Tuesday, April 30, 2013

Recent Sell

Last Friday I sold out of my small position in Waste Management (WM).  It's a shame to see them leave my portfolio since they were one of the first stocks that I bought but I can't justify holding a position for sentimental reasons if it's not performing how I'd like.  I wasn't thrilled with what I heard in the conference call and the last 2 dividend increases have been pretty paltry with 4.41% and 2.82% increases.  I'd be fine if that was a high yielder between 6-8% but with a current yield of   3.60% that just won't cut it.  Plus the P/E ratio is 23+ currently which seems way high for a slower grower like WM.

Monday, April 29, 2013

Stock Valuation Method - Dividend Discount Model

This is the 6th part in my stock valuation series.  I've previously covered the Graham Number, average dividend yield, average price-to-earnings ratio, average price-to-sales ratio, and Discounted Cash Flow analysis.  Today I'll cover the dividend discount model and how to use it.  Once again, for those that suffer from a lack of inner math nerd, I apologize.

Saturday, April 27, 2013

Weekly Roundup - April 27, 2013

Well, I got to leave the rig for vacation on Tuesday and it's been awesome since although it already seems like my vacation is over since I'll probably be leaving for work again on Tuesday or Wednesday of next week.  I had to get up really early for my flight yesterday morning but it's all worth it to be able to take a trip with my wife.  I'm in Nashville now where my wife is running in the half marathon and we'll be spending time checking out some of the honky-tonks tonight.

Wednesday, April 24, 2013

Recent Option Transactions

Well yesterday I sold 2 more call options on HAL, my ESPP shares.  On Monday HAL announced earnings for 1Q 2013 and the results were quite positive and the shares in turn made a nice move up.  With HAL continuing the increase Tuesday and trading back to around $39.50 I sold to open 2 call options.  If you remember I recently devised a strategy to try and maximize option premium and continue to diversify away from my employer's stock.  Once again the patience bug, or lack of patience, struck again.  I should have sold a deeper in the money call for the second call option since it's longer dated and would offer a better nominal return if I closed it out early.  Oh well, live and learn right?

Monday, April 22, 2013

Stock Valuation Method - Discounted Cash Flow

This is the 5th part of my stock valuation series and I've previously covered the Graham Number, average dividend yield, average price-to-earnings ratio, and average price-to-sales ratios. The previous 4 posts all looked at a historical trends but didn't really look into the future which is what we're interested in.  This week we'll take a more in depth look at the discounted cash flows of the earnings for a company.  Forgive me now, but this post will be a bit long and quite dry.  Such is the nature when talking math.  All my fellow math nerds though, enjoy.

Sunday, April 21, 2013

Option Expirations

Well the third Friday of April finally rolled around so it was option expiration day and I had two open put options expiring.  With both Intel and Bank of America closing above their respective strike prices on the puts I sold, I got to keep the full premium less commission/fees from when I sold them.  Let's look back to see how these put options worked out.

Saturday, April 20, 2013

Weekly Roundup - April 20, 2013

Well the time off was great, but it was time to head back to work.  I was at the experimental job for a few days but we didn't really do too much other than get as much stuff ready as possible and then wait for them to be ready.  Surprisingly that's a pretty common theme in the oilfield.  After being there for a few days I went to relieve a co-worker for his vacation and had it pretty easy so far.  The best part is that my vacation kicks in on Tuesday of this coming week so the end is in sight until I get to be back home with my wife and also get to enjoy a trip with her.  She's running a half marathon in Nashville and we'll be staying with a friend of hers, so it's going to be a relatively cheap vacation.  If anyone that follows along and is in the Nashville area, feel free to send me an email and we can see about meeting up if there's time.

Friday, April 19, 2013

Recent Option Transactions

With the continued market weakness on Wednesday and Thursday this past week, I closed out the $39 and $41 call options that I had open on some of my HAL shares.  I recent devised a strategy to try and maximize income and diversify out of my employer's stock.  I had originally sold both calls on April 9th so this was a much shorter holding period that I'd have liked.

