Recent Transaction

On Monday, February 25th I sold a put option on Microsoft.  I chose the $27 strike price since it offered a compelling premium return combined with giving a execution price that is over a 14% discount to my fair value calculation.  I sold the April 20th put option for $0.58.  After commission and fees of $7.99 I had received a total of $50.01.

Microsoft Stock Analysis

I've been real busy with work and then getting a chance to be home so I'm late on the stock analysis report.  We'll look at software giant Microsoft (MSFT).  They are a dividend contender recently hitting 10 consecutive years of dividend increases.  Microsoft closed trading on Friday, February 22nd at $27.76.

Company Background:

Microsoft Corporation develops, licenses, and supports software products and services; and designs and sells hardware worldwide. The company’s Windows & Windows Live division offers PC operating system that primarily includes Windows 7 operating system, Windows live suite of applications and Web services, and PC hardware products. Its Server and Tools division provides Windows Server operating systems, Windows Azure; Microsoft SQL Server, SQL Azure, Windows Intune, Windows Embedded, Visual Studio, Silverlight, system center products, Microsoft consulting services, and Premier product support services. This division also offers cloud-based services; and training and certification to developers and information technology professionals, as well as builds standalone and software development lifecycle tools for software architects, developers, testers, and project managers. The company’s Online Services division provides online information and content, including Bing, MSN, adCenter, and Atlas online tools for advertisers. Its Microsoft Business division offers Microsoft office, Microsoft Exchange, Microsoft SharePoint, Microsoft Lync, Microsoft Office project and office Visio, and Microsoft Dynamics ERP and CRM, as well as Microsoft Office Web Apps and Microsoft Office 365, which are online service offerings. The company’s Entertainment and Devices Division segment provides Xbox 360 entertainment platform, which includes the Xbox 360 gaming and entertainment console, Kinect for Xbox 360, Xbox 360 video games, and Xbox 360 accessories; Xbox LIVE; Skype; and Windows Phone. Microsoft Corporation markets and distributes its products and services primarily through original equipment manufacturers, distributors, and resellers, as well as through online. The company has strategic alliances with Nokia, and NIIT Ltd., as well as a strategic relationship Dominion Enterprises, Inc.

Weekly Roundup - February 23, 2013

It's been a while since I've posted a roundup and I really need to get back into it.  Here's some articles that caught my eye from this past week.

A Primer on Federal Income and Investment Taxes - MyFIJourney has a great overview of the 2013 Federal Income taxes on both ordinary and investment income.

Speaking of the overly complicated tax system...

Recent Buy and an Unexpected Dividend Increase

Yesterday, I was finally able to pick up some shares of Vodafone (VOD).  I've been wanting to own some VOD for over a year and just kept missing the pullbacks that it took.  It dipped below $25 again this past week and I decided that I needed to start my position.  I purchased 50 shares for $24.51 a piece giving a cost basis after commission of $24.67 per share.

Dividend Increase - Walmart (WMT)

Yesterday Walmart's Board of Directors also announced an increase in their dividend.  This time a whopping  18.24% increase.  It was one of their largest increases in their history, which is pretty amazing considering their 39 year streak.  The quarterly payout increased from $0.3975 to $0.47 giving an annual dividend of $1.88.  Walmart is currently yielding around 2.70%.

Dividend Increase - Coca-Cola (KO)

This morning the Board of Directors of Coca-Cola (KO) announced a 9.8% increase in their quarterly dividend from $0.255 to $0.28 per share.  This marked the 51st consecutive annual dividend increase which is just amazing.  There's very few companies that have a 25 year record, let alone broken the 50 year mark.

What are you doing with your tax refund?

April 15th is fast approaching us.  That wonderful deadline where that mysterious Uncle Sam that I've still yet to meet comes either asking for money or sends me a check.  It's time to look at the ways you can use any refund coming your way.

1.  Pay down debt 
This is step 1 for anyone that still carries debt, especially credit card debt.  Paying off credit card debt is going to be the best guaranteed return that you'll find.  According to CreditCards.com as of February 6th that national average interest rate on credit cards was 14.96%.  If you carry $10,000 in credit card debt at the national average rate, it will take over 12 years to payoff if you make the minimum payment and you'll end up paying over $4,400 in interest over that time.

