Spending and Dividend Income July 2014

Spending:

The numbers are in for July and another great month is in the books!  I think overall July was much more representative of what I will be spending going forward from here on out.  Over the last few months I have significantly cut expenses on my phone bill (Verizon to Republic Wireless), my rent (1050 per month to my now purchased home which costs 880 per month), and my student loans (122 per month down to 0 per month as work has picked up the tab for me).  So here are the new numbers:

There was a bit of a billing mix up this month and I was still charged for my student loan.  This is hopefully fixed for August and shouldn't happen again.  Other than that the only area of high spending was the Food and Dining category as I was a little lazier and purchased many breakfasts and lunches at work.  I have recently started going to the gym daily (free through work) and now need significantly more calories than I was eating before, it is likely that my food and dining expenses will be high from here on out as I am trying to gain a few more pounds of muscle.

This number is on track for my yearly goals and is less than my average monthly spending (Jan 1st - July 31st) of $1918.  Hopefully I can continue to bring this number down and finish the year strong.

Dividend Income:

The dividends just kept rolling in for the month of July.  While significantly lower than my June income I still managed a significant increase from my April income.  Dividends harvested this month include:

PSEC:    $33.14
SPLS:     $12.96
MO:       $19.20
PM:        $24.44
KO:        $7.93

Combining for a total dividend income of $97.67 dang so close to triple digits!  Compared to my April income 3 months ago this is an increase of almost 47%  Not bad at all!  This also brings my total dividends received up to $446.25 for 2014.

Total dividend coverage for the month was 5.54%  This was by far my second best month and it is exciting to see how quickly these numbers start adding up.  After just seven months of investing I was able to cover a good chunk of what it costs me to live.  The snowball is rolling now and it only picks up momentum from here on out.  I hope you all had a great July and here's to an even better August!  As always, thank you for reading.

You Sunk My Battleship, One Sale and Two New July Buys

Sometimes you just have to let go so that you can keep moving forward.  Earlier this week I sold out of my position in NAT.  This position was originally bought as a bet that the shipping industry was about to see a turnaround.  While I think the shipping industry is an interesting one at this time I felt like my position in NAT was a bit of a hot potato.  The company is well known for destroying shareholder equity by issuing shares and diluting value.  On one hand this is directly damaging to shareholders, on the other this allowed NAT to raise money without taking on debt, something which has helped the company immensely as the industry has tanked since the recession.  Similar shipping companies have not fared as well as the debt piled up and earnings fell.  Then there is always the ticking time bomb of China, whose shipyards are churning out more and more new ships which is leading to oversupply.

Overall I felt like I was stuck in a do loop, continuously analyzing this stock until I finally decided to take my profits and invest them elsewhere.  I sold 157 shares for a total of $1450.07 accepting an adjusted gain of just over 10%  Not bad for one month and definitely a learning experience for me.  This brings my total stock trading profit up to $432 for the year.

With this money, and some extra capital I initiated two new positions for my portfolio.  I ended up purchasing 22 shares of POPE (Pope Resources) for a total of $1501.59.  I also picked up 10 shares of BA (Boeing) for a total of $1252.49.  Boeing is one company that I have been interested in owning for a long time.  I took the recent sell off after earnings as an opportunity to initiate a position and it is one of those companies that I plan on holding long term.    After this portfolio reshuffling my 12 month forward dividends now sit at $2260.16 and I am sleeping significantly better at night.

June Spending, Dividend Income and a July Buy

It's looking like blog updates are going to be less frequent for the foreseeable future as my work hours are starting to pile up once again.  Overall June was my best month of the year for both dividend income and spending.  The numbers speak for themselves!

June Spending 

Total spending came in at a very low $849.81.  This is by far the best spending month I have had since I started this blog back in February.  The main reasons this number is so low has to do with the fact that my first mortgage payment wasn't due until July 1st so I had no rent or mortgage to pay in June.  June was also the first month that my work has started making my student loan payments.  This saves an additional $121 every single month which I will happily put to work earning me dividends.

My food and dining, shopping, and utility bills were higher than normal.  I had to pay utilities on two properties in June which propped up spending.  I also needed to buy a few household items to do some repairs/renovations on the new house.  I took friends out for dinner a few times and also bought groceries for a family barbecue which increases the food bill to slightly higher than normal.

June Dividend Income


The majority of my stocks have dividend distributions that occur in June.  As such it was by far my biggest dividend haul to date.  Dividend payments were as follows:

AWLCF: $50.51
INTC:      $10.13
CVX:       $9.63
TGT:        $7.74
MCD:      $8.91
PSEC:      $33.13
SDRL:      $43.00
GLPI:       $16.12

The total haul for the month of June was $179.17  When compared to last quarters March dividend income of $46.82 we have an increase of over 382%  I couldn't be happier with the increase which is mostly attributed to the fact that almost all of my high yield income investments pay out in this time period.  This brings my total dividends received in my first 6 months of investing up to $348.58.

Total dividend coverage for the month of June was 21.08% That little sliver of dividend income has had its first very noticeable month.  This is mainly due to the supplementation of my dividend growth stocks with high income investments.  My ideal portfolio at this time is an equal combination of dividend growth and income investments.  The higher yield income investments typically carry higher risk in particular risk to dividend distributions/increases due to very high, sometimes greater than 100% payout ratios.  There is a very real possibility of a poor quarter causing a dividend decrease.

 I carefully monitor these higher yield investments and consider all of these positions as possible trades.  I will typically pick up higher yield positions in industries that have seen hard times.  For example SDRL and AWLCF (offshore drilling) which has been rallying nicely for the last few months after a severe decline.  NAT (shipping) which is an industry that has still not recovered well since the financial crises.  However indicative rates (how much it costs to contract out an oil tanker) have risen substantially in the last few weeks causing the stock to bounce nicely (might sell soon).  Conversely my dividend growth positions I plan on holding and allowing the distributions to grow long term.  They are my SWAN (sleep well at night) investments that require significantly less attention and preening.

