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I’ve done a lot of adjustments to the Snowball in recent posts. I’ll try to keep this a little brief today, because I have an article I’ve spent two weeks working on coming out tomorrow, and yesterday’s budget was a long one.
My plan of picking reliable monthly paying funds, getting them to their self funding stage plus 12 shares, and then moving to the next fund has a flaw. It would need a lot of capital and it wouldn’t push the snowball much closer to the $1,000 per month mark.
EARN, my biggest single dividend producer took a giant haircut last week, putting its principal value almost $2,000 lower than my purchase price. It’s because they issued more stock so they can buy more properties during this housing downturn. As long as their 4+ year running 8 cent dividend continues this won’t actually be a problem, from the snowball perspective.
So what’s the problem? QQQI to self fund needs 85 shares right now. That’s roughly $4,400. MAIN needs 187, or $10,472 and O needs 239 shares totaling $15,300. So almost $20,000 for $172 a month. These are well reviewed, solidly considered dividend assets. The problem is they don’t push the dividends very hard. They also enter another issue. I said at the beginning of the Snowball Experiment that when these dividends reached 10% of my portfolio I would have to pivot into keeping my IPS balance on top of the dividend focus. Since that number is roughly $500,000, that means the Snowball can head to $50,000 before I make any other adjustments.
Diversification is important, it’s why I’m watching EARN tank $2,000 in value while its 50% of my current snowball spending, so I need to balance this so no fund is greater than 15% of the snowball, and prioritize what will get us to $1,000 fastest.
| Ticker | Goal Values | Estimated Monthly Div | % of $50,000 Portfolio |
|---|---|---|---|
| EARN | $10,000 | $150 | 20% |
| OXSQ | $5,000 | $97 | 10% |
| ORC | $5,000 | $83 | 10% |
| PSEC | $5,000 | $85 | 10% |
| ARR | $5,000 | $70 | 10% |
| PFLT | $3,000 | $38 | 6% |
| QQQI | $5,000 | $57 | 10% |
| AGNC | $3,000 | $34 | 6% |
| JEPI | $2,000 | $12 | 4% |
| MAIN | $2,000 | $10 | 4% |
| O | $1,000 | $4 | 2% |
| DIVO | $1,000 | $3 | 2% |
| SPHD | $500 | $2 | 1% |
| HRZN | $500 | $4.50 | 1% |
| *BLOX* | $2,000 | $61 | 4% |
| Total | $50,000 | $710.50 | 100% |
A note from previous articles PVL is at $226 right now, expecting to pay 61 cents per dividend. While its ratio is solid, it is a trust and has had many years that only pay dividends 4 or 6 months instead of 12. I won’t be increasing this position. HRZN, is in the middle of a merger and other questionable issues so while it’s ratio is high enough to be in that top 5 list, I’m going to wait to see if how their dividend payouts might change.
Now when we include the weekly funds that we don’t want to continue funding in Robinhood we had in February $139, and January was $124. The reasons for not building these funds is discussed in the End of Month update. Let’s assume our tanking weeklies can hold strong at $130 a month. Plus we have our HYSA interest of $35 per month. Totaling a hopeful – $875 per month.
This will allow me to focus on reaching a dollar goal for each fund, and act as a priority list. Much easier to throw money at the funds in order as I scale it out.
~~Miniwing~~
Investor, Stoic, Parent
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