Starting Your Dividend Portfolio | Podcast Episode #488

0:00
Hey everybody. This is Ryan Mallory with shareplanner.com’s Swing Trading the Stock Market. In today’s episode, we’re going to talk about getting started with investing in dividends. And I got a e-mail today from a listener and a subscriber to the SharePlanner Trading block, and he has all sorts of questions getting started out in dividends.

0:20
Now, as it always is with my emails, I never use people’s real identity. I always give them a good Florida redneck name. And that’s exactly what I’m going to do here, except he’s choosing it for me this time. He wants to be called Luddy after his Uncle Luddy. Now, I’ve never heard of such a glorious redneck name in my life.

0:40
Luddy, that’s great. So I wish I had a Uncle Luddy, honestly. But any case, Uncle Luddy writes. Good morning Ryan, hopefully this e-mail finds you well. For starters, I want to thank you for all that you do. You have helped my trading immensely. I have got it into trading at the end of last year so I’m still finding my feet and what works best for me.

1:00
Man what a start to the year so far. This market makes zero sense to me. I started off as a Robin Hood bro with beginner’s luck on a couple of trades which motivated me to learn more about the market. Moved on to Schwab to trade in a Roth IRA and then from there I dove into momentum trading trying to scalp where whatever was moving in the pre market so that I could get rich quick.

1:22
I’m sure that you know how that went for me. Trading stocks I knew nothing about from a technical or fundamental standpoint was only profitable once in a great while. Lucky for me, I came across one of your YouTube videos and immediately developed an appreciation for your technical analysis and approach to the market using your top down trading strategy.

1:42
I started listening to your podcast at episode #1 that’s that’s a long time ago. I think episode one goes back to 2017 if I’m not mistaken. So we’re in year 2025, so you’re talking about like 8 years worth of episodes.

1:58
That’s impressive man. I don’t even want to know what I sounded like back at episode #1 But any case, he says I’m close to episode 400 now and feel grateful for the Evergreen content that you’ve put out. Finally, my account is seeing something some consistent gains and if I manage the risk and stay away from the momentum trading.

2:17
To get to my question, I decided to open up another account to continue with my swing trades. I would like to continue to grow my long position account in the wrong Roth IRA and add some stocks with dividends. I’m a member of the SharePlanner trading block and notice that you have a long account with dividend stocks, but I don’t believe that you share the amount that you put into it.

2:36
If you have an episode that covers dividends and long positions, forgive me, I haven’t heard it yet. Where do you find the dividend details on a stock? What does a trader get when? When does a trader get to collect the dividends? Do you approach it like a swing trade with a stop loss and a profit target?

2:52
I’m guessing these stocks don’t go up and down and price that much. Is there a percentage of dividend stocks that you always have in your retirement account versus long positions? I think you have stopped doing the whiskey reviews. I always cracked up when you had a bad one like Raven’s Lace or Peanut Butter Screwball.

3:08
Now for those who don’t know what I’m talking about there, I used to all actually do whiskey reviews with my podcast. It was a long time ago. I honestly, the reason why I stopped is like I got too many bottles of like I, I can’t, I can’t keep housing all these different bottles and a lot of them were bad. So they were never going to get drinking.

3:24
So I have one, one time, the all time worst was Raven’s lace. It was absolutely disgusting. I think it came in like this little sample pack that I had and it was like completely pink. It was horrible. It was disgusting, all time worse and screwball the peanut butter screwball 1 is like right behind it.

3:42
I thought that was disgusting too. But he goes on to say I’d like to send you a bottle of Colorado mountain whiskey my homestay as a thank you and this makes if this makes this to the episode and you can give it a try. I would love to give it a try. I’ll do a special whiskey review if you send me that. So that would be great.

3:58
However you’d like to handle that, let me know and if this evil makes it to an episode, you can give me the name Luddy after my late redneck family member. Uncle Luddy, take care and good luck with all of your future trades. Sincerely, Luddy. OK, Uncle Luddy, First off, you started off with scalping.

4:18
OK, that’s definitely a rough way that to learn how to trade, because one of the things I would say successful scalping entails it means that you have to grind a lot. It’s, it’s a constant grind. I, I think about my kids, they play this video game Minecraft.

4:36
And when they play it, both my sons, they will, they would like hack away at these blocks. And then there’s another game that they play. It’s called Rust and, and they collect resources. And I’m telling you, they will spend all day collecting these resources. And it’s like this grind and, and, and they’re trying to build like a, a Ford or a base, but it’s a grind.

