Of course, the number of individual holdings will grow over the years as we add fresh capital to his account and the inevitable stock spin off that will occur as well. With that being said, let’s take a look at baby DivHut’s current holdings, sector allocation and dividend income for the first six months of the year.

 

Portfolio

SymbolDescriptionQuantityCost BasisMarket ValueCost/ShareGain or Loss
ABTABBOTT LABORATORIES8.8753$332.00$350.93$37.41+$18.93
5.70%
CATCATERPILLAR INC14.9589$991.03$1,143.61 $66.25+$152.58
15.40%
EMREMERSON ELEC CO COM36.7411$1,908.60 $1,917.89 $51.95+$9.29
0.49%
ITWILLINOIS TOOL WKS INC6.1483$512.02$644.40$83.28+$132.38
25.86%
JNJJOHNSON & JOHNSON8.2498$824.72$1,000.62 $99.97+$175.90
21.33%
ULUNILEVER PLC - ADR13.0079$515.10$624.77$39.60+$109.67
21.29%
VFCV F CORP25.0591$1,620.53 $1,561.18 $64.67(-$59.35)
(-3.66%)
YUMYUM! BRANDS INC14.2503$1,070.44 $1,190.33 $75.12+$119.89
11.20%

 

Dividend income from baby DivHut’s account totalled $33.95 in June with a six month grand total of $103.04.

 

Sector Allocaion

SectorSector %Market Value
Industrial Products43.94%$3,705.90
Consumer Discretionary18.51%$1,561.18
Medical16.03%$1,351.55
Retail/Wholesale14.11%$1,190.33
Consumer Staples7.41%$624.77

As you can see above, baby DivHut’s portfolio skews heavily towards industrial names. I’ll admit, I jumped on board the sector a little heavily. No doubt, this portfolio is not complete by any means as I am looking to add more diversification from the consumer staples and health sectors. Names that I am considering adding to his portfolio in the coming months/years include, in no particular order, General Mills, Inc. (GIS), Pepsico, Inc. (PEP), The Coca-Cola Company (KO), The Procter & Gamble Company (PG), Colgate-Palmolive Co. (CL), Archer-Daniels-Midland Company (ADM), Becton, Dickinson and Company (BDX), W.W. Grainger, Inc. (GWW) and Kimberly-Clark Corporation (KMB) and more.

 

What do you think about baby DivHut’s portfolio and sector allocations? Please let me know below.

 

Disclosure: Long all above

36 thoughts on “Baby DivHut Dividend Income And Portfolio Update

  1. That is a great start in life for baby Divhut. I am sure you will educate baby Divhut on just how to continue to grow his portfolio. It is definitely setting him up for success. Thanks for sharing.

    • Hi MD,

      The plan is to teach baby DivHut about the importance of investing, patience, time and compounding. If I can pass on those lessons to him I feel he’ll have the right tools to continue to grow his portfolio and passive income stream on his own. Thank you for sharing your thoughts.

    • Hi R2R,

      Thank you for the kind words. It will be interesting to note the progress and year over year growth, as time goes by, of this dividend income portfolio. As long as I can see his passive income continually increasing, I know he’ll have a solid “money machine” working for his as an adult to help pay for all or most of his monthly expenses. Thank you for commenting.

    • Hi TMB,

      My main focus for this portfolio is for it to create a constantly increasing passive income stream. While capital appreciation would be nice too, I’m more focused on the income it can generate after a couple decades or more. I’ll keep these updates coming three or four times a year as not much changes on a month to month basis with the portfolio and chronicle the progress that is being made. Thank you for sharing your thoughts.

  2. Terrific start for your son. I chose to skew my gdtr’s towards a learning experience she could relate to. Her cereal (GIS), candy (HSY), her first bank account (WFC) etc. Echoing R2R, keep it up!

