Thursday, March 26, 2015

Plans for Financial Independence: Part II

Last week I wrote about my plans in regards to financial independence.  You can read that post here: Plans for Financial Independence.  We all have different priorities and needs in our lives so you can't make a direct comparison and see that you're 20+ years from financial independence and others are 1-5 years away.  Don't get discouraged in the least and just remember that you're on your own journey.

If you don't remember at the end of the post I asked you all the following questions.

(1) When do you project you will reach your crossover point?
(2) What's your plan when you reach your crossover point?
(3) Which option do you think I should go for?

 The following graphs show the poll results as of 3/25/15.

Monday, March 23, 2015

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.

Purchases for my FI Portfolio should slow down over the next month or two, although I still currently have enough capital for one larger purchase or two smaller ones.  Of course there's also future dividend payments coming in each month which will help to build up my capital and allow me to make regular purchases.  The great thing about having a fairly sizable portfolio already is that I can expect it to churn out over $1,300 per quarter in cold, hard cash.  I get to use that dividend stream for whatever needs I have, whether that's build up savings or capital for future investments.  I'm always on the lookout for opportunities to purchase high quality companies at solid long term valuations and have a few other companies in mind for potential candidates to add to my portfolio.

Saturday, March 21, 2015

Weekly Roundup - March 21, 2015

Quick update this week.  I've been back at the hospital with my son since he had a "triple crown", tracheostomy, g-tube and circumcision.  So he's had a bit of a rough week since pretty much the whole front side of his body is sore and got poked and cut into.  He's still got a long road ahead of him but hopefully with a more stable airway he can start making a bit more progress.

I did make a few changes to the portfolio this week as well although I haven't gotten a chance to get the post written yet.  Hopefully this weekend or early next week I'll be able to put something together but for now I just don't have the time.

Also thanks to everyone that has answered my financial independence plans poll.  If you haven't yet done so please go to the post for the poll.  Thanks!

In case you missed them here's the posts from this past week.
Thanks to each and every one of you that read, commented on, and shared posts from here this past week. I appreciate it so much. Make sure you follow me on Twitter@JC_PIP or sign up to receive new post notifications via email so you don't miss anything.

Thursday, March 19, 2015

Plans for Financial Independence

Most of those that visit my blog are working towards a specific end goal, I know I am.  That goal for the majority of us is financial independence.  Financial independence can mean different things to different people.  To me financial independence is the ability to have enough passive income coming in to cover your monthly expenses.  This opens up your options which is what we all want.  To not be a slave to the office because we have to.

Passive income can come from a variety of places such as rental real estate, interest on cash, you can set up target websites to profit from web traffic/advertising, write and sell an e-book, P2P lending, my personal favorite dividend growth investing, and many other possibilities.  There's plenty of other passive income opportunities with a varying degree of passivity.  Most passive income sources require a large amount of initial work and then you get to reap the rewards over time.  The reason that dividend growth investing resonates with me is that it provides a reliable source of income that will grow over time.  Some passive income sources, e-books for one, don't provide the important factor of growth.  They usually have an initially high income that tails off, but that's not the case with dividend growth investing.  If you select your companies properly they will continue to grow over the long term and you can reasonably expect your dividend checks to grow year in and year out like clockwork.

Wednesday, March 18, 2015

Dividend Growth Checkup - Part II

Earlier this month I checked up on the overall dividend growth rate for my portfolio and you can find that article here. I like to take quarterly or annual looks at the organic dividend growth rate for my portfolio to get a "big picture" view of how the companies I own performed in regards to dividend growth as a whole. I was quite pleased with my portfolio since the overall, 1-year, 3-year, 5-year, and 10-year organic dividend growth rates were all above 11%, except the 5-year at 9.88%.

 I don't expect to be able to keep an average 10% growth rate for decades on end, unless I want to constantly change my portfolio around, which would trigger capital gains taxes. It's encouraging to see the growth rates well above my projection of 5% organic growth so there's a built in margin of safety in my projections. A dividend growth rate higher than my 5% level would allow me to reach my crossover point sooner.

Continue reading this article at Seeking Alpha. 

Tuesday, March 17, 2015

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.

