Recent Trade – Buy National Grid and RDSB

Now’s the time to buy Royal Dutch Shell

I did it. I am finally updating you as to what I did with the money I got for my recent sale of Royal Mail Group (LON:RMG). With the recent dips in oil, the opportunity was great to average down on my randomly bought one share of Royal Dutch Shell (LON:RDSB) (NYSE:RDS.B). I didn’t get it at the cheapest price, but I managed to get 12 more shares at £2 less than what I got the original share for. Now, this might seem like a ridiculously low amount of shares to buy, but I’ve got a weird deal with my broker, where I get to make share purchases for £1.50, so if I’ve got some leftover money and the price is right, then I often, but not always, take the opportunity to buy something I feel is good value. I wrote about Royal Dutch before, and they are even cheaper now, so I am hoping to pick some more up next month, if the price is still good.

 

Now is also the time to buy National Grid

I also took the opportunity to buy National Grid (LON:NG) (NYSE:NGG)- a favourite amongst German investors’ UK purchases. According to a German friend of mine, they are seen as one of the safest shares to buy, and the Germans are all about safety, if their obsession with insurance is anything to go by. But if you want a slighlty more reputable opinion about whether to buy National Grid, check out this article on the Motley Fool.

National Grid are the system operator for the entire UK electricity network. They also have undersea connections to France, Ireland, the Netherlands, and the Isle of Man. So basically, a pretty important and boring company like this one – which I think are the best kinds of dividend companies. If it’s exciting, it’s probably a growth stock which is subject to crazy fluctuations in price. I don’t want that, I want a boring, stable dividend from a company that does something necessary and useful. The exciting part for me, is the fact that I will have a regular dividend income, which will slowly increase over time. I don’t want anything to do with get rich quick schemes. I want to know what my money is doing, and I don’t want it doing anything sinful. I managed to get 17 shares, which adds around £5 to my dividend income in 2015.

 

A slow and steady way to earn passive income

I know that 17 shares does not sound like much, but my plan is to accrue more over the coming months when I have spare money, then by the time National Grid goes ex-dividend, I shall have quite a few shares, and my dividends will be able to buy me at least one whole share. This is the one ongoing annoyance of UK share investing, that we cannot buy fractional shares, except for in mutual funds. However, the spare money that cannot buy a whole share can sit in my account and be added to new money I try to put in every month. This is a slow and steady answer to question of how to generate passive income, and is one of the main strategies for wealth that we hope to use in the coming years. We do not want to be rich for the sake of having a big pile of money, we just want to have opportunities to use our time and money as we see fit, and with the high cost of living in the UK, having some passive income streams will hopefully be a great help in the future. One of our goals is to be financially independent by the time I am 50 (roughly 17 years’ time) which coincides with when our son will turn 18. I didn’t realise this coincidence at the time, but our son will also gain access to his child’s savings accounts at the same point. I look forward to the future, when he will hopefully have a decent sum of money he can put towards something worthwhile.

Let me know your thoughts! Leave a comment below.

P.S.

13 Comments

  1. I’m new to this blog so I don’t know if this has been said before, but you can make fractional purchases through Halifax Sharebuilder. I’ve been using it for years – you have to game the system a bit (there are set days when the cheap trades are made) but basically everything’s cheap and once you’ve got the shares bought, dividend reinvestment is automatic etc. I own 134.1235425 (or whatever) of RBS and 19.233xxx of Santander. etc etc

    Worth taking a look at, though they might not be the optimal brokers. 🙂
    Andrew recently posted…95 Days of HappinessMy Profile

  2. M,

    Great buys! I’d love to add some more RDSB to my portfolio over the coming months, but I’m too heavy on oil and energy at the moment. First world problems.

    Thank you for putting National Grid on my radar. Hadn’t heard of them yet. Seems like it’s the most boring company out there, but very profitable and likely to stick around for decades.

    Cheers,
    NMW
    No More Waffles recently posted…8,000 Visitors and Over 1,300 Comments Later – 2014 Goals UpdateMy Profile

    1. Yes, national grid are super boring, and therefore a dividend investor’s best friend! I’m hoping to build a significant position in them over a few months

  3. Great buys M.
    I have been watching RDSB myself and wish I had the cash ready for it when it dropped for $65 (on the US market). Still looks attractive at the current $71 level though.
    I havent looked at NGG in a while…looks pretty decent and utilities should do well for your passive income in the coming year.

    cheers
    R2R
    Roadmap2Retire recently posted…2014 ReviewMy Profile

    1. I definitely think it’s still at a good price. I sold out of oil the last time it was high, but i kind of wish I’d had some more spare money when oil got really cheap before Christmas.

      Thanks for stopping by 🙂

  4. M,

    two solid buys.
    I love the German comment on NGG, very entertaining. Owning the power grid as well as the power plants and operating in the UK as well as the US in mostly regulated environments really makes NGG a rock amongst other utility stocks.

    Good luck with the shares.

    1. Yes, totally agree. I didn’t realise they were in America until i was researching before buying the stock.

      My next plan is to research LON:SSE, and Iberdrola, who own Scottish Power. These two companies run the Scottish electricity network

  5. Hi M,
    Congrats on your purchases – they’re both very solid companies and should do well over the long term.

    Do you know why fractional shares can’t be bought? Is it a legal thing or just a “no-one’s done it yet” thing? I’ve been researching UK DRIP and SPP plans a little of late, and I guess my expectations have been spoiled by the US since I’ve not found one company sponsored SPP plan yet, and most company DRIP plans seem to charge fees.

    Wishing you all the best in 2015,
    -DL
    Dividend Life recently posted…What do investors really want?My Profile

    1. Yes unfortunately I think it’s because a share has to have a legal, nominal value when registered, which is why many shares will say something like ‘Sainsbury’s ord 8p’, which would be 8p pence per ordinary share at the time of registration.

      I pay up to 1% DRIP fees, or I can buy shares for £1.50, so I just work out what’s best and then set my account to reinvest or not to reinvest on each share. I can adjust it at any time, so for example, I’m hoping to buy more National Grid and RDSB, but they might get too expensive in the meantime, so I can just switch off reinvestment (not that I’ve got enough shares to purchase a whole one yet from the dividends).

      As always, thanks for visiting

      Cheers!

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