    • Hi Charlie,

      Keeping investments familiar to a child is a great way to keep them interested and involved. GIS, HSY, DIS, KO, MCD and many other names are great long term dividend payers than any child can relate to. The plan is to continue to expand the portfolio over the years and diversify further as its value increases. Thank you for commenting.

  3. Great that you are doing this for your son. I have three little ones and I like this idea a lot, but trying to get Papa’s portfolio up and running. I like Charlie’s idea of companies they can relate to, and what boy can’t relate to industrial machinery. 🙂 We all want a CAT in the backyard.

    • Hi Papa,

      While I think it’s important to focus on your portfolio first, as your children still have time on their side to grow their passive income, you still should not neglect to start something for them. Between, Loyal3, Robinhood and other free trading platforms that have very low minimum investments, it’s easy to start with $10 investment amounts on a weekly or even monthly basis and grow a portfolio slowly over the years. And, as you suggested, investing in a familiar company such as DIS, KO, MCD or even CAT can be a great way to get a child interested and involved with their investments. Thank you for stopping by and commenting.

  4. Can’t wait until 30 years to see how much this portfolio compounded. Baby DivHut will be so happy that his parents created such portfolio for him.

    • Hi Tawcan,

      I can’t even begin to imagine what multiple decades of compounding will result. For the most part we all are investing for well under ten years and the real magic of compounding has not taken its full effect. I hope he’ll appreciate and understand what has been created for him and that he’ll act mature and responsibly with his account as an adult. Thank you for sharing your thoughts.

  5. I can think of nothing better than to open up accounts for your children. I have done same for both of my kids and I’m excited to see where it ends up in 20 years.
    Regards,
    MrStockFox

    • Hi MSF,

      Congrats to you for doing the same for your children. I think it’s very important for every parent to take advantage of time and compounding for their young ones. These days there are no excuses for not setting up some sort of long term investment account for a child. Between Robinhood, Loyal3, etc. there are numerous free or very cheap trading platforms that have such small investment requirements that everyone can afford. Like you, I look forward to seeing where his account stands in a decade or two. Thank you for stopping by and commenting.

    • Hi FV,

      Time is the ally of every young investor and I am happy to be able to set up this account for him from birth. To answer your question I would not let him FIRE at 18. Perhaps by 30, if there is sufficient cash flow and maturity I’d be OK with him living a lifestyle of his choosing. As always, I appreciate your comment.

    • Hi IH,

      As long term dividend growth investors we always talk about the incredible effects of time and compounding. With this real world portfolio from birth I’ll be able to see it for myself and teach baby DivHut about patience with investing. Thank you for commenting.

  6. Divhut,
    IS this account opened in your name or the child’s? What are the tax ramifications? I have a wealthfront acct for my twins in my name but its their college funds. They are six months old and I have been placing $300.00 apiece for each kid. My thought is that when they turn 18 I will help them will college. If they get scholarships or do not attend college I wil use the funds for their first home, wedding etc.

    Thoughts, guidance?
    Thanks
    Nick

    • Hi BN,

      The account was opened in his name. It is a standard custodial account that will be his when he turns 18. For now, because I do not plan to sell any stock (no capital gains) and his dividend income is still too small to be taxed there are no tax ramifications. Of course, this will change over the years as his dividend income will grow to a taxable amount. I’m happy to hear that you have started a fund for your twins. We decided not to go with a 529 plan as we wanted to grow his account and passive income without any strings attached. Sure, taxes will be paid along the way as the dividends grow, but the money he receives will be able to be used for anything he chooses. There are a lot of opinions regarding starting a 529 or not for a child. You can read a lot of those comments here: Starting A Dividend Growth Portfolio At Birth. Who knows what college costs will be in two decades let alone the value of a degree. The way college costs keep rising each year the value of a degree earned becomes diminished. The bottom line is the fact that you started something for your children. That’s a huge first step that most parents do not even take. I applaud you for that. I don’t care if you invest in 529s, stocks, bonds, funds, gold, real estate or farmland, the fact that you took the step to invest in your children’s future is to be commended. Thank you for commenting.

