Wednesday, December 30, 2015

New Year, New You, New Goals


2015 is winding down and 2016 will be in full swing before we know it.  This past year was very crazy for my wife and I and we're both ready to move forward into 2016 and get back on track.  Financially it was fairly difficult and we ended up taking some steps backwards on our road to financial independence but we would have gladly taken much bigger steps back if it would have meant things would have turned out differently.

The new year is traditionally the time when people make resolutions for the coming year.  Typically resolutions center around health and wealth; however, if you ask the average person about their resolution there's very little meat to them.  A typical answer is something along the lines of lose weight, save more, or something else that is just too broad to keep their focus for more than a few weeks.  That's why you'll see the gyms packed in the first days of the new year but slowly see the headcount drop as the month marches on.

Monday, December 28, 2015

Recent Sell


Whenever I make a new purchase, or the rare sale, for my portfolio I feel it's only fair to get a post written giving all of the juicy details.  Normally I try to get the posts out as quickly as possible but there was way too much going on in my personal life over the past two months that I just didn't have the time.  So I want to update you all on some of the changes made to my portfolio.  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.

Friday, December 25, 2015

Merry Christmas!


Merry Christmas to all of you!  I love the Christmas and holiday season because it traditionally means gathering with family and friends.  I hope you all take the time today to enjoy your time with family and friends and focus on those that mean the most to you.




Image provided by Idea Go on FreeDigitalPhotos.net

Wednesday, December 23, 2015

The Continued Sell-Off In Shares Of V.F. Corporation Is Juicing Expected Returns


Chances are you have at least a couple of clothing items that V.F. Corporation (NYSE:VFC) offers within your closet. Whether it's jeans, backpacks, t-shirts, jackets, shoes, boots, you name it and V.F. Corporation likely sells it. Among its brands, it has 2 that provide over $2 billion in annual revenue and several sporting double-digit year-over-year growth. Shares have continued to trend lower due to low retail expectations and currency headwinds; however, the shares offer a compelling valuation at current levels.

V.F. Corporation is a dividend aristocrat with 43 consecutive years of increasing dividends. Every $1 invested in VFC 10 years ago is worth $5.76 today which is a 19.1% annualized return. Every $1 invested in VFC 20 years ago is worth $15.66 today, which is an excellent 14.7% annualized return. 

Projected Earnings and Dividend Growth

Before we move into the valuation analysis, let's get some general information out of the way. The reference entry price will be the closing price from December 21, $62.35, with an assumed purchase date of December 23. For fiscal-year 2015, V.F. Corporation is expected to earn between $3.11 and $3.18 with dividend payments totaling $1.33. This pegs the 2015 payout ratio between 41.8% and 42.8%. Return calculations will go through December 31, 2018 at a price of 20x 2018 earnings per share.

Continue reading the V.F. Corporation Valuation Analysis on Seeking Alpha.

To view more of my analyses check out my Stock Analysis page or in the following Google Sheet.




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Monday, December 21, 2015

Dividend Growth Investing at Work - Dialing Up More Dividends


Something I love about dividend growth investing is that each month I get to hear about companies I own deciding to pay me more money in dividends.  Just for owning a small portion of said companies.  Not going and doing R&D for new products or technology.  Not selling any products.  Not managing any employees or inventory.  Not making sales calls.  All I had to do was have the foresight to invest some of my savings in excellent companies.  That's dividend growth investing at work!  I mean who doesn't like getting a raise for doing nothing?

Saturday, December 19, 2015

Weekly Roundup - December 20, 2015


As the Notorious B.I.G. sang "Mo' Money, Mo' Problems", although this past week has been more like "Mo' Problems, Mo' Money".  I'm still out in West Texas which I'm not happy about and to make matters even worse we've essentially made no progress over the last week.  But not all is lost since whenever there's problems out here it means I make more money which means more savings which means more investing.  Plus how many other jobs out there can you get paid to play video games/watch movies while there's issues that aren't related to your specific part of the job?  That's good in small doses but when it keeps happening over and over it gets frustrating since it does mean I'm away from my wife.

Friday, December 18, 2015

Dividend Growth Investing at Work - Raising Rents and Dividends


Something I love about dividend growth investing is that each month I get to hear about companies I own deciding to pay me more money in dividends.  Just for owning a small portion of said companies.  Not going and doing R&D for new products or technology.  Not selling any products.  Not managing any employees or inventory.  Not making sales calls.  All I had to do was have the foresight to invest some of my savings in excellent companies.  That's dividend growth investing at work!  I mean who doesn't like getting a raise for doing nothing?

Wednesday, December 16, 2015

Net Worth Update - November 2015


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.  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 but in the long run as I continue to save and invest the net worth trend should be higher even though short term fluctuations can vary wildly.  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.

October was great for the net worth and November followed up with a very meh month.  The S&P 500 was essentially flat for the month which meant changes were primarily made via savings.  Unfortunately there wasn't much on the savings front due to me forgetting about our homeowner's insurance bill being due. which took away pretty much all the investment capital.  The majority of our net worth is tied to the performance of the stock market so a break from the roller coaster of the last few months was welcomed  The good news though is that the market changes are just noise to try and get your emotions to make you do something foolish.  It's the dividends that help to keep you sane when the markets are crazy or even boring.  Dividends are always a positive portion of return and in November we ended up with over $420 in dividends received.

Even better was the THREE dividend increases announced during the month.  That's extra money for doing nothing and I'm way okay with that.

For the month our net worth was flat just like the markets with a decline of just $12.46.

