Baby DivHut’s Dividend Income And Portfolio

2015 has been a very memorable year for me as I welcomed the birth of my first child in early March. With all the uncertainty and questions that inevitably come up when becoming a first time parent, one thing I was certain of was wanting to start a dividend growth portfolio for my child. Sure enough, within a couple months of his birth I opened a custodial account in his name and began his journey as a dividend growth investor from birth.

 

As I stare at the calendar while writing, I am amazed at how fast the entire year has flown by and my newborn baby is now knocking on ten months. I feel a great amount of satisfaction knowing that I am contributing to his own dividend growth portfolio and taking advantage of his greatest asset, time. Time to deal with short term paper losses, time to deal with potential dividend cuts, but also time to allow a couple decades worth of dividend growth as well as the magic of compounding dividend returns.

 

With that being said, let’s take a look at the companies in baby DivHut’s current portfolio as well as other names I am considering and his 2015 total dividend income.

 

Dividend income from baby DivHut’s 2015 stock portfolio totalled $62.04.

 

Of course, it will be interesting to see his year over year progress as time goes by.

 

Portfolio

SymbolDescriptionQuantity
CATCATERPILLAR INC6.7158
EMREMERSON ELEC CO COM36.0759
ITWILLINOIS TOOL WKS INC6.0774
JNJJOHNSON & JOHNSON8.1361
ULUNILEVER PLC - ADR12.8118
VFCV F CORP14.6862
YUMYUM! BRANDS INC14.0800

 

Sector Allocation

SectorSector %Market Value
Industrial Products45.18%$2,745.17
Retail/Wholesale16.93%$1,028.54
Consumer Discretionary15.05%$914.22
Medical13.75%$835.74
Consumer Staples9.09%$552.44

 

As you can see above, baby DivHut’s portfolio skews heavily towards industrial names. Of course, this isn’t by accident as the entire industrial sector got hammered in recent months only to slightly rebound towards the end of 2015. 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), Abbott Laboratories (ABT), W.W. Grainger, Inc. (GWW) and Kimberly-Clark Corporation (KMB).

 

Going forward, I’ll probably write these baby DivHut portfolio updates about two or three times a year as not much will change on a month to month basis with his holdings nor dividend income. Perhaps, if there is interest, I can publish monthly dividend income updates for baby DivHut’s portfolio too as those seem to be the most popular posts among our dividend growth community.

 

At the very least, this will be a real world “experiment” of sorts that can show the power of long term dividend growth and how simply holding quality companies, reinvesting dividends and rarely, if ever, selling can create a substantial passive income stream for anyone, given enough time and patience.

 

Of course, comments and suggestions are always welcome regarding this real world dividend growth portfolio. I’d love to hear your own suggestions for selecting individual stocks as well as sector allocation ideas below.

 

Disclosure: Long all above

34 thoughts on “Baby DivHut’s Dividend Income And Portfolio

    • Hi R2R,

      I agree that this will definitely be a real world experiment of sorts to see what simply buying and holding quality names long term can grow into. I feel a great sense of pride to be able to do this for my child and plan to educate him about the qualities of investing, patience and time. Thank you for stopping by and commenting.

    • Hi FV,

      I share your enthusiasm for baby DivHut 🙂 Appreciate your input regarding the insurance industry. I guess I’d look into AFL or TRV down the line. First off, I want to add a lot more consumer staples to his portfolio. Of course, this is a journey that will be measured in terms of decades so there will be plenty of time to consider new names and sectors. As always, I appreciate your comment.

  1. This is an amazing thing you are doing for your child. At your current pace your child will not need to invest any new funds in adulthood. Heck you may even be able to finance college with month dividends. I wish I would have done this for my kids.
    Investment Hunting recently posted…2015 Goals RevisitedMy Profile

    • Hi IH,

      Thank you for your kind words. As I commented earlier, it gives me great pride to be able to do this for my child. The hope is that his account will not only grow, but more importantly, be able to throw off a decent amount of passive income that he can use to supplement his lifestyle or even better continue to reinvest well into his adulthood to really create an impressive monthly passive income flow. Just imagine if he continued to invest till age 40. He would have a portfolio that had the benefit of forty years of compounding growth. I can’t even imagine what that would entail. Thank you for commenting.

  2. Nice, not even a year old and Baby DivHut has already earned $62 in dividends. May this be one very long and very profitable dividend streak 😉

    We have started as well (albeit two year late) with an account for our Miss CF. However, we have been a bit “lazy” and went on the index fund tour.

    Well done DivHut.
    Team CF recently posted…December 2015 Cheesy IndexMy Profile

    • Hi TCF,

      As I wrote in the post, this was something that I was 100% sure I wanted to do. Of course, I had the support of Mrs. DivHut which made the decision to go ahead even easier. I am happy that within two months of his life I began his journey and look forward to growing his account over the years and watch his passive income compound over time. Happy to hear you started a similar account for your child. The most important part is done, you started and going the route of index funds is just fine too. You took a great step just by simply starting. Thank you for commenting and sharing your own index fund tour.

