Monday, September 1, 2014

Dividend Update - August 2014


August was a great month for dividends and was my first non March/June/September/December month to surpass $300.  These dividend updates reflect all dividends that I receive through my investing pursuits and I hope 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 opens up all sorts of possibilities.  You can check my dividend income or progress page to see what dedication to an investment plan can give you.

Sunday, August 31, 2014

Weekly Loyal3 Purchases

Earlier this month I started a new portfolio through Loyal3 and what I really like about it is the opportunity to dollar cost average into positions for free.  That's right no commission costs.  And the fact that you can purchase shares using your credit card is just icing on the cake.  That's an extra 1% "yield" through the cash back rewards I get with my credit card.  Not bad for getting to invest capital that I'd be looking to invest anyways.

I was a lot more active this week with purchases in this new portfolio since there wasn't a whole lot of value that I saw to make outright purchases.  That's just fine by me since I can slowly build up positions over time in some great companies.  Last week I invested $100 through Loyal3.

Saturday, August 30, 2014

Weekly Roundup - August 31, 2014

The S&P 500 crossed 2,000 for the first time this past week which is an amazing feat considering where it was 5 years ago.  With new all-time highs in the markets there's been more and more people calling for a major correction to come soon.  I know this past week I heard someone on the financial news shows (yes I do watch them but ignore 99% of what they say) saying that a 50% correction is just around the corner.  Is it?  I have no idea but I have a feeling that as long as there's still the constant calls for a major correction it's probably not going to happen.  But dividend growth investors don't buy the whole market.  We select individual companies trading at good valuations so despite the record highs and elevated valuations for the market in general there's still pockets of value.

Tuesday, August 26, 2014

The Best of Both Worlds: Put Options

Obviously the most important part about investing is finding the truly great companies that have the ability to grow profits and dividends for decades on end.  Once you identify those companies through a qualitative analysis the next step I like to take is a fundamental analysis to determine what a "fair value" for the company's shares is.  After you determine what price you'd be willing to pay for the future growth and income stream that a company provides you can see where the current share price lies on the value spectrum, i.e. whether shares are under, fairly, or over valued.  There's two ways to enter into a position, you can either purchase shares outright or you can write/sell put options.  My preferred method is open market purchases but sometimes the value just isn't there and put options give

By selling a put option you are selling someone the right to sell shares of a company at a predetermined price.  Now no one is going to give up their "option" for free so in return the seller receives an option premium.  We'll use Coca-Cola (KO) (Full Analysis Here) since shares are currently trading for about a 1.50% premium to my fair value calculation of $40.75.  If I'm a stickler for not paying more than what I deem to be a fair value price then Coca-Cola wouldn't be a possibility right now unless I use put options.  Let's look at the options that expire September 26th.

Monday, August 25, 2014

Harris Corporation (HRS) Increases the Dividend

This morning Harris Corporation (HRS) announced an increase in the quarterly dividend.  The payment increased from $0.42 to $0.47 or 11.9%.  The new dividend rate is payable on September 23rd to shareholders of record as of September 9th.  This increase is now the 13th consecutive year of increasing the dividend.  The new dividend would be a 38.7% payout ratio based off the analyst estimate of $4.86 EPS for FY 2015 which leaves plenty of room for future growth.  Even better is that the FCF payout ratio using the new payment is only at 31.9% based on FY 2013's FCF numbers of $5.89 per share.  Click here to see the press release.

Since I own 82.506 shares of HRS this increased my annual dividends by $16.50 and increases my YOC to 4.01%.  Dividend growth investing in action!!!

My forward 12-month dividends are now $4,983.31 which is 99.67% of the way towards my goal of $5,000 by the end of the year.  A couple more dividend increases or another purchase and I'll pass my goal.  With 4 full months left in the year I'll smash my original goal and have to set a new one.  Great problem to have!

Sunday, August 24, 2014

Weekly Loyal3 Purchases

I recently started a new portfolio with Loyal3 and I'm working on building up a portfolio through dollar cost averaging into some really great companies.  Due to the batch trading that they do I don't really have a lot of control over the purchase price but the no fee investing more than makes up for that.

