Follow the dividend investment decisions of a person who has no background in financial investment and wishes to take control of their financial future to retire from their full-time job at 60.

Weekly Portfolio Summary - 18 Jan 2020 12:18

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Received my first two dividend raises of the year from Fastenal (FAST) at 13.64% and Brookfield Renewable (BEP) at 5% which provided a nice pop to my forward annual income. Who doesn't love getting dividend raises?

Portfolio Activity

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Portfolio News - (In Case You Missed These Headlines)

Brookfield Renewable Partners (BEP)

Fastenal (FAST)

Merck (MRK)

AT&T (T)

T. Rowe Price (TROW)

VEREIT (VER)

Interesting Blog Posts or Articles

Blog Posts

Articles

New Buy WEYS - 15 Jan 2020 02:43

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IRA Buy: Weyco Group (WEYS)

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Purchase Price: $23.85/share
Increase in Forward Annual Div: $18
Inflation Beating Streak: 31 Years
Div Growth Streak: 38 Years
Yield: 4.03%
Payout Ratio: 45%
Most Recent Dividend Increase: 4.35% / May 2019

Slowly increasing my position in this inflation beating champion. - Comments: 0

Weekly Portfolio Summary - 11 Jan 2020 11:04

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Portfolio Activity

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Portfolio News - (In Case You Missed These Headlines)

Air Products (APD)

Ares Capital (ARCC)

Goodyear Tire (GT)

Medical Properties Trust (MPW)

Merck (MRK)

Newtek Business Services (NEWT)

Procter & Gamble (PG)

Qualcomm (QCOM)

Walgreens Boots Alliance (WBA)

W.P. Carey (WPC)

Interesting Blog Posts or Articles

Blog Posts

Articles

2019 was supposed to be a great year financially but … - 04 Jan 2020 14:35

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The Unplanned Expenses

Going into 2019 I had high hopes that this was going to be my best year financially in the last 15 years but life had other plans that were small enough to be frustrating but nothing that derailed me.

Entering into 2019 it was to be the first full year of cash flow bliss with no debt from credit cards and my mortgage was paid off at the end of the 2018 summer. I only had one planned major purchase to buy a car and that was it. My financial goals were pretty straightforward; grow my dividend income a minimum of 12.5% and save an additional $2500 cash.

After the first month, my cash flow looked better than expected and I decided to start building a secondary emergency fund for unplanned expenses and padded it with $1000 by the end of February. This was going to be a very good year, or so I thought.

In March my kitchen stove just died, two months later my washing machine died. So much for that secondary emergency fund but hey that is what it is there for.

In June I was planning my new car purchase when an emergency arose with one of my in-laws. Her 20 year old mini-van died and she was in no position to afford a new car. She has spent the last few years struggling to get out of deep debt and was making great progress but this was going to set her back years financially and emotionally the stress was beginning to take its toll on her. After a discussion with my wife we decided to take my wife’s car and give it to her sister while we would buy a second new car since our cash flow situation has improved so much.

It was a bit frustrating up to this point. My extra $1000 for unexpected expenses was eaten up and I was behind on my $2500 goal but hey we got 6 months left to recover right? Think again…

In August our refrigerator decided to stop keeping things cold so it was our third new appliance for the year. Just when I thought my appliance issues were behind me our dishwasher kicked the bucket in October! This time we refused to replace it and decided to live with washing dishes by hand but the failing dishwasher did cause water damage to my kitchen floor so that need to be replaced. I replaced the floor myself at a cost of only $175 which limited the expense. Finally I thought everything was behind me when just before the Christmas holiday our vacuum died a miserable death, I’ve repaired it twice over the years but this time it was too far gone. A new vacuum was not expensive but more of just a final insult. I honestly believe an appliance demon has set up shop in my house.

Finding the Goodness of 2019

2019 was definitely an odd year for expenses. But thankfully I was in a position to absorb it via the sacrifice of my emergency money and liquidating what savings I had for my $2500 goal without adding any credit card debt. Yes I had to take out an unplanned car loan but at loan rate of 3% it’s not that bad and is better than credit card interest.

What allowed 2019 to be an annoying expense year versus a financial setback year was the fact I eliminated all my debt in 2018. I am truly blessed from that perspective and heck it could have been a lot worse so I felt really proud we didn’t let all these little expenses hurt us and we helped my wife’s sister in the process with a free car.

Expense issues aside, I did nail my dividend income growth goal by achieving 14.4% growth versus my target 12.5%. Beating my target helped wash away all those annoying unplanned expenses!

The Bad side of 2019

The bad parts of 2019 were not financial impacts but emotional ones. Throughout the year my father-in-law suffered multiple strokes and at age 87 it has greatly impacted his mobility requiring even more support from my wife and myself. We are not complaining as we love the guy but it is just tough to watch and somedays stressful taking care of two households.