July Stock Buy

Earlier this month I picked up 59 shares of CVRR for a price of $25.69 per share for a total investment of $1525.69.  My new 12 month forward dividend income sits at $2,316.4 with this purchase.  This is another high income play for me that pays out the majority of its free cash flow in dividends.  A risky play similar to my purchase of AWLCF, CVRR owns and operates two refineries.  The company is currently recovering from difficulties at one of their refineries last year which caused a major decrease in income/company value.

Currently considering for my second July purchase:
RY, WFC or TD  (I keep wanting to buy a financial but the prices keep rising.  I like each of these companies and might just pull the trigger regardless instead of missing the bus)
NORSB:  illiquid microcap great analysis here:  http://otcadventures.com/?p=1374
GE, RTN, LMT, AGU, POT (still need to do more analysis.)
Also closely monitoring the merger of RAI and LO for a buying opportunity.

Considering selling my position in NAT

Thanks for reading folks!

June 2014 Bonus Buy

It's time to put my income to work again with a duo of bonus buys for June.  Earlier in the month I picked up shares of VZ and NAT.  Since then I have been putting in my time researching the next place I want to unload a pile of cash.  I have also been working on coming up with a mathematical formula to help me assign scores/multipliers to dividend paying/growth stocks and populating a database with basic statistics to test the formula.  While I am still far from perfecting the process I did use the formula to single out my two buys this month.

For my first purchase I bought 30 shares of TGT at 58.09 per share for a total of $1762.69.  Target has been struggling recently with multiple management changes, a major security breach, and poor performance in its Canadian expansion.  While these are real issues (particularly the failures in Canada) they are somewhat reflected in the low price of Target stock.  If the new Canadian leadership can bail out this sinking ship Target is set for a major rally, if not there will be more blood-loss.

Shares of Target recently saw a dividend raise of 21% which is in line with their excellent history of being very generous with dividend raises.  This increases Target's payout ratio to 56% however future dividends could be in jeopardy if things do not improve.  Sounds like my cup of tea!

For my second purchase I bought 108 shares of SPLS at $11.14 per share for a total price of $1213.11.  Yuck another beleaguered retailer?  Well not so fast, Staples has been cutting costs recently by closing unprofitable brick and mortar stores around the country while ramping up their online operations. Staples is now the third largest global online retailer after Amazon and Apple.  Staples has an incredibly low debt and excellent free cash flow.  The dividend is secure and has seen steady admirable growth over the last five years.  Major insider buying is also another positive sign.

With these two purchases and the raise from target my yearly dividend income has increased from $1964.4 to $2085.12

2014 May Dividend Income, Spending, and a Pair of Trades

It's looking like my posts will be a bit fewer and far between while I settle in to my new house and get hooked back up to the internet.  So for the sake of efficiency I will probably be combining posts for the next few months.  For this month I present to you May's earnings, spending, and a few early month portfolio trades!

May Spending 2014

I accidentally blew my budget for the month of May.  I had to pay closing costs on my home purchase and pick up a lawn mower and weed eater to attack a lawn that had been neglected for almost a year.  With a few other essential home purchases I ended up spending a total of $2526.00 for the month.  Here is the spending breakdown!

The Misc Expenses, and Food and Dining categories were my biggest costs for the month.  Misc expenses includes my final closing costs, yardpocolypse equipment, moving truck fees, and a few smaller house items.  The food and dining budget was also part of the cost of moving as I took my friend and his fiance out for dinner and drinks to pay them back for helping me move(money well spent!)

While I was not able to meet my goals this month, going forward I am in a significantly better position to save money on both utilities and rent.  

May Dividend Income

My dividend income for May is as follows:

PSEC:  $11.04

KMI:    $18.90

For a total earnings of $29.94.  While this number still seems small, I have managed to double last quarter's (February) earnings.  I am extremely happy with this outcome and really look forward to blowing this number away this coming August.  Here is a breakdown of this months dividend income, and dividend income to spending.

Total dividend coverage to spending this month was 1.25%  This beats last February's 0.62% even considering I spent significantly more in May.  I am extremely happy with this outcome and am excited as to what the future holds.

Early June Portfolio Shake Up

Early in June I made the decision to sell off a few positions in my portfolio that do not meet my overall investing goals.  My typical investments are in dividend growth or high yield stocks.  While I plan on building my portfolio with rock solid blue chip investments I also occasionally dip into the foreign markets or industries with high yield stocks that have not recovered fully after the recession.  Two of my positions in my portfolio did not meet these criteria.  INTC and CHK.  Neither company has been successful at raising dividends in an extended time period, and they aren't my favorite high yield distressed companies. 

I took $600 of my own money and sold my positions in INTC and CHK (both for a profit), using the money to purchase shares of VZ and NAT.  I bought a total of 36 shares of Verizon for a price of $1797.12 and 157 shares of NAT for a total of $1307.81.  After the smoke cleared my new 12 month forward dividend income sits at $1964.40 per year.  My portfolio has been updated to reflect the new changes.

I am currently closely monitoring everything currently in my portfolio and RY, TD, and GM for a possible purchase later this month.

Thanks for reading and I hope you had an amazing May!

April 2014 Dividend Income, May Purchases, Dividend Raises and an Update Oh My!

May has been one of the craziest and busiest months of my life.  Not only have I been working long days (up to 14 hours/7 days a week) I have also closed on a house and moved in my spare time.  The end of May marks a brief reprieve from the long hours at work.  In the mean time I have missed out on many updates for you!.


April 2014 Dividend Income

The month of April marks my fourth month of investing in income and dividend growth stocks.  April was my largest harvest yet and I totaled $66.55 of income compared to $14.97 from January.  Compared to my spending of $1868.00 for April this dividend covers 3.56% of my total costs.

