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?