Monday, September 15, 2014

Net Worth Update - August 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 surged 3.77% during August and crossed the 2,000 mark for the first time.  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 August my net worth rose with the markets.  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 $4,700 in after-tax savings from my paycheck, $700 in ESPP contributions, and just over $960 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 August saw a $11,444.94 increase in my net worth.

Sunday, September 14, 2014

Weekly Loyal3 Purchases

Last month I started a new portfolio with Loyal3.  Loyal3 is a new brokerage that allows you to make purchases with no commission costs.  That's right, fee free investing.  Even better is that you can make the purchases with your credit card and earn cash back rewards.  For me that's an extra 1% yield on the first year's dividend.  It's a great way to dollar cost average into positions over time although they do have a limited selection of companies you can invest in.

Each week I plan to make small purchases in several companies to slowly build up the positions.  This allows me to get some capital invested every week, for free.  The valuations might not always be the best but it does help me to consistently build up my portfolio and dividend stream that will eventually allow me to consider early retirement.

Saturday, September 13, 2014

Weekly Roundup - September 13, 2014

Another week has come and gone.  How do the days keep flying by so fast?  All the more reason to reach financial independence as early as possible and start to recapture some of the ever-fleeting time that we have.  With no appointments this week that means it was time to get back to work.  Honestly I was glad to get back into a normal routine again after the whirlwind that was August.  One thing that I really like about my job is that there's a lot of downtime but I still get paid.  Who doesn't like that?  Yesterday three of the guys that I work with and myself went golfing at a course near where we're working.  It was a great day for golf as the temperature wasn't too hot considering we're in south Texas.  The front 9 went quite well but the back 9, not so much.  Considering I haven't golfed in nearly a decade I thought it was a pretty successful round.  And even better is that I got paid as if I was working but was out on the golf course.  That's a win in my book.

The markets have started to stumble a bit which is music to my ears.  I added to my position in Deere & Company this week as well as continuing to add to my Loyal3 portfolio.  I even got a few raises this week as well which is always a welcomed bonus.  I'm looking forward to the markets continuing to decline and hopefully open up a lot more value.  One company that I'm really interested in right now is Emerson Electric (EMR).  I already own a small position in them and would like to add more if the share price dips a little bit.  Other companies that I'm interested in are some of the oil majors (Chevron, ExxonMobil, BP) and Coca-Cola, PepsiCo, and YUM Brands.  What companies are starting to catch your eye for potential purchases?

Friday, September 12, 2014

Income Update - August 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.

Thursday, September 11, 2014

Recent Buy - Nothing Runs Like A Deere

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 Got a Raise!

Two raises in fact!  No it wasn't from my employer but rather these raises came from two of my employees.  Both of them have been working hard this past year and decided to shoot me a little bit more cash every quarter.  That's dividend growth investing in action and eventually with more increases and continued investment will allow me to consider early retirement.

Yesterday, Phillip Morris (PM) increased the quarterly dividend by 6.4% from $0.94 to $1.00 per share.  Since I own 62 shares of PM that's an extra $3.75 coming my way every quarter or $15.00 extra every year.  This increase marks the sixth annual dividend increase by PM and the current yield is now 4.75%.

Sunday, September 7, 2014

Weekly Loyal3 Purchases

Last month I started a new portfolio with Loyal3.  Loyal3 is a new brokerage that allows you to make purchases with no commission costs.  That's right, fee free investing.  Even better is that you can make the purchases with your credit card and earn cash back rewards.  For me that's an extra 1% yield on the first year's dividend.  It's a great way to dollar cost average into positions over time although they do have a limited selection of companies you can invest in.

Each week I plan to make small purchases in several companies to slowly build up the positions.  This allows me to get some capital invested every week, for free.  The valuations might not always be the best but it does help me to consistently build up my portfolio and dividend stream that will eventually allow me to consider early retirement.


Saturday, September 6, 2014

Weekly Roundup - September 6, 2014

This past week was trying to say the least.  Nothing much to report on the financial/investing front but lots of things changed with Lucas, our son set to join us in late December.  We haven't updated the BabyLukeBlog.wordpress.com site yet for this week but hopefully we'll get the chance to do so this weekend.  Ever since finding out that my wife was pregnant I've felt my priorities shift a bit and even more so after finding out there were complications that our little boy will face.  I don't expect anything to change too drastically in the next 6 months to a year, but after that there might be a job change on the horizon.

This weekend should be a pretty fun one.  Today our plan is to go meet up with some friends that have a lake house a few hours from here and spend the day out on the lake, bbq-ing, and having a good time with some friends.  Sunday is looking like we'll head back home kind of early but that's just so we can get back to civilization and watch some long-awaited NFL games.  It's the first full weekend of games and I'm quite excited.  Football is by far my favorite sport to watch on tv and even better when you can watch the games with friends.  And that's exactly our plan.  My wife and I are both looking forward to a relaxing weekend to kind of clear our heads from the whirlwind that the last month has been.  Unfortunately it's looking like Monday will bring another drive back to work but honestly I'm looking forward to that as well to get back into a normal routine.  Anyone else have some really kickass plans for this weekend?

Friday, September 5, 2014

How To Get Someone Started: Part 2

Last month I asked you all for some help with getting some of my relatives interested in dividend growth investing.  The idea of this comes from my desire to help and teach and also the simple fact that time in the market is extremely important.  My wife and I have a child on the way and I have 1 cousin that's a freshman in college, 2 in high school, and 4 more that are elementary school age or younger.  With at least a decade of compounding for the majority of them that's a huge advantage.  Even if it's just $100 dollars that's plenty to show the power of compounding and dividend growth investing.

My plan is to sit down with the 2 oldest, when I get the chance, and ask them about investing and help guide them.  I won't pick the company for them but I do plan on steering them towards the dividend growth companies that are available.  The biggest issue that I see is that dividend growth investing is a long term process so the right company is of utmost importance.  The company needs to make a product that they know, use, and see on a daily basis.  There's more established and more stable dividend growth companies out there but in order to keep their interest it has to be something that they will be interested in.  Unfortunately that probably eliminates companies like Chevron, ExxonMobil, Johnson & Johnson, Procter & Gamble, or Realty Income.  Unfortunately those companies aren't exactly the "sexiest" ones out there.

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.