Friday, February 12, 2016

Dividend Growth Investing at Work - Pouring Out Larger Dividends!


Something I love about dividend growth investing is that each month I get to hear about companies I own deciding to pay me more money in dividends.  Just for owning a small portion of said companies.  Not going and doing R&D for new products or technology.  Not selling any products.  Not managing any employees or inventory.  Not making sales calls.  All I had to do was have the foresight to invest some of my savings in excellent companies.  That's dividend growth investing at work!  I mean who doesn't like getting a raise for doing nothing?

Wednesday, February 10, 2016

Shifting Focus


Change is about the only thing that we're guaranteed in life.  As many of you know the last year and a half has been a time of big change for my wife and I.  We went from the excitement of her being pregnant, to finding out that our son had a very severe case of CDH, to my wife quitting her job to be with our son every day, to him battling for his life for 8.5 months in the hospital, to lots of medical bills, to me having to take a cut in pay due to the slowdown in the oil field and to me working much less than usual which meant less income.  And that's just the changes I can think of off the top of my head.

As such, financial matters weren't our real focus throughout much of 2015 as there were much bigger issues to tackle.  2015 could be defined as a year of treading water financially to say the least.  We made very little progress on our journey to financial independence, but honestly we were just happy that we were on solid enough financial ground that we were able to tread water and not drown.  We had finally gotten on top of all of our finances by the end of 2015 after neglecting many of the issues that had slipped through the cracks throughout the year.

We were hoping that 2016 would bring much calmer waters, but it looks like that won't be the case.  I'm excited to announce that my wife is pregnant again and we are expecting another child on July 11th.  While 2016 looks to be another transition year for our finances we're just hoping that everything turns out fine with our new child.  Everything was "normal" during the last pregnancy until the 20th week ultrasound which my wife will reach later this month.  We don't really expect there to be any issues, but then again we didn't expect there to be any issues the first time.



Tuesday, February 9, 2016

Calling Up Visa For Cash

Image result for visa logo

Step one in the investment decision process lies in identifying companies that are high quality. Whether that's through their moats, their operational excellence, their cash generation, their growth prospects, their credit ratings, their dividend or any other factors the high quality companies are the source of long term investment gains.

Step two in the investment decision process is where you determine what price you are willing to pay for shares. This is a trickier step because it generally entails making assumptions about future growth and is likely the step that has the most variance among investors.

Some use a ratio of the current price to the 52 low and 52 week high. Others use comparisons to traditional valuation multiples such as price to earnings, price to cash flow, price to book value, dividend yield or just about any other per share financial metric. Still others will use some kind I estimation of future dividends or cash flows of the company and discount them back to the present. Personally, I use a combination of many of these but whatever valuation method you use the end goal is a price target.

Once you've identified a price target you can now move on to the actual purchase of shares, of course there's still plenty of choices for that as well. You can set up a limit order to purchase the amount of shares of the company at a specific price and wait for the price to reach your price target. There's also the options market which is a valuable and often overlooked opportunity to generate extra income.

Continue reading the article on Seeking Alpha.

Also make sure to read my recent analysis of Visa on Seeking Alpha.


You can check out more of my stock and valuation analyses on my Stock Analysis page.

Image source

Monday, February 8, 2016

Visa Inc.: Cash Is King, But Credit's Good Too

Image result for visa logo

Visa Inc. (NYSE:V) is a wonderful company that few can argue about its quality as a company. The business model is excellent. Just charge merchants a percentage of every transaction with no liability for the customers' ability to pay. It's essentially a financial toll road that has excellent growth prospects moving forward.

I initiated a position in the company in August 2013 and have been more than pleased with the results as they are the 5th best performer in my portfolio as judged by internal rate of return. In that time I've received a dividend return of 1.60% and share price appreciation of 48.05%. That's good for a total return of 49.65% with an internal rate of return of 22.49%. As a dividend growth investor the even better news is that the dividend has been increased by 69.70% since I initiated the position.