I had two purchases go through this week.  On Wednesday, August 20th I had an order for Mondelez International (MDLZ) and VF Corporation (VFC) go through.  The starting yields on both are pretty low but I'm fairly confident that both will provide dividend growth rates well above inflation for decades to come.
  • MDLZ - 0.6968 shares @ $35.88 / 1.67% YOC / $0.42 annual dividends
  • VFC - 0.3925 shares @ $63.70 / 1.65% YOC / $0.41 annual dividends

Saturday, August 23, 2014

Weekly Roundup - August 23, 2014

I've been off work for 1.5 weeks now but today I'll be heading back.  Time to go make some money.  Now don't get me wrong I much prefer to be home but we aren't close to financial independence yet so I have to grind away.  It was great to be home and last weekend we had the gender reveal party, IT'S A BOY!, and then my wife and I and some friends went to the Soundgarden/Nine Inch Nails concert.  That made for a long day but it sure was fun.

After making at least one purchase each of the last four weeks I took a breather this week.  Although I didn't see a whole lot of value but I am looking into another insurer, Chubb Corporation (CB).  I hope to make a purchase of something next week though because I still have a good amount of cash waiting to be invested and with the month coming to an end there's about to be some more savings available.  I did make two small purchases though but definitely not needle movers.  The purchases were made in my new Loyal3 portfolio and I'm excited to dollar cost average into positions there.  With Loyal3 you can Buy Stocks Fee-Free$0 fees to buy and sell stock.Open a free online account today. (Affiliate Link) or Loyal3 (Regular Link).  The options are a bit limited but there's still plenty of great dividend growth companies to choose from.

Friday, August 22, 2014

How To Get Someone Started

I'm sure we all know someone that could benefit from embracing the dividend growth strategy whether that's a family member, close friend, coworker or anyone else.  With the first cousin that was born after me graduating high school a few months ago and starting college in just a few weeks I figure he's prime to take advantage of the power of compounding.  Even if he starts now at 18 that'd be about 10 extra years of compounding and dividend growth to get him started down the right path to financial independence if he so chooses.

Obviously there's a lot behind investing in individual companies.  There's a lot more risk than investing through index funds/ETFs and in order to mitigate that risk and keep from selling just because of share price movements he would need to commit to research and learning how to invest properly.  I'd point him in the right direction with a few books and of course a lot of the wonderful dividend growth investing blogs for starters.  And any help mentoring or being a sounding board or anything else.  If you're going to get someone started then I think you have to be available to help guide them along until they are ready to go on their own.

Wednesday, August 20, 2014

Life Can Change In An Instant

Starting at the beginning of this year my wife and I didn't exactly start trying to have a child but we stopped not trying.  It finally felt like the time to start working towards adding to our family.  Even though I expected for us to find out the good news the gravity of the change didn't really sink in until one day in May.  Around the middle of May my wife had an appointment scheduled and luckily things worked out with my work schedule that I was able to go with her to that appointment.  We got the news that we had been expecting and it was a huge emotional roller coaster.

Just finding out news that I'm now fully responsible for the care and well-being of another person is a bit overwhelming and changes your perspective on things.  Coupling the emotions of that news with the issues my grandfather was going through at the time made it kind of bittersweet.  For those that don't remember, my grandfather had fallen and broken his left hip and left shoulder.  That was a truly wild ride because my wife and I didn't feel that the time was right to share our good news with my family because the focus really needed to be on the well-being of my grandfather who was in bad shape.

Monday, August 18, 2014

Recent Buy

Whenever I make a new purchase for my portfolio I feel it's only fair to get a post written giving all of the juicy details. I want to be as transparent as possible with my journey to reach financial independence through dividend growth investing. Being open about the moves I make allows for better discussion with all of you and helps spread ideas around as well as letting me create my own "investing journal" to chronicle why I purchased a company in the first place and that way I can revisit if something changes and make the decision on whether to continue owning the company or not.

Saturday, August 16, 2014

Weekly Roundup - August 16, 2014

Quick update because it's late and I need to get to sleep.  I initiated 5 new positions for me this week, although 4 of them are really small at just $25 each so far.  I started positions in Disney (DIS), Apple (AAPL), Google (GOOGL), and Berkshire Hathaway (BRK-B) as well as a much larger position in a company I've been eyeing for a while.  I'll get a post up about the newest position early this coming week.  Make sure you follow me on Twitter@JC_PIP to get nearly up to the minute information of new purchases that I make for my portfolio.

Thanks again to each and every one of you that stopped by, commented, or shared posts from Passive-Income-Pursuit this past week.  I truly appreciate it and if there's ever anything I can do or write about to help you out then feel free to ask.