During all this my oldest sister was in two major car accidents and in the hospital multiple times. She has been having a long recovery to get her mobility back and this will carry well into 2020. I am stretched thin with my immediate family and father-in-law and felt guilty I could not do more for my sister other than give her rides here and there but luckily I come from a big family so my brothers stepped up and filled the gap.

The Disappointment

This one is for my oldest daughter. My daughter had planned to graduate from college in December. All she needed was to get a minimum grade of a 3.0 in Physics II that would allow her to waive an additional science class and graduate a whole semester ahead of schedule saving her $6,000. Unfortunately her final grade came in at a 2.8 and she has to start 2020 by going back for one last semester to complete one more class. Man that was a tough one for her considering it was only two tenths of point difference. I honestly think she would have felt better if she outright failed but to fall short by such a small amount had to take the wind out of her sails. Best I could do is be a loving Dad to be there for emotional support.

Looking Forward to 2020

I plan to keep my financial goals the same as last year but more humble. I think life reminded me not to get too overconfident. Hopefully I can continue to remain in a position to help others throughout the new year.

My third child will be starting college in September so technically I will have a three kids in college for the year and hope all do well. With three in college 2020 will be a slightly more expensive year but I love seeing my kids march on towards a new life journey and in some ways envy them.

If things go better than last year I might be able to take a vacation with just my wife. It is something we have not been able to do for the last 20 years because of finances or personal commitments with taking care of family or extended family. It has been a long road for my wife and I, the idea of finally getting to a point to enjoy other aspects of life is slowly settling in and this vacation is just the start.

That is it from my life and I wish everyone the best for 2020! - Comments: 0

December Dividend Income - 01 Jan 2020 14:17

Tags: monthly_income

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After 32 years of clocking in and out of work and religiously saving 10% annually every year, in good times and bad, I have decided to share my monthly dividend income to show what regular saving and investing can accomplish.

For the month of December I made $3,090; an increase of 25.1% versus this time last year. I target a growth rate of 12.5% and as I predicted last month it appears the bulk of my purchases and dividend raises seem to impact that last month of a quarter which was validated.

For the year I made a total of $‭32,382.65‬ which was a 14.4% increase from my 2018 dividend income and almost a full 2% better than my targeted growth rate of 12.5%. Hopefully 2020 will be as kind to me.

In regards to buying, I increased my positions in Pfizer (PFE), IBM (IBM), Goodyear Tire (GT) and started a new position in Brookfield Property (BPR). I did have a rare sell when I sold-off Westwood Holdings (WHG) which does not look capable of supporting the dividend going forward and this sell will not affect my dividend income until the second quarter of 2020.

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In my M1 Finance account, I continued with my weekly $120 contribution for a total of $600. The overall dividend yield of my M1 pie decreased yet again to 3.238%, There were no dividend cuts so this was all attributable to market returns as the DOW & S&P 500 continue their streak to record levels.

Overall my M1 Finance accounts are finally starting to gain dividend momentum as it contributed $7.68 to this month’s dividend totals. Not breaking any speed records but it is nice to see whole dollars versus cents.

I also provided a link to my M1 Pie for those interested in seeing all of the individual holdings.
https://m1.finance/NCB--FZCZ

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My age 53 goal (I’m 51 for those not in the know) improved by 0.48%. This was lower than last month but not surprising due to selling of my Westwood Holding (WHG) position.

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For those not familiar with my Age 53 goal, I plan in 7 year increments and targeted to have 57% of my expenses to be covered via dividend income and to be at 115% for my next 7 year target at age 60. Why 115%? This was based on a multiple bear market/crash analysis I performed back in 2018 that showed my optimal portfolio to withstand a long term bear market with high inflation would be to have dividend income of 115% of expenses and the equivalent of 9 months of expenses in cash. - Comments: 0

New Buys PFE and IBM - 30 Dec 2019 19:07

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IRA Buy: Pfizer (PFE)

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Purchase Price: $38.95/share
Increase in Forward Annual Div: $23
Inflation Beating Streak: 9 Years
Div Growth Streak: 10 Years
Yield: 3.9%
Payout Ratio: 53%
Most Recent Dividend Increase: 5.55% / Dec 2019

IRA Buy: International Business Machines (IBM)

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Purchase Price: $133.32/share
Increase in Forward Annual Div: $19
Inflation Beating Streak: 22 Years
Div Growth Streak: 24 Years
Yield: 4.86%
Payout Ratio: 55%
Most Recent Dividend Increase: 3.18% / Apr 2019

Looks like my last two buys for 2019…happy New Year everyone. - Comments: 0

Weekly Portfolio Summary - 28 Dec 2019 11:35

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Fairly quiet week with the old portfolio as I did little with the holidays and all. Speaking of holidays it was wonderful to get together with family and relax from the daily grind of work, hopefully all of you had the same luxury.

