Three Commission Free Investments and a Dividend Increase

Many readers know that it is possible to invest in some of the best blue chip dividend stocks without paying any commissions by using Loyal 3. There are plenty of companies like PepsiCo (PEP), Coca-Cola, McDonald’s, Unilever to name a few, where a beginning dividend investor can set up to invest anywhere from $10/month to $2,500/month. This is all commission free, and ideal for setting up a monthly investment plan with those companies. I believe that the most important part of investing is continuous education, and starting as early as possible, in order to enjoy the longest compounding of capital contributions possible. Even a small seed can turn into a mighty oak, which is why one should never despise the days of small beginnings. It is very important to invest a set amount in quality blue chips every month, reinvest dividends, and patiently sit on the companies you own for as long as possible. This is how wealth is built for ordinary investors.

With services like Loyal3, any investor who has at least $10 can invest in individual dividend paying companies, provided they like the valuations. Granted, the number of companies they offer is limited to less than 60, which is why investors who can put at least $1000/month might be better off opening a discount broker account like TradeKing and do their purchases that way. In addition, the executions take approximately 2- 3 business days. For that reason, I do very little investing using Loyal3. I am essentially buying small chunks every month, but my dividend stock investing is done using a discount broker like Interactive Brokers.

In the past several months, I have been adding up shares in the following three companies using Loyal3:

McDonald’s Corporation (MCD) franchises and operates McDonald's restaurants in the United States, Europe, the Asia/Pacific, the Middle East, Africa, Canada, and Latin America. This dividend champion has increased dividends for 39 years in a row. The company’s most recent dividend increase was by 4.90%. I am telling this because the earnings and dividend growth has slowed down considerably in the past few years. The stock is selling for 18.50 times forward earnings and yields 3.60%. Check my analysis of McDonald’s.

Unilever PLC (UL) operates as a fast-moving consumer goods company in Asia, Africa, the Middle East, Turkey, Russia, Ukraine, Belarus, Europe, and the Americas. The company operates through Personal Care, Foods, Refreshment, and Home Care segments. This international dividend achiever has increased dividends for at least 19 years in a row. Over the past decade, Unilever has managed to boost dividends by 6.10%/year in Euros. The stock is selling for 19.20 times earnings and yields 3.80%. Check my analysis of Unilever.

The Coca-Cola Company (KO), a beverage company, manufactures and distributes coke, diet coke, and other soft drinks worldwide. This dividend king has increased dividends for 52 years in a row. The company has managed to increase dividends by 9.80%/year over the past decade. The stock is selling for 20.30 times earnings and yields 2.90%. Check my analysis of Coca-Cola.

The drawback of Loyal3 for some investors is that it doesn’t allow automatic dividend reinvestment. However, if earn cash dividends earned in Loyal3, the cash will be used towards your next purchase there. For a new investor putting $50/month in 6-8 companies, it would take less than an year before monthly dividends exceed the $10 needed to make a one-time purchase commission free. That would be the nice part where a portion of monthly contributions are self-funded through dividends. It would also be pretty illustrative and motivating for the investor that the dividend machine they set up is now growing on its own, without much additional capital.

Another company I own that is not available through Loyal3, Aflac (AFL), raised dividends by 5.40% to 39 cents/share. This marked the 32nd consecutive annual dividend increase for this dividend champion. However, the most recent history of dividend increases has been pretty disappointing, when compared to the 16.80%/annual dividend increases enjoyed by shareholders over the past decade. That being said, the stock looks cheap at 9.70 times forward earnings and a current yield of 2.60%. Since I have a high allocation to Aflac, I doubt I would do much buying in the company. I like Chubb (CB) better, especially on dips. Check my analysis of Aflac.

Full Disclosure: Long everything mentioned here

Relevant Articles:

- Qualitative Dividend Analysis of Aflac (AFL)
- Chubb Corporation (CB) Dividend Stock Analysis
- How to buy dividend stocks with as little as $10
- Return on Investment with Dividend Stocks
- The Tradeoff between Dividend Yield and Dividend Growth