Follow the dividend investment decisions of a person who has no background in financial investment and wishes to take control of their financial future.

Weekly S&P Performance - 28 Feb 2016 19:10

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What a difference a day makes. The last day of the week was fairly interesting as the Utilities and Consumer Staples sectors were significantly negative and wiped out a weeks worth of gains. Up to Thursday the utilities were looking at a YTD return of 9.7% but after Friday's close the YTD return dropped to 6.7%.

It is unclear if this is just a temporary setback in the Utilities and Consumer Staples or a rotation out of defensive stocks. If this is a rotation out of defensive stocks then buying opportunities for dividend growth stocks will become more expensive.

Another sign that there may be a rotation out of defensive stocks is the gains in the Financial sector. All year financials have been near the bottom of sector performance week in week out. This week they were middle of the pack, not great but better than being at the bottom. Possible sign of better days ahead?

S&P Weekly Sector Perf S&P YTD Sector Perf
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New Buy GRMN - 25 Feb 2016 19:11

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Lot of attention to companies making wearables with Fitbit (FIT) reporting quarterly numbers below expectations and holding back other manufacturers from price gains.

One of those is Garmin Ltd (GRMN) which I bought 100 shares today at $39.91. The one area of Garmin I love is their avionics aerospace segment. They have developed a set of slick and affordable avionic packages for navigation, communication and safety. - Comments: 0

New Buy MHLD - 24 Feb 2016 19:25

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Grabbed 100 shares of Maiden Holdings (MHLD) at $11.46 and a yield of 4.88%. Took advantage of a pull back due to MHLD reporting a bad quarter as well as an early market sell-off on Wednesday.

Wednesday's early sell off had my buy fingers itching to also grab some shares of Ford (F) and T Rowe Price (TROW) but their share price did not drop enough to trigger my limit orders. - Comments: 0

Weekly S&P Performance - 21 Feb 2016 22:32

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The market finally strung together consecutive days of positive gains. Do not know if this is a temporary respite or start of a rally but it will be interesting to see where this goes. For the week every single sector was positive and it has been a long time since that last happened.

While the weekly performance was the best of all year it still was not enough to take most sectors out of the red in the YTD performance but it did decrease losses. What was confusing was no money was transferring out of the utilities and consumer staple sectors. For the week, these sectors added to their YTD returns which makes me wonder if it was large investment firms and hedge funds making most of the market moves while private investors continued rotating into utilities and consumer staples.

S&P Weekly Sector Perf S&P YTD Sector Perf
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Taking Small Steps Toward 2016 Goals - 20 Feb 2016 13:49

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This week was fairly light in regards to trading as I switched gears to focus my energies on taking a couple more small steps toward my annual goals.

1. Transitioning my old 401K – In early February I started the process and moved 40% of my assets into an IRA. This week I’ve finally closed all of the remaining 401K assets which should take 3 to 4 days to settle and then another week or two to transfer. By early March all funds should be available to start the transition to a dividend growth portfolio.

The total transfer amount was a significant sum of money, normally I wouldn’t flinch at taking risks because I always had the three security blankets of time, steady income, and a company 401K match to compensate for losses. But something weird happened, I pretended to be a person retiring and I actually found myself hesitating to hit the sell button. I realized my three security blankets wouldn’t be there. If I make a bad investing choice now my retirement (and my wife’s) could be screwed! Wow, this put a new perspective on things.

In real life I still have my security blankets so the fear is reduced but now I have a new perspective and respect for those quitting their lifelong jobs and entering retirement. It is a lot scarier than I imagined.

2. Getting my taxes done – For the first time in a long time I will actually have my taxes filed with the IRS by February. This was a necessary step to achieve as early as possible so my daughter can continue with FASFA forms and scholarships for college. Scholarship money will be extremely important to meeting the goal of funding my daughters first year of college fully paid.

3. Planning out my next step – My next step will be towards reducing my overall debt by 20%. My wife and I will gather and organize every single account by amount, percentage rates and loan periods. To help the two of us with motivation I found this interesting article on tips for staying positive while reducing debt.

One of the tips I found extremely useful is to calculate your interest expense on a daily basis. I think this will be a serious eye opener but I also believe it will be a great measure of success. If we start off with say a daily interest of $10 and after making an extra payment it reduces to $9.95 will allow us to quickly see the progress we are making.

Additionally, a 20% reduction on $10 per day sounds more achievable than 20% reduction on $30,000 of debt. Of course it equates to the same amount but mentally it sounds more appealing. If it works to get me and my wife on the same page then I’m all for it. - Comments: 0

Weekly S&P Performance - 14 Feb 2016 22:58

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The utilities sector finally saw some loses for the week but YTD is still positive. Consumer Staples showed some life but this type of movement is still indicative of investors continuing to rotate into defensive stocks.

Financials on the other hand continued the downward spiral with another week of loses adding to it loss leading number of -14%. How low will it go?

S&P Weekly Sector Perf S&P YTD Sector Perf
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Dividend Growth Offers Comfort - 13 Feb 2016 14:02

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Next month is time for my company's annual reviews and raises will probably be somewhere between 2 to 3%.

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This has been the norm not just at my company but across the U.S. The real kicker is your employer tries to make you feel good about it like they are doing you a favor. This is hard to swallow, as you know executives increase their compensation well above the lousy 2-3% you will receive. Take for example Bank of America’s CEO Brian Moynihan whose 2016 compensation is increasing a whopping 23% while his stock is floundering.

While company executives feel emboldened to enrich their lives, dividend growth can offer some comfort by giving you raises that exceed that paltry raise your supervisor plans on doling out to you this year. This month I have already received two gracious raises from Dr. Pepper/Snapple (DPS) and Hasbro (HAS) that have exceeded my expectations and will no doubt far exceed my raise at review time next month.