Thursday, April 18, 2013

Proctor & Gamble Dividend Stock Analysis

I'm going to revisit my previous dividend stock analysis on Procter & Gamble.  It's been about a year so it's time for an update.  I've learned so much more about stock analysis in that time so this will be more thorough and hopefully more insightful.  They are a dividend champion with 56 consecutive years of increasing dividends.  P&G closed trading on Wednesday, April 17th at $79.06.

Company Background (sourced from Yahoo! Finance):

The Procter & Gamble Company, together with its subsidiaries, engages in the manufacture and sale of a range of branded consumer packaged goods. The company operates in five segments: Beauty, Grooming, Health Care, Fabric Care and Home Care, and Baby Care and Family Care. The Beauty segment provides antiperspirants, deodorants, cosmetics, hair care products, hair colors, personal cleansings, prestige products, professional salon products, and skin care products primarily under the Head & Shoulders, Olay, Pantene, SK-II, and Wella brand names. The Grooming segment offers blades and razors, electronic hair removal devices, hair care appliances, and pre and post shave products primarily under the Braun, Fusion, Gillette, and Mach3 brand names. The Health Care segment provides feminine care, gastrointestinal, incontinence, rapid diagnostics, respiratory, toothbrush, toothpaste, oral care, and other personal health care products, as well as vitamins/minerals/supplements primarily under the Always, Crest, Oral-B, and Vicks brand names. The Fabric Care and Home Care segment offers bleach and laundry additives, air care products, batteries, dish care items, fabric enhancers, laundry detergents, pet care products, and surface care products primarily under the Ace, Ariel, Dawn, Downy, Duracell, Febreze, Gain, Iams, and Tide brand names. The Baby Care and Family Care segment provides baby wipes, diapers and pants, paper towels, tissues, and toilet papers primarily under the Bounty, Charmin, and Pampers brand names. The company markets its products through mass merchandisers, grocery stores, membership club stores, drug stores, high-frequency stores, department stores, perfumeries, pharmacies, salons, and e-commerce in approximately 180 countries worldwide. The Procter & Gamble Company has a strategic partnership with Verix, Inc. for building business intelligence capabilities.

Recent Buy

On Tuesday, April 16th I added to my position in Caterpillar (CAT) by purchasing 18 more shares at $82.60 per share.  I would have waited and tried to make the purchase tomorrow to get own the shares in time for the next dividend payment in May, but I got a little confused and saw the ex-div date of April 18th and was thinking that was the record date meaning today was the ex-div date.  Oh well, I still feel it's a fair price, although it is a bit lower starting yield than I'd like.  Caterpillar did lag the market on a generally up day and has recently been under pressure with concerns about the global economy.  I'm not worried about them long-term and if housing does get rolling again here in the United States, that will provide ample demand to keep them going strong.  My total positions for my FI portfolio has grown quite a bit so I was glad to get a chance to add to an existing position.

Wednesday, April 17, 2013

Stock Valuation Method - Average P/S Ratio

This is the 4th part in my series on stock valuation methods.  I've previously covered the Graham Number, Average Dividend Yield and Average P/E Ratio.  Today I'm going to take a closer look at the average low P/S ratio method.  This one is pretty much the same as the dividend yield and price-to-earnings ratio methods except now we focus on the revenue side of the business.

Monday, April 15, 2013

2013 Goals - 1st Quarter Update

I can't believe the 1st quarter has already come and gone.  Now that the 1st quarter is done, it's time to look back and see where I'm at on the goals that I originally set back in January.

