Monday, December 31, 2012

Investing Milestone

In December I passed $300 in monthly dividends received.  Granted I would have fallen about $10 short had Medtronic and Caterpillar not accelerated their 1Q 2013 payouts to 4Q 2012, but I'll take it.  It's great to see the progress that I've made in just the short time I've been striving for FI and building up my DG portfolio.  The next goal will be to reach $400 in dividends in a month.  That should come next year, most likely in the September or December payout, although since most companies pay on that schedule it might creep up into June.

I also updated my portfolio page to Google spreadsheets instead of manually updated tables.  This will help make that page run a little smoother and give more up to date information for everyone following along.  Check out the new page here.

Sunday, December 30, 2012

Long-term Dividend Goals

If you happened to notice on my Goals page I've updated it some to reflect my long-term dividend goals.  In this post I'll detail where and how I calculated the numbers for my dividends.  The Dividend Goal is the amount of forward 12-month dividends that I want to have by the end of each corresponding year.  The following dividend goals are only for my FI portfolio and does not include dividends received in my Roth IRA or from converting my 401k into DG stocks when I do get reach FI.  My 401k especially will add a big chunk of capital free to then invest.

Saturday, December 29, 2012

Recent Buy

Medtronic has pulled back since I first initiated my position so I doubled up on it yesterday for a price of $40.75 per share.  This brings my total position up to 90 shares.  I'm hopefully done buying for a bit but I do have some cash available should the right opportunity pop up.  Phillip Morris is high on my list and a pullback into the mid $82's would bring a few more shares my way.  I'd rather not make any purchases this close to the fiscal cliff deadline, for some reason I believe that Congress will come to an agreement and keep us from dropping off the cliff.  Whether a deal is reached or not I expect there to be big moves in the market next week in reaction to an agreement or lack thereof.  Only time will tell.

Caterpillar accelerates dividend

As I was compiling some dividend history for my positions to try and get and weighted average growth rate over the past few years, I noticed that Caterpillar (CAT) was scheduled for 5 payments this year.  Since other companies have gone the route of accelerating their dividend to pay this year I had to double check this on Caterpillar's investor relations website. 

Friday, December 28, 2012

Recent Buy

Since Target has dropped further from my purchase last week due to the overall weak holiday sales I decided that I should add to my position a little bit more and picked up 35 more shares to round out my position at 100 shares.  You can check out my previous 2 purchases here and here.  The latest shares were purchased for $58.71 per share which gives a 2.45% YOC.  I wasn't planning on making any more purchases this year and holding out until January, but the shares fell enough that I felt I should add to my position.  I've been torn on whether I should get my free capital invested quickly or not because the "fiscal cliff" will be a huge catalyst either up or down depending on the outcome.

Tuesday, December 25, 2012

Merry Christmas!!

Just wanted to wish Merry Christmas to everyone!  I hope you get to spend the day relaxing with loved ones.  Unfortunately due to my job I can't always be there around the holidays but I just might be able to run home later today or tomorrow.  Spending time with family is one of the most important things and exactly why I'm pursuing early FI so hard.  My gift to everyone is a stock analysis report on Lockheed Martin and Clorox, a dividend challenger and champion respectively.

Lockheed Martin Stock Analysis

For Christmas, my gift to everyone is some stock analysis reports.  In this one we'll look at defense behemoth Lockheed Martin (LMT).  There's a lot of questions about the fiscal cliff and how it will affect defense contractors since defense spending is targeted in the automatic spending cuts should no agreement be reached.  Lockheed Martin closed trading on Monday, December 24th at $92.77.