Tuesday, December 15, 2015

Keep Your Parents and Your Portfolio Moving with Stryker Corporation


When looking at my portfolio, one thing that stands out is the lack of exposure to the healthcare sector. I don't necessarily aim for certain sector allocations within my FI Portfolio; however, I'm very bullish on the sector and would like to increase my exposure there.

There's no denying that the healthcare sector is facing massive tailwinds with the "Baby Boomer" generation retiring daily. According to a 2014 report from the Census Bureau, the U.S. population of those 65+ is expected to nearly double between by 2050. The bulk of that growth is expected by 2035.

Given the demographic trends and vital nature of the healthcare industry, I've been looking for companies that fall into the sector and also fit my desire of being excellent dividend growth companies. Stryker Corporation (NYSE:SYK) is one such company that has grown dividends for 23 consecutive years.

Every $1 invested in Stryker Corporation 25 years ago is worth $55.83 today. That's 17.4% annualized growth. Historically Stryker has delivered excellent returns for investors and I expect that to continue moving forward. However, valuation is key to determining future returns, so I wanted to look at the current valuation for shares of Stryker and the future return prospects over the next 3 years.
Continue reading the Stryker Corporation Valuation Analysis on Seeking Alpha.

To view more of my analyses check out my Stock Analysis page or in the following Google Sheet.




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Monday, December 14, 2015

Why Dividend Growth Investing is Awesome!


There's lots of reasons to love receiving dividends from your portfolio.  For starters they are a truly passive income source.  You don't have to go around making sales calls or doing paperwork for the company.  All you have to do is invest in some of the best companies in the world and collect the checks.  Even better is that many companies increase their dividend payment each year which is a nice bonus since it means you get to collect even more money just for having an ownership stake.

A passive income source that tends to grow each year is right in the wheelhouse of those that are pursuing financial independence.  Financial independence is when your dividends, or other passive income sources, are higher than your expenses.  That gives you the freedom to pursue whatever it is your heart desires.  Whether it's writing the next great American novel, volunteering, spending time with family, doing extensive travelling, changing careers to something that might be more emotionally rewarding but not as financially rewarding as you need for your lifestyle.  The possibilities really are endless whenever your expenses are covered without having to commit 1/3 or more of your day to work.

Saturday, December 12, 2015

Weekly Roundup - December 12, 2015


I can't believe that we're already almost half way through December where in the world has the time gone?  We'll be on to 2016 in the blink of an eye.  I never understood this as a kid but time really does speed up as you get older.  Of course that's why so many of us are working to build up our portfolios to be able to own our time once more instead of slaving away for "the man".

Unfortunately I'm still at work and even worse is that it's out in West Texas.  Don't get me wrong there's some great things about West Texas but working out here is not one of them.  For starters it's about 10 hours from home.  And let's not forget the fact that it takes hours to get to any place worthwhile.  But one of the great things about it is that there's some truly amazing sunrises and sunsets.  I snapped the photo at the top earlier this week.

With Christmas just around the corner what better way to spread some Christmas cheer than with some free stock?  I can't think of anything much better.  Fellow blogger Ben over at Sure Dividend is offering a drawing for a $100 stock gift card through StockPile for the top 3 ranked Sure Dividend Stocks.  That's $300 total to invest in some of the best companies out there just for joining the drawing.  You can sign up for the contest via this link.  But hurry because the giveaway ends on December 15th with prizes awarded on December 16th.

Friday, December 11, 2015

Restarting the Roth IRA


For some unknown reason taxes and tax optimization has struck my fancy since returning back to work and blogging regularly.  Today I wanted to look at some of the benefits of Roth IRA's and why I'm glad that we're finally getting to invest in them again.

Roth IRA's are a powerful tool for long term investors.  The way Roth IRA's work is that you pay taxes on your income now but once you invest your savings inside a Roth IRA everything is tax free whenever you withdraw the funds.  That's tax free capital gains and dividends, at least as the law is currently written.  There's no immediate tax break but you reap the tax benefit later on by not paying taxes.  For those seeking financial independence that's a huge boon to provide tax free income to get you through the in between years of financial independence and access to traditional retirement accounts like 401ks.

Another benefit of Roth IRA's is that you can withdraw your principal after the account has been open 5 years.  That might not be the best route for long term wealth creation, but it's a nice benefit to help you through the bridge years if you just can't stand working any longer.

Wednesday, December 9, 2015

Dividend Update - November 2015


It's the end of one month and the beginning of another so it's time for my favorite update: my dividend update.  These dividend updates reflect all dividends that I receive through my investing pursuits. I hope they 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 open up all sorts of possibilities. You can check my dividend income or progress pages to see what dedication to an investment plan can give you.

Tuesday, December 8, 2015

Recent Sell


Whenever I make a new purchase, or the rare sale, for my portfolio I feel it's only fair to get a post written giving all of the juicy details.  Normally I try to get the posts out as quickly as possible but there was way too much going on in my personal life over the past two months that I just didn't have the time.  So I want to update you all on some of the changes made to my portfolio.  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.

Monday, December 7, 2015

Church & Dwight Co Inc.: Dividends Will Satisfy, Total Returns Look Dirty


One of my goals for the year was to increase my exposure to consumer staples companies in my portfolio. Consumer staples tend to have less fluctuations in their operations compared to other sectors of the economy. They also typically have pricing power and a strong baseline demand that doesn't change with the strength of the economy. Their stable nature makes many of them excellent candidates for investment within a dividend growth portfolio.

