The DRIP Club Starter Portfolio Concept
Many people would like to invest but don’t know where to begin. Faced with thousands of stocks, mutual funds, ETFs, and conflicting advice, they often do nothing at all.
The DRIP Club Starter Portfolio is designed to solve that problem.
The idea is simple. Instead of trying to build a large portfolio all at once, an investor begins by purchasing a single share of each company in a carefully selected five-stock portfolio. The companies are established businesses with histories of paying dividends and rewarding long-term shareholders.
Once the shares are purchased, the investor makes regular additions to the portfolio—perhaps $50 per company each month or quarter—and reinvests all dividends.
Over time, the investor accumulates additional shares. Dividends purchase more shares. Those shares generate additional dividends. The process gradually becomes self-reinforcing.
When each company in the portfolio is generating approximately $10 to $20 per year in dividends, the investor may choose to expand into a second five-stock portfolio, thereby increasing diversification while continuing to build the original holdings.
The objective is not to trade stocks or predict market movements. The objective is to become a part owner of quality businesses and allow time, regular investment, and dividend reinvestment to work together.
The four sample portfolios are designed to expose investors to different areas of the economy while emphasizing companies that have demonstrated an ability to generate profits, pay dividends, and grow over long periods of time.
The Starter Portfolio concept teaches several important investing principles:
• Start now rather than waiting for the perfect time.
• Invest regularly regardless of market conditions.
• ALWAYS Reinvest dividends.
• Build positions gradually.
• Diversify over time.
• Focus on business ownership rather than stock price fluctuations.
• Allow compounding to become your most powerful investment partner.
No one becomes wealthy from a single dividend payment. Wealth is built by repeating sound habits over many years. The Starter Portfolio is intended to help investors develop those habits from the very beginning.
| Portfolio #1 Core Dividend Foundation |
Portfolio #2 Quality Growth & Dividend Growth |
Portfolio #3 Cyclical Income & Financials |
Portfolio #4 Dividend Anchors & Defensive Income |
| The Procter & Gamble (PG) $153 | Union Pacific (UNP) $261 | Charles Schwab (SCHW) $92 | Abbott Laboratories (ABT) $92 |
| AbbVie Inc. (ABBV) $236 | Yum! Brands Inc. (YUM) $153 | The Home Depot (HD) $343 | Duke Energy (DUK) $127 |
| Bank of America (BAC) $58 | Ecolab Inc. (ECL) $279 | Freeport-McMoran (FCX) $62 | ONEOK Inc. (OKE) $88 |
| The Coca-Cola Co. (KO) $82 | Microsoft Corp. (MSFT) $267 | ConocoPhillips (COP) $108 | Waste Management (WM) $226 |
| NextEra Energy Inc. (NEE) $88 | Emerson Electric Co. (EMR) $142 | Realty Income Corp. (O) $63 | Johnson & Johnson (JNJ) $241 |
| Total: $617 | Total: $1,102 | Total: $668 | Total: $774 |
A Note for Investors with Larger Amounts to Invest
The Starter Portfolio concept is designed to help small investors begin building wealth one step at a time. However, investors who already have substantial savings or who have the ability to invest larger amounts regularly may choose to begin with all four portfolios.
Rather than starting with five companies, they might purchase shares of all twenty companies and make regular investments across the entire group. For example, an investor might invest $100 per month in each company, spreading investments across many industries and sectors of the economy.
Beginning with all four portfolios provides immediate diversification and reduces the likelihood that disappointing performance by a single company or sector will discourage the investor from continuing the program. While some companies may struggle during certain periods, others may prosper, helping to smooth overall results.
The most important principle remains unchanged: invest regularly, reinvest all dividends, and allow time and compounding to work in your favor.