May Stock Purchases     

Thanks to the healthy dose of overtime I was able to make many purchases in the month of May.  May marks another month of investing in beleaguered income investments.  While I would normally choose to place my money in stable dividend growth champions and aristocrats I could not ignore the prices of some of my favorite income stocks.  I have been rewarded with capital appreciation of ~15%  from my purchase of SDRL last month and hoped to continued the trend.  

I purchased 200 shares of PSEC at a price of $10.55 per share.  This increases my yearly forward dividend income by $264.96.  PSEC currently boasts a $0.1104 per month dividend.

I purchased 31 shares of GLPI at a price of $34.28 per share.  This increases my yearly forward dividend income by $64.48.  GLPI currently boasts a $0.52 per quarter dividend.

I purchased 112 shares of AWLCF at a price of $22.24 per share.  This increases my yearly forward dividend income by $515.20.  AWLCF currently pays a dividend of $1.15 quarterly.

This is a total increase of $844.64.  

The shares of PSEC were bought in two transactions.  The first occurring the day before a 5% drop in share prices due to the announcement by the SEC.  Shares are now down significantly to the $10.00 range.  While I still like the company there are some important factors that need to be addressed before I will purchase more.  I am currently less worried about the SEC investigation and squeeze on the BDC market overall from de-listing from major indices than I am about PSEC's ability to continue dividend coverage.

GLPI marks my first REIT purchase and exposes me to both the REIT and gaming industries.

AWLCF is my favorite offshore drilling play on the market at this time.  The company pays the vast majority of its income from its two rigs out as dividends.  This is quite possibly the most risky and intriguing play in my portfolio.  The dividend is currently sitting over 20% and would absolutely be unsustainable if anything disastrous were to happen to either of the rigs.  Currently both of the rigs are contracted out and receiving increased dayrates in the near future.  I am under the opinion that AWLCF greatly benefits in the current tight offshore drilling market by having only two rigs, making it easier to secure contracts and maintain efficiency.

May Dividend Increases 

Two positions in my portfolio increased dividends in May.

SDRL increased it's dividend from $0.98 to $1.00  this increase of ~2% marks the fifth quarterly increase in a row for the company.  Shares of SDRL have also rebounded greatly in the last month and a half.

AWLCF increased its dividend from $1.10 to $1.15.  This marks the third time that AWLCF has raised its income in the last year and is an increase of ~4.5%.

With these new purchases and dividend increases my current yearly forward dividend income is now $1799.37.

When I get access to internet on my personal PC again updates should return to the normal rate and I will update my portfolio page.  Hopefully you all had a fantastic May!

My current watch list for June purchases:  NAT, GM, VZ, RIG

Disclosure:  Long AWLCF, GLPI, PSEC

April Spending Report 2014

With April come and gone It is time to report my monthly spending.  These spending reports are one of my favorite segments because they help keep me honest.  Any time I start to think about making an unnecessary purchase I remember that at the start of each new month I have to air it out for everyone to see and I risk missing my monthly goal of spending less than $2,200.

For the month of April I spent a total of $1868.76.  This beats my goal  and is my second lowest month of spending so far this year.  Right now February came in at $5 cheaper (Darn Subway sandwich).  I am absolutely ecstatic with this amount and hope to be able to continue the run going forward.  My spending breakdown (courtesy of Mint) is as follows:

Major notable differences include:

• The utilities category where I managed to only spend $256.81, this includes heat/power/cell phone/internet service.  This has been decreased by switching from my $55 verizon plan to a $12 per month Republic Wireless plan which was also a significant boost in quality of service.  The coming of spring has also helped to knock down my heating bill significantly.

• I also switched car insurance companies to a company called Metro Mile which provides deeply discounted car insurance based on how much (or in my case how little) you drive.  As you can see I didn't get out and drive much this month (working 90 hour weeks will do that to you).  With this change I am saving ~$20 per month.  I am about a 5 minute walk from my office/groceries so that really cuts down on my monthly commute expenses.  At this point the only reason I maintain a car is for the occasional camping/hiking/paddle boarding adventure.  

• I spent slightly more money this month on entertainment and bought my pet parrot a treat.  

• Misc expenses include the cost of filing my state taxes.

This morning I finished signing paperwork for the purchase of a new house.  This should knock about $170 off my monthly Home cost and will significantly decrease my heating costs in the near future.  The downside will be a few months of increased misc spending as I purchase necessary home items (insulation, curtains, furnace filters, lawn mower, etc.)

I hope you all had a fantastic April!

Chevron Gave me a Raise!

I would like to take a moment to thank Chevron Corp.  (CVX) for giving me a 7% raise this year.  Chevron has increased their dividends from $1.00 per share up to $1.07 per share.  This is one of those warm fuzzy moments that occur multiple times a year when you invest in strong dividend growth stocks.

I personally own 9 shares of Chevron so this raise will net me an extra $2.52 per year.  It doesn't seem like much but these raises add up tremendously year after year.  I plan on putting this money to good use in my future purchases.  So thank you Chevron for the extra cash, I will buy half a Subway sandwich in your honor.  My yearly dividends going forward have increased to $942.29

April Bonus Buy

After my Seadrill purchase I have been analyzing many other offshore drilling companies.  The sector has recently been beat up over fears that major oil companies are pulling back on ocean drilling operations.  After heavily researching the major players in this sector I have narrowed my search down to 4 target companies that I added to my watch list.  Earlier in this month I pulled the trigger on one of these companies picking up shares of Seadrill.  I still consider this sector a risky play however I also see great potential upside.  On Monday I made another purchase after delving through financials picking up 45 shares of Awilco drilling (AWLCF).

