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.

2014 Goals - 29 Dec 2013 14:42


1. Contribute $6,000 to new DGI purchases
This will be a tough one. I am the sole earner for a family of five and extra money is never easy to come by. I am hoping that my continued search for money saving ideas yields $1500, a combination of tax refund and annual bonus check adds $3000, that just leaves a challenging $1500 to find. If my company decides to eliminate or drastically reduce the bonus I may have to have discussions with my wife about getting a full or part-time job (she has not worked since 2001). My wife going back to work was always in the cards when my oldest starts college but this may just accelerate things by two years.
2. Re-invest $2,000 into DGI purchases
This is more of a discipline goal than anything else. For 2014 I should be on pace for $2000 in dividends so I just need to not let things sit idle.
3. Increase forward DGI yield by 20%
This is really a combination of goals 1 & 2 as well as counting on a portfolio dividend growth rate of 7%. Sounds easy but at least 2 of my investments are for income only and provide no growth.
4. Increase 401K balance by a minimum 10%
To achieve this I need to maintain my existing 401K contribution rate and I’ll need at least a 4% growth of my existing 401K balance.
5. Increase IRA balance by 5%
I have no plans to contribute and money to my IRA so this will need to be accomplished through price appreciation
6. Have 10% cash reserves in IRA/401K
With the run-up in the stock market in 2012 & 2013 my cash reserves have fallen to a woeful 4% allocation. To maintain my risk reduction, things need to change. My plan is to direct my 401K contributions to cash and any paid dividend/capital gains by existing mutual fund holdings will also be directed to cash. I am hoping that by this time next year I will hit my cash allocation goal. - Comments: 0

Quarterly Portfolio Update - 27 Dec 2013 15:35


Quarterly Dividend Growth
% from Div Growth 3.56%
% from New Investments 18%
% from Reinvested Div 0.00%
% Overall Growth 21.56%

This is my second quarter utilizing a DGI strategy and time to measure growth. In early November I completed the remainder of my portfolio rebalancing with the purchase of Ensco Plc (ESV). I was also able to re-invest the last quarter dividends by buying additional shares of the utility company PPL to level off my diversification into utilities but that purchase did not contribute to this quarter for dividend growth.

For the quarter there were four stocks that contributed to passive growth; Microsoft (MSFT), Seagate (STX), BP Plc (BP), and Prospect Capital (PSEC).

MSFT continues its historical dividend growth but surprised investor with the size of the increase which came in at a whopping 21.7% increase. Personally I was expecting between 9-12% so this was a nice Christmas present. Additionally MSFT has been firing on all cylinders in the last quarter of 2013 with brisk sales of enterprise solutions, Xbox One, Surface 2, and Windows Phone products. A year ago I saw the potential of Windows 8 commonality across devices and jumped on MSFT for this reason and so glad I jumped in when I did. Even though MSFT has seen a run-up in share price this year I still like the stock as long as it yields at least 3%.

STX continues to be a star in my portfolio as they increased their dividend by 13.16% and I’m looking at a capital gain of 120% in just one year. Though the stock has become expensive for me to consider adding additional shares I do not plan on selling as their strategy for SDD, HDD, and cloud storage appears strong and I foresee continued dividend growth going forward.

BP has slowly been coming off of its Gulf disaster and starting to see light at the end of the tunnel by rewarding investors with a 5.15% increase in dividends. While this is below my minimum 7% growth rate I purchased BP with the hope that as more of the liability of the Gulf incident decreases the dividend increases will start to exceed my minimum.

PSEC increases were minimal from month to month but I bought this as a high income dividend payer positioned for a rising interest rate environment and to date PSEC has not disappointed.

As far as additional contributions I only managed to save $140 this quarter. In my house we have quite a few computers (3 kids plus me & the Missus) so I switched to a free anti-virus software package which detected more viruses, malware, and tracking cookies than our current software. By not renewing our software it saved $140 which I redirected to the portfolio. - Comments: 0

Time for Planning - 18 Dec 2013 13:07


At the start of November I made my last purchase of 2013 with Ensco Plc. At this point I am fully invested into my DGI portfolio and have no additional cash. Nothing to do for a few months but sit back and collect dividends while determining what to buy next.

This downtime comes a great moment that allows for re-evaluation of all my financial positions, goals, and strategies for the coming years. A quick glance and I noticed my 401K is grossly deficient with a cash position leaving me exposed to risk so my first goal for 2014 is to return to a 10% cash position within my 401K.

Over the next few weeks I'll start slaving away looking at expenses (both current and retirement) and remaining debt to determine what my savings rate/balances should be.

Another area I will take time to analyze will be my exposure to risk in all of my investments. For my DGI portfolio I feel pretty confident on my diversification but there are a couple of areas I still need to get into but just do not have the money.

One area of risk I desperately need to plan for is the scenario of a layoff. Where I work there are already rumors spreading of a significant first quarter 2014 layoff and even if I miss that one I can foresee annual layoffs up to 2018. I hope that my DGI portfolio can buffer some of the loss but my current portfolio does not even come close to my monthly salary. As I am the sole income earner for my family this would be devastating! I will need to think long and hard on this one. - Comments: 0

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