Wednesday, July 30, 2014

What's Your Weight?

No I'm not asking you to divulge your body weight, although if that will help you with any weight loss goals you have feel free to do so.  The weight I'm referring to has to do with your portfolio.  I think we all understand the importance of diversification, especially for those looking to live off the dividends your portfolio churns out.  You don't want to be left owning a few companies or a be highly concentrated in one segment of the economy as we all know how that worked out for those that were heavily invested in the finance sector during 2008/9.

Most dividend growth investors that I've spoken with agree on the importance of diversification and fall somewhere in between wanting to own 20-50 companies in their portfolio.  I currently own 41 companies and I'm trying to really focus on building positions up rather than continually expanding into new positions.  So when it comes to diversification you can either weight your portfolio based on capital value or on dividends paid.  In a perfect world all companies would pay the same yield to make this a lot easier but we have to work with what's available.  I created a chart showing the weighting of my taxable portfolio based on current capital value and on the dividends each position provides.

Monday, July 28, 2014

Another Rental Propportunity

One of my goals for this year was to purchase a rental property to further diversify my passive, well semi-passive, income sources.  After the first quarter of the year I figured it probably wouldn't be a realistic option because there's a lot of obstacles to overcome given my work schedule.  It had been a while since I looked at potential real estate investments but earlier this month I decided to browse around a bit on the internet and found a really great opportunity.

Based on the pictures I found online the property looks to be in pretty good shape.  There's laminate wood flooring throughout with newish appliances.  The previous owners had added on an extra room that added an extra 342 sf to the house which is essentially a second living room.  I used to live in this same neighborhood before my wife and I bought our own house and the area is in a great location with easy access to two main highways.  It's a small neighborhood off on it's own and isn't the greatest of neighborhoods but would probably be considered a B/C neighborhood.

Saturday, July 26, 2014

Weekly Roundup - July 26, 2014

Another week of being home for a while and then heading back to work.  Although I think I'm glad to be back at work so I can finally get some rest.  My wife and I were busy just about the whole time that I was home.  Saturday was spent painting, well picking up some small test paint samples and painting, and running errands.  Sunday we spent most of the day with my grandparents; giving my grandmother a break and helping out with my grandfather.  He's back home now but still has a ways to go.  Monday we ran some other errands that I can't even remember what we all we did and then bought a new car for my wife.  An Acura RDX if you're interested; a bit more expensive that I really wanted to spend on a vehicle but hers was old and starting to break down and she really wanted it.  We were debating between the Hyundai Santa Fe and the Acura RDX but went with the RDX because it drove better and had a few more features she wanted for about $5k more from the quote we got on the Santa Fe.  I figured since she has to deal with me being gone a lot she deserved a bit of a luxury in the meantime.  Tuesday we spent a solid 5.5 hours cleaning out our garage.  It was still a big mess from when we moved last year and it feels great to finally get it cleaned out and organized.  Then it was back to work.  So it was a pretty busy week in general.

Friday, July 25, 2014

Recent Buys

Man it feels good to be back and adding to my forward dividends.  It was 1 month exactly since I made a purchase so it's been a long time coming.  I guess the main reason is that my attention was being pulled in a million different directions so it was hard to focus on any specific one.  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.

Wednesday, July 16, 2014

2014 Goals - 1st Half Update


Time keeps on slippin', slippin', slippin' into the future.  Somehow the first half of the year is already over.  It seems like just a few weeks ago I was reporting on my progress for the first quarter and now another quarter is over and done with.  I think it's important to set specific, measurable goals at the beginning of each year to keep you focused and motivated towards hitting your goals.  It's important for them to be measurable so you can see exactly how you're progressing.  Back in January I set several goals covering budgeting, savings, investing, blogging, and personal goals, so it's high time I take a look and see how I'm doing.