2013 Budgeting Goals - 1st Quarter Results
Goal 2013 Amounts Status
80% take-home pay savings rate 84.00% average savings (Jan 85.35%, Feb 82.23%, Mar 84.41%) Exceeded Goal
Less than $1,400 required expenses $1,372.94 average (Jan $1,304.19, Feb $1,500.33, Mar $1,314.30) Exceeded Goal
Reduce Misc. Expenses by 15% (Exp. < $96.51 per mo) $116.83 Needs Improvement
Reduce Restaurant Expenses by 10% (Exp. < $128.31 per mo) $112.07 Exceeded Goal
Reduce Grocery Expenses by 5% (Exp. < $205.64 per mo) $212.76 Needs Improvement

Saturday, April 13, 2013

Weekly Roundup - April 13, 2013

This has been a great week at home, although anytime at home is a great week.  Last Saturday we went hiking with our dog through one of the local state parks and had an awesome time at the hockey game on Sunday even though it made for a long day after her run that morning.  The rest of the week has been pretty boring especially with her having a bit of a cold/sinus/allergy issue.  It seems like she's getting over it so hopefully I can still be home through the weekend and we can go enjoy the great weather.

Whenever I do get back to work there's a chance that I'll be getting to try out some experimental stuff which should be interesting.  It always makes you feel good when they have the confidence in you to let you be the guinea pig.

With the markets continuing their march upward and a new round of ESPP shares hitting my account, my FI portfolio's value including cash surpassed $100k in about 1 year and 8 months time.

On another note, I saw this quote yesterday "We fear things in proportion to our ignorance of them."  Please if you know anyone that fears personal finance or investing, pass them the links to some of the great blogs that are out there.  I wouldn't say it has to be here, but I won't mind if you do. ;)

Thursday, April 11, 2013

Recent Options Transactions

On Tuesday, April 9th I sold 2 more call options on some of my shares of HAL.  If you remember from my previous post, I'm going to start a new strategy in regards to my HAL shares.  They are my employer and I acquire the shares through the ESPP program at work so I continue to receive a  pretty significant number of shares every few months.  My position in HAL is the largest by far in my portfolio and it's not really a great dividend grower, increasing the dividend every few years or so.  They are also my employer, so I'd hate to lose my source of income as well as have a good chunk of my portfolio lose it's value, hence the need for strategy to diversify.

Wednesday, April 10, 2013

Net Worth Update - March 2013

March was a much better month that I expected for my net worth.  I actually almost topped February's increase and that was without having any extra contributions to my 401k for profit sharing or a ESPP purchase, so I'm quite pleased.  I had a little over $1,460 in combined contributions to my 401k and another $1,000 to my ESPP plan.  The really big contributor for the gain was my high income combined with a very high savings rate.  I was able to sock away just under $7,600 from my take home pay, with almost $7,000 going straight to the portfolio.  The rest of the changes was due to the markets or other transactions within the portfolio and of course the dividends received.

Tuesday, April 9, 2013

Recent Option Transactions

I have 2 option trades to announce from yesterday.  I closed out another call option on Halliburton, my ESPP shares, and I also sold a put option on ExxonMobil.  I try to announce every single move that I make for my portfolio to help everyone that follows along get an understanding of my reasoning behind any change.  Plus it gives me a record of what I was thinking at the time of the trade and I can then analyze go back and analyze my reasoning and determine whether the original investment merits are still in place.

Monday, April 8, 2013

Stock Valuation Method - Average P/E Ratio

In an attempt to determine the fair value or a target entry price for a stock, it's best to use multiple methods to compare across different metrics.  This is the 3rd part in my series on stock valuation methods in which I've already covered the Graham Number and the Average Dividend Yield.  Today I'm going to take a closer look at the average low P/E ratio method.  This one is very similar to the average dividend yield valuation.

Sunday, April 7, 2013

Income Update - March 2013

This year has been just amazing.  My income has been way up and that has helped to contribute to so many of my goals for 2013.  I did  really good in March on controlling the expenses, and brought them back in line with January after February's increase due to the cell phone billing issue.  I was actually under both my groceries and restaurant budgets for the month, which rarely happens.  I can usually keep one under but that's because the other is over.  My minimum expenses came in at $1,314.30 which lowered my average thus far in 2013 to $1,372.94 which is currently under my goal of sub-$1,400.  My total expenses for March ended at $1,481.64.  This was a little higher than I wanted but I needed some new running shoes if I want to stay on track with my weight loss goal.  My average total monthly expenses for 2013 sit at $1,512.32 and should hopefully keep coming down.

