Dividend Investing With Loyal3

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Update: As of April 2015, I liquidated my Loyal3 portfolio to move funds into cash so I can fund my travels and living expenses after I quit my job. I still find Loyal3 to be a great service for those interested in dividend investing and I still recommend it. Once I have more funds to invest, I may go back to investing with Loyal3.

In 2014, I started investing in dividend stocks for my taxable investment portfolio using Loyal3. With Loyal3, you can buy up to $2,500 per month, per stock of the 60+ stocks they have available for investing in. These are all big name companies and a lot of them are dividend stocks. When I first found out about Loyal3, you were able to purchase stocks with a credit card. This was great, but in November 2014, the company stopped allowing credit cards. I've earned some decent credit card rewards on the stock that I did buy and continue to think that Loyal3 is a good option for those looking to invest in high quality companies at no cost. 

What Other Bloggers Have To Say

Some blog posts that I've read that got me excited about investing in Loyal3 dividend stocks:

Snapshot of My Loyal3 Holdings

As part of my Loyal3 investment strategy, I look at investing in some of the best dividend stocks available on the platform:

My Loyal3 Investment Holdings as of DECEMBER 31, 2014

My Loyal3 Investment Holdings as of DECEMBER 31, 2014

I'm shooting for earning over 3% worth of dividends on my Loyal3 holdings. As you can see below, the investments I've purchased are high quality companies that pay around 3% yield resulting in 12-month forward dividends of about $147 a year. 

Based on my experience with the service, here's what I thought the pros and cons are:

The Pros

  • Can invest in quality dividend paying stocks
  • Can invest in IPOs
  • Zero commission trades

The Cons

  • No real-time trading - stocks trade in batches that can take 2 business days.
  • Limited Stock Availability - as of this writing, there are only 64 stocks available to invest in
  • It takes about 5 mouse clicks to purchase a stock - In my case, when I want to purchase additional shares of all of my stocks in one day, it takes a lot of clicks.
  • Monthly reports don't have much investment information other than the number of shares and value at month end. I would like to be able to see cost and unrealized gains/losses. I've had to create a spreadsheet and track it manually every month. (hat tip to WriteYourOwnReality for the 12-month Forward Dividends idea)
Loyal3 Investments with 12-month Forward Dividends

Loyal3 Investments with 12-month Forward Dividends

  • Can't do much research on investments within the Loyal3 platform. I typically will go to google finance to research a stock
  • Not able to link to financial tools such as Mint.com and PersonalCapital.com to be able to include in your total net worth and visualize total asset allocation 
  • Unable to participate in DRIPs (Dividend Reinvestment Plans) - I have to keep an eye on the dividends I receive and invest manually

Despite the long list of Cons, I still think Loyal3 is worthy of using. I don't plan on using Loyal3 for a large part of my investment strategy, but again, earning some dividends on cash that I'd otherwise have sitting in a savings account. 

The Bottom Line

Overall, I prefer to invest most of my money in low cost index ETF such as the Schwab US Broad Market ETF (SCHB) for my retirement accounts. My Loyal3 dividend investments only represent a small portion of my total investment portfolio. This happens to be money I've allocated towards building up an account for excess cash I don't want to keep in checking/savings. 

Have you tried buying stock with Loyal3? What do you think?

Disclosure: I'm not an licensed investment professional, so please invest at your own risk. I get a commission for links on the blog. You don’t have to use my links, but I'm very grateful when you do.