Visa is a Dividend Challenger with 8 consecutive years of dividend growth. At a price of $71.56 the current yield is 0.78%.

However, that's what it's done for me in the past and has no bearing on the future. Is there any value in the shares at the current prices?

Continue reading the article on Seeking Alpha.


You can check out more of my stock and valuation analyses on my Stock Analysis page.

Image source

Saturday, February 6, 2016

Weekly Roundup - February 6, 2016


Another week down and another crazy week for the stock markets.  The S&P 500 had the following returns this past week -0.04%, -1.87%, +0.50%, +0.15% and -1.85%.  All told it worked out to a 3.10% decline for the week.  It appears that January's poor month has spilled over into February, well at least the first week.  It looks like the markets are being controlled by two major themes/rumors.  One being oil which continues to be a drag with its relentless decline.  And the second being the slowing of the global economy and possibility of a recession coming.  Although as dividend growth investors it's important to focus on what really matters: dividends.  Your dividends don't fluctuate just because the markets are jittery.  If the companies you own are in sound financial shape and even growing operations you should use market fluctuations to your advantage and just collect your dividends while you wait for opportunities.

Thursday, February 4, 2016

Data Mining The CCC List: Wrap Up


Company and sector allocation shouldn't be a concern for investors that are just starting out on their investment journey. However, once a portfolio reaches six figures I think allocation needs to start coming into play. Sector allocation shouldn't be the be all and end all of portfolio construction; however, paying some attention to it is part of the portfolio building process. If you don't believe me just ask how investors that were overweight energy over the last year or the financials in 2008/9 feel about it in retrospect.

Each component of the series can be found here.

Part 1 - The Challengers 

Part 2 - The Contenders

Part 3 - The Champions

Today I want to wrap things up by looking at the CCC list in its entirety and compare my current portfolio to see if there's any changes that I should/could make in order to optimize my dividend growth portfolio. By applying a few filters to the CCC list we can get a general overview of sector allocation among its members to help with allocation decisions for our own portfolios. I wouldn't recommend that anyone try to reach a target allocation based on the CCC list or any other group of stocks. A portfolio's sector allocation is just one concern of the individual investor and should be tailored to meet their own risk tolerance.

Continue reading the article on Seeking Alpha.


Image provided by renjith krishnan via FreeDigitalPhotos.net

Wednesday, February 3, 2016

Dividend Growth Investing at Work - 58 Years of Dividend Growth


Something I love about dividend growth investing is that each month I get to hear about companies I own deciding to pay me more money in dividends.  Just for owning a small portion of said companies.  Not going and doing R&D for new products or technology.  Not selling any products.  Not managing any employees or inventory.  Not making sales calls.  All I had to do was have the foresight to invest some of my savings in excellent companies.  That's dividend growth investing at work!  I mean who doesn't like getting a raise for doing nothing?

Tuesday, February 2, 2016

Data Mining The CCC List: Part 3 - The Champions


This is Part 3 of my series examining the CCC list in regards to portfolio allocation. This article will cover the Dividend Champions as found on the CCC list provided by David Fish that was downloaded on January 12, 2016. Once again, thank you to David Fish for maintaining this vital resource.

Part 1: The Challengers 

Part 2: The Contenders

The Champions are the creme de la creme. In order to reach Champion status these companies had to raise their dividend payouts each year for the last 25 years. That's a huge feat as these companies have been able to consistently raise dividends through all sorts of market and economic cycles. A 25-year streak encompasses the financial crisis in 2008/9, the dot-com boom and bust of the late 1990s/early 2000s, September 11th and a whole assortment of other economic catastrophes of the day.

All charts/images reference data found in the CCC Spreadsheet downloaded on January 12, 2016.

Continue reading the article on Seeking Alpha.


