One Piece At A Time | Week Ended 12/27/19

Zero | Commission | Purchase | Investing | Dividends | Financial Independence

My investment strategy has changed a bit now my that my brokerage firm, as well as most others out there, have moved to ZERO commissions.  I had typically tried to purchase in dollar amounts that put commissions at 1.0% or less.  I've always wanted to implement, at least partially, the dollar cost average method but commissions prohibited me from pursing that.  However, now it's very feasible and reasonable to do so. 

My focus has always been on quality businesses, but the problem was typically buying shares at good valuations, often I had to settle for good enough.  The longer that I've been investing, the more that I've come to realize just how powerful hitching your investment wagon to great companies can be.  That's why I've shifted my focus to dollar cost averaging to build up my positions; because the larger your purchases the more attention that needs to be paid to valuation and vise versa.

I'd still prefer to do larger scale purchases, but the problem is that quality businesses don't often trade at good valuations.  In general valuations aren't exactly cheap; so I'll just keep building up my stakes in great businesses.

$0 Commission | Recent Buy | Dividend | Investing

These purchases actually cover the last 3 weeks as I was able to be home more often and  we're also shifting our plans once again.  

In total I invested $447.20 and boosted my forward dividends by $16.48.  That's an average yield of 3.69% across all of the purchases.  All purchases were made in my FI Portfolio for the last 3 weeks.

As expected the pace of my purchases slowed down.  I still have some capital ready and waiting for me to dollar cost average into some more great companies, but for now I'll probably hold off a bit making just a handful of purchases each week.

All 4 purchases were in what I call the "sweet spot" for dividend growth investing which is a starting yield somewhere around 3-4% and a dividend growth rate in the 5-10% area.  The reason I like those so much is that they are a good combination of current income as well as future growth potential.
Stocks | Investing | Valuation | Dividend Growth Investing

J.M. Smucker was the much better value purchase of the 2 companies I added shares of.  The EV/EBITDA is just 10.9x and looking at more traditional valuation metrics such as P/E shares look quite cheap at just 12.6x and 12.5x estimates.  

The fair price based on dividend yield theory is also significantly higher than my purchase price at and represents ~36% upside potential.  

I continued to add shares of Digital Realty Trust as I believe the valuation and longer term trends should work out well for DLR and its shareholders.  Based on 2019's FFO estimate of $6.60 my purchases were made at an average of 17.4x.  Dividend yield theory suggests a fair price right around $114 so my purchases were made right around fair value give or take a little.


My FI Portfolio's forward 12-month dividends increased to $7,822.29 with my FolioFirst dividends at $101.24.  My Roth IRA's forward dividends remain at $643.02 while my Rollover IRA's dividends are $2,354.07.  My taxable accounts can expect to produce $7,923.53 over the next year with all accounts providing $10,920.62.

Are you doing more dollar cost averaging now that most every brokerage firm is at $0 commissions?  What do you think of my purchases from the last few weeks?


  1. Hey JC,

    I love and hate that commissions are zero lol. Before, I waited for a significant purchase where commissions were .5% or less of total purchase amount. It caused me to do more due diligence. Now that I can buy a share at a time I can just buy a share of JNJ or V and not even worry about it. I'm dollar-cost-averaging but it's such a small amount at a time that I don't pay as much attention to their metrics.

    That's a lot of passive income. Keep up the good work!

    1. Ha! I hear ya on that. I think it depends more on your investment style, but I totally understand letting the valuation metrics expand when you're just DCAing. I'd much rather put my cash to work in larger chunks, but there's not really anything that I track that is trading at a good enough valuation to do that. I personally think that the smaller your purchases the less focus that needs to be paid to valuation, it's all an educated guess anyways, and the more focus that needs to be placed on quality. The larger the purchase amounts the more that valuations really needs to be adhered to.

  2. Like the strategy and the buys this month. I always forget about SJM, looks like a good time to avg down in my $118 cost basis position. It currently tops my list of portfolio decliners. DLR is interesting here too!

    Keep it going-

    1. Divcome,

      I'd much rather make large scale purchases, but I just don't see much that's at a great value among the businesses that I want to buy. Most are somewhere in the range of fair value which isn't necessarily a bad thing, but I suspect there will be much better opportunities sometime in 2020 so I'll just stick with small dollar cost average purchases for now to keep the compounding moving forward. I'll likely be adding some more SJM if the share price keeps hanging out down here.

      All the best.

    2. Commission free trading has opened the door all traders to not worry about frees eating into profits.

  3. I am loving the $0 fees and am experiencing the same thing. Purchasing smaller amounts seems to make you less aware of valuation when DCA. What I feel is more important is entering a position in tiny pieces as opposed to sitting on cash and waiting for the right entry point.


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