Company Background:

Lockheed Martin Corporation, a security and aerospace company, engages in the research, design, development, manufacture, integration, and sustainment of advanced technology systems and products in the areas of defense, space, intelligence, homeland security, information technology, and cyber security in the United States and internationally. It also provides management, engineering, technical, scientific, logistic, and information services. The company operates in four segments: Aeronautics, Electronic Systems, Information Systems & Global Solutions (IS&GS), and Space Systems. The Aeronautics segment offers military aircraft, including combat and air mobility aircraft, unmanned air vehicles, and related technologies. Its products and programs comprise F-35 Lightning II joint strike fighter; F-16 Fighting Falcon multi-role fighter; F-22 Raptor air dominance and multi-mission stealth fighter; C-130J Hercules tactical airlifter; and C-5M Super Galaxy strategic airlifter. The Electronic Systems segment provides surface ship and submarine combat systems; sea-based missile defense systems; ship systems integration; littoral combat ships; nuclear instrumentation and control systems for naval submarines, aircraft carriers, and surface warships; air and defense missile systems; air-to-ground precision strike weapons systems; tactical missiles; munitions; fire control and navigation systems for rotary and fixed-wing aircraft; manned and unmanned ground vehicles; mission operations support, readiness, engineering support, and integration services; simulation and training services; and energy programs. The IS&GS segment offers management services, information technology solutions, and advanced technology solutions. The Space Systems segment provides satellites, strategic and defensive missile systems, and space transportation systems; and space shuttle replacement services.

DCF Valuation:

Analysts expect Lockheed Martin to grow earnings 4.94% per year for the next five years and I've assumed they can continue to grow at 3.50% per year thereafter, right around the long term inflation rate. Running these numbers through a two stage DCF analysis with a 10% discount rate yields a fair value price of $126.28. This means that at $92.77 the shares are undervalued by 26.5%.

Clorox Stock Analysis

For Christmas, my gift to everyone is some stock analysis reports.  In this one we'll look at consumer staple giant The Clorox Company (CLX).  I would like to add some more defensive and consumer staples companies to my portfolio so let's see where Clorox stands.The Clorox Company closed trading on Monday, December 24th at $73.63.

Company Background:

The Clorox Company manufactures and markets consumer and professional products worldwide. The company’s Cleaning segment offers laundry additives, including bleach products under the Clorox brand, and Clorox 2 stain fighter and color booster; home-care products primarily under the Clorox, Formula 409, Liquid-Plumr, Pine-Sol, S.O.S, and Tilex brands; naturally derived home care products under the Green Works brand; and cleaning and disinfecting products under the Clorox, Dispatch, Aplicare, HealthLink, and Clorox Healthcare brands. Its Household segment offers plastic bags, wraps, and containers under the Glad brand; cat litter products under the Fresh Step, Scoop Away, and Ever Clean brands; and charcoal products under the Kingsford and Match Light brands. The company’s Lifestyle segment provides dressings and sauces primarily under the Hidden Valley, K C Masterpiece, and Soy Vay brands; water-filtration systems and filters under the Brita brand; and natural personal care products under the Burt’s Bees and güd brands. The Clorox Company also markets its products primarily under the Javex, Glad, PinoLuz, Ayudin, Limpido, Clorinda, Poett, Mistolin, Lestoil, Bon Bril, Nevex, Agua Jane, and Chux brands. The company sells its products primarily through mass merchandisers, warehouse clubs, grocery stores, other retail outlets, distributors, and medical supply providers, as well as a direct sales force, combination of direct sales teams, and network of brokers.

DCF Valuation:

Analysts expect Clorox to grow earnings 8.04% per year for the next five years and I've assumed they can continue to grow at 3.50% per year thereafter, right around the long term inflation rate. Running these numbers through a two stage DCF analysis with a 10% discount rate yields a fair value price of $78.83. This means that at $73.63 the shares are undervalued by 6.6%.

Saturday, December 22, 2012

Blog Milestone

I passed 20k page views for my blog last night.  I just want to thank everyone that's stopped by to check out the blog and follow along with my journey.  If anyone has any questions or would like a stock analysis of any company in particular feel free to let me know in the comments.  Thanks again for stopping by!

Thursday, December 20, 2012

Recent Buy

After adding to my Target position, I also initiated a new position in Phillip Morris (PM) this morning by picking up 25 shares at $84.43 each.  If I was able to be near my computer at the open this morning I would have been able to get the shares a little cheaper but I had to run in to the office to finish up some paperwork so I had to set the limit order and hope it hit without dropping too much further through my price.  I've had my eye on Phillip Morris for most of the year but didn't have the capital available when the price got down to this level.  Luckily, this time around I had some cash ready to deploy and got the chance to start a position with them.

