Markets

My Most Important Income Investing Advice for 2012

I've collected 595 dividend checks in the past two years... and I'm just getting started.

Let me explain.

It seems like yesterday that I sat down to write the first issue of my Daily Paycheck advisory. It was actually Dec. 15, 2009 when I made the first purchases for the advisory's $200,000 "real-money" portfolio.

The Daily Paycheck follows a very simple strategy, yet it almost feels revolutionary in today's market . My entire goal is to build a portfolio that pays me dividends every day. I'm not trading, and I'm not "betting" on speculative stocks and hoping they go up.

I'm buying solid dividend payers, being paid regularly, and reinvesting those dividends. And I do it all with actual cash. My publisher wants to prove this method of investing is the way to beat the market. That's why they put up $200,000 for the portfolio.

I built my portfolio slowly. After six months, roughly 60% of my cash was invested and my monthly income was just under $750.

-- Amy Calistri

By the end of last month, my monthly dividend checks totaled $1,668.49 -- 47% more than I received a year earlier. Meanwhile, in just two years' time, I've collected 595 dividend checks for a total of $25,075.55.

Of course I didn't do this all on my own. Reinvested dividends and investing in companies raising their dividends have helped do the lion's share of the work. For instance, Kinder Morgan Energy Partners (NYSE: KMP ) is a master-limited partnership ( MLP ) that has raised its dividend every quarter since I bought my initial shares back on Dec. 15, 2009. By reinvesting these fast-growing dividends, my quarterly income from KMP has jumped 23.6% in just two years' time.

But perhaps the most pleasant surprise in the two years I've managed The Daily Paycheck portfolio is its overall performance. Even though it is made up of many conservative income securities, the portfolio has outperformed the S&P 500 Index . Meanwhile, the portfolio is less volatile and produces more than four times the income generated by the S&P 500 (the average yield on my portfolio is a shade over 8.0%).

I know a lot of traders who sit in front of their terminals all day long trying to beat the major averages. When I tell them about my Daily Paycheck strategy, they don't believe me. They assume that strategies that beat the market have to be complex and time consuming.

I also have a lot of friends who are in their late 50s and 60s. They are worried that they won't be able to build up an account that can produce the kind of income they'll need in retirement. When I tell them about The Daily Paycheck strategy, they don't believe me. They've been told that it takes decades to build a strong income-generating portfolio.

This has been a valuable two years for me. I have confirmed that building an income-producing portfolio doesn't have to be complicated. Once you find a solid dividend-paying security, the rest is simple. You don't have to babysit every position every minute of the day. You don't even have to remind yourself to reinvest your dividends -- this happens automatically through your broker. And I've learned that even within the short investment time frame of two years, you can significantly grow your income.

Action to Take --> In short, using The Daily Paycheck strategy is the best advice I can give an income investor going into 2012.

To get ready for the new year, I'll be rebalancing a few of my positions. I have a few lower-yielding securities with large gains. And I'd like to put some of these gains to work in higher-yielding securities. I also have a few positions that have been underperforming the market. I want to put them under the microscope to be sure they have what it takes to get me where I want to be this time next year.

[ Note: I didn't invent The Daily Paycheck strategy. StreetAuthority's co-founder Paul Tracy gets the credit for that. Earlier this year he even collected more than $6,000 in a single month in dividends. To learn more about how to put this strategy to work -- no matter the size of your portfolio -- you can visit this link .]

Disclosure: Amy Calistri and/or StreetAuthority, LLC hold a position in KMP.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

© Copyright 2001-2010 StreetAuthority, LLC. All Rights Reserved.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

MLP

Other Topics

Investing