Identifying high quality consumer staples companies is the easy part. Finding the shares trading at attractive valuations is the hard part. One company that I've been watching for years is Church & Dwight (NYSE:CHD). Their products are likely found within just about every household in America. Looking at companies like Procter & Gamble (NYSE:PG) and Colgate-Palmolive (NYSE:CL), there's no doubt that there's profits and growing dividends within the sector.

What intrigues me most about Church & Dwight is their size. Church & Dwight's market cap sits at just 11.37 B while Procter & Gamble and Colgate-Palmolive sit at 211.74 B and 59.50 B, respectively. This makes them an excellent candidate for outsized growth compared to their competitors that are already behemoths.

Continue reading the Church & Dwight Co., Inc. Valuation Analysis on Seeking Alpha.

To view more of my analyses check out my Stock Analysis page or in the following Google Sheet.




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Saturday, December 5, 2015

Weekly Roundup - December 5, 2015


This past week was pretty boring and quiet.  Work was smooth on our end but unfortunately it was quite slow during what should be one of the faster sections of the well.  I can't stand when things are slow out here because every hour making no progress out here means that's another hour I'm not at home with my wife.  But at least it pays the same whether I'm actually working or just watching tv as long as I'm out here.

There's not a whole lot to report this week because frankly very little happened.  That's good and bad though.  I'm getting frustrated with how many different expenses keep creeping up on me though.  It seems like every month there's another $1-2k expense that I had forgotten about after being out of the loop for much of this year.  I know I've said this before but I think we might finally be caught up on things.  There's still some significant savings we need to come up with regarding our property taxes but if there's no other emergency expenses that need to be covered then we should be able to hit that pretty easily.  I'm excited to finally start getting back to investing because while I love writing about it and analyzing companies I love practicing what I preach even more.

Friday, December 4, 2015

Will United Parcel Service, Inc. Ship More Dividends Your Way?


If I own a company that makes a product for consumers, there's a few options as to how I can get those goods into the consumers' hands. I can build out smaller, local factories and rely on local shipping methods, although that would lead to a decrease in efficiency due to smaller scale plants and profitability due to needing more employees. I can also build fewer larger factories that would improve efficiency and profitability but would require me to build out a distribution network, which would be time consuming and expensive. Or I could contract with one of the best logistics companies in the world to deal with the shipping and likely save money over the long run.

The company I'm talking about is United Parcel Service (NYSE:UPS), a leader in getting goods to where they need to be on time. United Parcel Service currently has a 6-year dividend growth streak after keeping the dividend steady during the Great Recession. However, the dividend has not been decreased since being initiated in 1999.

Every $1 invested in United Parcel Service 20 years ago is worth $2.20 today, which is just a 5.1% annualized return. The lackluster returns are largely due to the lofty valuations that reduced the operational growth of the company. Shares of United Parcel Service currently offer an initial yield of 2.82%.

Continue reading the United Parcel Service Valuation Analysis on Seeking Alpha.

To view more of my analyses check out my Stock Analysis page or in the following Google Sheet.




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Thursday, December 3, 2015

Position in Focus: Union Pacific


Back in October I mentioned how we were going to be in a lower tax bracket this year compared to last year and most years going forward.  We're dropping from the 28% tax bracket all the way to the 15% bracket because of much lower income this year.  Going forward I expect us to be in the 25% tax bracket in most years so it makes sense to try and take advantage of the lower rates while we can.  As such it would make sense to maximize our capital gains this year since we would pay 15% on short term gains and 0% on long term compared to the expected 25% and 15%.

However, there's still the opportunity to do some tax loss harvesting as well.  The downside to doing tax loss harvesting though is that we'll get a bigger benefit out of it in the future when we have higher tax rates.

There's a lot of factors that go into the decision making process when considering whether the harvest tax losses or not.

One holding that I'm considering doing tax loss harvesting on is Union Pacific (UNP).  I originally purchased 2 different lots of Union Pacific at much higher prices in June of this year at $101.81 and $97.49 per share cost basis', respectively.  The current share price is down at $83.99 which means the position is sitting on a 15.87% short term capital loss.  I have received one dividend payment though that helps to ease the sting slightly that bumps the total return to just a loss of 15.32%.

Wednesday, December 2, 2015

Delivering Dividends With Owens & Minor Inc.


I currently own just 3 companies that are directly health care related, although I do own some health care REITs that provide additional exposure to the industry. According to a 2014 report from the Census Bureau, the 65+ population in the United States alone is expected to double from approximately 40 million currently to 80 million by 2050, with the majority of those gains seen over the next 10-15 years.

An unfortunate side effect of aging is that your health care costs rise precipitously. It's estimated that about half of your lifetime medical expenses will be incurred from the age of 65 on. I'm very bullish on the health care sector because it's an essential part of everyone's lives, and the aging population will provide a tailwind for the industry. The demographics for increased health care spending make the industry very intriguing from an investment standpoint, and as such, I want to increase my exposure to the sector.

Owens & Minor, Inc. (NYSE:OMI) is a company within the sector that should do well as the need for health care supplies expands over the coming decades. Owens & Minor is a logistics company that deals with shipping medical supplies across the United States and Europe. Since they don't manufacture the supplies themselves, they are less exposed to potential regulation that could harm their profitability.

Continue reading the Owens & Minor, Inc. Valuation Analysis on Seeking Alpha.

To view more of my analyses check out my Stock Analysis page or in the following Google Sheet.




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Tuesday, December 1, 2015

Has It Really Been Four Years Already?