Purchases for my FI Portfolio should slow down from here.  Well, I need them too although there's still enough capital for two smaller purchases.  I do have my eye on a few other potential purchase candidates but we'll see what kind of opportunities that Mr. Market decides to throw our way.  The great thing about having a fairly sizable portfolio already is that I can expect it to churn out over $1,300 per quarter in cold, hard cash.  I get to use that dividend stream for whatever needs I have, whether that's build up savings or future investments.

Monday, March 16, 2015

Net Worth Update - February 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.  During February my net worth increased $17,202.15.

Saturday, March 14, 2015

Weekly Roundup - March 14, 2015

Time continues to move faster and faster.  I honestly have no idea where the last week went.  While I didn't like the reason I was off for 12 weeks from November to February, it sure was a nice break from the constant hustle and bustle of work.  I can't wait to reach that magical crossover point where my passive income sources can cover my expenses.  There's a long ways to go but we're continuing to work towards it.

I continued to invest this week even though my plan is to rebuild our emergency funds.  At least the capital was put towards a positive use and not just spent on unnecessary things.  I fully expect the purchases to slow down although there is one more that I need to write about and I do have enough capital for another purchase already in my brokerage account and with some more dividend payments throughout the month, possibly enough for two more purchases if I split up the capital into smaller portions.

Friday, March 13, 2015

Income Update - February 2015

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.

Wednesday, March 11, 2015

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.

On Friday, March 6th I made two purchases, both in new positions.  I know I'm trying to build up cash, but I promise to slow down my purchases.  I just couldn't help myself after taking 3 months off.  Let's just call it an itchy trigger finger.  Of course there's much worse things that I could do with this capital than continue to build up my dividend stream.

Monday, March 9, 2015

Why T. Rowe Price Group, Inc. Is At The Top Of My Watch List

One sector that I've been looking to increase my stake in is financials. I currently own some of the "too big to fail" banks that have treated me quite nicely, but a little further diversification in the sector would be welcomed. Asset management seems ripe for the picking for profitable companies and T. Rowe Price Group, Inc. (NASDAQ:TROW) hasn't disappointed. TROW currently has a 29-year dividend growth streak, marking it as a dividend champion. The following tables/graphs are from my personal stock analysis spreadsheet. Data for the stock analysis was acquired through T. Rowe Price Group's investor relations page, Morningstar.com, and Yahoo!Finance.

Historic Growth Rates: 

 Historically, T. Rowe Price has provided excellent returns. According to longrundata.com shares of TROW have given investors a 324% total return over the last 10 years, good for 12.47% annually. Looking at the historical growth rates for per share dividends, earnings, revenue and free cash flow paints an equally bright picture.

Check out the remained of the T. Rowe Price Stock Analysis on Seeking Alpha.

Saturday, March 7, 2015

Weekly Roundup - March 7, 2015

It feels great to be back and writing more regularly again.  As most of you know I had to take some time off to be with my son since we knew he was going to require a lengthy hospital stay after being born.  But he's still here and fighting which is all we can really ask for.  February was mainly filled with getting everything caught up from the time that I was gone because I didn't track anything at all.  Now I'm caught up and it's back to just maintenance which makes everything a whole lot easier.  Another month is over and done with and we're already through the first week of March which is hard to believe.  Time is absolutely flying by but that's why my wife and I, and many of you, are striving to reach financial independence.  To reclaim our time and just slow down the pace of life.

Friday, March 6, 2015

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.

I know I know my plan was to build up cash and stay away from investing for the next few months.  But I just couldn't help myself since I hadn't made any purchases since back in November 2014.  I was sitting on about $5k cash in my brokerage account and had targeted some companies trading near price levels that I feel are good long-term entry points and went ahead and set some limit orders.  Don't worry I still have an ample emergency fund and now that I have income coming in again I'll be able to build it up a bit quicker.  I'd been trying to find some higher yielding companies that also have clear runways to continue increasing the dividend at a solid rate.

Wednesday, March 4, 2015

Dividend Growth Checkup

As part of my annual review process for my portfolio, I read through the latest quarterly or annual reports for the companies I own, as well as checked up on the organic dividend growth for each position and for the portfolio as a whole. The dividend is only one piece of the dividend growth strategy. The other very important aspect is the organic growth of the said dividend.