Dividend Increase - Phillips 66 (PSX)

Earlier this week the Board of Directors of Phillips 66 (PSX) announced another increase in their dividend.  This was their second increase since being spun off from ConocoPhillips (COP) in the middle of last year.  The new rate is $0.3125 and is a 25% increase from the $0.25 quarterly dividend paid in December and a 56% increase from their first payout back in September.  It's great to see management increasing the dividend further.  I expect the dividend growth to slow down because management was originally targeting a 5% annual growth in the dividend once they were spun off.

Recent Buy

Earlier this afternoon I purchased 45 shares of Aflac (AFL) for a $50.15 each.  After commission, my cost basis is $50.33 per share.  These shares will provide an extra $63 in annual dividends before reinvestment or future dividend increases.  Aflac is a dividend champion with 30 consecutive years of dividend growth with a 10 year dividend growth rate of 19.3% and a 1 year dividend growth rate of 8.9%.  Their current payout ratio is a very low 22%.

How getting laid off was the best thing for my finances

After I graduated college, I began my career as a engineer in training for a mid-size civil engineering firm and made a nice $50k per year.  I didn't really care too much about money and personal finance at the time, although I did begin to get interested in the stock market mainly through investing with the 401k.  After I started trying to learn more about the market, I still didn't think I knew enough about investing to try and go on my own so I stuck with just using the 401k.

Net Worth Update - January 2013

I expected a good month in January because my income was going to higher than normal, but with the markets going on a tear to start off 2013 I hit a pretty crazy number for a one month net worth increase.  Especially since my net worth isn't some crazy high number, this was a very meaningful change.  I had around $1,400 in combined 401k contributions and another $1,000 in ESPP withholding.  The 2 heavy lifters though in January were over $8,100 in savings from my net pay and the markets.  My latest round of ESPP shares were purchased adding to that position.  With the markets going almost straight up and lifting my employer's stock as well that added to the big gain for the month.

Recent Transaction

On Monday, I sold another call option on some of my HAL shares.  I currently own just over 565 shares and will be adding around another 75-100 shares every quarter, so I need to get some of the shares off my hands.  I now have 3 open call options on HAL, adding to my previous two that expire in April and July.  I'm taking a bit of a gamble having the 3 options open since I only have 184 shares that have hit long-term capital gains treatment already.  Although I think it's a risk worth taking since most options aren't executed early and  I'll have another 182 shares hit long-term capital gains on June 30, 2013.

Income Update - January 2013

January was a truly awesome month.  I ended up bringing home over $2,200 more than my average for 2012 and the best part is that all went straight to savings.  I only overshot one category by a lot but that'll start getting in check beginning with February.  Grocery expenses were the only other category that I went over but it was right in line with where my spending was during 2012 so I'm not too disappointed by it although I do need to work a little more on it.  My minimum expenses for the month came in at $1,304.19 which was my lowest total for a full month.  I did get lower last June but that was mainly from being on the honeymoon which those expenses were all saved for.  TTM minimum expenses are averaging $1,469.13.  Total expenses for January ended at $1,451.85 and brought the TTM average down to $1,631.36.  Dividend and interest income was pretty light for the month at only $25.09, so my potential retirement income covered only 1.92% of expenses.  The 30 year treasury yield ended January at 3.17% which brings my FI number up to $288.37, over 2.5 times January 2012's number.  This would cover 22.11% of my minimum January expenses.  I know my expenses will creep back up some because my cell phone bill was noticeably missing since I started the new contract by joining on my wife's account in the middle of a cycle so they held off on the billing.  I'm not too happy with that but it is what it is.

Recent Transaction

I've been on a bit of an option selling frenzy the last week or so, but that happens when there's not as much value available in the market.  Hopefully a bit of a correction will start rearing it's head and allow some actual purchases to be made, but in the meantime I'll sell my options and collect the premium while keeping an eye out for deals on DG stocks.

Dividend Update - January 2013

January was an okay month for dividends but still a far cry from December's personal record.  I ended up having 2 companies pay in my FI portfolio and 1 in my Roth IRA.  Normal January's from now on would see 3 pay outs in the FI portfolio but Medtronic moved their January payment to late December.  Wal-mart did the same so my Roth IRA will normally see at least 2 companies paying.  With the markets being on a bit of a tear to start the year I didn't make any purchases in either account so the change in forward 12-month dividends only reflects announced increases and dividend reinvestment.  For the FI portfolio they sit at $1,827.20 and for the Roth IRA they're at $206.27.