4:58
It’s just constant like hacking away, getting materials, getting lumber to create this base. Now I know I’m, I’m, I might sound like I’m getting sidetracked here, but just bear with me here. Scalping’s a little bit of the same thing. It’s a grind. You’re talking about typically making 50 to 100 trades in a single day, if not more.

5:19
And you’re doing it for pennies on the dollar, like you’re not making a lot. But where a lot of new traders get themselves into trouble as they get into scalping and instead of it being a grind, they think they’re going to snap their fingers with a trade in, it’s going to go up like massive amounts. And they’re going to do that on a regular basis.

5:35
Now, you may have one or two that does that here and there, not every day, but, you know, every once in a while, sure, that kind of stuff can happen all the time. I mean, you got into crowd right before it shot up like over 15% today. Yeah, you were doing pretty good there. If that was a scalp and it’s all of a sudden you’re looking at 18%.

5:52
But if you’re actually following a strategy, you probably didn’t write it out for the 15 to 17% that it went up. You, you were probably getting it out at pennies on the dollar because if you’re following a trading system and you have to do that with your scalping, you’re not aiming to get massive gains. You’re just looking to grind away each and every day, all day long.

6:12
And so a lot of your new traders when they start saying that they’re scalping, they’re, they’re trying to go for big gains, they’re trying to get rich quick like what Uncle Letty here said. And you just can’t do that. It’s a grind and it’s a very boring. It’s, it’s probably the most boring kind of trading when done right because you’re just trying to get pennies on the dog.

6:33
You’re not going for big gains, but enter the new trader. They’re going for the big gains. And what they’re usually doing is they’re they’re going for reward risk ratios that are not in their favor, especially if you’re trading and scalping the pre market gainers, because those big pre market gainers, they may be up 15 to 20%.

6:53
And if they go against you, and they easily can, they may not even really be like reversing. They may just be having like a simple 4 or 5% pull back, but you were trying to scalp maybe 3 or 4% on that trade. And now you’re, you’re in a horrible situation here, especially if you’re not practicing risk management.

7:11
So the, the the scalping is just a really bad thing. Usually that needs to be more of your seasoned traders that have a proven system, a very like lockdown system that you know the reward, you know the risk on every single trade, you know the the typical percentage, it’s been back tested in terms of how many winners and losers you’re going to have.

7:33
And it is consistent on a regular basis. So that’s what scalping needs to be. It can’t be like what you see a lot of these people are talking about where they’re getting in and they’re riding this wave of momentum where they’re trying to pump these penny stocks and so forth. Or you’re seeing a stock that’s up 20% and you’re thinking, OK, it’s up 20% of the pre market.

7:51
Maybe I can write it up another 5% at the open or 10% at the open. Often times what ends up happening is the people who were riding it up already in the pre market because they held overnight. They’re using that open to liquidate their position and they need you to come in there and buy those shares from them.

8:06
Because remember, every time you’re buying shares of a stock, there’s somebody that’s selling you shares of a stock that believes that you’re wrong and that the stock’s going down and this is the optimal time to get out while you’re buying the stock leaving that they’re wrong.

8:22
So there’s two people on each side of the trades. Now, sometimes it may not be necessary flesh and blood. It will be like algorithms or or computer selling programs or or whatever it might be. But nonetheless, there’s always a human logic that’s behind all of that and what’s driving those sell decisions.

8:39
So as it pertains to dividends, and this is where it gets a little bit more interesting, where we get into the meat and potatoes of this dividend podcast. Where do you find dividend stocks? Where do you find the details on them? For me, the most important part on the dividend stocks is, is really, you know, what’s the yield.

8:56
Now there’s a lot of dividend stocks out there that are like 15 to 20% yields and would make sense will go after the highest yields. But often times that’s because they’ve experienced a massive, massive pullback. And maybe they haven’t cut their dividend necessarily just yet. But when they start having those massive pullbacks, they usually do ultimately cut that, that dividend and then all of a sudden, you know, the stock may even drop even further.

9:20
Now I’ve, I’ve been in stocks that have had their cut, dividends cut recently and it, and it’s actually been a little bit on the stranger side. One was MMM, which I don’t think they had ever done it up until just recently. And then when they cut their dividend, the stock went skyrocketing. And the one before that was Intel and they, it did the same thing for a while there.