Four years.  In early November I reached my 4 year "blogiversary".  I honestly don't know where the time went because it doesn't seem like it was 4 years ago that I was writing that horribly brutal post introducing myself to the finance/investing blog world.  Seriously, don't check it out.

So much has changed over that time.  For starters my portfolio has grown significantly.  My FI Portfolio's value was $0 with total investments of $48250.  Just 4 short years later and those numbers have grown tremendously.  My taxable accounts, FI Portfolio and Loyal3, totaled over $190k at the end of October with total investments worth over $360k.  My net worth has grown by a factor of 6 to just over $400k at the end of October.

Even more impressive, to me at least, is that those numbers include this year which has seen a considerable decline in investment capital.  I've only added a net of $7,500 to my FI Portfolio this year due to other demands for my cash.  Yet my portfolio has continued on churning out dividends that have already surpassed $5k for the year.  That's almost as much capital as I've added to my portfolio through dividends alone.

Saturday, November 28, 2015

Weekly Roundup - November 28, 2015


This past week was rough for my wife and I.  Last Saturday was our son's 1st birthday and then Monday we had a meeting with the doctors to discuss the autopsy report and Luke's case.  Strangely enough it wasn't weird to be back at the hospital and was honestly kind of comforting for my wife and I because we both feel that many of the staff are now family members so it was great to see some of them while we were there.

My wife and I happen to be a bit different from most of the families with children in the NICU.  It was always so sad to see how many babies that were there that rarely or never had their parents with them.  My wife and I always planned to be there every step of the way for Luke and many of the nurses and doctors noticed.  I also have to say that we paid very close attention to rounds and got a crash course in medicine in the 8.5 months we were at the hospital.  Sadly we both know way too much about CDH, nursing, diagnosing...

Since we left the hospital in August there's been changes, primarily because of us and how difficult Luke's case was.  They've since started daily multi-disciplinary rounds to discuss all of the CDH cases.  We've also been asked to be a part of a group with doctors, nurses, management staff, and another family to help brainstorm ideas for ways to improve the care for some of the sickest babies in the NICU which should hopefully start up soon, my guess would be the first of the year.  We've also both been asked to possibly do something with family advocacy and the Chief of Neonatology told us we're definitely a resource they're going to use.  It doesn't take the pain away from losing Luke but knowing that there's changes because of him helps to ease the pain slightly.  We've had countless doctors and nurses that have told us how much the three of us have taught them and how much they learned from us.

Other than that it was steady as she goes and time to head back to work.  I was originally scheduled to go to work near College Station, about 1.5 hours from our house, but an emergency job came up and I drew the short straw and had to head to West Texas on Tuesday.  Needless to say I wasn't very happy about that.  Much further from the house and leaving a day earlier was not fun.

Thursday, November 26, 2015

Make Every Day Thanksgiving


First off Happy Thanksgiving!  We all have so much to be thankful for and today is a day where we're supposed to reflect on that.  Whether you're spending the day with family, friends, or alone today is a blessing.  But every day is truly a blessing and something we should focus on daily rather than just one day out of the year.

This past year has been a very difficult one for my wife and I.  A year ago in August my wife and I were very excited since we were expecting our first child, our son Luke.  Just a few days later our world was turned upside down when we found out that his diaphragm hadn't formed correctly, a condition called congenital diaphragmatic hernia and the prognosis was a coin flip at best.  On November 21, 2014 we welcomed him to this world.  Unfortunately after 8.5 months his heart just couldn't fight any more and he passed away in August.

This past weekend should have been when we were celebrating his 1st birthday and while we still had a party for him he was noticeably absent.  This past year was full of an absolute roller coaster of emotions, sometimes within just a few minutes we would swing from one end to another.  It's been very hard to carry on without Luke being around but I'm so thankful that we had him for at least 8.5 months.  We recently got the autopsy report back and sat down with the doctors to discuss the findings and his case.

Wednesday, November 25, 2015

Dividend Growth Investing at Work - More Healthy Dividends


Something I love about dividend growth investing is that each month I get to hear about companies I own deciding to pay me more money in dividends.  Just for owning a small portion of said companies.  Not going and doing R&D for new products or technology.  Not selling any products.  Not managing any employees or inventory.  Not making sales calls.  All I had to do was have the foresight to invest some of my savings in excellent companies.  That's dividend growth investing at work!  I mean who doesn't like getting a raise for doing nothing?

Sunday, November 22, 2015

Weekly Roundup - November 21, 2015


It was a great week as work went pretty smooth and we even finished up another well and I was able to go home.  We're getting our first taste of winter with this latest cold front to come through and it's great whenever I'm home and can get under a blanket and watch some movies with my wife.  I love the cold weather whenever I'm not forced to be outside in it.

Also, Nike (NKE) continues to reward owners as they announce a 14% dividend increase, a huge share buyback, as well as a 2:1 stock split.  Unfortunately I don't have much of a position in Nike and own less than 1 full share of it in my Loyal3 portfolio.  The shares still seem expensive here so I'm not looking to really add significantly to my position but at some point I'll get an opportunity to grow my stake.

I also got to participate in two posts that are absolutely wonderful.  One is a compilation of over 35 personal finance/financial independence bloggers and I felt honored to be able to participate.  Make sure you check it out here.

Who else wants to retire early and be free? by Sustainable Life Blog

The other was an excellent post discussing personality types and the financial independence lifestyle.  It's a bit long but it's well worth the read if you get a chance.

