Thursday, July 31, 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.

Earlier this week I wrote about another rental propportunity that I happened to find.  Given the right property in the right location you can generate a lot more cash flow on a monthly basis by investing in real estate.  However, my big concern with going that route is being adequately diversified.  The approximate $25k that I'd need for the downpayment on that property would only net me on property and require the use of debt or I could continue to build ownership stakes in 5-10 companies.  Since I'm still a little undecided on rental properties as an option right now, I still like to invest in real estate investment trusts (REITs).  So yesterday I added to one of the best run REITs out there, Realty Income (O).

Wednesday, July 30, 2014

What's Your Weight?

No I'm not asking you to divulge your body weight, although if that will help you with any weight loss goals you have feel free to do so.  The weight I'm referring to has to do with your portfolio.  I think we all understand the importance of diversification, especially for those looking to live off the dividends your portfolio churns out.  You don't want to be left owning a few companies or a be highly concentrated in one segment of the economy as we all know how that worked out for those that were heavily invested in the finance sector during 2008/9.

Most dividend growth investors that I've spoken with agree on the importance of diversification and fall somewhere in between wanting to own 20-50 companies in their portfolio.  I currently own 41 companies and I'm trying to really focus on building positions up rather than continually expanding into new positions.  So when it comes to diversification you can either weight your portfolio based on capital value or on dividends paid.  In a perfect world all companies would pay the same yield to make this a lot easier but we have to work with what's available.  I created a chart showing the weighting of my taxable portfolio based on current capital value and on the dividends each position provides.

Monday, July 28, 2014

Another Rental Propportunity

One of my goals for this year was to purchase a rental property to further diversify my passive, well semi-passive, income sources.  After the first quarter of the year I figured it probably wouldn't be a realistic option because there's a lot of obstacles to overcome given my work schedule.  It had been a while since I looked at potential real estate investments but earlier this month I decided to browse around a bit on the internet and found a really great opportunity.

Based on the pictures I found online the property looks to be in pretty good shape.  There's laminate wood flooring throughout with newish appliances.  The previous owners had added on an extra room that added an extra 342 sf to the house which is essentially a second living room.  I used to live in this same neighborhood before my wife and I bought our own house and the area is in a great location with easy access to two main highways.  It's a small neighborhood off on it's own and isn't the greatest of neighborhoods but would probably be considered a B/C neighborhood.

Saturday, July 26, 2014

Weekly Roundup - July 26, 2014

Another week of being home for a while and then heading back to work.  Although I think I'm glad to be back at work so I can finally get some rest.  My wife and I were busy just about the whole time that I was home.  Saturday was spent painting, well picking up some small test paint samples and painting, and running errands.  Sunday we spent most of the day with my grandparents; giving my grandmother a break and helping out with my grandfather.  He's back home now but still has a ways to go.  Monday we ran some other errands that I can't even remember what we all we did and then bought a new car for my wife.  An Acura RDX if you're interested; a bit more expensive that I really wanted to spend on a vehicle but hers was old and starting to break down and she really wanted it.  We were debating between the Hyundai Santa Fe and the Acura RDX but went with the RDX because it drove better and had a few more features she wanted for about $5k more from the quote we got on the Santa Fe.  I figured since she has to deal with me being gone a lot she deserved a bit of a luxury in the meantime.  Tuesday we spent a solid 5.5 hours cleaning out our garage.  It was still a big mess from when we moved last year and it feels great to finally get it cleaned out and organized.  Then it was back to work.  So it was a pretty busy week in general.

Friday, July 25, 2014

Recent Buys

Man it feels good to be back and adding to my forward dividends.  It was 1 month exactly since I made a purchase so it's been a long time coming.  I guess the main reason is that my attention was being pulled in a million different directions so it was hard to focus on any specific one.  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.

Wednesday, July 16, 2014

2014 Goals - 1st Half Update


Time keeps on slippin', slippin', slippin' into the future.  Somehow the first half of the year is already over.  It seems like just a few weeks ago I was reporting on my progress for the first quarter and now another quarter is over and done with.  I think it's important to set specific, measurable goals at the beginning of each year to keep you focused and motivated towards hitting your goals.  It's important for them to be measurable so you can see exactly how you're progressing.  Back in January I set several goals covering budgeting, savings, investing, blogging, and personal goals, so it's high time I take a look and see how I'm doing.

2014 Budgeting Goals - 1st Half Results
Goal 2014 Amounts Status
Grocery spending < $200 per month $223.70 Needs Improvement
Restaurant spending < $110 per month $106.76 Needs Improvement
Average monthly expenses < $2,350 per month $2,638.12 Needs Improvement

Tuesday, July 15, 2014

Reynold's American (RAI) to buy Lorillard (LO)

This morning it was announced that Reynold's American (RAI) would buy methol cigarette maker Lorillard (LO) in a deal valued at $68.88 per share.  If the acquisition is approved then LO shareholders will receive $50.50 in cash for each share of LO and 0.2909 shares of RAI at closing which is projected to take place in 2015.  I was quite surprised to see that shares of both LO and RAI sold off pretty hard on the news with RAI losing 6.9% on the day and shares of LO losing about 10.5%.  Pretty surprising considering that when talks of a potential merger/acquisition surfaced shares of LO had increased strongly on the rumor.

The deal could definitely face some headwinds due to regulatory and anti-trust concerns and could therefore fall through.  If the merger is given the green light then the new company will be divesting some of the smaller brands to the British tobacco company Imperial Tobacco.  What was really surprising to me is that one of the brands that will be sold off is the Blu e-cigarette that Lorillard currently owns.  Blu is the leader in the e-cigarette market and I don't understand why you would want to get rid of that even if RAI is coming out with their own e-cig called Vuse.  This is the most baffling piece of information about the merger, at least to me.

