It's dividend time!

Maybe one basket isn't so bad.

Photo by Hans Eiskonen on Unsplash

This one’s hard to write because it means admitting — publicly — that I was wrong.

For more than 2 1/2 years, I put too much faith in my ability to pick winning stocks.

It cost me time, energy and returns I now realize could have come more easily through a different approach.

But I’m ready to course-correct. It’s time to own my mistake and move forward, wiser.

And that means selling my babies.

Like many new investors, I got attached to the individual stocks I picked, companies I believed in, followed closely and rooted for. In my excitement, emotion got in the way of strategy.

As the final three dividend-paying companies in my portfolio reflect, I’m still holding on. Maybe out of habit. Maybe out of hope.

But investing is a game of returns, not feelings. And the truth is, I’ve spent too much time clinging to positions that aren’t delivering the growth I need.

Instead of betting on individual stocks, I’m committing to a broader, more reliable approach.

That means turning to my preferred ETF (exchange-traded fund), the Vanguard Total Stock Market Index Fund ETF (VTI).

VTI gives me exposure to the entire U.S. stock market, including small, mid and large-cap stocks, all in one fund. It’s diversified, low-cost and has a track record of steady, long-term growth.

I’m content to let VTI be my primary source of dividends and allow the market to work for me. I’m ready for consistency, less stress and a strategy built for the long haul.

The hardest part of this transition is selling my Nike and Hershey position. Along with Starbucks, they’re my final three dividend-paying companies in my taxable portfolio.

I’ve held Hershey and Nike since October 2022, and both positions are currently down. I’m not rushing to sell just yet. I’m preparing to hold until their stock prices rally, at which point I plan to sell for a profit and redirect the proceeds into VTI.

While Nike and Hershey are solid brands with strong histories, their futures as individual companies aren’t as certain as the broader stock market.

Even though I take pride in owning shares of both Nike and Hershey, I realized that to see significant profits, I would need to accumulate thousands of shares and hope for a parabolic surge in their stock prices. The reality is, with my current holdings, the returns are unlikely to generate the major growth I’m aiming for. This clarified that a more diversified, market-wide approach would provide a better path to long-term wealth.

I guess you could call it learning. It feels a bit silly that it took me this long to see it.

That’s the lure of stock picking. I started my investing journey with J.L. Collins’ “The Simple Path to Wealth” as my guide, but I still believed I could outpace the market.

It’s not all bad. I’ve learned more about how companies’ stock prices move and why. I’ve developed my buy-and-hold discipline. And although my Nike and Hershey positions don’t show it right now, I’ve collected profits from several stocks along the way.

While I’m committed to making this shift, I’m not completely ruling out the possibility of selectively investing in individual stocks when the opportunity feels right.

But the goal is long-term success without the stress and time drain of constant stock picking, and I can achieve that with VTI as my vehicle.

After earning $111.99 this cycle, I’ve now collected $1,349.06 in dividends since the first payout in November 2022.

I’ve scaled back on investing into my taxable account to prioritize tax-advantaged accounts such as my 401(k), Roth IRA and HSA. My Roth IRA, in particular, has amassed $3,367.50 in dividends, and those quarterly payouts are starting to grow large enough that they’re becoming impossible to ignore.

My daughter Parker’s investments have crossed $1,000 in lifetime dividends. She has earned $1,037.09 across her Roth IRA and custodial accounts, all through broad ETFs.

She’s never experienced a significant drawdown, and she doesn’t have to worry about whether a pullback will turn into a prolonged downturn. Diversification is her saving grace.

I wasn’t disciplined enough to structure my portfolio the same way.

I was wrong.

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Disclaimer: The information contained on Money Talks is not intended as, and should not be understood or construed as, financial advice. I am not an attorney, accountant or financial advisor. These are my personal experiences, and neither this website, newsletter nor podcast is a substitute for advice from a qualified professional.