Saturday, May 31, 2014

Weekly Roundup - May 31, 2014

We live in some truly amazing times.  The World Cup will be starting soon and there's a doctor from Brazil that has the audacious plan to have a paralyzed person be able to use a exoskeleton suit and control it with his own mind.  It's truly amazing to think that we are on the cusp of being able to see paralyzed people walk again on their own accord.  You can read the full article at The Dream Kickoff, it's awesome to see the things that people can come up with.

I didn't make any moves in my portfolio this past week although I did finally get my full write up about my recent purchase of YUM Brands.  I wouldn't say it's all that cheap here but they should have a long runway for growth and it's still a decent starting point for a position.  I'll be looking to add on any dips in the future.  I I finally got a chance to start writing again after my time was being filled with checking on my grandfather.  He's been moved to a physical therapy/rehab center so hopefully we can get him walking again and back on his own in a few months.  I'll be glad to go see him again once I'm home this weekend since I had to get back to work.  All the more reason to strive for financial independence.  If I didn't have to rely on employment income I'd be free to spend as much time as I could with my family.  It feels great to get a chance to write some more.  I received a request to do a full analysis on Cracker Barrel and the results from the last few years have been truly amazing.  You can read the full analysis here.

Friday, May 30, 2014

Is Cracker Barrel Old Country Store, Inc. Cooking Up Rewards For Investors?

Cracker Barrel Old Country Store Inc. (CBRL) has been a dividend darling the past few years with huge dividend increases and massive share buybacks while the share price was depressed. If you do a lot of travel by car you're most likely familiar with the old-timey restaurant/gift shop combination stores. It's' down home country cooking is great for the road weary traveler. Every now and then I get in the mood to venture away from the tried and true dividend growth companies and search for new-to-me companies to research and follow. As a dividend growth investor seeking to reach financial independence it's usually the new-to-me companies that are providing much higher dividend growth rates which is just icing on the cake. Cracker Barrel Old Country Store Inc. closed trading on Wednesday, May 28th at $101.14 giving a current yield of 3.95%.

Discounted Earnings:

Analysts followed by Yahoo!Finance expect Cracker Barrel to grow earnings 10.10% per year over the next 5 years and I've assumed they can grow at 7.58% (75% of 10.10%) for the next three years and at 4.00% in perpetuity. Running these numbers through a discounted earnings analysis with a 10% discount rate and summing over 30 years yields a fair value price of $114.95. This means the shares are trading at a 12.6% discount to the discounted earnings analysis.

Click here to read the rest of the analysis on Seeking Alpha.

If you'd like to receive posts via email you can do so here or on the Subscribe page at the top of this blog. As an email subscriber you'll be the first to know about ideas that are running around in my head for the blog. Also make sure to follow me on Twitter @ JC_PIP to get real time updates of purchases and what I'm reading.

Tuesday, May 27, 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.  I normally try and get these posts up within a day or two of the purchase but like I mentioned in my option transaction post my grandfather was in the hospital and so I needed to be there.  Things are looking much better and he's supposed to get moved to a rehab/PT center today if things still go as planned.

Thursday, May 22, 2014

Recent Option Transactions

It feels great to get back to sense of normalcy.  I was off work for 2.5 weeks although originally it was just supposed to be 1.  The first part of my time off was great since I got to hang out with some great buddies of mine and we went to Vegas for a bachelor party.  However, all of the fun ended on Tuesday when I found out my grandfather had fallen and broken the head of his left femur and left humerus.  Not good at all for a 93 year old.  It's been a huge emotional roller coaster ever since he went into the hospital but they were finally able to do surgery on his left on Tuesday and we're all hoping for a great recovery.  I've had very little sleep the last 1.5 weeks so I'm kind of glad to get back to work and back into a routine.  Things are starting to get back to normal so it's time to catch all of you up on what's been going on with my portfolio, namely some options updates in this post and a new position in an upcoming post.