Awilco is a much smaller company than Seadrill operating two semi submersible drilling rigs.  The company operates out of the UK and trades on the Norwegian stock exchange.  Awilco chooses to pay out the majority of its profits in dividends currently paying out a 20.16% yield at the time of this writing.  With just two rigs, Awilco is a very risky play because damage caused by inclement weather or an accident could set back their profits in a big way.  Furthermore Awilco has scheduled maintenance on both of their rigs in 2016 which will put them each out of service for two months for upgrades (having worked in a shipyard I know how these things can drag out past the planned two months.)  With cash on hand, and the rigs contracted out for many years to come for increasing dayrates, Awilco should see a nice boost in profit next year.

With this purchase my forward yearly dividend has increased from $741.77 to  $939.77.  My portfolio has been updated to reflect this change.  Do not be surprised if I buy two more drillers for my next purchases, and remember that I am extremely tolerant to risk. Remember to read my disclaimer before following me in any stock purchases.

Disclaimer:  Long SDRL, AWLCF

Kinder Morgan Boosts Dividends Again

Energy transportation giant Kinder Morgan (KMI) has announced a 1 cent increase in their quarterly dividend bringing the new quarterly dividend to $0.42 per share.  While this might not seem like much, this is not the first time in the last year that they have increased payouts.  Within the last year they have increased dividends from $0.38 to $0.40, and again from $0.40 to $ 0.41 and finally one last time from $0.41 to $0.42.  Three total increases in a one year period totaling ~10.5%  This continues the trend of multiple yearly dividend increases for Kinder Morgan.  

I am happy to be a shareholder in a company that is so dividend friendly.  Kinder Morgan was a more recent addition to my portfolio and I own a total of 45 shares.  This increase brings my 12 month forward dividends from $739.97 up to $741.77.  This is easily good for a few cookies per year from my local Subway which is truly life changing.  In reality every single penny increases the momentum of my portfolio and I always appreciate getting a raise for no effort.  My portfolio has been updated to reflect this change.

Disclaimer: Long KMI

April 2014 Stock Buy

A new month brings a new stock for the portfolio.  With the recent sell off in the market I decided that it was the perfect time to go bargain shopping.  One of the stocks that has been sitting on my watchlist dropped down below my target threshold today and I just had to make the move.  I set my alarm and woke up in the middle of my sleep period (I work nights) to make a quick market check and pick up shares of beleaguered offshore drilling MLP Seadrill (SDRL).  I spent a total of $1,428.56 and bought 43 shares at $32.99 a pop.

While this article is by no means meant for analysis I will give an extremely brief breakdown of why I picked this company.  Seadrill has been under fire lately as there is an expected lull in the deepsea drilling industry due to increased production from oil shale.  Seadrill also carries a large debt load and pays out the majority of its profits in its dividend.  But even with all of these issues the company still pulls in enough profit to pay its bills and maintain/grow the newest fleet of offshore rigs of any drilling company in the world.

It is my opinion that this position carries more risk and potential upside than any other position in my portfolio.  In the past 6 months shares of Seadrill have declined 27.66% and I don't know if they will continue to decline meaning I could be trying to catch a falling knife here.  As an engineer I analyze risks every single day and for me personally I am willing to assume the risk at this price point.

I look forward to writing more detailed articles once I have returned back to a more manageable work/life balance.

Seadrill's dividend is currently frozen at $0.98 per share which gives me a yield on cost of 11.88%.  Adding 43 shares I have increased my 12 month forward dividend by $168.56 of ordinary dividend income.  My new yearly dividend income sits at $739.85.  It is not yet half way through the year and I have now reached my original goal of having $700 in forward dividend income by the end of the year.  I am also well on my way to smash through the $900 adjusted goal that I came up with.  At this rate assuming a 3% yield on future investments I will need to invest just over $5,000 in the next 8 months to reach this rate.  My portfolio has been updated to reflect this new purchase.

“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful”

                                                                                                                     -Warren Buffett

Disclaimer:  Long SDRL

Dividend Income Report March 2014

Here we are again, my favorite time of the month.  It's time to report my dividend earnings for March, 2014.  We are just three months into this new dividend investing strategy and already the numbers are beginning to add up.  March was by far my best month yet, here are the results:

Prospect Capital Corp (PSEC):     $11.04

McDonalds (MCD):                        $8.91

Target (TGT):                                $7.74

Chevron (CVX):                             $9.00

Intel Corp (INTC):                          $10.13

This was by far my best month yet!  The grand total for March came in at $46.82.  For the first time I was even able to use some of this dividend money to purchase shares of Kinder Morgan(KMI) which was the second purchase I made in March.  Now for the important part, the breakdown of my spending for March vs dividend income.  

Holy moley is that a green bar I see?!  Prior to this month special equipment (a magnifying glass) was required to see my dividend income compared to my spending.  This month a good pair of reading glasses is all it takes.  We are movin' on up in the world!  This month I was able to cover 2.01% of my total expenses with dividend income alone.  In comparison last month I was only able to cover 0.618% of the expenses.  This is fantastic considering that March was also my most expensive month of the year.  Next month should be another big one as some of my largest positions pay out in April.  Hope you all had a great March!

Disclosure: Long PSEC, MCD, TGT, CVX, INTC, KMI

March Spending Report 2014

March is finally over which means it's that time of month again, spending report time!  My total spending for the month of march came in at $2,326.27.  While I failed to meet my goal of spending less than $2,200 this month I still feel like it was a major success.  My average monthly spending for the last six months has dropped down to $2,315.  Compared to last month's six month average I dropped a total of $90.  My spending can be broken down as follows:

This month contained another massive energy bill ($292) which is really disappointing because I kept my house a chilly 61 degrees Fahrenheit all month.  The month also contained an unusual bill of $400 when I bought a new smartphone/plan with Republic Wireless.  So far the service has been excellent and I absolutely love having a smart phone finally.  This plan drops my future monthly phone expenditure by ~$40.
Finally, I found out this month that the bank has accepted my offer on a house for short sale.  While this will cause me to have a huge spending bill in May (Closings costs, etc.) this should lower my monthly spending by ~$200 not including the equity that will build in the house.  The total home cost is $140,000 at an interest rate of 4%.  It should also provide savings on the energy bill (home built in 2005 with great insulation vs the 1905 house I am renting now)  and it is within walking distance of my work so my commute costs won't change at all.  Once the dust settles I expect to lower my monthly spending significantly meaning more money for investments!   Thanks for reading!

