# Starting a dividend portfolio (Help Needed)



## Equilibrium (Jun 29, 2015)

I just turned 18 and am completely new to the investing game. I have been looking around and would like to start out with investing in dividend stocks and build a portfolio in that first. I am in it for the income and not the capital gain. I have about $1000 I would like to put in right now and add to it over time. What I need help with is pretty much everything lol, but more importantly the best online broker and the stocks I should invest in. I am open to any advice, stories or anything else you would like to share.

Thanks,


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## mf4361 (Apr 11, 2015)

Assuming you are investing for longer term (7-10 years+)

I don't know if putting money in dividend stocks alone would be a prudent idea. I myself put money in broad based ETF funds that includes everything, from large to small cap, dividend or not. If you really want to do dividend stocks only, there are numerous dividend stocks ETF that tracks a basket of div stocks, that's where I would start. With only $1000 I don't think it makes sense to do individual stocks (unless you gamble your money in 1 company) 

Quest Trade and Virtual Brokers are generally said to be the lowest cost brokers out there. I use VB and I'm quite satisfied with it.


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## CalgaryPotato (Mar 7, 2015)

What is your goal with the money? You seem to be hyper focused on the process of how you want to invest, but what is the underlying goal. What is the big benefit of getting maximum dividend out of such a small amount of money, I'm assuming you'll just invest it back anyway. And why are you set on individual stocks rather than an ETF?


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## gardner (Feb 13, 2014)

And is this going to be registered or non-registered? TFSA, RRSP, RDSP, RESP?

Short advise is:

(1) read
(2) read some more
(3) get a brokerage account
(4) read even more
(5) do the couch potato strategy


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## Oldroe (Sep 18, 2009)

That's the perfect amount to start.

Little skin in the game HELPS.

Then read, study, ask,read ,study and ask.


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## My Own Advisor (Sep 24, 2012)

Check out some blogs 
http://www.myownadvisor.ca/canadian-dividend-stocks-buy-mostly-forget/

Like oldroe mentioned, some skin in the game helps - but not too much since experience and failure can be a great teacher.

What books have you read on the subject of dividend investing?

If none, I'll recommend some great ones:
http://www.myownadvisor.ca/the-single-best-investment-book-review/

The Investment Zoo
http://www.myownadvisor.ca/my-favourite-takeaways-from-the-investment-zoo-–-part-1/

Do some reading, some books, and then consider your online brokerage etc. 

It's a lot easier to know where you're going once you figure out what you want to do. Time is your friend at 18. I wish I was an inspired to invest as you are when I was 18! Kudos to you.


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## Equilibrium (Jun 29, 2015)

So to clear up some of the questions and misunderstanding here it is.

How long do I plan on investing?
I plan on investing till the day I die since I need money coming in someway or another.

Goal with money?
My goal with the money is to constantly add capital to my investments and to continue reinvesting my earnings to build a passive income.

Why individual stock over ETF's?
I can build a diversified portfolio over time. I have no control over what an ETF does and there are fees involved.

Accounts?
I'm just gonna have to go with what I read on My Own Advisor's blog and go with non-registered and TFSA accounts because they seem like they know what they are doing.

Thats pretty sweet that you have that whole blog going and from Ottawa! I've seen your blog before and will keep reading through it. I will read those books over my cruise next week and will invest when I get back most likely.


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## My Own Advisor (Sep 24, 2012)

Happy reading Equilibrium. 

Just know that investing in dividend stocks _is not without risk_. Actually, all investing has some risk. 

Read lots before you start, at least you'll be more aware of what you're getting into. Check out those books!


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## CalgaryPotato (Mar 7, 2015)

Equilibrium said:


> How long do I plan on investing?
> I plan on investing till the day I die since I need money coming in someway or another.
> 
> Goal with money?
> My goal with the money is to constantly add capital to my investments and to continue reinvesting my earnings to build a passive income.


So your goal is to invest enough to eventually live off the dividends with all your capital still in tact... fair enough. 

Dividend investing does make sense then, I would consider the ETFs though until you get a bit more money personally. There are fees involved with buying and selling stocks. They may outweigh the MER on an ETF until you have quite a bit more money. No, you can't control what companies will be held in the ETF but if you're long term investing rather than trading, don't overestimate how much you can beat the market with a diversified portfolio.

Definitely check out MOA's blog, tons of great information!


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## Tawcan (Aug 3, 2012)

Mark shares some great links. Definitely read a lot and become knowledge in the world of investing before you tip your toes in the water.