When constructing a dividend growth portfolio, you'll generally find three types of companies to choose from. The low-yield, high-growth companies, think 0-2% yield with 15%+ annual growth, such as Visa (NYSE:V) or Starbucks (NASDAQ:SBUX). In general, these companies are early in their dividend growth phase, with plenty of runway for future growth through both growth in earnings and expansion of the payout ratio. You'll also find the opposite end of the spectrum, the high-yield, low-growth companies, think 4%+ yield with < 5% annual growth...

Continue reading this article at Seeking Alpha.

Tuesday, March 3, 2015

Dividend Update - February 2015


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, March 1, 2015

Takeaways from Berkshire Hathaway's 2014 Shareholder Letter

Whether you've invested a dime in the stock markets or not, you've undoubtedly heard of Warren Buffet and his investing powerhouse Berkshire Hathaway.  Last year I started a small position in Berkshire Hathaway through the Class B shares available through Loyal3.  I figured that Warren and Charlie are some of the best capital allocators in the world, so I might as well have them working for me.

Here's some key takeaways from the latest shareholder letter.

Wednesday, February 25, 2015

Net Worth Update - January 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.  During January my net worth decreased $15,178.59.

Saturday, February 21, 2015

Dividend Update - January 2015


I've just about got all of my spreadsheets up to date which is good because now it should just be maintenance to worry about.

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.

Thursday, February 19, 2015

2014 Goals - Full Year Recap


I know it's after mid-February and I'm just now getting out my 2014 goals update ,but there's been so much going on that I had to step away from the blog for a few months.  I still have no idea what happened to 2014.  The first half was a blur and the second half was even blurrier.  Now that I have a bit more time on my hands I need to check on my goals for last year.  There were a lot of "failures" but the good thing about those failures is that I still made good progress on the majority of my goals.   It's important to set specific, measurable goals so you have something to compare it to and keep motivated along your journey.  Enough stalling, let's get into the goals.

2014 Budgeting Goals - Full Year Results
Goal 2014 Amounts Status
Grocery spending < $200 per month $190.16 Reached
Restaurant spending < $110 per month $208.49 Failed
Average monthly expenses < $2,350 per month $2,676.59 Failed

Wednesday, February 18, 2015

Net Worth Update - December 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.  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.  Between my last update covering October 2014 through the end of the year my net worth increased $18,475.94!

Sunday, February 15, 2015

Dividend Update - December 2014


I'm still working on getting all of my spreadsheets up to date and just about have my portfolio taken care of.  There's still going to be the massive undertaking that will be my budget spreadsheet but that's for another day and time.

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 page to see what dedication to an investment plan can give you.

Friday, February 13, 2015

Dividend Update - November 2014


It's been a while since I last had a chance to post, almost 3 months in fact.  I didn't disappear or anything but was having to deal with medical issues for my son, Lucas.  He's one heck of a strong willed kid and whenever he gets out of the NICU I know he's going to be a handful.  It's been a crazy wild ride that my wife, son, and I have been on but he's doing a bit better now and hopefully we can keep him stable while we work on his nutrition and get him to grow.  The short story is that he has a congential diaphragmatic hernia, CDH, and his diaphragm didn't form right while in utero so some of his organs were in his chest cavity which made his lungs very underdeveloped.  It affects about 1 in 2500 kids and unfortunately the survival rate is only about 50%.  But Luke is still fighting which is all we can ask for.  If you want to follow along with what's going on with him you can check out BabyLukeBlog.wordpress.com.

So I'll be recapping the past few months to get caught up on the juicy details of my portfolio(s) and most importantly dividends.  Those dividends act as seed money for investments and will eventually allow my wife and I to reach financial independence.  I expect the rate of new capital investments to slow down a bit from my usual pace at least for the next month or so while I build up savings, deal with medical costs, finance a full household expenses since my wife quit her job to be with our son, and since I work in the oil field a little extra buffer won't hurt considering the state of the patch right now.  So please bear with me while I get everything up to date between my own spreadsheets, Google spreadsheets, and around the blog.