9:39
Obviously it’s come back down, but both of those were stocks where they, they cut the dividend substantially where it really wasn’t necessarily a good dividend stock anymore. It was like 1 or 2%. But then when it went way up, I think like for instance, on, I think on both of my I, I brought in like over 70% on each of those trades.

9:58
I can’t remember that specifically, but I, I’m pretty sure was like, I think MMM was like 79%, but I went ahead and closed out those positions. Why? Because I had made a substantial gain, not necessarily expecting it to go up that high, but when it did and then there’s no real dividend to benefit from in the future.

10:15
I went ahead and, and closed it out because it really didn’t align anymore with My Portfolio. Now in terms of My Portfolio, like how much of my capital do I contribute to dividends? It’s about 15% of my capital that I put in my dividend stocks. Now the caveat with that, because he’s asking about now what about stop losses, Do you use stop losses on your positions?

10:37
I don’t. And I know that sounds crazy because I talk about swing trading, how important stop losses are. But on dividends, I do it a lot differently. I’m not really trying to make a big splash with one particular stock. All of my dividend stocks, they’re built over time, not, not anything like instantaneously where I’m dumping a whole bunch of money in there right away.

10:58
And all of my positions by and large, outside of maybe a few exceptions are about two to 3% of My Portfolio. Now that doesn’t sound like much, but there’s a reason behind this because I want to keep it for the long term. I’m I’m really looking to have a a widespread of good dividend place in the portfolio.

11:18
I know that some of them are not going to work out and I’ve actually had one just recently or that didn’t work out. But I know that if a, if a stock goes down to zero, that OK, if it’s like 2% of the portfolio, that’s the biggest impact on My Portfolio.

11:34
The reason why that’s different from swing trading is that I’ll put 16% of my position of My Portfolio on a position and I’m All in all at once. So if the stock did happen to go to zero, I wrote it down over time, down to 0, you’d be talking about a 16% hit.

11:50
That’s much more different, much more substantial than taking a 2% hit from a stock. Now the one that I’ve had recently that that really kind of beat me up pretty good from from individual position standpoint was NFENFE horrible.

12:06
I mean look at the chart, it’s a absolute dumpster fire. But I was slowly adding over time and I wasn’t. And when I’m talking about slowly adding over time, but I am not really trying to build a position fast at all make maybe over the course of eight months to a year, I’m building it up and I’m building it up sometimes weekly, bi weekly, maybe sometimes even monthly.

12:29
And so the, the story with NFA is I, I, I started adding to it and I probably had about 1% of My Portfolio into it. And then all of a sudden it started going South pretty substantially. And I think it’s down something like like 80% or something like that now from where I got in at now that’s, that sounds horrendous, But when you only have 1% of your portfolio invested into it, it’s yeah, 1% stinks.

12:55
But I’ve also been collecting dividends over that time. So I’ve, I collected the dividends. So that helped offset some of it there. And I don’t re reinvest my dividends either. I, I just usually distribute it to all the other stocks as well as some of my better performers. So I, I was able to collect dividends off of it.

13:11
And so I, I was able to really minimize the impact to the overall portfolio. And then you take stocks like MMM or INTC that was just talking about that I recently sold and you know, they’re going up 7980. I think I’ve even had CVX, Chevron went up over 100% for me.

13:28
And you know, that easily offsets the losses there because those are actually full positions. Whereas NFE, because once I start to see, OK, this is starting to falter, this isn’t playing out correctly, that’s when I go ahead and stop adding to those positions.

13:48
So when it starts to weaken, I don’t take advantage of weakness in the same way. I’ll start off on a stock that might have pulled back some and I’ll start creating a dividend position like I did that with NEE last year. You know, it dropped well below that $70 threshold that it tends to stay above. And it was getting into like the 60s and even into the 40s.

14:04
And I started adding A and building a position there. Now, while I was adding, let’s say you know, I got 1% of My Portfolio and NEE not NFE, but N EE and it starts to dip down into the 20s. Well, something’s a little bit more severe, severely wrong with it, you know.

14:20
And so I’m, if I’m, you know, in at average position size of like 45 and it drops down, let’s say 50 and it drops down to 20 and I’ve got 1% of My Portfolio into it. OK, not fun, not, not anything ideal, but clearly something’s not right there.

14:37
So my risk management, my dividends really comes down to my position sizes because I’m so spread out. It’s kind of like SPY, for instance, SPY has 500 stocks in it. If one stock and SPY not named like NVIDIA or Apple or Microsoft, let’s say one of the stocks goes bankrupt.

