Sunday, April 27, 2014
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
Thursday, April 17, 2014
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
Friday, April 11, 2014
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
Sunday, April 6, 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
Tuesday, April 1, 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?