Image provided by renjith krishnan via FreeDigitalPhotos.net

Monday, February 1, 2016

Dividend Update - January 2016


It's the end of one month and the beginning of another so it's time for my favorite update: my dividend update.  These dividend updates reflect all dividends that I receive through my investing pursuits. I hope they can help inspire you to take control of your own finances and invest to build a passive income stream. What you use that stream for is up to you, whether it's to fund early retirement, just provide some FI/FU money, or even to provide for an annual vacation; the key is that it can provide options and open up all sorts of possibilities. You can check my dividend income or progress pages to see what dedication to an investment plan can give you.

Saturday, January 30, 2016

Weekly Roundup - January 30, 2016


Did you really expect anything else to close out what was a crazy month of January?  You just knew that we'd be doing anything but remaining flat over the week.  The S&P 500 added 1.75% for the week and had a whopping 2.48% gain on Friday alone.  Oil staged a comeback as well and is now around $33.74 after rumors of production cuts from OPEC/Saudi Arabia.  I for one would love to see some cuts to increase oil prices and bring about some more stability, and hopefully income, from my day job.  Who knows what February will bring for both the stock and oil markets?

Friday, January 29, 2016

Dividend Growth Investing at Work - Health Care and Real Estate: 2 Great Trends for the Long Term


Something I love about dividend growth investing is that each month I get to hear about companies I own deciding to pay me more money in dividends.  Just for owning a small portion of said companies.  Not going and doing R&D for new products or technology.  Not selling any products.  Not managing any employees or inventory.  Not making sales calls.  All I had to do was have the foresight to invest some of my savings in excellent companies.  That's dividend growth investing at work!  I mean who doesn't like getting a raise for doing nothing?

Wednesday, January 27, 2016

Data Mining The CCC List: Part 2 - The Contenders


In the beginning stages of building a portfolio, company and sector allocation shouldn't be much of a concern. On a $25,000 portfolio an additional $2,000 purchase would represent a 7% weight in the now $27,000 portfolio. At those portfolio levels a purchase can drastically alter the weight given to a specific company or sector.

However, my portfolio is now hovering around the $170k level and as such I think it's much more important to take allocation into account. One idea that I had was to look into the CCC list that David Fish so graciously updates to see if there's any guidance it can provide in regards to allocation for a dividend growth portfolio.

This is Part 2 of my series on data mining the CCC list. You can find Part 1 which covered the Challengers here.

In order to qualify as a Contender on the CCC list a company must have grown dividends each year for at least the past 10 years. Ten years is a significant amount of time in the business world and is generally long enough for at least one full economic/market cycle to come full circle. If a company was able to continue growing dividends throughout the financial crisis in 2008/9 I'm interested.

Continue reading the article on Seeking Alpha.


Image provided by renjith krishnan via FreeDigitalPhotos.net

Tuesday, January 26, 2016

Data Mining The CCC List: Part 1 - The Challengers


Now that my portfolio is quite sizable and fluctuating around the $170k mark, I feel that portfolio allocation, both among individual companies as well as sectors, should play a bigger role in its construction.

One idea I've had to get a rough estimate of how my portfolio should be allocated is by using the trusty CCC list that David Fish so graciously provides for us. Before I go any further I just want to say thank you to David for such a valuable resource.

So the thought that crossed my mind was that maybe I could glean some information from the CCC list in regards to portfolio sector allocation for my actual portfolio. This will be the first of a four-part series where I look at the sector makeup of the Challengers, Contenders, Champions and then wrap it all up by relating my current portfolio allocation to my findings.

The Challengers are the companies that have paid and grown dividends for between 5 and 10 years. These are the companies in the beginning stages of rewarding owners with what will hopefully turn into a decades long streak.

David already provides some analysis on the averages for each list, but I wanted to take it a step further and add in a sector comparison as well.

Part 1 of this series will cover the Challengers. Part 2 will cover the Contenders. Part 3 will cover the Champions and Part 4 will cover the CCC list in its entirety as well as comparing it to my portfolio's current allocation in search of sector allocation optimization.