    • Hi DG,

      Always happy to share my personal dividend growth journey and now the journey of my child as well. When the time does come and you are face to face with your first child I hope to read a similar post from you. Remember, children hold the greatest asset of all, time. It’s up to us as adults with investment knowledge to get them started on this compounding journey as soon as possible. Thank you for stopping by and commenting.

    • Hi Tawcan,

      That’s the name of the game. To think, at ten months old he already has an income of $62. From small beginnings great things can come. Of course, that’s the plan as his account will have about two decades worth of growth and compounding in front of him. I hope he’ll continue his compounding journey well into adulthood and really set himself up with a serious passive income flow by the time he is 30 or 40 even. As aways, I appreciate your comment.

  3. I think that’s a great idea. Is it going to be something you include BabyDivhut, teaching a lesson maybe? Or a big surprise at a certain age? There’s a good link you could do showing how businesses make money from things we all use (eg Pepsi, Coke, Colgate, P & G) and that your kid can get in on that action.

    This is definitely something I’d like to do with my future children too, this will definitely pay off in the long run and will be worth tons more in 20 years time to them.

    Tristan
    Tristan @ Dividendsdownunder recently posted…Saving for the future: DecemberMy Profile

    • Hi Tristan,

      There’s no question that this will be a real world life lesson. I plan to teach him the value of investing over time, patience as well as the power of compounding. When he is older I will definitely impart to him that he owns a small piece of a real business and that every time he sees someone buying a Coke or brushing with Colgate he should understand that a small portion of that profit will be returned to him. I am excited just thinking about teaching these concepts to him. For now, it’s all about starting his portfolio and slowly adding to it every year. I look forward to publishing his updates and following his journey that literally started at birth. Thank you for stopping by and sharing your thoughts.

  4. I think it’s wonderful that you have already started investing for Baby DivHut. With the power of compounding on time on your child’s side, this portfolio will look pretty good years from now. Do you have a plan in place where you allocate a certain % of your savings to invest into your child’s account every month?
    A Christian Investor recently posted…2015 Passive Income CoverageMy Profile

    • Hi ACI,

      I always say that children have the greatest asset of all, time. Why not take advantage of all that time and put it to good use. After all with so much time to compound returns even modest sums of money can grow into something substantial down the road. For now, I do not have any formal plans of allocating a certain percentage of cash each month. I know that every year I will contribute to his portfolio and that’s about it. Some years might be more, some might be less. Perhaps, when the account is larger and more diversified I’ll set up some rough guidelines for cash and asset allocations. I appreciate your comment.

  5. Great job Keith. Awesome for you to be thinking so far into the future. Very intelligent of you and considerate. Your children will thank you one day. I know it.
    Thanks for sharing and keep it up bud. Always a pleasure… Cheers bud.

    • Hi DH,

      I can only imagine where I would be financially had my parents started a portfolio for me at birth. Even with minimal knowledge one could have simply invested in KO, PG, PEP, JNJ and the like and be well ahead today. No matter, I’m doing what I’m doing for myself and now for my child. I hope to instill these investing disciplines in my child going forward and teach him the values of long term investing with patience and temperament. Thank you for commenting.

  6. Good for you for setting the table for Baby DivHut. I would love to own every single one of those companies in the portfolio. This has to be fun to monitor since the power of dividend investing is starting from the earliest point possible. Must be exciting to see the baby’s nest egg grow. I can only imagine the feeling.

    Thanks for sharing. I’m hoping to do something similar when my fiance and I are ready to start our family one day.

    Bert
    Dividend Diplomats recently posted…My Top 5 Reasons to Make Larger Stock Investments ($3,000+)My Profile

    • Hi DD,

      “Setting the table for Baby DivHut,” I like that phrase. Kind of drives home the point of what a parent should do for their child in many respects, not just financially. I agree, that it will be very interesting to see his annual income grow from year to year. To think, only ten months old and already has an income of $62 via dividends in 2015. Of course, as he gets older I’ll be more than happy to impart investing knowledge upon him and hopefully get him as excited as I am about long term dividend and passive income growth. Thank you for stopping by and sharing your thoughts.

  7. Just throwing out an idea, Keith, but the babe’s portfolio could use some growth stocks. I personally like NKE, V, and SBUX for long term growth of both earnings and dividends. GOOGL doesn’t pay dividends (yet) but has great growth prospects for the decade to come. Otherwise, great start for the little ‘Hut.

    • Hi KeithX,

      I have started the baby DivHut portfolio based on my current holdings but I do agree that some type of growth might be warranted. In the back of my head I have SBUX first and perhaps NKE as well. Before I add those names though I would like to add several “old school” consumer staples like PG, KO, CL and the like. I appreciate all suggestions. Thank you for commenting.

  8. Great job DivHut!.
    Baby DivHut will thank you while reaping the benefits of decades of compounding.
    What broker did you set up the custodial account through?

    • Hi sans,

      Thank you for your kind words. I sure hope when he gets older he’ll be able to appreciate what we have started for him. If nothing else, I’d like him to understand and appreciate the passive income that his portfolio is generating. His account was set up through Sharebuilder now Capital One Finance. It was set up under a legacy promo they had with Costco where commission is a flat $2. I appreciate your comment.