2014 Budgeting Goals - 1st Half Results
Goal 2014 Amounts Status
Grocery spending < $200 per month $223.70 Needs Improvement
Restaurant spending < $110 per month $106.76 Needs Improvement
Average monthly expenses < $2,350 per month $2,638.12 Needs Improvement

Tuesday, July 15, 2014

Reynold's American (RAI) to buy Lorillard (LO)

This morning it was announced that Reynold's American (RAI) would buy methol cigarette maker Lorillard (LO) in a deal valued at $68.88 per share.  If the acquisition is approved then LO shareholders will receive $50.50 in cash for each share of LO and 0.2909 shares of RAI at closing which is projected to take place in 2015.  I was quite surprised to see that shares of both LO and RAI sold off pretty hard on the news with RAI losing 6.9% on the day and shares of LO losing about 10.5%.  Pretty surprising considering that when talks of a potential merger/acquisition surfaced shares of LO had increased strongly on the rumor.

The deal could definitely face some headwinds due to regulatory and anti-trust concerns and could therefore fall through.  If the merger is given the green light then the new company will be divesting some of the smaller brands to the British tobacco company Imperial Tobacco.  What was really surprising to me is that one of the brands that will be sold off is the Blu e-cigarette that Lorillard currently owns.  Blu is the leader in the e-cigarette market and I don't understand why you would want to get rid of that even if RAI is coming out with their own e-cig called Vuse.  This is the most baffling piece of information about the merger, at least to me.

Can Johnson & Johnson Cure What Ails Your Portfolio?

Johnson & Johnson (JNJ) is well known around the dividend growth investing community with over 50 consecutive years of dividend increases. Chances are there's Johnson & Johnson products in your medicine cabinet right now and if you've ever had to take prescription medicine or had a medical procedure you've most likely used its products even if you didn't know it. Johnson & Johnson is a diversified giant in the health care industry. Johnson & Johnson closed trading on Friday, July 11th at $105.10 giving a current yield of 2.66%.

Discounted Earnings: 

Analysts followed by Yahoo! Finance expect Johnson & Johnson to grow earnings 6.96% per year over the next 5 years and I've assumed they can grow at 5.22% (75% of 6.96%) for the next three years and at 4.00% in perpetuity. Running these numbers through a discounted earnings analysis with a 9% discount rate and summing over 30 years yields a fair value price of $111.61. This means the shares are trading at a 5.8% discount to the discounted earnings analysis.

Click here to read the rest of the analysis on Seeking Alpha.

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To check out previous stock analysis reports check out the Stock Analysis page.

Monday, July 14, 2014

Net Worth Update - June 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 up again this time adding 1.9% during June.  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 May a rising tide lifted all boats.  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 $4,000 in after-tax savings from my paycheck, around $560 in ESPP contributions, and just over $770 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 June saw a $10,723.85 increase in my net worth.

Sunday, July 13, 2014

Weekly Roundup - July 13, 2014

As most of you know I was on vacation in Nashville over the past 1.5 weeks and it was awesome.  It's always great to get some time to go have fun and see some good friends.  Even better was that we happened to be vacationing over the July 4th weekend which meant there was lots to do.  We went to the hot chicken festival which was good although it did involve standing in a bunch of lines.  It was definitely worth it although I wish we could have tried more than one company's hot chicken.  Hot chicken, for those that don't know, is a local specialty in Nashville that is exactly what it sounds like spicy friend chicken.  We only got to try out Hattie B's and it was delicious.  With July 4th happening we also got to go enjoy the second best fireworks display in the nation as rated by the American Pyrotechnics Association.  There were over 30,000 fireworks set off in less than 30 minutes which is pretty cool if you like watching fireworks displays.  We were also looking for things to do on Monday and for anyone that likes puzzles and is in the Nashville area or where they have other places like this I'd highly recommend it.  We went to the Nashville Escape Game and did the Underground Playground room.  The four of us and 10 other people were locked in a room (claustrophobes don't worry you can leave if you want) and had to solve a series of puzzles in order to try and "escape" the room.  It seems a bit expensive at $28 per person for 1 hour but it was definitely a lot of fun.  We also did a little bit of geocaching (a great cheap entertainment) near our friends house and finished with a trip to Arnold's and the Johnny Cash Museum.  Arnold's Country Kitchen is a meat and three (sides) restaurant that has honestly some of the best chicken and dumplings, mashed potatoes, green beans and the best collard greens I've ever eaten.  Go there if you're in Nashville for whatever reason.  You won't be disappointed.  But get there early because the line starts forming before place opens.