Friday, August 15, 2014

I Finally Did It

A few months back I wrote about some alternative brokerage options.  My portfolio is now getting to be pretty hefty at over $160k and I've been looking at possible brokerages to further diversify my holdings.  There's no sense in having everything held at just one brokerage firm just in case the brokerage has any issues that keeps you from having access to your investments while the problems are sorted out.  I discussed a few different options each with their own advantages and disadvantages.  I've been pretty interested in Loyal3 for a while now and finally decided to go on and open an account.  The biggest positive with Loyal3 is that all trades are fee free.  That's right no commission.  Although I've grown more comfortable with the long term viability of their business model it's still something to watch closely for potential changes in the fee structure.

Wednesday, August 13, 2014

The Evidence for Dividend Growth Investing

This following post is written by Ben Reynolds, who runs the Sure Dividend site. Sure Dividend focuses on high quality dividend growth stocks suitable for long-term investing.

Dividend growth stocks are an excellent vehicle to build passive income over time. The idea of owning businesses that pay you more money year after year has a certain appeal to those in pursuit of passive income. Not only do dividend growth stocks give you a raise year after year, they have also historically outperformed the market. The Dividend Aristocrat Index is made up of businesses that have raised their dividends for 25+ consecutive years. The Dividend Aristocrat index has outperformed the S&P500 by 2.41 percentage points per year over the last decade.
Source: S&P500 Dividend Aristocrats Fact Sheet

Dividend Aristocrats & Quality

The Dividend Aristocrat index is full of high quality businesses with a long history of success. Some examples are Coca-Cola (KO), Wal-Mart (WMT), PepsiCo (PEP), 3M (MMM), and Johnson & Johnson (JNJ). There are 54 businesses in the Dividend Aristocrats Index. You can download a full list of current Dividend Aristocrats sorted by dividend yield, growth rate, and P/E ratio right here. Not only do Dividend Aristocrats have a long history of profitable growth, they also tend to have higher profitability on average. The average return on assets (ROA) for the S&P500 is 7.23%, compared to 9.58% for the average Dividend Aristocrat stock.

Tuesday, August 12, 2014

Liebster Award Nomination


Last week I was nominated for a Liebster Award by both Asset Grinder and Roadmap2Retire.  Thanks so much for the nomination guys!  The Liebster Award is a given to bloggers by bloggers in an attempt to learn more about them and their blog.  I really like getting to know the story behind the blog so the Liebster Award really helps with that.  If you're nominated for the Liebster Award you're supposed to answer the questions given to you from the nominator and then nominate five other bloggers for the Liebster Award and give them five questions of your own.

Monday, August 11, 2014

Recent Buys

Whenever I make a new purchase for my portfolio I feel it's only fair to get a post written giving all of the juicy details. I want to be as transparent as possible with my journey to reach financial independence through dividend growth investing. Being open about the moves I make allows for better discussion with all of you and helps spread ideas around as well as letting me create my own "investing journal" to chronicle why I purchased a company in the first place and that way I can revisit if something changes and make the decision on whether to continue owning the company or not.

Saturday, August 9, 2014

Weekly Roundup - August 9, 2014

This past week was pretty crazy and honestly it was a really tough week.  It started off good enough with the same old routine of finish up one job, drive home, do some paperwork, then spend some time with my wife.  I love when the summer is in full swing and she's not working, she's a teacher, so we can spend all day every day together when I actually get a chance to be home.  She's one of the biggest reasons why I'm working towards reaching FI as quickly as possible.

On the investing front the S&P 500 was up slightly on the week but it was anything but a smooth ride.  Essentially all of the gains were made thanks to a very good day yesterday that saw the index gain 1.15% from Thursday's close.  Although a grumpy or fickle Mr. Market is great news for long term investors.  Last week I added to positions in Realty Income, General Mills, Verizon and Wal-Mart to help boost up my dividends and get some idle capital to work.  I also went ahead and added to 2 more positions this week that were long overdue to have further investments made.  That post will be up early this coming week, most likely Monday.  If you want to stay on top of the latest purchases, in almost real-time from the trade execution, then make sure to follow me on Twitter@JC_PIP.  There's still a few other positions that I'm looking to add to and hopefully I can do so this week.

Friday, August 8, 2014

Net Worth Update - July 2014

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.  The S&P 500 was down 2.16% during July although the real action came on the last day as the S&P 500 saw a 2.00% drop sparking worries of a correction being underway.  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 and for July my net worth suffered.  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.  I had just under $5,700 in after-tax savings from my paycheck, almost $900 in ESPP contributions, and just over $1,200 in 401k contributions counting the employer match.  The rest of the changes were due to dividends received and changes in the stock market.  All in all July saw a $5,412.25 decrease in my net worth.  Yikes!