Saturday, May 10, 2014

Weekly Roundup - May 10, 2014

That's right I'm heading to the land of frugality and simple life:  LAS VEGAS!  Okay, maybe it's the land of excess, either way I'm excited.  I wish my wife could be joining me but she wouldn't exactly be welcome on a bachelor party for one of my friends.  It's going to be great getting to spend a few days in Vegas with some of my great friends.  Actually I've known everyone that's going for over half of my life which is pretty amazing.  We don't always keep in touch as often as we should but it's always fun when we get together.  I expect to have a crazy weekend and most likely very little sleep.  The last time we all went together I think I got all of about 6 hours of sleep the whole time we were there.

Friday, May 9, 2014

Net Worth Update - April 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 essentially flat for the month increase 0.50%.  Although with some disappointing earnings reports, announcements from the Fed, and the issues in the Ukraine led to a much more volatile month than the end result.  Since more and more of my net worth is tied to the markets, there's a larger between my net worth and 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 over $6,000 in after-tax savings from my paycheck (although only $4.5k is directly earmarked for savings/investment), around $850 in ESPP contributions, and over $1,150 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 April saw a $10,725.43 increase in my net worth.

Wednesday, May 7, 2014

Income Update - April 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.

Saturday, May 3, 2014

Weekly Roundup - May 3, 2014

Another week and another month is in the books and now we're on to May.  With the markets going everywhere and nowhere during the month and May now upon us, the usual chatter of "sell in May and go away" is coming up.  Personally I'm looking forward to the markets retreating some to allow us all to invest in great companies at better valuations.  There's definitely some headwinds for the markets since it's been a somewhat disappointing earnings season with a lot of companies beating on earnings but missing on revenues.  To me that signals better cost control and cost cutting rather than solid core fundamental growth.  But all we can do is invest capital at whatever we feel are good valuations.  I try to stay away from building too large of a cash position because I haven't found a way to time the market and no one else has either.  A lot of people were calling for a big decline all throughout 2013, but we ended up with about 30% gains across the market.

Friday, May 2, 2014

Colgate-Palmolive Company: High Quality But Should You Buy?

As a dividend growth investor, consumer staples companies are great because people need to brush their teeth, clean their house and wash their body whether the economy is in boom or bust mode.  It's the consistency in their operations and steady, although sometimes slow, growth that allows them to continue to grow year in and year out and the reason why you can find several consumer staples companies on the list of dividend champions.  Earlier this week I updated my valuation on The Procter & Gamble Company (PG) (Full Analysis Here) but today I wanted to see how Colgate-Palmolive Company (CL) stacks up.  Colgate-Palmolive closed trading on Monday, April 28th at $67.86 giving a current yield of 2.12%.

Discounted Earnings:

Analysts followed by Yahoo!Finance expect Colgate-Palmolive Company to grow earnings 8.90% per year over the next five years and I've assumed they can grow at 7.12% (80% of 8.90%) for the next three years and at 3.50% in perpetuity.  Running these numbers through a discounted earnings analysis with a 10% discount rate and summing over 30 years yields a fair value price of $62.01.  This means the shares are trading at a 9.4% premium to the discounted earnings analysis.

Click here to read the rest of the analysis on Seeking Alpha.

If you'd like to receive posts via email you can do so here or on the Subscribe page at the top of this blog.  As an email subscriber you'll be the first to know about ideas that are running around in my head for the blog.  Also make sure to follow me on Twitter to get real time updates of purchases and what I'm reading.

Thursday, May 1, 2014

Dividend Update - April 2014

Somehow April is already in the books and now it's time again for my favorite monthly update, my dividend update.  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 to 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.  April treated me quite well on the dividend front and finally cross $200 in one month for the January, April, July, October payout schedule.  Dividend growth investing is hardly a get rich quick strategy as it takes time, consistency, and dedication to build up your portfolio and its' dividend stream.  You can check my dividend income or progress page to see what dedication to an investment plan can give you.  The beauty of investing in dividend growth stocks is that you don't have to spend 40 hours a week earning that money.  The companies do the work for you and cut you a check.  May will probably be the last month that I have automatically reinvested dividends since I decided to try collecting them in cash and reinvesting them with new capital.  Time will tell if I keep it that way.