So I was quite busy with everything we tried to pack into our trip and then coming back home to get a few things done before heading back to work.  Since then I've been back to the grind and trying to find places to invest some capital.  Unfortunately that didn't happen this past week but the markets have been a bit more choppy lately so there's always the possibility for some better valuations on the horizon.  I didn't get a lot of writing done but I'm working on that for the next week or so.  I've got some stock analysis reports to get written up and hopefully posted soon in case we do get that elusive pullback.

Friday, July 11, 2014

Income Update - June 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.

Saturday, July 5, 2014

Weekly Roundup - July 5, 2014

My wife and I flew in to Nashville to see some friends of ours and man the change in weather alone is worth the trip.  Instead of 95+ with 90% humidity we're looking at some mid-80's temperatures.  Perfect weather to be outside.  I'm not really sure what all is in store for our time here but I know it's going to be awesome.  One thing I'm definitely looking forward to is the fireworks display on July 4th.  Back to the future right?  It's ranked the 2nd best in the nation and I can't wait to see it.  Other than that it's going to be relaxing and doing whatever we feel like doing.  Enjoy the time with family and friends this holiday weekend.

I didn't make any purchases this past week, although it was a holiday shortened week.  I came close to making a few buys but we got some good jobs report numbers and a much better mood from Mr. Market which quickly shot some companies away from my buy zones.  Oh well, eventually there will be other opportunities to add to great companies.  I did recently add to my position in both Procter & Gamble (Full Analysis Here) and Deere & Company which you can read about here if you're interested.  The really exciting thing was getting to tally up all of the dividends I received in June though.  I passed the $600 mark for the first time which was awesome.  It's amazing to see the dividends growth month after month.

Friday, July 4, 2014

Happy 4th of July!



Happy 4th of July to all of you!  I'm so blessed to live in a country where I have the freedom to pursue just about anything that I want to go after.  I'm also so glad to be in a position to pursue financial freedom.

Safe travels to all of those that are travelling.  My wife and I left yesterday to go to Nashville for about 6 days.  It's a very much welcomed bit of relaxation and a chance for me to recharge my batteries a bit.  Enjoy the fireworks if you're checking them out this holiday weekend and have a great day with your family and friends!

Photo credit: FreeDigitalPhotos.net

Thursday, July 3, 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.  I'm a bit late on getting these out but better late than never.

Wednesday, July 2, 2014

Dividend Update - June 2014


June was a solid month for dividends and pretty much steady as she goes.  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.

Sunday, June 29, 2014

Weekly Roundup - June 29, 2014

I can't believe that we're almost half way done with 2014.  Time is just flying by although that just continues to reinforce my desire to reach financial independence.  This past week was awesome though as we finished up the well we were on and we had also reached a pretty rare and significant milestone.  The guy that's been working nights for me for the last year and I reached one year of having no tool failures.  Essentially this has never happened before or at least very rarely has happened.  So my boss, my boss's boss, and 2 of my boss's boss's bosses took Francis and I out to lunch on Friday.  It was pretty awesome to get recognized for a job well done and even better was that the steak house we went to was absolutely delicious.  As we were leaving I told them that we'd see them again in 6 months.

Thursday, June 26, 2014

Semi Recent Buy and Two Recent Sells

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.  I normally try to get these posts out within a day or two but between work and being sick I've had very little energy the past week and a half.  I'll quickly run through these moves and give my thought process on each one.

Sunday, June 22, 2014

Short Term Price Movements Are Not Indicative of Value

In late February I posted a stock analysis over at Seeking Alpha where my conclusion was to wait for lower prices.  The company was undervalued on a relative basis against its competitors but it seemed a bit overvalued on its' own merits based on my analysis.  It wasn't grossly overvalued but it was trading higher than my fair value calculation and I felt that there were better values to be had at the time.  Thus my conclusion was to wait for a small retreat in the share price to give better value for the long term investor.