How did you do this March?

March 2014 Bonus Buy

Well it's still March but I couldn't resist making a new purchase (stocks are my comfort food).  One of the benefits of working insane hours (up to 13's now) and graveyard shifts means they compensate well in return. This morning I decided to pull the trigger on 45 new shares of pipeline giant KMI (Kinder Morgan) at $31.89 per share.  This was an investment of $1,435.05.  KMI currently pays out $0.41 per share which works to increase my total yearly dividend by $73.80.  This brings my forward yearly dividend from $497.49 up to $571.29.

This brings me one step closer to hitting my goal of $900 forward dividends by the end of the year.  Right now, assuming a 3% interest rate on future investments this, would require an investment of $10,957 new dollars or $1,217.44 per month for the rest of the year.  I am still hoping to write articles about PM, and KMI to further explain my purchases but for now I will be holding off until time becomes less constrained.

My portfolio has been updated to reflect this new purchase.

Disclosure:  Long PM, KMI

A Penny Saved is a Fistfull of Dollars Earned

Hello again, it's been an extremely hectic week.  Work has intensified immensely and I now find myself working 72+ hour weeks.  While this is great for the pocket book (hello overtime!) my time available to manage Dividendasaur has suffered.  I also recently made on offer on a house.  This offer was accepted by the owners of the house but now awaits final acceptance by their bank (short sale).  Even through all of this madness I have still found a way to increase my invest-able income in the long run.

When I consider monthly spending, one of my favorite things to do is convert that monthly bill into an equivalent lifetime dividend income to see how much the service is actually costing me.  I use a simple conversion (no tax included) to see just how much money I would need to save in order to cover that bill for the rest of my life.  One example of this is my monthly phone bill which I have recently attacked.

Currently I pay $54 per month for a Verizon service which provides me with 1000 texts, 400 minutes and extremely limited data.  I have paid this bill monthly since 2008 and while I have no problem with the service, I know that I can do better.  To analyze this monthly payment I make the assumption that the average dividend paying stock I purchase will provide me with a 3.5% return yearly.  Here is the calculation:

12 months * 54 (dollars/month)  / 0.035 = $18,514

This means that to cover my $54 phone bill for the rest of my life I would need to have $18,514 invested in my portfolio earning a yearly 3.5%.  Well that just isn't very good when my goal is to cover my total monthly spending each month with just my dividend income.

To address this problem I went shopping.  For the cost of ~300 dollars to buy a new smart phone I have decided to try out service with Republic Wireless.  This will provide me with a smartphone for the first time in my life, unlimited talk and text, and data when I am within range of WiFi.  Most importantly it should lower my monthly bill by ~ $44 each month.  This savings requires me to invest  $15,086 LESS money in my portfolio to cover my total phone bill. Now instead of having to earn that extra $44 monthly I have an extra $44  to help the dividend snowball grow.

While I do not recommend Republic Wireless at this time I will be evaluating the service over the next month or two to see if it is satisfactory.  If I am impressed with the service I will likely write a followup post about them as I like to promote frugal services that I personally enjoy/use.

  

March 2014 Stock Buy

It's stock buying time and here are my results for March 2014.  I may need help because it seems like I have an addiction... to tobacco stocks.  This morning I purchased 13 more shares of PM (Phillip Morris) at $80.24/share for a total cost of $1,043.12.  This satisfies my goal of buying at least $1,000 worth of stocks each month, but most importantly PM is currently paying $0.94 per share quarterly increasing my dividend by a total of $48.88 per year for a new forward yearly dividend of $492.09.  

In order to reach my goal of $900 in forward yearly dividends by the end of the year I would need to invest about $13,600 or  about $1,510.8 per month at a 3% return rate.  This is going to be a serious challenge because I have recently made an offer on a new house which if successful will eat into my emergency fund.  If this new house deal goes through I will more than likely stick to my $1,000 per month while I refill the war chest.  Regardless I am confident that I will meet my original goal of $700 per month in forward dividends.

My portfolio has been updated to reflect this new purchase.  

Disclosure:  Long PM

What stocks are you buying this month?

Dividend Income Report February 2014

Hold on to your shorts, we have an exciting dividend income report for February 2014!  One of the downsides of starting this blog so early in my investing career is that there are certain time periods when I will not be receiving much of a monthly dividend income.  Last month happened to be one of those months.  I currently hold no positions in companies that regularly pay in the Feb, May, Aug, Nov cycle.  So without further ado my income for the month is as follows:

PSEC: $11.03
C: $0.10

For a grand total of $11.13.  While this may not be a dazzling sum of money it does represent at least two subway sandwiches worth of income, a valuable prize indeed.

This income represents about 0.618% of my total spending for February a decrease when compared to last months coverage of 0.671%.  You can barely see the tiny green bars peeking out in the graph on the right.  You will also notice a stock which no longer exists in my portfolio.  Before the creation of this blog I sold my entire position in Citigroup in order to purchase assets with a higher dividend payout.  The majority of my positions pay out on the March, June, Sept, Dec schedule so this month should be the largest yet in my investing history, stay tuned!  