    • Hi OBFW,

      In about two decades time I expect there to be significant capital appreciation but the main focus of starting this account in his name is to create an ever growing passive income stream. Dividends will always be the main point of his account. These days every parent can create a dividend income portfolio for their child. With free trading platforms and low minimal buys starting at just $10 there is no excuse to not start a Loyal3 or Robinhood account and buy solid dividend payers for their young ones. As always, I appreciate your comment.

  7. This portfolio looks like it will make Baby divhut very rich after decades of receiving dividends. No oil and gas exposure, I see! Maybe caterpillar but probably a smart thing because of all the volatility that’s going on. I feel that you’re putting your money in companies that want to stay in business over the long haul.

    • Hi FS,

      The intent behind his portfolio and mine is to stay the course for the long haul with companies that are not in traditionally volatile sectors. This includes energy and technology too. I would much rather stick to the “bread and butter” type stocks in the consumer staples, health and industrial sector primarily. Thank you for sharing your thoughts.

    • Hi easydividend,

      I’m happy to hear that you plan to do something similar for your child when that day comes. The primary focus of this portfolio will be dividend income and not capital appreciation. Of course, I’m not against selling stocks should a valid reason become warranted but it will be more about growing a passive income stream and long term compounding. Thank you for stopping by and commenting.

    • Hi SAD,

      I’ll be posting the progress of his portfolio every few months as not much changes on a month to month basis. Still, it will be interesting to see how the portfolio develops over the years and how much passive income it will be earning along the way. Of course, as he gets older I plan to teach him the fundamentals of investing, patience and passive income. Thank you for commenting.

  8. Looks like Baby Divhut is off and to the races. I love the strength of the portfolio. If it has grown this much in such a short time, just wait until Baby Divhut becomes an adult. Holy cow. I know I always say it, but good for you for starting Baby Divhut out on the right foot and success in the future.

    Thanks for the update!

    Bert

    • Hi DD,

      No doubt his portfolio is off to the races as the market continued its climb in 2015 and now halfway through 2016 as well. Of course, the main focus of his portfolio will be dividend growth and making sure his passive income stream increases each year versus just capital appreciation. In time, I’ll be teaching him the basics of investing, patience and consistency and hope he’ll continue to run with this portfolio once he is an adult. Thank you for stopping by and commenting.

    • Hi BSR,

      The beauty of investing today is that we have so many affordable options to be able to create accounts like these for our children. Between Loyal3 and Robinhood to name a couple, any parent can set aside small amounts of cash and build a passive income portfolio fee free. Just imagine if more parents set aside just $10 a month for their kids in solid long term dividend payers. They might not be multimillionaires, but they’ll have a definite financial advantage compared to others who never invested. As always, I appreciate your comment.

    • Hi Neal,

      Thank you for your kind words. Like you, I also wish my parents would have started any sort of investment for me at birth. The truth is that these days every parent can afford to do the same for their children. With fee free trading platforms and minimum investments starting at $10 there is zero excuse to not put a little away for the next generation. Glad you enjoy the site too. Thank you for commenting.

  9. It’s great to see that in such a short time how much this is already growing. The compounding of re-investing dividends is already strong. A very, very lucky kid that’s for sure.You don’t have any financial stocks – too volatile?

    Tristan
    Dividends Down Under recently posted…2016 Goals: HalfwayMy Profile

    • Hi DDU,

      While still a very young portfolio, I expect the magic of compounding to take effect in a big way several years down the road. That’s the beauty fo starting a dividend growth portfolio from birth, you have the luxury of time. As the portfolio grows over time I’m sure we’ll be adding other stocks to the mix. This portfolio is in no way fully diversified or complete. There may be room for a financial/insurance stock down the road. Perhaps, WFC, AFL, CB, TRV, USB and the like. Of course, I’d like to add a lot more consumer staples to the mix but will wait for better values and yields. Thank you for stopping by and commenting.

Leave a Comment

CommentLuv badge