2015 - Cut...It's a Wrap

01 Jan 2016 17:57

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2015 Financial Wrap-up

For investors, 2015 was not a year without challenges. Oil prices below $40 a barrel, a strong dollar, a China slowdown, an ETF flash crash in August, a fourth quarter junk bond collapse, commodities continued their steep decline and of course a Fed rate increase of 0.25%. I’m sure I missed a one or two but you get the gist, it was hard and the markets reflected it! The S&P 500 was down 0.7 percent for the year and a recent CNN article reported that according to Openfolio nearly 70% of investors lost money in 2015.

On the home front I fared slightly better with my 2015 financial goals. My proudest achievement was meeting the DGI goal of increasing my 2016 forward dividend by 15% which was beat by $4 to $3178. The reason I am proud of this goal was that I did it with 50% less new cash than I used last year. One of the reasons why I did so well was my limited exposure to oil related stocks.

A few fellow dividend growth investors were over-exposed to the oil industry and struggled. Luckily I had a diversified portfolio with limited exposure to oil via Chevron (CVX) and BP. CVX & BP of course were not immune and neither increased their dividend payout but they are diversified enough with downstream refining products to offset some of the pain and keep their dividend payments stable. I did hold a third position in Ensco (ESV) but I sold this position in early 2015 before it could do any serious damage to my portfolio.

Unfortunately, my retirement accounts did not fare as well. For 2015 I had an overall target of growing my 401K & IRA by 7%. My 401K grew 9.65% but the IRA lost -1.5% which resulted in a total return of only 4.88%. Not bad results given the market conditions but still not on target. While not on target I have bigger concerns with retirement as I was dealt with two blows. The first was a fed change to Social Security that eliminates the file & suspend feature for married folks. The second and larger blow was the elimination of my early retirement benefit, this was eliminated because my company was bought out and the new owners had no such policy and did not wish to incorporate into their benefits package. Besides developing 2016 goals it looks like I have to re-plan all of my goals into retirement.

2015 was clearly a challenge but my portfolios still managed positive returns which I contribute to diversification. In the Dividend Growth Portfolio it was sector diversification and in my retirement accounts it was an equity diversification of stocks, preferred stocks, bonds, cash, and real estate.

Blog Updates

I posted 40 articles throughout 2015 and represents the most posts I’ve made in a single year. As active as I was with posting I did notice I neglected some pages so I also updated my Investing Rules page and published a new watch list for 2016.

My Investing Rules page has not been updated since I first started the site in 2012 so I’ve rolled 3 years’ worth of learning into the page revision. The page is now separated into the following sections:

  • Stocks Meet Initial Screen
  • Stock is Well Positioned in Their Industry or Sector
  • How Much and What to Buy
  • Selling Rules
  • Dividend Re-Investment (DRIP) rules

The new 2016 Watch List has quite a few additions and a couple of deletions as well as a new column to identify which stocks I am currently DRIP’g.

In regards to removals Exxon Mobil (XOM) and Chevron (CVX) are gone. Oil prices have placed pressure on their dividends and ability to grow. They may be added back but for now are off the list. McDonald’s (MCD) and Walmart (WMT) have both been growing their dividends at a rate below my needs and may also be removed but for now I left them on to see if things turn around.

There have been quite a few additions Apple (AAPL), Con Edison (ED), Donaldson (DCI), Dow Chemicals (DOW), and Kohl’s (KSS). Not sure if these are value plays or value traps but will definitely be interesting to follow. One to note was DOW, just a week after adding it to the list they announced a merger deal with DuPont (DD) so the addition of DOW may be sort lived.

Here's to 2016

Well that was a recap of my 2015 so no more dwelling on the past and time to look towards the rest of 2016. I wish everyone the best of luck on their endeavors and to continue down the path of financial independence.

Happy New Year Everyone!

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