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.

Defensive Addition to My Portfolio - 22 Feb 2014 21:33



Over the last 9 months REITs (Real Estate Investment Trusts) have been in a sell-off. This sell-off has finally motivated me to buy my first REIT in an effort to diversify my portfolio. In addition to increasing my portfolio diversity I also have the goal of picking a defensive stock in the case of a significant market drop by owning an alternative investment in the form of property. A REIT is easier than actually buying property and the headaches that come with it as well as also being more liquid.

I settled with a purchase of 54 shares in HCP at a price of $37 per share and a dividend yield of 5.8%. HCP’s health care property investments are the most diverse in their industry and tenant income source is just as diverse as it is spread (almost evenly) between Private investment, Medicare, & Medicaid.

Additionally HCP has increased its dividend for 29 straight years, has a 10 year dividend growth average of 2.4%, and is the only REIT currently a member of the S&P 500 Dividend Aristocrats Index. HCP is quite proud of its inclusion in the index and heavily advertises as such, of which helps attract new investment when HCP requires capital for property growth. - Comments: 0

Summary of First Quarter Increases - 15 Feb 2014 12:45



In the first quarter I expected 6 stocks to increase dividends and to date I have 1 miss in Triangle Capital (TCAP).

Though TCAP did not raise their dividend they did issue a special dividend of $0.30 per share payable in two installments of March and June ($0.15 per share in each installment). While not a regular increase it is still a bump of 13% more than last years overall payment. TCAP has already been on my 2 year watch list as they had no increases last year which gives them another 10 months to recover with growth.

Financially TCAP continues to manage their portfolio and position themselves for future growth and one of the primary reasons I am giving them a full two years to get back on the div growth wagon. The second half of 2013 saw extensive loan repayments. TCAP's ability to identify strong investment candidates and to quickly turn the repayment money back into their portfolio will be key to maintaining my faith in management.

Rounding out the remainder of expected increases we had Dr. Pepper Snapple (DPS) 7.9%, PPL Corp (PPL) 1.4%, and Hasbro (HAS) 7.5%. Of course the quarter is not over and next month I am expecting news from Air Products (APD) and Waste Management (WM). - Comments: 0

DG Investing in a Taxable or Deferred Account? - 05 Feb 2014 15:23


I occasionally get asked if using a tax deferred account (such as an IRA) is better than a taxable account for dividend growth investing and my answer is always the same; it depends.

There is no absolute right answer and much depends on your goals and where you are in life. If your goal is to create an income flow during retirement then a Roth IRA or Roth 401K is your best solution.

If you are saving to build an emergency fund then a taxable account is your best solution as you can easily access your income stream without paying early withdrawal penalties. But this all depends on your age and how far along you are towards your goal. The closer you are to your goal or nearing retirement age (within 10 years) it would make sense to start placing all or some of your future investments into a tax deferred account while you still qualify. The ability to grow dividends at an even faster rate would be yet another tool to help combat inflation during your retirement years.

Besides growing your earnings in a tax free or deferred IRA or 401K there is an additional benefit that may be realized that investors should not overlook. Some U.S. States have a classification of being “tax friendly”. Tax friendly states, such as Pennsylvania, do not tax distributions from 401(k)s, IRAs, deferred-compensation plans or other retirement accounts. If you think a Roth account solves this think again. A Roth may help with federal taxes but States are under no obligation so “tax un-friendly” states such as Connecticut are not shy about taxing Roth distributions. If you are fortunate enough to live in or plan to move to a tax friendly State then consider having some of your investments in a tax deferred account.

Not sure if your state is tax friendly? Check out this neat tool from Kiplinger’s that summarizes all 50 States. Kiplinger's State by State Tax Guide Link - Comments: 0

Goals Have Become Challenging - 01 Feb 2014 17:02


It is amazing how thing change in just a month. First off I can officially say I am now part of the sandwich generation. Recently (and unfortunately) my aging in-laws require care that my wife needs to provide on a daily basis and top it off the oldest of my three children is only two years away from college.

At my place of employment one of my fears came true in that there will be no annual bonuses this March. I was really counting on that to meet my investing goal $6K of new stock purchases. My wife could get a full or even part-time job to compensate but that commitment would take away from the time she cares for her parents of which I will not deny her that. We will just have to dig a little deeper to figure out how to fund the goal.

Speaking of goals January was not polite overall. With the markets down it places both my 401K & IRA behind the curve. There are still 11 months left in the year so still time to recover. On the positive side my efforts at the start of the year to reestablish a 10% cash position in both funds has limited the downside.

On the dividend growth side I neither purchased nor sold any stocks but have accumulated $2K in cash for future purchases. Dividend payouts remained steady with no decreases but expect increase announcements starting in February. My expectations for dividends & growth was the only goal meeting my expectations and further reinforces how steady a DGI portfolio can make ones financial efforts.

Though I never buy stocks in the first month of a new year I am seeing buying opportunities with the recent market pullbacks. As of today I see buying opportunities with General Mills (GIS), McDonalds (MCD), HCP Inc. (HCP), Proctor & Gamble (PG), Dr. Pepper Snapple (DPS), Chevron (CVX), and Ensco plc (ESV). If prices continue to drop I see even more with Cummings (CMI), Coca-Cola (KO), Johnson & Johnson (JNJ), and Target, (TG).

While it looks like a tough start to the year for the overall market I definitely see DGI opportunities that meet my long term goals. If January is any indicator for the remainder of the year then 2014 may be a great opportunity for investing. Now I just need to dig deep and find opportunities to unlock some money to invest.


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