Myers-Briggs Personality Types of Personal Finance Bloggers by Freedom 35

Thursday, November 19, 2015

Is Becton, Dickinson And Company Poised To Continue Double-Digit Returns?


The healthcare industry is poised to continue to grow as the population continues to age. The unfortunate side effect of growing older is that your healthcare expenses tend to rise. A study from 2004 analyzed the medical expenses of a cross-section of users found that almost half of lifetime healthcare expenses are incurred once you reach 65+.

With "Baby Boomers" retiring daily, this will lead to a rather large increase in the number of individuals aged 65 and over each year. There are currently around 45 million Americans over the age of 65, and that number is expected to increase to over 83 million by 2050. The most rapid growth in that segment of the population is expected to occur over the next 10-15 years, with slower, but consistent, gains each year until 2050. Here's how this population is expected to grow, based on a 2014 report from the Census Bureau. (click to enlarge) Forecast Annual U.S. Population Aged 65+ Through 2050

One of my goals for this year was to increase my portfolio's exposure to the healthcare industry. Currently, my portfolio consists of just three healthcare companies that account for 8.7% of my investment capital and 6.4% of my forward 12-month dividends. Ideally, I'd like to get that to between 15-20% of both capital and dividends, so there's a lot of work to do on that front.

Continue reading the Becton, Dickinson & Company stock analysis on Seeking Alpha.

To view more of my analyses check out my Stock Analysis page or in the following Google Sheet.




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Wednesday, November 18, 2015

Why Dividends Matter: The Calm in the Storm


Dividends.  I love them.  One of the reasons that dividends are so awesome is that they provide a positive portion of return that can't be taken away.  If you receive a $50 dividend in cash that's a positive return.  Forever.  The company won't take it back out of your account if they decide they want some more cash.  It can never turn into a negative return unlike the capital gains portion of total return which is subject to the whims of the markets.  That little bit of return that you get from each payment may not seem like much in isolation but they add up over time.

What I'm talking about is called the payback period.  It's quite simple to calculate as you just divide the cumulative dividends you've received from a company into the total capital you've invested.  Simple as that.  If a company yields 3% you get a 0.75% return with each payment.  So in 33.3 years you'll receive your original investment back through the dividend payments.

However, something magical happens when you combine dividend payments with a company that also grows that dividend.  Just for an example say that 3% yielding company raised the dividend by 10%, now with each and every payment going forward you're receiving 0.825% of your investment back.  You already received 3% of your investment back the first year and the second year you'll receive 3.3%.

Tuesday, November 17, 2015

3M Is A Wonderful Company But Not A Buy Here


The economy is on stable ground but is far from growing by leaps and bounds. Even worse the volatility in the stock markets are playing with investors minds. Back in August and September the stock markets declined significantly, but shot up 10% in October alone to continue higher. Recently the markets have been seeing red with a potential increase in interest rates on the horizon. The uncertainty of the Federal Reserves' actions are whipsawing the markets which makes me want to add to some of the highest quality companies out there.

I consider 3M Company (NYSE:MMM) to be one of those high quality companies and the 57 year streak of growing dividends seems to back that up. The breadth and diversity of their products smoothes out operations. When one segment suffers the others tend to pick up the slack. That can lead to some amazing long term results for investors. Every $1 invested in 3M Company 30 years ago is worth $36.28 today. That's a 12.7% annualized return.

While I'm glad to call myself an owner of this excellent company that doesn't mean I'm willing to purchase shares at any price. The truest fact with investing is that valuation matters. I wanted to reexamine the future return potential if you purchased shares of 3M Company at current levels to gauge whether it could make for a solid investment.

Continue reading the 3M Company stock analysis on Seeking Alpha.

To see more of my stock analyses check out the Stock Analysis page.

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Monday, November 16, 2015

Net Worth Update - October 2015


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.  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 but in the long run as I continue to save and invest the net worth trend should be higher even though short term fluctuations can vary wildly.  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.

What a difference a month makes!  The stock market surged higher with the S&P 500 gaining 8.3% in October alone.  The majority of our net worth is tied to the performance of the stock markets so good months like October sees our net worth skyrocket but bad months like August or September sees our net worth decline along with the markets.  In the short term that's just noise to try and discourage you and it's in the bad months that I focus on my dividends.  Whether the markets are up or the markets are down those dividends continue to roll in throughout the month with just over $260 in passive income for the month.  Even better is the SIX dividend increases announced during the month.  That's extra money for doing nothing and I'm way okay with that.  Couple the market surge and a return to positive cash flow from my day job and it turned into a solid month.  During October my net worth charged higher by $26,601.32.

Sunday, November 15, 2015

Weekly Roundup - November 15, 2015


This past week was great.  I was able to go home, although only for a day, and be with my wife which is always a good thing.  We ended up going to see another movie at the theaters which is more than I've seen in probably the previous three years combined.  We're suckers for scary movies even though they tend to be a letdown in the end but watched Crimson Peak anyways.  It was an okay movie, but one that I'd definitely recommend to wait until it goes to Netflix.

It also doesn't hurt that cooler weather has moved in.  Well it's good during the days with highs in the upper 60's and lower 70's, but at night it's a bit too cold for this Texas boy.

Blogging/Writing

If you've been following along this week I was quite busy with the blog/writing.  The good thing about me working nights is that there's less distractions during the time I work.  No checking in o how the markets are doing, less people from town worried about the drilling.  So I get to focus a lot more and get more writing done.  I was able to post 5 different articles, get 3 other articles written that should be going up this week, as well as get started on a 4 part series as well.  There's plenty of ideas rolling around in my head and I'm excited to get a lot more writing done.  It was definitely a good week for writing.