Recent Buy

This morning I picked up 25 more shares of Target (TGT) bringing my total position up to 65 shares.  I would still like to add more to the position over time but need the price to come down further before I would continue to average down.  I feel that Target is set up for a long streak of growth of the company and in turn the dividend.

Saturday, December 15, 2012

Weekly Roundup - December 15, 2012

It's been a while since I've gotten a weekly roundup out but I finally got some time to be able to roundup the links.

What I'll be Buying if the Fiscal Cliff Causes Recession - Dividend Growth Stock Investing posted his watchlist.  That's something that I unfortunately don't keep track of as much as I should.  He's got a great list of stocks should the market and economy take a nosedive.

If You Must Value the Market - Dividend Mantra posted about 2 metrics for valuing the market as a whole. While he doesn't use really use these, they can come in handy.

Time:  It's Everything - Speaking of Dividend Mantra, he had another great post earlier this week.  It's all about time and the freedom to do as he pleases.  It's a great post and sums up most everyone that I know that's pursuing early FI.

Thursday, December 13, 2012

How important is valuation?

There's several companies that I would like to own much larger stakes of.  One of these companies is Coca-Cola (KO).  They are a dividend champion with 50 consecutive years of dividend growth.  That's quite a feat.  However, given Coca-Cola's size and stability should you invest your hard-earned money in them no matter the valuation of the shares are?  Let's run some numbers for some hypothetical earnings per share (EPS) and dividend growth for the next 10 years and compare the possible returns.  Coca-Cola closed trading on Wednesday, December 12 at $37.64.

Wednesday, December 12, 2012

Medtronic Stock Analysis

Like my Coca-Cola stock analysis I was surprised when I looked back through my stock analysis archives that I had never posted about Medtronic (MDT).  I had actually gone through the full analysis back in June of this year but couldn't find my post so I"m assuming I ended up getting busy with last minute wedding stuff. Medtronic is another one of the companies that I would love to own a piece of but the price just hasn't been there when my capital was available.  Medtronic closed trading on Monday, December 10th at $42.60.

Company Background:

Medtronic, Inc. manufactures and sells device-based medical therapies worldwide. It provides products for the diagnosis, treatment, and management of heart rhythm disorders and heart failure, including implantable cardiac pacemakers, implantable cardioverter defibrillators, cardiac resynchronization therapy devices, arctic front cardiac cryoablation catheters, arctic front cardiac cryoablation catheters, and patient management tools. The company also offers cardio vascular products, such as percutaneous coronary intervention device, which is used for the treatment of patients with coronary artery disease; renal denervation for the treatment of chronic uncontrolled hypertension; endovascular stent grafts to treat abdomen and thoracic regions of the aorta; peripheral vascular intervention that encompasses various procedures to treat patients with peripheral vascular disease; surgical valve replacement and repair products for damaged or diseased heart valves; transcatheter heart valves; a line of blood-handling products used in arrested heart surgeries; positioning and stabilization technologies that assist physicians performing beating heart surgery; and surgical ablation system, which allows cardiac surgeons to create ablation lines during cardiac surgery. In addition, it provides medical devices and implants that are used in the treatment of the spine and musculoskeletal system comprising thoracolumbar, cervical, and biologics products; neurostimulators for chronic pain, implantable drug delivery systems, and deep brain stimulation systems, as well as urology, fecal, and gastroenterology devices; and integrated diabetes management solutions. Further, the company offers products and therapies to treat diseases and conditions of the ear, nose, and throat, as well as certain neurological disorders; and image-guided surgery and intra-operative imaging systems.

DCF Valuation:

Analysts expect Medtronic to grow earnings 5.21% per year for the next five years and I've assumed they can continue to grow at 3.50% per year thereafter, right around the long term inflation rate. Running these numbers through a two stage DCF analysis with a 10% discount rate yields a fair value price of $59.83. This means that at $42.60 the shares are undervalued by 28.8%.

