2016 2nd Quarter Summary

01 Jul 2016 21:57
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The first half of 2016 was definitely interesting with the markets dropping throughout all of January through mid-February only to see it rally through June and then a market drop from BREXIT but the markets rallied in the last week to where they were before BREXIT. Good thing I am not a trader because it would definitely have given me an ulcer. With all of the market ups and downs here is state of my portfolio in relation to my 2016 goals.

Taxable Portfolio

My 6 month dividend income in comparison to the same time in 2015 has increased 15.15%. This is right on target for meeting annual income growth of 15%. For the second quarter of 2016 I actually purchased no new stocks but instead relied on dividend raises and dividend re-investment.

This has been pretty awesome to achieve as I have not been adding any new funds and instead redirecting extra cash towards my daughters first year of college and reducing debt.

IRA Portfolio (401K Rollover)

My goal at the beginning of the year was to invest all of the cash from a 401K rollover by the end of the year. I was actually a bit cocky as I thought I would accomplish this by June. But alas I did not even come close as I have only invested 50% to date.

It is not that I do not think there are no good buys out there, on the contrary there are quite a few but they are all in sectors I already have a significant investment in and do not want to become overweight. The areas I need to diversify into are utilities and consumer staples, unfortunately I did not foresee a run-up in the sectors and am struggling with valuations.

Luckily a significant portion of what I did invest was during February when the market had a significant sell-off which will provide a forward annual dividend of $5,200. My forward annual dividend target for this account was $7,500 so with 50% remaining to invest it looks like I should exceed my expectation.

DRIP Portfolio

For the second quarter I changed my philosophy on when to automatically reinvest dividends via a DRIP program. I have developed a table (based on my retirement goals), that identifies what dividend growth rate I need in relation to dividend yield.
Yield Min Growth Rate
2.00% 11.50%
2.50% 9.70%
3.00% 8.00%
3.50% 6.70%
4.00% 5.50%
4.50% 4.30%
5.00% 3.20%
5.50% 2.00%
6.00% 1.00%

(note: for yields above 6% only reinvestment is required to meet my goals, any dividend growth is pure gravy)

I evaluated every holding to see which stock holding fits into the table above and it tripled what stocks I should DRIP. Here is a list of all the companies I now DRIP:

COMPANY SYMBOL COMPANY SYMBOL
BAR HARBOR BANKSHARES BHB OMEGA HEALTHCARE INVS OHI
CUMMINS INC CMI PEBBLEBROOK HOTEL TRUST PEB
DOMTAR CORP COM UFS PETMED EXPRESS INC PETS
DR PEPPER SNAPPLE GROUP DPS PROSPECT CAP CORP PSEC
GATX CORP GATX QUALCOMM INC QCOM
GENERAL MOTORS GM SPAN AMER MED SYS INC SPAN
HASBRO INC HAS STAG INDUSTRIAL STAG
HOSPITALITY PROPERTIES TRUST HPT THOR INDS INC THO
LINEAR TECHNOLOGY CORP LLTC TRIANGLE CAP CORP TCAP
MAIDEN HOLDINGS LTD MHLD WESTWOOD HLDGS GROUP WHG
MARINE PRODUCTS CORP MPX WP CAREY INC WPC
MICROSOFT CORP MSFT Nordic American Tankers NAT

Personal Goal

In the first quarter I had completed my goal of funding my daughter’s first year of college and I am proud to say I completed another goal related to this as I just bought her a car so she can commute.

Debt Goal

During the first quarter I summarized all of my debt into how much interest I was paying daily which was $4.83/day. In lieu of adding more funds to my investing accounts I funneled all excess cash to paying down debt and our new daily interest per day is $3.43/day. This was a whopping 29% decrease in my debt!

Unfortunately this may flatten out for the next quarter. When we bought my daughter a car it was slightly more expensive than I had planned and used some emergency funds to cover the difference. For the next few months my extra money will be used to replenish the emergency fund. Hopefully we will be back on track in the 3rd quarter.

ROTH IRA

No new progress on the ROTH. It still has a small balance of a $100 and will probably remain that way as I am sacrificing this goal to eliminate debt. Who knows maybe a contribution in the 4th quarter but it will not be enough to max out the 2016 contribution.

Summary

So there you have it, income is up, debt is down, and my daughter’s future is off to a decent start.

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