February Spending Report

It is that time of the month again, time to report spending for the month of February.  Spending for the month came in at a grand total of $1,863.29.  This meets my goal to spend $2,200 or less every month, and brings my six month average spending down to $2405.13.  Overall my spending for the month was a huge success and hopefully I can continue to decrease this average each month.  I have some big plans for the near future that could greatly lower this monthly spending so stay tuned!  My spending can be broken down as follows:

Compared to my January Spending Report I was able to lower costs in the Bills and Utilities ( $-123.08) and Food and Dining ($-68.60), my Auto & Transport, and Entertainment categories grew slightly but overall I spent $368.04 less this month then last.  I have been extremely busy with work this month (60+ hrs/wk) which really keeps my entertainment spending low.  If my plans work out (they never do as intended) I will be able to lower this total by approximately $414 more each month by June.  All the more money to invest and grow the portfolio!  By continuously auditing my spending each month I am constantly able to find ways to improve.

First Milestone Passed

Today was a pretty big day in the history of this blog.  As of today my investment portfolio crossed the $10,000 mark. While $10,000 is not much to some, for me it is huge.  Just two months ago my path to retirement was murky.  I was storing up my funds in a bank account earning almost nothing for interest.  I was spending money unnecessarily and not putting the funds that I had accumulated to work.  With the decision to start investing and tracking the journey it seems as though a path has materialized in front of me.  I know that if I simply continue to walk on this path that I will find success.

Here is a snapshot of my future financial milestones.  I look forward to sharing with you every time I manage to fill in one of the dates.

While today I hit the 10,000 dollar portfolio value mark, I expect this number to fluctuate above and below this threshold until I make up my mind on which stock to buy for March.  As you can see above I also managed to reach a net worth of $10,000 back around October of 2013.  Below is a graph (from mint) showing this change in net worth since my graduation date in May of 2013.

  It is amazing how quickly being frugal, and saving the majority of your income can add up.  It is also important to remember that investing and saving money is not a competitive race but rather a personal challenge where you are your only competition.  Challenge yourself to spend less than the previous month, constantly audit your budget and find new places where you can save.  Never accept complacency.

Thank you all for stopping in and sharing this moment with me. By taking a moment to recognize the little victories and set your sights on the next goal you will always find the finish line.

Have you passed any of your milestones lately?

Stock Spotlight, Kimberly Clark Corp

Kimberly-Clark is a company that has been on my radar for awhile now as alluded to in my last months stock analysis post.  At the time I decided not to pull the trigger on KMB, instead opting to buy shares of Altria group.  Well, as a new month rolls around and the old war chest is filling up with new spoils I am once again considering this purchase.  I have been holding off on KMB recently hoping for a better entry price but as I sit on the sidelines the stock continues to chug right along leaving me out in the cold.  Lets take a look at KMB and see if it is worth these premium prices.

Kimberly Clark was founded in 1872 and was initially in the paper mills industry.  The company quickly evolved inventing cotton substitutes that eventually led to the first disposable feminine hygiene products.  The company is now famous for its brands which include Huggies diapers, Kotex feminine hygiene products, Kleenex brand tissues, and most recently its expansion into the health care industry.  KMB currently sits on a market cap of $41.73 billion which seats it in the top 20 non-cyclical consumer goods and services industry category.

Quick Stats:

• 52 week range $91.44-$111.68
• Current Price $109.99
• P/E 19.88 
• Dividend $0.84/3.05%
• EPS 5.53
• Inst Ownership 71%

KMB is currently trading near its 52 week and all time high.  It trades with a P/E ratio of 19.88 which is above the industry median of 18.11.  A dividend raise was announced today for KMB marking its 42nd straight year of an increase.  This is an increase of only 3.7% compared to last years raise of 9.5% which could indicate low expected sales growth.  KMB will pay out its dividend on April 2, 2014 with an ex dividend date of March 7, 2014.

While a yield rate of 3.05% does not seem too impressive by itself KMB has experienced tremendous growth rates at the same time.  Over the last five years KMB (growth of 129.18%) has managed to keep close to the S&P 500 (growth of 151%) in overall growth rates while still offering its dividend.  Compared to a company like AT&T which offers a juicy 5.72% dividend yield which has a total five year growth of 51.22% it becomes clear that dividend yield is not the only factor when selecting a stock.  KMB has also outpaced some of its major competition which can be seen below.

Figure 1: KMB's 5 Year Growth vs S&P 500 & Competition

   KMB is currently seeing stagnated growth in the United States but in emerging markets it is experiencing significant growth (6%) in its KC Professional line, (5%) in its personal care line, and declining growth overall in its health care business which is to be spun off (tax free) later in the year.  By removing this burden KMB should be able to focus on its core industry and growing its most profitable segments. 

I believe that KMB is making a good decision by spinning off its healthcare division and getting back to its basics.  I am personally long term bullish on KMB and believe that it will continue to grow its revenue from the emerging markets sector.  I would like to add one or two major consumer goods stocks to my portfolio as to me they are a hedge against any major recession.  While I am not one to predict calamities, one thing that I do know is that even when the markets are down diapers and feminine hygiene products are still required.    

Current watch list  (looking to purchase one in the next 2 weeks): CL, CLX, PG, KMB, JNJ 

What company is your current favorite in the non-cyclical consumer goods and services industry?

Dividend Increase, Coke Bubbling Up More Dividends

Coca Cola (KO) has recently announced that they will be increasing their dividend from $0.28 to $0.305 per share.  This constitutes an increase of 8.9% from their previous payout.  I don't know about you, but getting an 8.9% raise in a year for doing absolutely nothing seems pretty nice to me!  This is the power of dividend growth investing in action.

I personally have 26 shares of coke in my portfolio.  Today's action increases my yearly dividend payout from $440.61 to $443.21 per year.  A total increase of  $2.60.  While this may not seem like much, every single penny counts, and this snowflake just became integrated into my little snowball forever.  I have updated my portfolio to reflect this change.

Beverage Battleground, Coke vs Pepsi vs Doctor Pepper

The Players

Every dividend growth investor is well aware of Coca Cola (KO) and many also track the slightly less popular PepsiCo (PEP).  These two carbonated drink behemoths have been steadily providing juicy dividend growth to investors for years.  While these two brothers battle it out for supremacy of the beverage industry what about their lesser known brother, the often forgotten yet still distinguished Dr. Pepper (DPS) and his sidekick Snapple.