  9. I’m sure that this portfolio will help baby divhut understand the benefits of dividend investing, compound growth and eventually how to prudently manage investments over the long-term. It is going to be interesting to follow along to see the progress. Thanks for sharing and kudos for coming up with such a great idea!
    Dividendniche recently posted…Dividend Income Update DecemberMy Profile

    • Hi Dividendniche,

      As you can imagine, I’m pretty excited about his portfolio as well. I agree that it will be interesting to see how it grows as well as how much passive income it will be throwing off in five, ten and twenty years down the road. It’s funny, right now I can hear him crying in his crib. I can only imagine what the future will bring as I know I’ll miss those cries one day. Thank you for stopping by and commenting.

  10. I can only imagine what Baby DivHut’s dividend income will look like at 18 years old. Or at 30-40.

    I think I once voiced my opinion before that you should refuse to hand over the portfolio until at least the age of 30. This way, Baby DivHut learns the value of hard work, having to go out and get a job and pay bills until age 30. This way, that portfolio is in much less danger of being cashed out on frivolous things.

    Sincerely,
    ARB–Angry Retail Banker
    ARB recently posted…A Reminder That I Need To Retire EarlyMy Profile

    • Hi ARB,

      I’m looking beyond 18 years of age. I really hope he continues on this journey into his 30s and 40s when about four decades of compounding will have done its thing. You sound like my brother. He said, don’t tell baby DivHut about this portfolio until at least age 30. He figures, most of us are still pretty dumb with money as young adults. Ideally, I’ll be able to teach him about money and investing and he’ll have the common sense on his own not to cash out the portfolio for nonsense. In a perfect world, he’ll work till around 40 at which time there will be enough compounded returns and monthly passive income that he’ll “retire.” Thank you for stopping by and sharing your thoughts.

    • Hi Integrator,

      Yes. I would like to add some growth stocks to his portfolio eventually. Of the names you mention SBUX would probably fit the bill and maybe NKE. For the most part, I’d rather focus on steady growth that’s more predictable and “boring” as can be found in the consumer staples space. His portfolio is by no means complete at this point and will definitely grow in terms of number of holdings in the coming years. Thank you for your suggestions and comment.

  11. If you manage to keep this up until baby DivHut is 30 – like ARB says – then he can retire maybe then already, having also experienced hard work. Would be cool.

    For my kids I am doing something similar. I deposit a small amount of money each month in a set of mutual funds. (no way yet here to buy partial stocks). I let it grow until they need the money. In the mean time, it should be hidden for them.

    I might use this list as inspiration for my starter dividend portfolio. I am looking for strong brands that most likely do not require me to look at them for years to come.
    Amber Tree recently posted…How I use covered calls.My Profile

    • Hi AT,

      I’m still not sure about keeping this portfolio secret from baby DivHut as I feel it can be a great real world tool and lesson for him about dividend growth, passive income and long term investing and patience. We’ll see in the coming years how I’ll feel though. I think it’s great that you are doing the same for your kids. I don’t care if it’s savings, 529, mutual funds, ETFs, individual stocks, gold/silver, real estate or whatever… the point is that you are doing something for the next generation. Too many people get hung up on how or what to invest in that they never do anything. I started. You started. That is the single most important step to take. No one knows what the future will bring but at least we are taking measures to try and take some of the guesswork out of our children’s future finances. Baby DivHut’s portfolio is still not complete. Over the months and years I still want to add more stability via consumer staples like GIS, KO, PEP, PG, CL and the like for example. Then perhaps some growth like SBUX or NKE. We’ll see. There’s time. At ten months of age he has time on his side. Thank you for stopping by and commenting.

  12. This is nice that you created an account for your kid and use your own dividend income strategy to grow it. I imagine you may want to tell him about the account when he’s old enough to understand what it means and maybe understand what stocks and / or dividends are?
    I’m on a similar path with my daughter so I’m curious: how do you think you’ll explain the existence of this account and how you managed it?
    It’s a little late, but congrats 🙂
    TheMoneyMine recently posted…The Secrets of the Financial Independence PlaybookMy Profile

    • Hi TMM,

      I figure, if a strategy is good enough for my own long term benefit, it should be good enough for my child as well. I’ll continue to add dividend paying stocks to his account over the years and reinvest all dividends automatically for faster compounding. I plan to teach my son about investing and the benefits of dividends as he gets older. I want to convey the lesson that it may be OK for him to enjoy the dividend fruits from time to time but that he should never cut down the dividend tree. This way, he’ll understand the concept of an entity always producing an income for him no matter what. I’m still not sure how I’ll explain the existence of this account to him. I want him to be mature enough to be able to handle the responsibility so it may be well after his 18th birthday. We’ll see. In the meantime, I could still teach him the basics and maybe even open another account in his name for him to trade with. Nothing large, just enough for him to learn from his mistakes. Thank you for sharing your thoughts.

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