Additions to my Portfolio Tracking

I was also busy making some changes to my FI Portfolio that I track in Google Sheets to be able to get quick visuals of the weightings for my portfolio.  I added a Weights tab that compares the capital weight vs the dividend weight for each sector that I'm invested.  This gives me a quick view of which sectors might be out of whack with how I would prefer my portfolio allocation to be as well as let's me know if a sector is also providing an abnormally high amount of dividends.  There's also a new tab called Tree Map.  Google added the tree map function to their sheets and I really do like it.  Here's what it looks like.

Thursday, November 12, 2015

Hormel Foods Corporation: Valuation Matters


One of my goals for the year was to increase the amount of capital I have invested in consumer staples companies. I like the consumer staples because of the fact that their businesses are rather boring and don't fluctuate much based on the state of the economy. You aren't going to stop eating or doing laundry or brushing your teeth just because the economy is limping along which makes for steady and consistent growth for the companies that provide those products you use every day. 

Unfortunately I haven't been successful at increasing my exposure to consumer staples thus far. The market recognizes the strength of the staples and typically rewards them with a premium valuation. 

One company that intrigued me on initial perusing of David Fish's CCC list was Hormel Foods Corporation (NYSE:HRL). What caught my eye was the dividend growth over the last decade which is quite impressive with double digit annualized growth over the last 1, 3, 5, and 10 year periods. Even more impressive is that they've increased the dividend for the last 49 years and should raise it again when the next payment is announced later this month.

Potential earnings and dividend growth

Let's get some general information out of the way before we get started. My reference entry price will be the close from November 11th, $67.36, with an assumed purchase date of November 12th. For fiscal year 2015 Hormel paid out $1.00 per share in dividends and is expected to generate $2.61 in earnings per share for the year. This gives an expected payout ratio of 38.3% for the year. The sale date will be December 31, 2018 with a price calculated at 20x 2018 earnings per share.

Continue reading the Hormel Foods Corporation stock analysis on Seeking Alpha.

To see more of my analyses be sure to check out the Stock Analysis page.

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Wednesday, November 11, 2015

Dividend Growth Investing at Work - Upping the Ante With the Happy Meal


Something I love about dividend growth investing is that each month I get to hear about companies I own deciding to pay me more money in dividends.  Just for owning a small portion of said companies.  Not going and doing R&D for new products or technology.  Not selling any products.  Not managing any employees or inventory.  Not making sales calls.  All I had to do was have the foresight to invest some of my savings in excellent companies.  That's dividend growth investing at work!  I mean who doesn't like getting a raise for doing nothing?

Tuesday, November 10, 2015

The Coca-Cola Company Is Priced For Near Double Digit Returns


I love the consumer staples companies and want to have a bulk of my portfolio tied to their success. Consumer staples tend to have less fluctuation in their operations compared to other sectors simply because their provide consumable items that consumers love. However, the market realizes this too and typically the shares of the excellent companies trade at premiums precisely for the stability and excellence of their operations.

The Coca-Cola Company (NYSE:KO) was one of the first companies I ever purchased for my dividend growth investing portfolio. While I've received better returns from other positions there's few companies that I can say without a doubt will raise their dividend each and every year which The Coca-Cola Company has done for 53 straight years.

Every $1 invested in Coca-Cola 10 years ago has turned into $2.66 today. 20 years ago? $3.70. 30 years ago? $51.59. That's the beauty of investing alongside one of the best companies in the world. Something that's so simple and economical to run that even blundering management can't mess up the operational excellence that is The Coca-Cola Company.

Continue reading The Coca-Cola Company stock analysis on Seeking Alpha.

To see more of my analyses make sure you check out my Stock Analysis page.

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Monday, November 9, 2015

Dividend Update - October 2015


It's the end of one month and the beginning of another so it's time for my favorite update: my dividend update.  These dividend updates reflect all dividends that I receive through my investing pursuits. I hope they 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 open up all sorts of possibilities. You can check my dividend income or progress pages to see what dedication to an investment plan can give you.

Sunday, November 8, 2015

6 Months Later, Still Not The Time For McCormick


Consumer staples companies typically make for excellent dividend growth candidates. In general, they have rather inelastic demand that doesn't see operations fluctuate with the health of the economy, at least not to the degree that other sectors do. It's the stable nature of the business that makes them for attractive investments for the defensive portion of your portfolio.

Thanksgiving will be here before we know it, so I wanted to take a look at the leading spices and flavors company in the world, McCormick & Company (NYSE:MKC). I looked at the company in May and determined the shares were overvalued. It's been six months; how does the valuation stack up now for this high-quality consumer staple?

Potential Earnings and Dividend Growth 

Let's get some general information out of the way before we jump into the analysis. My reference entry price will be the closing price from November 5th, $85.86, with a purchase date of November 6th. McCormick & Company will pay no more dividends this year but still has one more that will go on record as a fiscal year 2015 payment. The current quarterly dividend rate is $0.40 and based on the consensus estimate of $3.47 for the current fiscal year the payout ratio will come to 46.1%.

Continue reading the McCormick & Company stock analysis on Seeking Alpha.

Also to see more of my analyses make sure you check out my Stock Analysis page.

