Over the past few days, I got our new account, “Big Bad Baa!” all set up with Level 1 options permissions at Fidelity. I started this account with a small amount of initial funding ($50,000.) Earlier today I made an initial four purchases. I plan for these to serve as cornerstones of our new and soon to be growing portfolio.
I didn’t exactly follow our main philosophy of acquiring shares on the cheap through selling puts. But yesterday was a big down day, and has been so for the last couple of days. Our system does allow for buying a few shares when a full contract is just too much, or for other reasons, as long as we are buying on some sort of dip.
These four purchases will bring in some immediate dividend income and start contributing right away to the growing income stream that we plan to build.
What I bought
Specifically, I purchased 80 shares of ARCC, Ares Capital Corporation for $1,862. ARCC is yielding 8.21% currently, and these few shares are expected to bring in annual income of $153.60.
I also purchased 30 shares of DGRO, iShares Dividend Growth Fund ETF for $1,913. Although ETFs are not a core part of our philosophy, this ETF specializes in holding dividend growth stocks. DGRO is currently yielding 2.16%, which is nearly double that of the S&P 500, and likely to grow from here.
I purchased 6 shares of MGK, Vanguard Mega Cap Growth Index Fund for $2,091. I made this selection not for the dividend yield, but for the opportunity to put a little growth into our basket. This one currently yields a meager 0.41%, but lately the Mag 7 continues to dominate the world, and this fund is heavily invested in those growthy mega caps, as its name might suggest.
Finally, I purchased 4 shares of plain old VOO, Vanguard 500 Index Fund for $2,208, my biggest purchase (I decided to concentrate on whole shares rather than be pedantic about maintaining an exacting equal size of my investments.) This fund has an initial yield of a mere 1.19%, but allows us the opportunity to participate in the growth of “the market” of the entire S&P 500. This seems like a way to avoid falling badly “behind” with our overall portfolio. This one did cut into our final yield. I debated this purchase with myself but ultimately I felt that having some ties to the overall market had some value.
Recap
In all today I spent just over $8,000, leaving us with an annual projected income of $241.91 or just over $20 a month. Even so, this left us with just short of $42,000 of dry powder remaining. This allows us to start pursuing our main objective, selling some puts during big price dips on high quality, dividend champion companies. We just need to get started! On a day where almost everything is a potential target, there are no outstanding targets.