Shameless self-plug here... here are some links that you might find interesting:

http://www.tawcan.com/tips-on-dividend-investing-with-canadian-perspective/

http://www.tawcan.com/start-dividend-investing-today/


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## Potato (Apr 3, 2009)

I'll suggest that you go with passive investing for now -- TD e-series or Tangerine would be a great start at this point. It'll give you a chance to read up and build some more capital up. Yes there are fees, but a single $10 commission will put you on par with Tangerine at the point, and $1000 is the bare minimum to open an account at Questrade, and you'd face quarterly inactivity fees until you're over $5000.


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## Equilibrium (Jun 29, 2015)

So as I work I plan on pumping the majority of my earnings into dividend stocks to try and get a decent portfolio of 5-10 stocks. That is why I think I want to just put 1000 in one stock and save up another 1000 put in another and so on until I have 5-10 (Give me your thoughts on this). I am wondering what you guys prefer as your TFSA, which company your with and if you like it as I would like to pick the best one right from the get-go.


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## Oldroe (Sep 18, 2009)

Fees will crush you.

At this point I wouldn't worry about it. Pick 2 stocks and then start studying. You will want 100 share buys so most stocks of interest will be 4k +.

You could try Shareowner or DRIPS they both have down sides.


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## lonewolf (Jun 12, 2012)

Equilibrium said:


> I just turned 18 and am completely new to the investing game. I have been looking around and would like to start out with investing in dividend stocks and build a portfolio in that first. I am in it for the income and not the capital gain. I have about $1000 I would like to put in right now and add to it over time. What I need help with is pretty much everything lol, but more importantly the best online broker and the stocks I should invest in. I am open to any advice, stories or anything else you would like to share.
> 
> Thanks,


 @ the market heights were @ now asking someone to help you find a dividend stock table to put your money on so you make money, that's like someone in the summer of 1929 asking for help to pick out a stock to invest in.

I do not think anyone can help you.


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## My Own Advisor (Sep 24, 2012)

I would not go that far....re: summer of 1929.


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## RBull (Jan 20, 2013)

^Another bold prediction from our resident investment contrarian, soothsayer, astrologist, cleric.... 

An ~80% drop in stock values, a 10 year depression with massive unemployment and poverty followed by a world war.......


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## Woz (Sep 5, 2013)

Generally, I advise going with your bank as the commissions are $10 for most brokerages, not enough to make a difference. However, as you’re only planning to trade $1000 at a time, $10 would be an immediate 1% expense, which is pretty steep. Also, many brokerages have annual fees if you don’t maintain ~$25k depending on the brokerage. For that reason, I’d probably suggest Questrade. They’re lower cost (~$5/trade) and have a low minimum balance ($5k, waived if under 25 I believe). You can also transfer later when you have more accumulated. There’s usually a ~$150 transfer out fee but many receiving brokerages will cover that expense if you’re transferring ~$25k.

As for your plan, it depends what your expectations are. It doesn’t seem ideal from a returns perspective, but if you’re just looking to educate yourself with some skin in the game then there’s no real reason not to. The issues I see from a returns perspective is the trading fees are going to be a fairly large drag, and you’re not going to be particularly diversified until you get to >10 stocks so you’ll have a drag there as well.

The diversification drag is often overlooked. For example, one person invests in an index fund, the other person picks one stock at random and at the end of every year sells it and picks another stock. Many people think they’ll have the same expected return, which is partially true, they’ll both have the same expected average return. However, the expected median return will be very different. The person with the one stock portfolio would have a 50% chance of underperforming the index investor by 10% or more per year. If you picked 10 stocks at random each year that drag would decrease to 1%.


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## besmartrich (Jan 11, 2015)

If you just have $1000 then TD e-series would be a good idea as no commission will be charged and their MER is lower than other mutual funds. When you start to have $2,500 or more then you should look into investing directly to Vanguard ETFs such as VUN, VCE etc... or dividend stocks such as TD, BNS, SU, CU, ACO etc...


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## My Own Advisor (Sep 24, 2012)

RBull said:


> ^Another bold prediction from our resident investment contrarian, soothsayer, astrologist, cleric....
> 
> An ~80% drop in stock values, a 10 year depression with massive unemployment and poverty followed by a world war.......


LOL

I suppose anything is possible? Well, maybe not all that


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## AltaRed (Jun 8, 2009)

I agree with all the comments that fees will kill the OP. I wouldn't consider a discount brokerage account until I was at the $25k level (unless Questrade) and wouldn't be buying stocks until my account size was circa $25k anyway (perhaps even $100k). The place to start is with a TD e-series index mutual fund account and then move to ETFs when at circa the $25k level (Questrade potentially being the exception). XDV, for example, is a dividend paying ETF that will provide the diversification needed while having a pretty good yield. So is XIE. 