Saturday, November 7, 2015

Weekly Roundup - November 7, 2015


One of my guilty pleasures is watching CNBC.  I know, gasp!  How could I?  While I typically recommend that we all ignore the financial media there's times where it's actually useful.  Mainly the interviews with some really great business and investment minds that the average Joe just doesn't have access too.  I don't think I could call up Buffett and expect to get him to answer.  I got an idea for a post from one viewing this week which I hope to get up sometime this month but another morning there was an enlightening interview with Mel Karmizan. (I had no idea who he was but he had a very interesting anecdote)

Anyways so he was discussing the future outlook for the markets with the hosts and told us of a recent encounter with some of the best fund/investment managers in the business.  He didn't give names but seeing as how he was the CEO of CBS and Sirius at one point in his career I imagine he has access to some really big time investors.

The question he posed to these excellent managers was what kind of return he could expect if he gave them a large sum of money today that they could manage.  For the most part they responded with 6-7% which seems in line with my own expectations so it's nothing unreasonable.  However, he then proposed that he would give them the money but want a guaranteed 3% return each year and they could keep any excess returns.  Not a single one would guarantee the 3% to take him up on his offer.  I was quite surprised by the lack of interest from some of the "great" investment minds on this.

Thursday, November 5, 2015

The Hershey Company: Sweet Dividends With Consistent Growth


Halloween just passed us by, and if you have children, you likely still have piles of candy in your house: Jolly Ranchers, Payday bars, Kit Kats, Hershey's bars, or my personal favorite Reese's peanut butter cups. These are just some of the great brands that are all made by The Hershey Company (NYSE:HSY). It's these great brands that have given the company a dominant 45% share of the domestic confectionery market and allows it pricing power. I don't know about you, but I've had the non-name brand versions of some of these and they are a far cry from being the same.

Due to its dominant position, brand power, and pricing power, the shares of The Hershey Company typically trade for a premium which is well deserved. The company has grown revenue every single year since 2002 with solid total returns. Over the last decade, total returns have amounted to 7.2% annually. The annual returns jump to 11.7% for the last 20 years and 13.2% over the last 30 years. Put another way, every dollar invested 30 years ago is worth $41.54 now.

I think The Hershey Company gets overlooked by dividend growth investors due to its shorter dividend growth streak. The company kept the dividend the same for 10 straight quarters while the financial crisis was playing out, which was a prudent move at the time. However, in its history, it hasn't decreased the dividend once.

The Hershey Company has delivered excellent returns for shareholders over the years but what could they potentially look like going forward?

Continue reading The Hershey Company quick analysis on Seeking Alpha.

Also, in case you missed it this morning make sure you check out the PepsiCo quick analysis as well.

Check out my Stock Analysis page to find other stock analyses.

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PepsiCo Inc.: You're Paying Up For This Consumer Staple


Consumer staples companies are the bread and butter of the dividend growth philosophy. The biggest reason for that is the consistency in their operations. In general they have rather inelastic demand compared to other sectors of the economy and for the companies with strong brands they have excellent pricing power. You might put off the purchase of a new car if the economy isn't firing on all cylinders but are you really going to stop eating or bathing?

PepsiCo (NYSE:PEP) is a fine example of an excellent consumer staple company with brand recognition, pricing power and even better growth. Forbes even recognized PepsiCo as the 29th Most Valuable Brand earlier this year and I expect PepsiCo to continue moving forward.

Historically, PepsiCo has been a wonderful investment with 43 consecutive years of dividend growth. Every dollar you invested 10 years ago has turned into $2.26 today. Every dollar invested 20 years ago has turned into $6.31 today and every dollar invested 30 years ago has turned into $55.94 today. That's an impressive record and I'm glad to call myself an owner (too bad my shares weren't purchased 30 years ago though).

Continue reading the PepsiCo quick analysis on Seeking Alpha.

For more detailed analyses check out my Stock Analysis page.

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Wednesday, November 4, 2015

Dividend Growth Investing at Work - Disappointing but Expected


Something I love about dividend growth investing is that each month I get to hear about companies I own deciding to pay me more money in dividends.  Just for owning a small portion of said companies.  Not going and doing R&D for new products or technology.  Not selling any products.  Not managing any employees or inventory.  Not making sales calls.  All I had to do was have the foresight to invest some of my savings in excellent companies.  That's dividend growth investing at work!  I mean who doesn't like getting a raise for doing nothing?

Tuesday, November 3, 2015

After The Run Up There's Still Double Digit Return Potential For Johnson & Johnson

When you think of some of the greatest companies in the world one name that is sure to come up is Johnson & Johnson (NYSE:JNJ). What's not to like about a company that has earned investors 8.0% annualized total returns over the last decade, 10.8% annualized returns over the last 20 years, and 15.0% annualized returns over the last 30 years. Every dollar invested 30 years ago has turned into $66.21 today. There's very few companies that can match Johnson & Johnson's historic returns. Even more impressive is the 53 consecutive years of growing the dividend. Johnson & Johnson is clearly in very rare territory and has made long term investors very wealthy.

All those years of growth for Johnson & Johnson have grown the company into a $279 B behemoth in the healthcare industry. Johnson & Johnson is unlikely to continue providing double digit annual growth in the company mainly due to their large size.

Shares represented a good opportunity between late August and mid October when they traded in the low $90's. However, since then shares are now trading hands for $101.03. So what kind of returns could you expect if you buy shares today after the recent run-up.

Continue reading the quick Johnson & Johnson stock analysis on Seeking Alpha.

For more detailed analyses check out my Stock Analysis page.