The Champion

Coca Cola was born in the 19th century, created by Pharmacist and Colonel, John Pemberton.  Originally designed as an alternative to the addictive opiate Morphine, Coca Cola was marketed to cure a great number of different ailments.  While not quite the miraculous potion it was touted to be, it managed to cure more than one shareholder of an empty wallet.  From its humble beginnings Coca Cola has been able to propel itself to the head of the beverage industry currently sitting at a market cap of 163.31 billion dollars.

The Contender

PepsiCo also found its beginnings in the late 19th century, created by Pharmacist Caleb Bradham.  While this underachiever did not rise up through the ranks of the military he did create an extremely successful beverage which eventually grew into a beverage and snack company hybrid that currently sits at a market cap of 118.24 billion dollars.  In 2005 PepsiCo managed to briefly dethrone the champ after 112 years of constant battle, eventually losing the throne back to Coca Cola.  Currently the main sources of beverage revenue for PepsiCo is attributed to brands Gatoraid and Tropicana not the original fizzy drink of fame that brought the company its original fortune.

The Challenger

Not to be forgotten, the third leg of the beverage tripod goes by the name of Dr. Pepper.  Dr. Pepper actually preceded Coca Cola by one year with its "Hello World" introduction in 1885.  The good doctor was created by Pharmacist Charles Alderton who shortly after birthing the famed beverage sold the recipe to his business partner to focus on his medical career.  While not as impressive as the other two titans of the industry, Dr. Pepper should not be counted out as it has grown to a noteworthy market cap of 10.09 billion dollars.

Summary Statistics

Values Current as of 19 Feb 2014

From the data presented we can see that both Coca Cola and PepsiCo are considered dividend champions having achieved consistent dividend growth over vast periods of time.  Dr. Pepper initiated its dividend in 2009 and has been a solid grower every year since then. 

 All three companies have a very similar dividend yield, with Dr. Pepper edging out the others at 3.22%  

PepsiCo has the greatest earnings per share and also maintains an extremely aggressive share buyback program which it initiated in March of 2013, pledging to buy 10 billion dollars worth of shares back over a 3 year period.  Both Dr. Pepper and Coca Cola maintain much smaller share buyback programs.  

The P/E ratios of all three companies are very similar with Dr. Pepper taking the edge at 16.66.

As a dividend growth investor, lower (compared to historical value) share prices are not always a bad thing since we tend to buy and hold stocks for very long periods of time to collect the dividend.  As long as the environment of the company has not changed significantly, buying at market lows allows us to reduce our cost basis and increase our yield on cost for a position.  Both Coca Cola and Pepsi had lackluster 4th quarters for 2013.  As such their share prices have suffered in the last few weeks creating interesting buy opportunities.  Coca Cola in particular is currently trading near its 52 week low.  Dr. Pepper reported excellent earnings for this same quarter with share prices reaching historical highs.  

All three companies have a majority of institutional ownership.  Dr. Pepper leads the pack with a whopping 96%.  On one hand this shows that the directors, officers and employees of Dr. Pepper have a high level of confidence in their product.  On the other hand, a major sell off by institutional owners (who often have massive positions within the company) could saturate the market quickly when supply overshadows demand.

The Intangibles 

Russell Wilson didn't recently lead the Seattle Seahawks to Superbowl victory because he is the most genetically superior or experienced athlete on the field. Russell has a characteristic that is difficult to quantify, a fire that burns in his heart so strongly that there was simply no way he could accept failure.  Each of these companies also has an intangible, a characteristic or unique property that sets them apart.  

Coca Cola has charged into the foreign market.  Greatly expanding operations in China and India that could provide the company with billions of new customers.  With billions of dollars invested Coke recently opened its forty-third bottling company in China.  In 2013 Coca Cola managed a sales volume increase of 1% total with 8% and 5% increases in India and China respectively.  Coca Cola also recently acquired K-Cup maker Green Mountain Coffee which could provide an interesting growth opportunity as the companies work together to launch a soft drink portfolio to challenge Sodastream's do-it-yourself soda market.  

When most people think of PepsiCo they immediately think of the sugary beverage that is the namesake of the company.  They often fail to realize that PepsiCo has a much deeper pool of products that are driving its earnings and growth potential.  PepsiCo is the global leader in the savory snack category with a massive assortment of snacks ranging from Life Cereal to Sun Chips.  PepsiCo also has a 10 billion dollar "Good-for-You" product line which includes companies like Naked Juice, Quaker Oats and Aquafina.  With the combined potential of their beverage and snack branches PepsiCo is capable of dominating multiple industries at the same time.  

Dr. Pepper is finally taking steps to join Coca Cola and PepsiCo on the pedestal.  They have recently worked their way into the energy drink industry with the "Venom" line of beverages.  While I'm not sure that drinking Venom is good for you, this product could allow Dr. Pepper to take a healthy bite out of the energy drink market.   They are also making a huge move by expanding on their newer bottling services.  Dr. Pepper has historically outsourced this integral part of their operation to Pepsi (30%), Coke (30%) and other outside services (40%).  One major setback faced by Dr. Pepper is the fact that they do not own rights to their own product outside of North America.  Currently Dr. Pepper products outside of this region are owned by both Coca Cola and Pepsi who purchased the trademark from Dr. Pepper because they have greater capability to distribute the product worldwide.  

Conclusion

These are three dividend growers whose seeds were planted at the same time, in the same soil, but grew into completely different products.  Coca Cola may wear the crown currently, but Pepsi with its retinue of snacks still poses a constant threat.  While Coke and Pepsi turn to foreign lands and new industries for growth, Dr. Pepper has found room to expand and grow at home by increasing its infrastructure.  All three companies offer an interesting opportunity for dividend growth investors and should not be overlooked.   