Lots of choices to provide dividend income...but that in itself seems to be an oxymoron for a 'starting out' investor. The goal for a young investor should be on total return which is what index mutual funds and ETFs provide.

There is way too much emphasis on (and desire by) folks wanting to get into the stock market buying individual equities. Makes for good watercooler bragging but isn't the most effective choice, especially for smallish accounts (considering the combination of risk, volatility and returns).


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## Mortgage u/w (Feb 6, 2014)

First, I think you're on the right path - saving, that is. Glad you have the passion for this and I hope many more can begin your journey at such a young age.

Ok. So I get your idea, but stocks are not for you right now. Unless your planning to come across and save $1000 every 2 weeks or so, you will have a hard time keeping your portfolio afloat. As others mentioned, fees and market volatility will crush you. And what will you do if your investment drops dramatically?

A good strategy with Dividend stocks is the DRIP. This only works if you have enough shares to generate the necessary dividend to buy back a share. With $1000, few stocks can provide this benefit for you.

If I were you, I would build my savings further before plunging into the market. A comfortable sum such as $10k would be ideal. To get there, use either a high interest savings account or a low volatile fund - the key with this one is to find one with low MER fees as well. ETFs are good too, but similar with stocks, upfront fees can affect you.


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## Westerncanada (Nov 11, 2013)

I would highly suggest TD E-series... Mers of .30-.55 which is half of what youll pay commisson wise if you purchase one stock. Not only that.... their funds have some of the best companies on the globe. 

Individual stocks dont make a ton of sense until your spending $3500 and up. 


Lots of great advice given prior to my comment.. but if your dead set on dividends vs capital you can research some REITs or a dividend ETF such as CDZ


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## Cal (Jun 17, 2009)

A simple way to start with a small amount may be to purchase a dividend etf or e series fund through Td that holds dividend payers, and follow those holdings closely. You will begin to formulate your own plan for dividend investing, and gain a greater understanding of the markets.


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## huynhhh (Apr 29, 2015)

We're on the same boat as well OP, I'm turning 18 as well in about a week and am heading off to post secondary to study financial planning. When I turn 18, after doing a bunch of online reading I am personally going to go with share owner. With capital your size dividends that are gained will NOT get reinvested due to a lot of brokerage accounts only allowing synthetic drips. I am in Canada as well so share owner seems to be a great way to story our journey. Shareowner allows fractional shares which is a huge plus to people like us. I have about 10K ready to invest that is liquid, not including emergency funds, and PM used as a hedge. I feel as though at any age there are many unpredictable variables, you should start saving for an emergency fund before diving into the market, just incase. Just my opinion.


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## tenoclock (Jan 23, 2015)

Most of the above advice is good, and if I had $1000 it would go directly to a diversified ETF. You can buy ETFs on questrade without any commissions. Don't worry about MER because the commissions on the stocks you will buy will be more than enough to offset that. 

However at 18, I would give a different advice, invest that $1,000 in your education and improving your marketable skills and it will most definitely outstrip any stock market returns that you will get. It's always good to start early and have skin in the game because you learn a lot, but make sure that the opportunity cost of investing in stocks is not your education because that is what will dramatically maximize your income potential at this age.
Spend your money on a marketable degree, designation, extra curricular courses, or even paying people to get experience, that will return you a lot more money than anything elsewhere (save for starting your own business)


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## jaybee (Nov 28, 2014)

AltaRed said:


> I agree with all the comments that fees will kill the OP. I wouldn't consider a discount brokerage account until I was at the $25k level (unless Questrade) and wouldn't be buying stocks until my account size was circa $25k anyway (perhaps even $100k). The place to start is with a TD e-series index mutual fund account and then move to ETFs when at circa the $25k level (Questrade potentially being the exception). XDV, for example, is a dividend paying ETF that will provide the diversification needed while having a pretty good yield. So is XIE.
> 
> Lots of choices to provide dividend income...but that in itself seems to be an oxymoron for a 'starting out' investor. The goal for a young investor should be on total return which is what index mutual funds and ETFs provide.
> 
> There is way too much emphasis on (and desire by) folks wanting to get into the stock market buying individual equities. Makes for good watercooler bragging but isn't the most effective choice, especially for smallish accounts (considering the combination of risk, volatility and returns).


I agree with what you've said, but how do you feel about Drips with SPP's for people like OP?


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