Dividend Millionaire – Hayford Peirce

Dividend Millionaire – Hayford Peirce

The story of Hayford Peirce is an interesting one. He is another secret dividend millionaire who successfully created a passive income stream. His story is a case study about how to live off dividends. He was a science fiction author without a formal education in stocks or investing. He died in 2020 at the age of 78, a relatively early age, unlike many other secret dividend millionaires. 

Information about the extent of his wealth is not clear. However, he received tens of thousands of dollars annually in dividend income from his stock holdings.

Hayford Peirce was a dividend investor before it was vogue. In 1995, at the age of 53, his portfolio was already generating roughly $14,000 per year in dividends. This dollar amount was about 13.8% of his income. At this time, he was living in Tahiti and created a plan.

At a Tahitian café, he began examining his investments. He had two groups of assets. One group were about a dozen high-yield stocks, but these appreciated slowly. This group included utilities and high-yield bonds. The other group was blue-chip stocks that appreciated faster and were also dividend growth stocks. His largest holding was Philip Morris (PM), the tobacco company.

He planned to increase the dividend payout by 10% per year for 30 years. Hayford’s goal was to achieve a dividend income of $250,000 by 2025. Although he fell short of his goal, Hayford Peirce’s portfolio still generated a substantial dividend income stream.

Hayford Peirce’s Biography

Hayford Peirce was born in Bangor, Maine, on January 7, 1942. He was named after his father, a Byzantine art collector and published non-fiction author. His father died in 1946.

Hayford was an American author of science fiction, mysteries, and spy novels. His one spy novel was written in 1968. He primarily wrote short stories for science-fiction magazines like Analog, Galaxy, and Omni. His first science fiction short story was written in 1974 for Analog magazine. Additionally, he wrote for Tor Books and Wildside Press.

Hayford Peirce lived for many years in Tahiti. After he returned to America, he lived in San Francisco, CA, and then Tucson, AZ. He died on November 19, 2020, at the age of 78.

Hayford Peirce’s Stock Holdings

Hayford Peirce had a concentrated portfolio. In 1995, he owned about 19 stocks comprising a dozen high-yield utilities and bonds. He also owned stocks like Coca-Cola (KO), Johnson & Johnson (JNJ), Kellogg (K), Merck (MRK), Pfizer (PFE), General Electric (GE), and Philip Morris (MO). His dividend income was $14,267.50 in 1995.

Between 1995 and 2017, his dividend payments grew at about 8.54% per annum, short of his 10% goal. His dividend payments totaled $1,148,079.84 and averaged $49,916.51 per year during this period.

By 2017, he owned 12 stocks and one convertible bond. The stocks were divided into four blue-chip dividend growth stocks and eight master limited partnerships (MLPs). The four blue-chip stocks were Altria (MO), Johnson & Johnson (JNJ), Philip Morris International (PMI), and Kinder Morgan (KMI). The eight MLPs were Alliance Resource Partners (ARLP), Enbridge Energy (ENB), Energy Transfer (ET), Enterprise Products (EPD), Hi-Crush (HCRSQ), ONEOK Partners (OKE), Plains All American (PAA), and Suburban Propane (SPH).

From 1995 until about 2017, his portfolio and passive income stream grew. By 2017, he received approximately $86,611.76, 62.2% of his total income for the year. His dividend income was higher in 2015, but he owned Kinder Morgan Partners (KMP), which cut the dividend. Although his full portfolio size was not known, we can estimate it. His portfolio ranged from about $1.445 to $1.732 million, assuming a roughly 5% to 6% dividend yield.

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How Hayford Peirce Became a Dividend Millionaire

Planning

Hayford Peirce made a plan. He created a long-range plan for 30 years and seemingly followed it. Many small investors don’t have a plan making Hayford somewhat unique. He also calculated how much money he would need to live. By 2015, his income from all sources was about $165,000, more than he needed.

Good Stock Picking

Despite no apparent training, Hayford Peirce picked good high-yield and dividend growth stocks. Although his portfolio was concentrated, he was still successful. Unfortunately, some stocks also cut their dividend. For example, GE and Bank of America cut their dividend earlier during the subprime mortgage crisis. After which, he moved into MLPs. However, Hi-Crush eventually went bankrupt, and Kinder Morgan cut its dividend in 2015.

However, owning Philip Morris was a major plus for him. He first bought the stock in 1987. Then, he purchased more shares in 1988, 1991, 1996, and 1997, each time the stock price dropped significantly. Eventually, he owned about 11,000 shares. After spinoffs, he held 11,000 shares of Altria, 7,000 shares of Kraft, and 11,000 shares of Philip Morris International. He said his cost basis was about $200,000, but the stock was worth about $1.25 million.

Buy and Hold Investor

He was a buy-and-hold investor, similar to many other secret dividend millionaires, but he did adjust his portfolio periodically. Along those lines, he tracked his portfolio and dividend income with spreadsheets at least annually and tweaked his holdings.

Hayford’s plan, combined with his diligence in following it, led to his success. However, he was not truly a dividend growth investor because he did not reinvest the dividends. Instead, he lived off the income.

Luck

Luck played a moderate role in Hayford’s success. First, he was born into a wealthy family and inherited assets when his father died. Hence, he had a head start on his road to dividend millionaire status. Next, he was lucky to own and stick with Philip Morris.

Final Thoughts on Dividend Millionaire – Hayford Peirce

Hayford Peirce was a successful dividend investor. He combined attributes of dividend growth with income investing. He was lucky to own Philips Morris. A stock with returns whose successors companies became a Dividend King. The qualities that helped his success were planning, good stock picking, buy and hold, and luck.

Thanks for reading Dividend Millionaire – Hayford Peirce!

You can also read Dividend Millionaire – Grace Groner.

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Published at Tue, 13 Dec 2022 04:00:00 -0800