14:54
OK. Kind of like what you saw with Dell, the Dow Jones Industrial Average with UNH just recently when UNH completely crashed. Yes, they’ll take a little bit of a hit, but they won’t, it won’t crash the ETF, it won’t crash the index. And it’s the same way with the dividend portfolio.

15:10
That’s why I don’t really use the stop losses in the dividend portfolio because I’m so well spread out. So that’s the, that’s the logic in the, the thinking behind that. Now, when does a trader get to collect the dividends? You have an X divvy date. That’s when they take it out of the share price and then you collect it later and they’ll always put it into your account.

15:30
You don’t even, I don’t even really worry about it. I don’t like even track it for that matter. But the X dividend date, what you’ll see, let’s say, for instance, and this is just using like simple math, let’s say it’s a stocks trading at $10 and they have a 1% dividend. That’s that’s coming out of out of the stock.

15:47
You know that tomorrow when the stock opens up tomorrow, it’ll be trading at $9.90. It’s going to account for that 10 cent dividend that was taken out of the stock. So you may actually see it. And this is where some of the brokerages have different approaches to it and even charting platforms, you’ll see the stock trading down 1% at the open, while some other platforms will account for that dividend and actually say that it’s flat instead of saying it’s down 1% at 990.

16:15
So keep that in mind. It’s good to know if if you’re tracking your dividend stocks regularly. For me, I’d probably check in on my dividend stocks once a month. I see them come up in scans and sometimes I’ll I’ll look at them then just out of curiosity. But overall, I don’t put a ton of effort into my dividends because these are really things that I want to hold for 10 to 1520, thirty years hope, maybe even when I’m dead, you know, if my kids are going to have to figure out what to do with them at that point.

16:39
And hopefully I’ve given them some instructions as well. But it’s not really something that I want to move on from. I have stocks or DSU for instance, that’s been a really good one. I, I don’t, don’t mind adding to it when it’s below $10.00, but I, I think it has a dividend yield of a like 11.3% right now.

16:59
And I probably have had that since 2008 and it’s always been fantastic. That doesn’t mean that it’s going tomorrow and it doesn’t mean that you should be buying that. I’m just giving you my personal experiences, but that’s one that’s that’s done me pretty well over the years. That’s a higher dividend yield, but you got some of them out there that’s doing that a little bit more.

17:17
But when it comes to individual stocks, when they start to get up there with, you know, like WBA or, or or whatever it might be, those are usually warning signs when the yields get a little bit too high there to go into it and say, oh, look how great the yield is, I’m going to go ahead and buy.

17:35
That may not be the best idea. So I think I answered all the questions here, but one of the things I would tell you as well is check out swingtradingthestockmarket.com when you go there. It really awesome stuff there. It’s going to take you to my SharePlanner website and you can have a whole list of different training courses that you can subscribe to.

17:55
You have a whole bunch of different options from getting into the trading block where you can actually trade with me each and every day. You’re going to get my videos, you’re going to get my watch list. Really great stuff there. The training courses, especially the self-made trader, that is my marquee training course that’s going to teach you everything that I know about trading.

18:15
So check that out. swingtradingthestockmarket.com. And if you enjoyed this episode, I would also encourage you to leave me a five star review on whatever platform it it is that you’re watching me on. If it’s on YouTube, make sure to like and subscribe. If it’s on Spotify, make sure to follow me and also leave a good review because I do appreciate those.

18:33
And I do read your feedback. You can leave comments. Same thing with same thing with apple and send me your questions ryan@shareplanner.com. I want to hear from you. I want to hear your stories. I want to hear your struggles. And we’ll make a podcast episode out of it. I would love to hear what you’re dealing with.

18:49
So with all that says, thank you and remember Jesus Christ died for your sins so that you might have a personal relationship with him through faith in him. Thank you guys, and God bless. Thanks for listening to my podcast, Swing Trading the Stock Market. I’d like to encourage you to join me in the SharePlanner Trading Block where I navigate the stock market each day with traders from around the world.

19:10
With your membership, you will get a seven day trial and access to my trading room including alerts via text, e-mail and WhatsApp. So go ahead, sign up by going to shareplanner.com/trading Block. That’s www.shareplanner.com/trading-block and follow me on SharePlanners Twitter, Instagram and Facebook where I provide unique market and trading information every day.

19:32
If you have any questions, please feel free to e-mail me at ryan@shareplanner.com. All the best to you and I look forward to trading with you soon.