As the days turn into weeks, the weeks into months, and the months into years…the New Life Portfolio keeps on growing. We really get excited every time we make a new purchase and add a great dividend paying company to our Portfolio. With every purchase we make, it is getting us closer and closer to our goal of Financial Independence.
On February 26, 2016 we purchased 8 shares of PepsiCo, Inc (NYSE: PEP) for $97.985 a share, plus $4.95 commission, for a total cost of $788.83.
We are very excited to be able to add another Dividend Aristocrat to the Portfolio. In case you were living under a rock for the past few decades, Pepsi is the second largest beverage company in terms of market cap, next to Coca-Cola. Pepsi carries 22 individual and well-known brands that generate over $1 billion (with a “B”!) dollars annually. If you want to get more into the specifics you can see a great analysis HERE.
Pepsi has been paying a reliable dividend payment for a long, long, LONG time, achieving 25+ years of dividend payments without a reduction, even through economic recessions. PEP is the 6th Dividend Aristocrat to be added to our holdings, along with Emerson Electric (EMR), ExxonMobil (XOM), HCP Inc. (HCP), AT&T (T) and Wal-Mart (WMT).
Currently, Pepsi pays a dividend of $0.7025, yielding about 2.85% return based on closing stock price on 2/26/2016. However, based on chatter around investment sites that cite Pepsi’s latest press release, Pepsi is due to raise the dividend in June by 7.1% to $0.7525, effectively taking our Yield-On-Cost above 3%. This purchase also gets our foot in the door as shareholders only a few days before its scheduled ex-dividend date of 3/2/2016.
Using only the current dividend, this purchase adds $22.48 to our forward 12-month dividend amount ($24.08 if using the “chatter” amount of the expected dividend increase, in case you were curious, like me).
We now expect dividend income, on an annual basis, of $211.06, or approximately $17.59/month. This passive income, along with interest income from cash savings, covers three (almost four, but not quite) of our living expenses, and we are only getting started! This is why we invest and save! These are expenses that we never have to go to work to pay for again, because they are covered by passive income!
The next time you are in the grocery store and pick up a bag of Doritos, Tropicana Orange Juice, Sun Chips, Quaker Oats, Gatorade, Aquafina water or any Pepsi product, think of the TOL’s and eat up!