Time for a dose of Finance Friday! I said in my 'a new year, and a new focus for this blog' post that on the first Friday of each month I would be outlining the dividend income that I received the previous month. I've only been investing for around 18 months, but I've got an income portfolio that I'm pretty happy with on the whole and my target for 2022 is to receive £1000 in dividend income. I've done the sums based on my current holdings (which are revealed below) and it looks like I should be getting at least £950 so hopefully with me making 2 purchases each month, I can push this up to my target.
My income portfolio is held in a stocks & shares ISA (or S&S ISA for short) with Interactive Investor, and I put in around £500 out of every paycheck (I'm paid every 4 weeks in my job rather than every month, so one month has 2 paychecks), which I then make 2 purchases with. The fee structure that I have means that although I pay a direct debit of £19.99 each month, I can then make 2 trades (purchases or sales) without having to pay commission. Fees can add up quickly and swallow up any potential profits, so I try to keep myself to just those 2 trades. Again, I've done the sums and I've worked out that if I take my current holdings out of the equation, I have made a profit of a little over £1300 during the lifetime of my ISA (around 14 months), and I've done a fair few trades during that time! I've planned out which of my holdings I will be making purchases in each month based on when the dividends should be received as well, subject to change of course but I do like having a semblance of structure.
If you are still reading (well done if you are, I know investing can be a boring subject for some), then here is my income portfolio as of 1st January 2022:
Investment trusts have a blank background, whilst individual company holdings are in colour. I used to have a lot more individual companies in my S&S ISA but I found that investment trusts were a better way to diversify my holdings, and actually, they already held some of the individual companies I had. The current top 10 holdings of Merchants investment trust contains 8 individual companies that I owned shares in at some stage (only SSE and WPP that I have never owned). Makes sense to sell the individual companies and go for the investment trust doesn't it? As I said above, I'm pretty happy with this portfolio on the whole. There might be one or two changes but I'll come to those in a moment.
Altogether, this portfolio has around £20k in it so far, so I'm still in the early stages really. My top holding has a little over £1800 in it, whilst my bottom holding has around £750. There's a couple of my holdings that have been around since I first started investing back in August 2020, and the newest ones came in around September/October, so that partly accounts for the difference.
Top 5 Holdings according to spend (fees included):
1. Ferrexpo
2. Anglo Pacific
3. Persimmon
4. Hipgnosis Songs
5. Diversified Energy
Bottom 5 holdings according to spend (fees included):
1. European Assets
2. iEnergizer
3. JPM Russian Securities
4. Lloyds Banking Group
5. Schroder Euro Real Estate
I did mention earlier that there may be 1 or 2 changes to my portfolio - usually I only look to change in one of two scenarios: if the holding becomes expensive in relation to the dividend (this tends to be where the dividend policy has changed) or if the value of my holding drops by at least 30% compared to what I have spent. With this in mind, 2 of my holdings are potentially going to be sold, but I will need to review them first. Castings is one where I'm not getting too much income (it is just outside of my bottom 5 holdings) and the value is more often than not lower than what I paid for it. I've been wavering on this one for a little while as I've held it for over a year, but I'm more likely than not going to sell it. The second one is actually my top holding Ferrexpo. I've held this one for around 9 months but the current value is nearly 25% lower than what I paid for it, so there's not too much further to go for it to hit my 30% sell trigger. I think I'm going to wait until their final results come out (which I believe is March) and make a decision then, if it hasn't already hit the trigger. If I do sell those two, it would free up a little over £2k which I could then pile into some of my lower holdings - it would take me nearly 4 months to pay in that much, so it's a lot!
I'll probably do a mini-update around July, if only to see if my top 5 and bottom 5 holdings have changed at all. Otherwise, the next dividend post will be around Friday 4th Feb where I reveal how much dividend income I made in January and from which holdings. I've had a couple of payments already but I still have some more to come in.
Until then, Happy Friday!
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