Tuesday, December 11, 2012

Recent Buy

This morning I set a limit order for 45 shares of Medtronic (MDT) and earlier this afternoon the order was executed.  I purchased 45 shares for $42.46 per share.  With the current annual dividend of $1.04 per share my YOC after commissions is 2.44%.  I would have liked to get into the shares a little lower but I feel that today's prices are around the fair value range and still offer a solid return going forward.  As you'll see in my stock analysis report on Medtronic due out tomorrow I picked up the shares for about 6% higher than my fair value calculation so I'll be looking for an opportunity to average down my cost basis.  I finally got a pure-play on the health care industry since Walgreen's was my only exposure to health care.

Sunday, December 9, 2012

New Page Added to Blog

Not much of an update here today, but I did add a Progress page to the blog.  The Progress page will keep track of my yearly net worth improvements as well as annual and quarterly passive income as well as expenses to show the progress that I've made toward reaching early FI.  It's more of a consolidation page if you're looking for a quick overview, obviously you can go through the whole blog to get the details.  I hope that consolidating this information can help motivate people to pursuing early FI because it will truly be a wonderful day when I no longer have to work and can choose to do so however and whenever I want without needing the income.

Friday, December 7, 2012

Wednesday, December 5, 2012

Net Worth Update - November 2012

November ended up being a solid month for my net worth considering it was down pretty low due to the markets during part of the month.  For the month I ended up with just under a $9,000 increase.  About $1,300 was from 401k contributions and the company match the rest came from after-tax savings, interest on savings, dividends and market fluctuation.

Monday, December 3, 2012

Income Update - November 2012

November's income was higher than my average so far for the year which is great because I'm still able tor reduce my expenses so every extra dollar of income gets to be converted into savings mainly dividend growth investing capital.  Not only did I have a higher income for the month but my minimum and total expenses were both lower than I've averaged for the year so far.  My food budget is still really high but that's mainly due to the fact that I am on the road a lot so when I'm home I spend more on restaurants to take my wife out and my grocery bill is elevated for the same reason.  Once we reach early FI I know our food budget will be drastically reduced.  In November my minimum expenses for the month totaled only $1,392.81 which is my lowest for a total month.  Unfortunately my total expenses didn't drop quite as much but they did drop so there was improvement on that front.  Total expenses for November came in at $1,530.60.  My average minimum expenses for the year dropped from $1,519.96 to $1,508.40, of course that includes my debt service payment from earlier this year.  My average since that's been gone is $1,418.22.  My average total expenses dropped from $1,691.36 to $1,676.74 including November.  Dividend and interest income for the month was a little light, coming in at $63.09, this covered 4.53% of my minimum expenses for the month.  My FI number, net worth less traditional retirement accounts based on the monthly income I could generate from the 30 year Treasury yield, increased again to $196.58 with my extra savings.  This covered 14.11% of my minimum expenses for the month.

Sunday, December 2, 2012

Scottrade to offer a fee free semi-DRIP plan?

Read this with a grain of salt because I haven't researched it but on the comment thread from an article on Seeking Alpha, one user commented that Scottrade was making a change to a their dividend reinvestment policy in 2013.  Starting in February they will begin allowing all dividends to accumulate and you can then reinvest in one stock for no commission.  It will still be full shares only but a change like this could be useful.

Saturday, December 1, 2012

Dividend Update - November 2012

November was a decent month for dividends with 5 companies paying out in my FI portfolio but none in my Roth IRA.  This was much better than October's 3 total payouts.  And December is going to be an awesome month with 12 payouts in my FI portfolio and 3 for my Roth IRA.  I had 4 buys in November adding to 3 positions and starting a new position in Target as well as selling out of my small position in Pfizer in my FI portfolio.  I also added to my NSC position in my Roth IRA.  I was able to increase my forward 12-month dividends for my FI portfolio to $1,496.68 from $1,309 with my purchases and dividend reinvestment.  My Roth IRA forward 12-month dividends increased from $180.08 to $202.08.