Saturday, April 6, 2013

Weekly Roundup - April 6,2013

This past week was great.  We have a bit of a cool front dip down to south Texas to cool things off and the best part was that it came the day before we were having to be really busy since we had finished drilling the well.  Even better is that we should get 4-5 days of bonus out of this well which will be another $1,600-$2,000 coming my way on top of the $800 we got for the previous well.  No complaints from me about that.  But the best part about this week is that I'm now home with my wife and should get to spend the next 1.5 weeks with her while they're finishing up with the well and then moving the rig to the next location.

Thanks to everyone that mentioned Passive Income Pursuit this past week.  I really appreciate it and couldn't help grow my blog without you.

Thursday, April 4, 2013

Johnson and Johnson Dividend Stock Analysis

I've been meaning to revisit my analysis on Johnson and Johnson since it's been a year since I first looked at them.  I've learned so much more about stock analysis in that time so this will be more thorough and hopefully more insightful.  They are a dividend champion with 50 consecutive years of increasing dividends.  J&J closed trading on Wednesday, April 3rd at $82.07.

Company Background (sourced from Yahoo! Finance):

Johnson & Johnson, together with its subsidiaries, engages in the research and development, manufacture, and sale of various products in the health care field worldwide. The company operates in three segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics. The Consumer segment offers products used in the baby care, skin care, oral care, wound care, and women’s health fields, as well as nutritional and over-the-counter pharmaceutical products, and wellness and prevention platforms under the JOHNSON’S, AVEENO, CLEAN & CLEAR, NEUTROGENA, RoC, LUBRIDERM, DABAO, VENDÔME, LISTERINE, REMBRANDT, REACH, BAND-AID, NEOSPORIN, CAREFREE, STAYFREE, SPLENDA, TYLENOL, SUDAFED, ZYRTEC, MOTRIN IB, and PEPCID AC brand names. This segment markets its products to the general public, as well as to retail outlets and distributors. The Pharmaceutical segment provides various products in the areas of anti-infective, antipsychotic, contraceptive, gastrointestinal, hematology, immunology, infectious diseases, neurology, oncology, pain management, thrombosis, and vaccines. This segment distributes its products directly to retailers, wholesalers, and health care professionals for prescription use. The Medical Devices and Diagnostics segment offers products to treat cardiovascular disease; orthopaedic and neurological products; blood glucose monitoring and insulin delivery products; general surgery, biosurgical, and energy products; professional diagnostic products; infection prevention products; and disposable contact lenses. This segment distributes its products directly, as well as through surgical supply and other distributors to wholesalers, hospitals, and retailers.

Wednesday, April 3, 2013

Recent Buy and 2 Closed Options

I try to be as transparent as I can with my moves for my portfolio in order to let my readers know exactly what my reason for any investment was.  Plus it allows me to go back to analyze the reasons for any transaction and determine if it's time to sell.  Yesterday morning I purchased 18 shares of Air Products and Chemicals (APD) for $85.21 per share and today I closed out the $41 call on Halliburton and the $27 put on Microsoft.

Tuesday, April 2, 2013

Stock Valuation Method - Average Dividend Yield

We all want to be able to assign a fair value to a stock to determine what price we should pay for a share iof a potential investment.  This is the 2nd post in my series on different stock valuation methods.  I've previously covered the Graham Number and today will examine the average dividend yield method.

Monday, April 1, 2013

Dividend Update - March 2013

Wow, I can't believe that March has come and gone.  Time just keeps going faster it seems, which is all the more reason to reach FI as early as possible.  It's time for another installment of my favorite monthly update; the Dividend Update.  March set a new monthly record for dividend income.  It's great to see the dividends continue to add up and compound.  This was a 581% increase over March 2012, of course that's off a much smaller base to compare to.  I hadn't really been able to start investing really heavy in dividend growth stocks since I needed to pay off some debt.