Continue reading the article on Seeking Alpha.


Image provided by renjith krishnan via FreeDigitalPhotos.net

Saturday, January 23, 2016

Weekly Roundup - January 23, 2016


This past week was definitely not a quiet one for the markets.  Through the close on Wednesday the S&P 500 had declined another 1.1% bringing the YTD decline to 9.0%.  Oil dipped down below $26 during the week as well.  However, things turned on Thursday and Friday with the S&P 500 posting the first back to back gains of the year adding 2.6%.  Oil staged an even more remarkable comeback climbing over 9.2% on Friday alone to get back over $32 per barrel.  We're definitely in an unstable period for the markets but all I know is that the dividends just keep rolling in providing a bit of calm in the storm.  I haven't been able to take advantage of the turmoil so far this year but hope to get in on the action soon.

I had finished up a job last Saturday and was luckily able to stay home until this past Thursday when it was time to head back to work.  Since I work in the oil field there's no declining work right now because who knows when more will come along.  So I'm back to work near my alma mater and even better is it's just a couple hours from home.

Wednesday, January 20, 2016

How Quick Can You Reach Financial Independence?

There's 8,760 hours in a year.  If you're like most people you work a minimum of 40 hours per week and I'll assume there's another 2 hours per day that you spend on either getting ready for work, commuting to work, or de-stressing from work.  That's 50 hours per week minimum that is likely devoted to work related activities or 2,600 hours per year.  A minimum of 30% of every year once you reach working age until you retire is devoted to work.

I think it's quite obvious that we should all find a way to cut that down.  Just imagine what you could accomplish and how much healthier your life would be if you could find a way to support your lifestyle on the income that your investments provide.  That 2,600 hours per year that we spent working could now be devoted to something, anything.  Malcolm Gladwell wrote in "Outliers" that it takes 10,000 hours to become a master of something.  Using just the time that you used to spend working you could potentially become a master at anything in less than 4 years.


Many of you that visit my blog are pursuing financial independence just like my wife and I.  The concept of financial independence largely springs from a desire for freedom.  Freedom to travel.  Freedom to more fully develop relationships.  Freedom to raise your children yourself.  Freedom to pursue causes you're more passionate about.  Freedom to not HAVE to work.

Monday, January 18, 2016

Net Worth Update - December 2015


While cash flow is more important when it comes to financial independence, it's still good to look at the balance sheet too, which is why I provide these net worth updates.  Since more and more of my net worth is tied to the markets, there's a larger correlation between my net worth and the markets but in the long run as I continue to save and invest the net worth trend should be higher even though short term fluctuations can vary wildly.  As a dividend growth investor I'm not overly concerned with the short-term gyrations as long as the dividend stream remains in tact, but the markets' effect is noticeable.

Much like November, December ended up being a pretty bland month in terms of net worth.  The S&P 500 was down around 1.75% during December so essentially a flat month for my net worth again is fine by me since the majority of our net worth is tied to the performance of the stock market.  Although market changes are generally just noise that are typically best to be ignored.  Of course receiving over $840 in dividends and getting three raises to boot sure does help to ease the sting of market volatility.  Dividends are great because they are always a positive portion of return.  For the month our net worth declined by $224.62.

Sunday, January 17, 2016

Weekly Roundup - January 16, 2016


Quick round up this week.

The markets sure are in a sour mood to start off the year.  After being down about 6% through the first 5 trading days of the year the S&P 500 is now down 8% year to date.  If only I had some cash ready.  Luckily though I'm working on getting money moved around in order to restart our Roth IRAs so hopefully sometime over the next couple weeks we can start making the first purchases.

Other than the market turmoil and the noise from the financial media it was a pretty calm week.  I had gone back to work a week ago Friday and it was great because it was only 2 hours or so from the house and about 30 minutes outside of College Station, home of my alma mater Texas A&M University.  I loved getting to be back in the area of where I went to school and even walked around campus a couple days just to check things out.

