$1000 Growing in an E*Trade Account

As part of the Grow Your Dough challenge, I’ve opened a second account in E*Trade and deposited $1000 in the empty account. I decided to make this like a micro version of my regular investment portfolio.

Personal investment risk levels vary, as do investment preferences based on a few factors. I am a divorced, Gen Xer with two children, a decent amount of money saved and invested from the proceeds of the sale of my house last year (and I am currently renting and have not yet bought another house), and I have a moderate to slightly conservative risk tolerance level. My preferences are for relatively stable investments in established companies that pay a reasonable dividend (preferably over a 2% yield) and I tend to favor income over growth stocks. I also like to diversify across different industries and investments to moderate risk.

For this account, I wanted to pick investments that cost less than $50 per share and paid dividends. Any dividends earned will be automatically reinvested. I chose the following investments for this account:

• General Mills Inc (GIS)
• Brookfield Property REIT (BPR)
• SPDR Portfolio S&P 500 High Dividend ETF (SPYD)

We eat a lot of cereal at my house, and while I’d love to tell you that I got the idea to buy General Mills while staring at a box of Honey Nut Cheerios, that wasn’t what happened. Still, I find it oddly consoling to think that when I buy this product I’m also, in a small way, putting a few cents back into my own pocket.

I bought into General Mills because I like their financials: Earnings Per Share is $3.44, Price to Earnings ratio is 12.59 (I like stocks with P/E ratios between 10 and 20, as the stock still has somewhere to grow, without out feeling too risky), and a generous dividend yield of 4.53% ($1.96 per share).

In this volatile market we’ve experienced the last few months, I like this consumer staple to anchor the account, because recession or not, people will still need to eat. While I’m not expecting massive growth out of this company, I do expect it to at least hold its ground on price and the dividend income is a sweet bonus. I purchased 7 shares at $43.24 per share.

My new favorite investment category that I learned about in 2018 are REITs (real estate investment trusts — which enable people to invest in real estate without actually buying a whole property), so I wanted to include one in the E*Trade account. I discovered REITS when I found out that it was possible to invest money in the Empire State Building (through ESRT). I thought buying a few shares of ESRT for my regular portfolio would be an excellent souvenir of my trip to New York, where I conquered my fear of heights to stand on the 86th floor observation deck of the Empire State Building twice (daytime and nighttime). I’ve since received $15 in dividends from ESRT — how many knick-knacks and T-shirts give you cash back? The nice thing about REITS is that they must pay out at least 90% of their net earnings to shareholders, so they tend to have high dividend yields.

I admittedly chose Brookfield Property REIT after doing some research on recommended REITS to invest in and reading a positive article about BPR on Seeking Alpha. After reading about it and looking at the financial factors, noting the $1.26 per share, 7.3% dividend yield, I initially bought some BPR shares for my IRA a couple months ago. I found BPR appropriate for this challenge as the purchase price per share was inexpensive at $17.72, allowing me to buy 20 shares for the E*Trade account.

Finally, I like to own ETFs with low expense ratios to further diversify my portfolio. Having recently read the book A Random Walk Down Wall Street by Burton G. Malkiel, which espouses investing in Index Funds for the long-term, I wanted to invest in an index-based ETF. I had recently added SPDR Portfolio S&P 500 High Dividend ETF (SPYD) to my IRA and thought SPYD would be a perfect addition to the E*Trade account for the Grow Your Dough Challenge. It has a very low expense ratio of .07% and the dividend yield is 4.4% ($1.62 per share). I paid $36.70 each for 8 shares. After my three orders were filled, I have $28.47 in cash left in my E*Trade account. This is my “slow and steady income wins the race” account for the challenge.