Can Johnson & Johnson Cure What Ails Your Portfolio?

Johnson & Johnson (JNJ) is well known around the dividend growth investing community with over 50 consecutive years of dividend increases. Chances are there's Johnson & Johnson products in your medicine cabinet right now and if you've ever had to take prescription medicine or had a medical procedure you've most likely used its products even if you didn't know it. Johnson & Johnson is a diversified giant in the health care industry. Johnson & Johnson closed trading on Friday, July 11th at $105.10 giving a current yield of 2.66%.

Discounted Earnings: 

Analysts followed by Yahoo! Finance expect Johnson & Johnson to grow earnings 6.96% per year over the next 5 years and I've assumed they can grow at 5.22% (75% of 6.96%) for the next three years and at 4.00% in perpetuity. Running these numbers through a discounted earnings analysis with a 9% discount rate and summing over 30 years yields a fair value price of $111.61. This means the shares are trading at a 5.8% discount to the discounted earnings analysis.

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

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To check out previous stock analysis reports check out the Stock Analysis page.

Monday, July 14, 2014

Net Worth Update - June 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 up again this time adding 1.9% during June.  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 and for May a rising tide lifted all boats.  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 under $4,000 in after-tax savings from my paycheck, around $560 in ESPP contributions, and just over $770 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 June saw a $10,723.85 increase in my net worth.

Sunday, July 13, 2014

Weekly Roundup - July 13, 2014

As most of you know I was on vacation in Nashville over the past 1.5 weeks and it was awesome.  It's always great to get some time to go have fun and see some good friends.  Even better was that we happened to be vacationing over the July 4th weekend which meant there was lots to do.  We went to the hot chicken festival which was good although it did involve standing in a bunch of lines.  It was definitely worth it although I wish we could have tried more than one company's hot chicken.  Hot chicken, for those that don't know, is a local specialty in Nashville that is exactly what it sounds like spicy friend chicken.  We only got to try out Hattie B's and it was delicious.  With July 4th happening we also got to go enjoy the second best fireworks display in the nation as rated by the American Pyrotechnics Association.  There were over 30,000 fireworks set off in less than 30 minutes which is pretty cool if you like watching fireworks displays.  We were also looking for things to do on Monday and for anyone that likes puzzles and is in the Nashville area or where they have other places like this I'd highly recommend it.  We went to the Nashville Escape Game and did the Underground Playground room.  The four of us and 10 other people were locked in a room (claustrophobes don't worry you can leave if you want) and had to solve a series of puzzles in order to try and "escape" the room.  It seems a bit expensive at $28 per person for 1 hour but it was definitely a lot of fun.  We also did a little bit of geocaching (a great cheap entertainment) near our friends house and finished with a trip to Arnold's and the Johnny Cash Museum.  Arnold's Country Kitchen is a meat and three (sides) restaurant that has honestly some of the best chicken and dumplings, mashed potatoes, green beans and the best collard greens I've ever eaten.  Go there if you're in Nashville for whatever reason.  You won't be disappointed.  But get there early because the line starts forming before place opens.

So I was quite busy with everything we tried to pack into our trip and then coming back home to get a few things done before heading back to work.  Since then I've been back to the grind and trying to find places to invest some capital.  Unfortunately that didn't happen this past week but the markets have been a bit more choppy lately so there's always the possibility for some better valuations on the horizon.  I didn't get a lot of writing done but I'm working on that for the next week or so.  I've got some stock analysis reports to get written up and hopefully posted soon in case we do get that elusive pullback.

Friday, July 11, 2014

Income Update - June 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, July 5, 2014

Weekly Roundup - July 5, 2014

My wife and I flew in to Nashville to see some friends of ours and man the change in weather alone is worth the trip.  Instead of 95+ with 90% humidity we're looking at some mid-80's temperatures.  Perfect weather to be outside.  I'm not really sure what all is in store for our time here but I know it's going to be awesome.  One thing I'm definitely looking forward to is the fireworks display on July 4th.  Back to the future right?  It's ranked the 2nd best in the nation and I can't wait to see it.  Other than that it's going to be relaxing and doing whatever we feel like doing.  Enjoy the time with family and friends this holiday weekend.

I didn't make any purchases this past week, although it was a holiday shortened week.  I came close to making a few buys but we got some good jobs report numbers and a much better mood from Mr. Market which quickly shot some companies away from my buy zones.  Oh well, eventually there will be other opportunities to add to great companies.  I did recently add to my position in both Procter & Gamble (Full Analysis Here) and Deere & Company which you can read about here if you're interested.  The really exciting thing was getting to tally up all of the dividends I received in June though.  I passed the $600 mark for the first time which was awesome.  It's amazing to see the dividends growth month after month.

Friday, July 4, 2014

Happy 4th of July!



Happy 4th of July to all of you!  I'm so blessed to live in a country where I have the freedom to pursue just about anything that I want to go after.  I'm also so glad to be in a position to pursue financial freedom.

Safe travels to all of those that are travelling.  My wife and I left yesterday to go to Nashville for about 6 days.  It's a very much welcomed bit of relaxation and a chance for me to recharge my batteries a bit.  Enjoy the fireworks if you're checking them out this holiday weekend and have a great day with your family and friends!

Photo credit: FreeDigitalPhotos.net

Thursday, July 3, 2014

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.  I'm a bit late on getting these out but better late than never.

Wednesday, July 2, 2014

Dividend Update - June 2014


June was a solid month for dividends and pretty much steady as she goes.  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.  I was able to set a personal best in dividends received during March which is great motivation and helps to keep me on track.