M1 Finance Dividend Portfolio | How To Make Easy Passive Income!

TL;DR

You can build an M1 Finance dividend portfolio by selecting an Income Earners Expert Pie or creating a custom Pie with dividend-paying stocks and ETFs. M1 Finance offers over 30 free Expert Pies, while the demonstrated custom portfolio divides its allocation equally among five stocks. Dividends accumulate as cash and can be automatically reinvested toward target allocations, so read on to compare both approaches and understand the reinvestment process.

Transcript

• So, in this video today, we are going to be building a mock dividend portfolio in M1 Finance, just so you guys can understand, how does that work, with earning dividends with M1 Finance, and why are there a lot of dividend investors flocking to this free investing app? Now, that being said, if you guys, at the end of this video, do decide that yo... Read More

Key Insights

• 👤 M1 Finance offers a convenient and user-friendly platform for building dividend portfolios.
• 🏛️ Investors can choose between pre-built portfolios or build their own custom portfolios with high-dividend stocks.
• ⚖️ Dividends earned in the portfolio are accumulated in the cash balance and automatically reinvested.
• 🎯 M1 Finance helps investors maintain target allocations through portfolio rebalancing as funds are added or dividends are invested.
• 👻 The platform's fractional shares feature allows for a diversified portfolio without worrying about share prices.
• 😑 Pre-built portfolios in M1 Finance offer exposure to different industries and regions, catering to investors' preferences.
• 💐 Dividend income provides investors with cash flow and can be a valuable source of passive income.

Questions & Answers

Q: How do you build a dividend portfolio on M1 Finance?

Choose an Expert Pie focused on dividends and income returns, or build a custom portfolio from scratch with dividend-paying stocks and ETFs. The demonstration shows both approaches and explains what happens when the portfolio earns dividends.

Q: What are the two options for earning dividends with M1 Finance?

The first option is investing in an Expert Pie or Expert Portfolio with a high dividend yield. The second is creating your own portfolio and selecting the dividend-paying stocks or ETFs yourself.

Q: Where can you find M1 Finance's dividend-focused Expert Pies?

They are primarily located in the Income Earners section of the app. This category contains portfolios focused on dividends and income returns, including bond, domestic-dividend, and global-dividend choices.

Q: What does the M1 Domestic Dividend Pie invest in?

The M1 Domestic Dividend Pie provides exposure to U.S. companies with larger-than-average dividend distributions. In the example shown, 83% of its allocation is in a Vanguard Dividend Fund, its total expense ratio is 0.11%, and its dividend yield is 1.84%.

Q: How does the Global Dividend fund compare with the Domestic Dividend Pie?

The Global Dividend fund provides global exposure through five funds and has a dividend yield of 3.37%. That yield is higher than the Domestic Dividend Pie's 1.84%, although the global fund also has a slightly higher expense ratio.

Q: Which five stocks are used in the custom M1 Finance dividend portfolio example?

The mock portfolio includes AT&T, Altria, Southern Company, Wells Fargo, and ExxonMobil. They were chosen for educational purposes from different industries, and the presenter explicitly advises viewers to conduct their own research.

Q: How is the custom five-stock portfolio allocated?

M1 Finance automatically splits the allocation evenly among the five selected stocks. That places 20% of the portfolio in each stock.

Q: What happens to dividends earned in an M1 Finance portfolio?

Earned dividends accumulate in the portfolio's cash balance. With Auto-invest, the cash is reinvested after the balance exceeds $10, and M1 Finance directs the funds across the portfolio to help restore its target allocations.

Summary & Key Takeaways

• The video demonstrates how to build a mock dividend portfolio on M1 Finance, either by choosing from pre-built portfolios or selecting high-dividend stocks.

• M1 Finance offers over 30 pre-built portfolios focused on dividends and income returns, providing exposure to different industries and regions.

• Dividends earned in the portfolio are accumulated in the cash balance and automatically reinvested to maintain target allocations.