Image sourced from JNJ.com

Monday, November 2, 2015

Recent Sell


Whenever I make a new purchase, or the rare sale, for my portfolio I feel it's only fair to get a post written giving all of the juicy details.  Normally I try to get the posts out as quickly as possible but there was way too much going on in my personal life over the past two months that I just didn't have the time.  So I want to update you all on some of the changes made to my portfolio.  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.

Sunday, November 1, 2015

Weights



Quick update today that doesn't have to do with investing.  Well not investing like I normally talk about, but rather investing in myself.  For the time being I'm in a location that's close to my gym so I'm taking full advantage of it by working out when I can.  Your health is obviously very important and over the years I've let myself slip way out of shape.  So it's time to fix that.  I've been going to the gym every other day since being over here and I plan to stick to that.  But what better way to make sure I go than to add little weekly updates to let you all know how I did.

While I have access to the gym I'll be giving updates during my Weekly Roundup posts detailing what I did each week.  The overall plan for my workouts is big, compound, Olympic style lifts for the strength training and then I'll try to do "finishers" that task my endurance/cardio to try and burn more calories while still getting a strength component.  Moves like the deadlift, hang clean, shoulder presses will be the full body exercises that I do for strength/power.  The "finishers" will typically include kettle bell swings with something like box jumps, bodyweight lunges/squats, pushups.  Mainly things that will keep the heart rate up to try and burn calories.  I want to maximize my workouts by doing exercises that task my whole body at the same time so I can get in and get out.

Saturday, October 31, 2015

Weekly Roundup - October 31, 2015


Another week down and after today another month will be done with.  Of course that means today is Halloween.  Halloween is one of my favorite holidays.  Down here in Texas the weather is finally starting to get better and there's no shortage of haunted houses.  It's always fun to go to the haunted houses for a little bit of scary fun.  While those are sometimes scary, there's nothing scary about receiving six dividend raises throughout the month.

We finally started doing things again and I was so thankful to have to work.  A week and a half of being away from the house and actually going backwards instead of making progress is way too long.  We're moving slow right now but at least we're moving in the right direction which is more than I can say for last week.  I'm slowly building up my workout regimen and it sure is nice being just a few miles from the gym.  Even better is that since I'm working nights that means I get to go to the gym during the day when there's a whole lot fewer people.  So there's no waiting for people to quit using what I need.  I get in, work out, and leave usually within 30-40 minutes which is great.  Just the little bit of exercising I've done has already made a tremendous difference in the way my body feels.  Focus on your health people!

Friday, October 30, 2015

Dividend Growth Investing at Work - Two More Increases to Close Out October


Something I love about dividend growth investing is that each month I get to hear about companies I own deciding to pay me more money in dividends.  Just for owning a small portion of said companies.  Not going and doing R&D for new products or technology.  Not selling any products.  Not managing any employees or inventory.  Not making sales calls.  All I had to do was have the foresight to invest some of my savings in excellent companies.  That's dividend growth investing at work!  I mean who doesn't like getting a raise for doing nothing?

Thursday, October 29, 2015

Portfolio Management: Considering Closing a Position


In a post last week I discussed our forecast tax situation for 2015.  It's a weird place to be in as I don't expect us to normally be in the 15% tax bracket but there's a big benefit to that: qualified dividends and long term capital gains are taxed at 0%.  That's a great position to be in and since then I've been examining my portfolio for potential candidates to take advantage of the long term capital gains being taxed at a lower rate.  One position I'm considering selling is Baxter International (BAX).

One of the reasons that Baxter is on my consideration list, heck the biggest reason, is that after spinning of the biotech arm in Baxalta (BXLT) they took the opportunity to decrease the combined dividend payout of the two companies.  Prior to the spin-off Baxter was paying $0.52 per share each quarter and now the combined dividends from both companies is equal to $0.185 per share per quarter.  That's a 64% decrease.  I don't have a hard and fast rule about selling no matter what if there's a dividend cut and figured that Baxter has been a truly excellent company for decades if you look at all of the spin-offs they've completed.  I've already disposed of my Baxalta shares so today I wanted to take a closer look at Baxter's future prospects.

Use The Recent Selloff In V.F. Corporation To Pick Up Shares

Clothes.  We all need them and chances are you have at least a couple of the wares that V.F. Corporation (VFC) offers.  V.F. Corporation has a huge stable of brands with two sporting $2 B in annual revenues and several with double digit year over year growth.  The recent selloff is not a sign of operations declining but rather just brings the valuation down to more reasonable levels.  The dividend was just increased by 15% to $0.37 per quarter which marks the 43rd consecutive year of increasing dividends making V.F. Corporation a true dividend aristocrat.  Shares of V.F. Corporation closed trading on Tuesday, October 27th at $66.30 giving investors a current yield of 2.23%.

The following tables/graphs are taken from my personal stock analysis spreadsheet.  Data for the stock analysis was sourced from V.F. Corporation.'s investor relations page, Morningstar, and Yahoo Finance.

Historic Growth Rates:

Owners of V.F. Corporation's share have earned absolutely outstanding returns over the last decade.  According to longrundata.com, shares of VFC have earned investors a total return of 549.6% or 20.6% annualized over the last decade.  Those numbers are market returns at specific snapshots in time and aren't necessarily indicative of the business results over the same time period.  Looking at the historic growth rates for per share dividends, earnings, revenue, and free cash flow gives a better idea of the true operational results that V.F. Corporation has delivered.

Continue reading the V.F. Corporation dividend stock analysis on Seeking Alpha.

Also check out more of my stock analyses on my Stock Analysis page.

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