What is your favorite soft drink company moving forward and why? 

  (I am currently long KO)

  

February Stock Purchase

This morning marked a pretty big event in the history of this blog... my first stock purchase.  As alluded to in my previous entry I decided to make the jump and pick up shares of Altria.  I bought 40 shares of MO at a price of $35.18 per share for a total cost of $1,407.20.  This satisfies my monthly goal to invest $1,000.  Most importantly Altria is currently paying $0.48 per share in dividends, increasing my yearly dividend by
$76.80 for a total new yearly dividend of $440.61.

This purchase brings me closer to my yearly dividend goal of $700.  For the sake of challenge I have decided to alter this goal to attempt to hit $900 of forward dividends per year by the end of December 2014.  With this new goal I have 10 months to increase my dividend by $459.39.  I believe this new goal should provide a more adequate challenge as most stocks I invest in will likely not have a 5.4% yield like Altria.

This purchase weighs my portfolio rather heavily in the tobacco industry with my previous position in Phillip Morris.  Going forward this will be corrected as I choose new stocks monthly and diversify my portfolio more.

Always remember to read my disclaimer before following me in any and all stock purchase decisions.  

Stock Analysis February Edition

The tax man stopped by this month and left me with a little present.  What better to do with a gift then use it to create more smaller gifts every quarter for the rest of my life?  So with this new found capital I have decided to write up my likely stock buy for tomorrow.

Altria Group (MO) is the domestic (US) version of Phillip Morris (PM) (the international version), which provides consumers with tobacco and tobacco related products.  Some quick Altria facts:

• Price to earnings ratio of 15.60 vs the industry average of 19.5
• EPS of 2.26
• Current Yield 5.44%
• Increased dividend 47 times in the last 44 years
• Diversified into the e-cig, smokeless tobacco and wine industries.  

I also speculate that Altria will be a strong play if the US ban on Menthol cigarettes occurs.  This will cause many traditional menthol smokers switch over to new tobacco products.  This move could be devastating to LO where menthol currently accounts for almost 90% of its profits.

But what about your morals!?

My personal stance is that we all own 100% of the shares which make up our body.  What we decide to do with those shares is our own choice.  I personally have many smokers in my immediate family and have lost members to relevant cancer related illnesses.  This does not change the fact that they are adults who don't need anyone to tell them what they can and cannot do.     

Other stocks I am currently considering for my upcoming buy: KMB, TGT, T

What are your favorite dividend stock picks right now?

Goals and Dreams for 2014

Without goals it is too easy to slip into routine.  One way that I stay motivated and moving ever forward is to keep a checklist and attack it vigorously.  It is also important to include a few "low hanging fruit" items because the act of crossing an item off that checklist can provide a huge confidence boost.  When I was going through engineering school I remember being completely overwhelmed by the enormity of finishing the degree, at that time my ultimate goal.  By breaking the monumental task up into ever smaller pieces I was able to digest it one item at a time, eventually leading up to the completion of the ultimate goal.  

Financially my ultimate goal is to earn enough money passively that at any time I would no longer need to rely on a job to survive.  Currently that goal is so far out it seems all but impossible.  But by breaking it into smaller chunks, one investment, one blog post at a time I know that it is achievable.  So without further ado, these are my goals for 2014.

1)  Achieve a forward 12-month dividend of 700 dollars per year.

2)  Invest at least $1,000 in a dividend paying stock each month.

3)  Update this Blog with a new post at least once per week.

4)  Have an average spending per month of $2,200 or less.

5)  Close my darn #2 captains of crush grip strength gripper.  

These goals provide me with weekly, monthly and yearly goals.  Since I am completely new to this it is a bit difficult to fully gauge how realistic my goals are, but I will give them my best.  I am confident that I will look back on this year in 2015 with a smile.  (The gripper will likely kick my butt though)

What are your goals for 2014?

-Dividendasaur

January Spending Report

Spending totals for the month of January were $2,231.  This is slightly below my six month average spending of $2467.  Unexpected expenses during the month included auto licensing and registration and a $319 energy bill to heat the old house I am renting.  My Spending for the month is as follows:

The bills and utilities category includes the $319 utility fee as well as costs for phone and internet service.  In March when my phone contract expires I am hoping to decrease the bill by around $40 per month by switching to Republic Wireless's $10 plan.  This comes with the expense of having to buy a new phone but on the plus side I will join the rest of the people in this decade with a smart phone.  The $121.95 student loan charge will be picked up by Uncle Sam starting in June which is one perk of government work.  My entertainment category was extremely low this month partially because most of my hobbies don't cost money, combined with the fact that I have been very busy at work.

For February my goal is to focus on lowering my food and dining category by using my crock pot and Vitamix blender more often.  This typically forces me to eat more healthy and cost effective food.

New Year, New Beginning.

With the beginning of the new year I have decided to chronicle my journey to financial independence online for the world to see.  I made my first stock purchases in the last days of December, 2013 when I injected almost $8,000 into eight different dividend paying stocks.  My goal is to invest at least $1,000 every month into whichever dividend stock I feel provides the highest value at the time and share with you my journey to financial freedom.  My portfolio is currently:

Portfolio as of January 2014

This results in a forward yearly dividend payout of $363.81.  In January a total of two stocks in my portfolio paid dividends, they include:

PSEC: $11.03

CHK: $3.94

The final tally for dividends earned in
January 2014 was $14.97.  It might
not seem like much but we all have
to start from the beginning.  

This covered 0.671% of my total spending for the month.  If you pull out your magnifying glass you can almost see the tiny green bar.








Hopefully this is the start of a long and rewarding journey.  I do not know if anyone will ever actually read this blog but maybe the process of writing about my personal finance and investment ideas will keep me motivated and on the path to financial independence.

Take care and have a lovely weekend.

-Dividendasaur