I've received a bit of criticism because between then and now the share price has increased about 16%.  Ooops!  Now don't get me wrong I can take criticism and I want each of you to question everything you see here and anywhere else for that matter.  We're all looking to improve our investing skills and an open forum for that is the best way.  Discussion breeds improvement.  Due to that criticism I decided to take a look at some common metrics for the company to see whether the value has gotten better in conjunction with the increase in share price.

Saturday, June 21, 2014

Weekly Roundup - June 21, 2014

As usual it was a busy, busy week with work.  There were lots of issues which led to us having to change out tools a bunch of times this past week and to top it off I picked up a bit of a head cold on Tuesday and been fighting it ever since.  Is it just me or do head colds in the summer seem a lot worse than head colds in the winter?

So work was busy although not as productive as I'd have liked and unfortunately Mr. Market continued to be in a happy mood and didn't give much opportunities for me to put extra capital to work.  I did close out my position in Bank of Nova Scotia (BNS) and sold about 40% of my position in Lorillard (LO) and I hope to get a write up about those soon but this darn head cold has really worn me out.  Other than that my portfolio just continued to churn out dividends as I had three companies pay out this past week.  That's the beauty of dividend growth investing.  Whether the markets are on fire or dropping like a rock, the dividend checks keep coming from high quality companies.

I'd just like to say thanks to everyone that stopped by, commented and shared posts from Passive-Income-Pursuit this past week.  I truly appreciate it all of your continued support and I just hope to reciprocate.

Friday, June 20, 2014

Rethinking Our Debt Payoff Plan

I'm sure most of you know that last year my wife and I bought a house.  While we love the house the unfortunate thing is that we went from renting a fairly small house to owning a much larger one.  One of the hidden costs in making that move was that we didn't have nearly enough furniture to really utilize our new house.  So we made a trip down to the local furniture store and picked up a new living room and bedroom set and went to Sears to purchase a new refrigerator.

Since we were able to purchase everything at 0% interest we weren't in a big hurry to pay off the debt especially while the markets were still offering solid values.  We figured why throw extra money towards our debt, especially at 0%, when that's such an easy hurdle to beat through investing.  Mr. Market has continued his relentless march higher and it's been doubly bad because I'm sitting on a bunch of cash right now, much more than I'd like to.  That's why I've been making a few more purchases over the last couple of weeks even though they haven't been at the most ideal valuations.

Monday, June 16, 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.  On Wednesday of last week I initiated a new position in Deere & Company (DE) (Full Analysis Here as of 12/2013).

Saturday, June 14, 2014

Weekly Roundup - June 14, 2014

It's been a busy and fun week.  I've been back to the grind at work now and I can't say I'm all that excited about it.  Especially now that my wife is on summer break and has loads of free time.  It makes it that much more difficult to be away from her when I know we could be spending lots of time together.  After all that's the whole reason we're striving for financial independence.  But the good news is that my wife drove down to come and see me yesterday and we got to be together.  We're trying to see what will be going on with my work for tonight to decide whether she should stay or not.  That's the joy of having a job that can completely screw up plans like that.

After being fairly quiet with my portfolio over the last 1-2 months I've gone on a bit of a buying spree.  Is is the best time to be investing capital?  I'm not really sure, but as long as I can find quality companies at reasonable valuations I'm going to continue to invest.  I'm still undecided on whether to pursue real estate investing and becoming a landlord so in the meantime I've started to invest more capital in the markets.  It just doesn't make sense to me to have $30k sitting in a savings account earning next to nothing.  I added to my position in Wal-Mart early this week as well as initiated a new position and added to another.  I've only put about $5k to work but it feels good to be able to invest some capital again.  For those of you that don't follow me on Twitter@JC_PIP you're just going to have to wait to find out about the other two purchases.  I still might change my mind on real estate but it just doesn't seem like it's going to work for us at this time.  Although that's probably just me over-analyzing the whole thing.

Friday, June 13, 2014

Net Worth Update - May 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 up 2.1% during May.  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 May a rising tide lifted all boats.  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 over $6,200 in after-tax savings from my paycheck, around $1,030 in ESPP contributions, and over $1,400 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 May saw a $9,140.28 increase in my net worth.