Wednesday, August 6, 2014

Income Update - July 2014

I'm a big proponent of tracking every single penny that comes into your hands if you're really wanting to make a change to your finances.  Mental accounting is too difficult to keep track of and the mundane everyday expenses get forgotten.  Once you keep a detailed history you can see that you're really spending $400 per month on restaurants or $100 on coffee or whatever little expenses that are fine by themselves but add up quickly to destroy a budget.  This is why I like to keep track of all of my expenses to help keep myself accountable and looking to see what areas I'm just plain doing poor in.  If you want to improve your finances, then please track everything for a 3 month span and then take action to make positive changes.

Monday, August 4, 2014

Recent Buys

Whenever I make a new purchase for my portfolio I feel it's only fair to get a post written giving all of the juicy details. I want to be as transparent as possible with my journey to reach financial independence through dividend growth investing. Being open about the moves I make allows for better discussion with all of you and helps spread ideas around as well as letting me create my own "investing journal" to chronicle why I purchased a company in the first place and that way I can revisit if something changes and make the decision on whether to continue owning the company or not.

Mr. Market was in a sour mood to close out July and had the worst weekly loss in two years with the S&P 500 dropping 2.0% on July 31st alone.  That's just fine by me though as I had plenty of capital that I was ready and willing to put to work.  As a long term investor drops in prices don't concern me as long as the fundamentals of the company remain in tact.  So I took advantage of the dip to close out the month and added to three positions.

Saturday, August 2, 2014

Weekly Roundup - August 2, 2014

Well this past week was just grinding away in the blistering heat down here in south Texas.  Luckily I don't actually work outside but man it was extremely hot.  We should be able to finish this well up sometime this weekend and I can't wait to get back home and spend some more time with my wife.  I'm not sure what all we'll be up to but I want to take advantage of her last few free days before the next school year really starts kicking into gear.  I'm also glad to report no big expenses this past week so that is very good.

What a difference a week makes.  The S&P 500 was down 2% on the last day of July and the DJIA retreated about 1.8%.  That makes for a happy investor especially since both indices were already a few percentage points off their recent highs.  I was quite busy over the last week or so by adding to my position in Realty Income (O) and then adding to 3 positions on Thursday, write up on those coming early next week.   I just tallied it up and I invested over $9k in July which was quite surprising to me because I didn't think it was anywhere near that.  I've still got a lot of capital to put to work though so hopefully the markets continue to sour.  I'm very happy to announce that with dividend increases and the new purchases I made in July my forward 12-month dividends are now up over $4,800.  I've got my eye on a few more companies to purchase during August, of course there's no telling what Mr. Market will do.  I actually had to log out of my brokerage account because all of that red on Thursday.  Not because there was so much red but there were lots of companies moving into the high ends of my buy ranges and I had to keep from going through my whole stash.  Got to keep some powder ready, right?

Friday, August 1, 2014

Dividend Update - July 2014


July was fairly steady as she goes as far as dividends with just a slight increase from April but progress is progress.  These dividend updates reflect all dividends that I receive through my investing pursuits and I hope 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 opens up all sorts of possibilities.  You can check my dividend income or progress page to see what dedication to an investment plan can give you.  I was able to set a personal best in dividends received during March which is great motivation and helps to keep me on track.

Thursday, July 31, 2014

Recent Buy

Whenever I make a new purchase for my portfolio I feel it's only fair to get a post written giving all of the juicy details. I want to be as transparent as possible with my journey to reach financial independence through dividend growth investing. Being open about the moves I make allows for better discussion with all of you and helps spread ideas around as well as letting me create my own "investing journal" to chronicle why I purchased a company in the first place and that way I can revisit if something changes and make the decision on whether to continue owning the company or not.

Earlier this week I wrote about another rental propportunity that I happened to find.  Given the right property in the right location you can generate a lot more cash flow on a monthly basis by investing in real estate.  However, my big concern with going that route is being adequately diversified.  The approximate $25k that I'd need for the downpayment on that property would only net me on property and require the use of debt or I could continue to build ownership stakes in 5-10 companies.  Since I'm still a little undecided on rental properties as an option right now, I still like to invest in real estate investment trusts (REITs).  So yesterday I added to one of the best run REITs out there, Realty Income (O).