Dividend Stocks on Sale!!

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Dividend Stock SaleMy grandfather used to always say “When everyone’s running in one direction, you should be running in the other.”  Well, this past week was a great opportunity to follow that advice and pick up some new dividend stocks.

When the stock market started to drop, people started to panic… everyone and their brother was hurrying to sell what they could before “they lost it all.”  The media hyped it up even more and got people even more worried.

The good news is that I was waiting for this chance… and I was elated.

Everything’s on sale – get it while you can!!

On Monday morning (8/24/15), I bought a new stock with the little bit of cash I had on hand in my Roth IRA.  I picked up 10 shares of Aflac (AFL) for 57.278/share.

On Tuesday (8/25/15), things continued to drop.  I was so excited but I didn’t have any more available cash in my Roth.  That evening, I hurried to transfer money into my Roth account so I would have some additional funds to work with.  I moved money from my checking and joint savings at our credit union to TD Ameritrade and was able to add another $2,000 to my account.

On Wednesday morning (8/26/15), I bought the following:

  • 11 shares of Medtronic (MDT) at $71.43/share
  • 9 shares of Deere & Company (DE) at $80.96/share
  • 10 shares of Wells Fargo & Company (WFC) at $51.56/share

In addition, on Monday evening, I filled my wife in about this “day-after-Halloween candy sale.”  She ended up buying 9 shares of Colgate-Palmolive (CL) at $63.00/share on Tuesday morning with the available cash she had in her Roth account.

So I feel like we definitely got some great deals on some solid dividend stocks.  If you remember my article Make Dividend Stocks a Part of Your Portfolio, I talked about how I need to pick up some more dividend stocks for my portfolio.  I was able to do some research and add a handful of good companies this week so that really made me happy… but I still have a long way to go to make the passive income really count.  I don’t expect to have a portfolio like Jason at Dividend Mantra, but every stream of passive income makes a difference.

Now onto the flip side of things – this week also proved to be a bit of a learning experience for me.  For example…

1)  I wasn’t prepared to get to my money quick enough.  I’m happy with the amount of money we spent during this market correction (around $3,000), but what if I had wanted to spend more this time around?  I usually leave around $1,500 to $2,000 in our joint savings account at our credit union, but the rest I have in an online savings account (currently with Ally Bank) because we get a MUCH better interest rate.

The problem is, although the online savings account is pretty liquid, it still takes a couple days to move money from that account back down to our savings account at the credit union.  Because of this, we can miss possible opportunities that might end in a flash (like this market correction did).  It’s a tough call, but maybe I’ll leave just a little more money in the credit union account to have on-hand even though that means we’ll miss out on the better interest rate.

2)  I didn’t have margin trading setup on my Roth IRA, my wife’s Roth IRA, or my taxable account.  A margin account gives you the opportunity to basically borrow money to buy securities.  In other words, I could buy the stocks I wanted (within reason) even if I didn’t have the available funds in my account.  Then I could afford the couple days it takes to get the money transferred from my online savings to my credit union and up to TD Ameritrade.

I’ve now setup margin trading on all our accounts at TD Ameritrade and I wish I had done that sooner.  It basically took less than a minute on each account to apply and it was approved on each of them the next morning.  This will give me a better buffer in the future to make sure I don’t miss out on any good deals.

All in all, we spent $3,169.75 in just a few days in the stock market frenzy.  This is not something I normally would do – in fact, this is the first time I’ve ever done that.  But, this was (potentially) a great opportunity to get in on some great deals.

And one of the great benefits of Roth IRAs, as I’ve mentioned before, is that you can always take out your contributions without penalty.  So, if I’m ever in a real pinch (and I mean a real pinch!), I can pull out this $3,000+ in the event of an emergency.

You shouldn’t really try to time the market, but this looked to be one of those great opportunities and I hope some of you were able to take advantage of it as well.

Thanks for reading!

— Jim

Full Disclosure: Long AFL, CL, DE, MDT, and WFC.

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