Almost done for the year will be interesting where 2020 goes and I'm sure it will be a circus with the upcoming Presidential election so nothing to do but hold on tight and keep investing.

Portfolio Activity

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Portfolio News - (In Case You Missed These Headlines)

Preferred Apartment Communities (APTS)

Medical Properties Trust (MPW)

Pfizer (PFE)

Prospect Capital (PSEC)

Walmart (WMT)

Interesting Blog Posts or Articles

Blog Posts

Articles

Can an ETF Provide Real Dividend Income Growth? - 26 Dec 2019 12:34

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Back in 2011 I started shifting my portfolio to a more dividend focus. Since that time I kept a notebook of different ideas and things I learned along the way. The other day I decided to flip through some of the earlier pages and revisit some of my comments when I started this journey and stumbled upon one note from 2012 that said “Not enough history on dividend growth ETFs – revisit and analyze in 5 years”.

Apparently I forgot about this note as it was 7 years ago and I never did investigate further. But the thought nagged at me as it was still relevant and was making me question if an ETF is a simpler approach. Of course I had to address this nagging feeling so here is my analysis 2 years late.

Screening Criteria

  • Minimum of $1 billion of Assets Under Management
  • Minimum of 5 years of consecutive annual increases in distributions
  • Minimum dividend yield of 1.7%

Screen Results:

The iShares Core Dividend Growth ETF (DGRO), specifically targets companies that pay a qualified dividend, must have at least five years of uninterrupted annual dividend growth and their earnings payout ratio must be less than 75%.

The WisdomTree US LargeCap Dividend ETF (DLN), seeks to track the performance of dividend-paying large-cap companies in the U.S. equity market. The WisdomTree Large Cap Dividend Index consists of the 300 largest companies ranked by market cap from the WisdomTree Dividend Index.

The iShares Select Dividend ETF (DVY), seeks to track the investment results of the Dow Jones U.S. Select Dividend Index composed of relatively high dividend paying U.S. equities with fund weightings determined by yield instead of market cap.

The Schwab US Dividend Equity ETF (SCHD), includes 100 stocks based on strong fundamentals, such as cash flow to debt, return on equity, dividend yield and consistent dividend payouts for at least 10 consecutive years.

The Vanguard Dividend Appreciation ETF (VIG), tracks U.S. stocks that have increased dividends on a regular basis for at least 10 consecutive years.

The Vanguard High Dividend Yield ETF (VYM), seeks to track the performance of the FTSE High Dividend Yield Index, which measures the investment return of common stocks of companies characterized by high dividend yields.

I will admit I was surprised by this and expected a larger return of ETFs, however, it may signal that this is more of a total return investment philosophy than a pure income growth play.

Comparative Analysis

The top three performers are highlighted in green for each category.


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Conclusion

From a pure dividend growth perspective there were 3 consistent ETFs results with DVY, SCHD and VYM.

When we look at the 6 ETFs from a total return perspective we see much better results from DGRO, DLN, and VIG. This performance difference is more than likely based on what holdings constitute their portfolios. For example, DVY has the lowest 5 year total return but their holdings are heavily weighted towards financials and utilities. But VIG has a more diverse and higher quality amount of holdings.

This leads me back to why the screening results were so low and that most dividend growth labeled ETFs are designed for a total return strategy. If your objective is total return you should balance this with other growth type ETFs and here an interesting article I found on this topic from last November by John Hancock Investments. That said, this analysis and ETF screen did not factor in total return and if this is your strategy you should expand the search as there may be better investments.

For those more interested in a consistently rising ETF dividend income stream I would narrow it down SCHD and VYM. The two funds have low expense fees and decent dividend growth rates that well exceed the rate of inflation.

Overall, if you are uncomfortable picking individual stocks but want a dividend income stream ETFs are a viable option to achieve this result. - Comments: 0

Weekly Portfolio Summary - 21 Dec 2019 12:05

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Markets moved higher putting my RMD theory into the old trash can. Two nice dividend announcements this week from Pfizer and Waste Management helped grow my future earnings.

Portfolio Activity

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Portfolio News - (In Case You Missed These Headlines)

AbbVie (ABBV)

Preferred Apartment Communities (APTS)

Chevron (CVX)

General Mills (GIS)

Goodyear Tire (GT)

Merck (MRK)

Pfizer (PFE)

Prospect Capital (PSEC)

Phillips 66 (PSX)

Waste Management

W.P. Carey (WPC)

Weyerhaeuser (WY)

Interesting Blog Posts or Articles

Blog Posts

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