Friday, January 15, 2016

Dividend Growth Investing at Work - The First Raises of 2016!


Something I love about dividend growth investing is that each month I get to hear about companies I own deciding to pay me more money in dividends.  Just for owning a small portion of said companies.  Not going and doing R&D for new products or technology.  Not selling any products.  Not managing any employees or inventory.  Not making sales calls.  All I had to do was have the foresight to invest some of my savings in excellent companies.  That's dividend growth investing at work!  I mean who doesn't like getting a raise for doing nothing?

Wednesday, January 13, 2016

Jackpot!


I don't think there's anyone, in the U.S. at least, that hasn't heard about the $1.3 $1.4 $1.5 B Powerball lottery that will be drawn tonight.  That's right a B not an M.  A 1 and a 5 and then 8 0's.  I don't normally purchase lottery tickets because it's a tax on people that can't do math, but $1.5 B has me intrigued so I went ahead and threw $10 at it.  Just in case.

I know that the odds of my wife and I winning the Powerball are slim to none*.  Well, probably closer to none to none, but that $10 won't break us and who doesn't like to dream a bit.  Of course the $1.5 B is actually closer to $930 M if you take the cash instead of the annuity and you'll actually only take away about $560 M after the government gets it's cut.**  But I think we would be just fine with a $560 M lump sum.

That kind of money is life changing and would quickly throw us into the upper echelon.  Although I have a feeling that we'd never rub elbows with them.  While my wife and I don't lack much of anything and overall I'd say our lives are around an 8 out of 10 on an arbitrary happiness/contentment scale.  Overall we're quite happy but seeing as how I'm at work as I write this and my wife will be getting up in a few hours to head to work as well, we don't own our time.

Tuesday, January 12, 2016

Dividend Update - December 2015


It's the end of one month and the beginning of another so it's time for my favorite update: my dividend update.  These dividend updates reflect all dividends that I receive through my investing pursuits. I hope they can help inspire you to take control of your own finances and invest to build a passive income stream. What you use that stream for is up to you, whether it's to fund early retirement, just provide some FI/FU money, or even to provide for an annual vacation; the key is that it can provide options and open up all sorts of possibilities. You can check my dividend income or progress pages to see what dedication to an investment plan can give you.

Saturday, January 9, 2016

Weekly Roundup - January 9, 2016


The new year is in full swing and I've been taking the time to relax, read, and research.  After being gone for work for 33 days until just before the end of 2015 and finally getting some time off I decided to take a break from the blog for a couple weeks.  I was able to make it home a couple days after Christmas and while I missed the day I didn't miss the family.  Some of my family was out of town over Christmas so we did a big Christmas and birthday celebration on New Years Day.  It was great getting to see everyone which unfortunately happens much less often than I'd like.

Since my work schedule is very unpredictable I tend to slack on the writing whenever I'm home if I don't already have posts lined up because I stay busy with taking care of the "honey do" list and trying to see as many family and friends as possible.  And of course relax a bit.  Despite the large decline in the price of oil, work hasn't slowed down too much for me which is both a good and bad thing.  Although there won't be too many complaints from me because I'm thankful to have survived the layoffs thus far and to still have a job.

Wednesday, December 30, 2015

New Year, New You, New Goals


2015 is winding down and 2016 will be in full swing before we know it.  This past year was very crazy for my wife and I and we're both ready to move forward into 2016 and get back on track.  Financially it was fairly difficult and we ended up taking some steps backwards on our road to financial independence but we would have gladly taken much bigger steps back if it would have meant things would have turned out differently.

The new year is traditionally the time when people make resolutions for the coming year.  Typically resolutions center around health and wealth; however, if you ask the average person about their resolution there's very little meat to them.  A typical answer is something along the lines of lose weight, save more, or something else that is just too broad to keep their focus for more than a few weeks.  That's why you'll see the gyms packed in the first days of the new year but slowly see the headcount drop as the month marches on.