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DPS announced a 10.4% increase to their quarterly dividend from 48 cents per share to 53 cents to be paid on April 5, 2016. I bought DPS back in 2013 @ $46 with a yield of 3.31% which now has grown to a yield on cost of 4.61%, not too shabby! When I first purchased DPS 9 people commented on the buy with 6 negative and 3 supportive. In all fairness, the 6 negative didn’t think it was a bad buy but were shocked that I passed on KO & PEP. Their biggest gripe was DPS market was limited to the U.S. and the lack of international exposure would limit growth. Regardless of what people thought back then I stood with my decision of a strong balance sheet and an incredible stable of non-cola drinks many of which were number 1 or 2 in their categories.

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HAS announced a 10.8% increase to their quarterly dividend from 46 cents per share to 51 cents. This one really surprised me and I have to admit I was wrong last summer when I did not believe growth would exceed 7%. I sold some of the shares last fall to capitalize on the equity growth that at the time far exceeded the dividend growth. I still stand by that decision to prune back some shares but the gap between HAS price equity and dividend growth has reduced thanks to the latest increase so I have no plans on to sell any shares in the near term. Overall this has been a nice investment, I bought HAS in 2012 @ $36 with a yield of 3.98% and today my yield on cost has grown to 5.64%.

At the rate my dividends are growing for some companies I am on pace to see my yield on cost doubling in just 5 more years, a total time investment of 8 years to double. I definitely do not see my salary at doubling in that same time period! - Comments: 0

New Buys - AVX and PFG - 11 Feb 2016 22:59

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The market took another one on the chin today and it triggered a buy on two of my limit orders. Today I bought 100 shares of Principal Financial Group (PFG) at $34 and a dividend yield of 4.47% quickly followed up with a buy of 200 shares of AVX Corp (AVX) at $11 and a dividend yield of 3.82%.

These two buy brings my IRA portfolio to a 5.25% overall dividend yield. I still have two limit orders remaining for PPL Corp (PPL) and SPANAMERICA Medical (SPAN) but current prices are still a decent amount over my buy prices of $34 & $17.70. Once these two execute I'll still have a little bit of dry powder but not much. - Comments: 2

New Buys - HCP, AEO, F, OHI - 10 Feb 2016 23:20

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Continuing with my 401K to IRA transition I had a few buys this week.

On Monday I had a limit order for 200 shares of HCP filled at $34/share with a yield of 6.7%. Unfortunately, the price came crashing down the following day and is currently trading at $27.21. Happy with the yield I got but an 8% yield sure would have been nicer. Other than HCP I had no other limit orders filled but since I decided not to chase Cummins (CMI) it did leave me with a little extra cash to spread around for some other buys I had my eye on.

With the all healthcare REITS crashing on Tuesday I took advantage of the opportunity and picked up another 50 shares of Omega Healthcare (OHI) at $27.45 and a yield of 8.31%.

My second pick-up of the day was 100 shares of Ford Motor (F) and $11.36 and a dividend yield of 5.28%. American auto manufacturers are so unloved and Ford’s share prices are the same as they were in 2012. Sorry but this is not the same company it was back then. They have better cost structures and Union agreements better positioning the company to weather down cyclical years. Lots of investors are staying way but I’m embracing GM & F while prices are low.

My third and final pick was 100 shares of American Eagle Outfitters (AEO) at $13.20 and a dividend yield of 3.79%. With disappointing growth numbers coming out of Christmas the whole sector has been beaten down and AEO is well positioned if consumer spending picks up. While not a traditional dividend grower there is potential, they have a significant amount of cash on the books and no long term debt. Their main product line is still popular and their new Aerie lingerie brand has been exploding and is actually starting to challenge Victoria’s Secret. I could have picked up Kohls (KSS), Wal-Mart (WMT), or Target (TGT) but the problem I have with many of the big names is that they have already expanded into every state so growth is extremely limited unlike AEO who has expanding and popular product offerings. - Comments: 0

A Different Path to Retirement - 09 Feb 2016 14:42

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A friend showed up an hour early for my Super Bowl party and luck would have it I was actually ready and had the luxury to grab a beer and sit and talk with my old friend. We have been friends for just over 30 years and one of the secrets to our good friendship is we never pry into each other’s personal lives.

Sitting and enjoying a beer together, I casually made a joke of how we are now 48 and actually have to start thinking about retirement and how it stinks having to be a grown-up. I was shocked when he turned serious and in a solemn tone replied “My only option is to work till the day I die…”.

How do you respond to something like this? The first thought that ran through my mind was “You A—hole we were supposed to retire together, what were you thinking!” but of course this is not what I said. Instead I took a long swig of my beer, which felt like an eternity to swallow as I searched for words that wouldn’t sound like pity or be condescending. Both he and his wife have decent jobs and a wonderful marriage, I could only guess he had no savings and the effort to get there was so large he relegated himself to the position of why try. This was a defeatist attitude which I never seen him have before and it pissed me off seeing him like this.

There was a pretty long silence between the two of us. The silence actually gave me time to pull some words together without prying into his personal life. I sighed and took a quick second swing of my beer and then turned to him and said “you know, a mound of cash isn’t the only way to get to retirement”. This statement did more than just break the awkward silence, it actually got his attention as he replied “Okay, I’m listening”.

The rest of the conversation went like this …

Me: Instead of worrying about a mound of cash how about you focus on other aspects like reducing your spending and debt?”

Friend: No way can I live like a pauper or a hermit. Besides my wife and the kids wouldn't buy into it.

Me: No nothing like that. You can set small goals each year, like reducing your debt by some percentage each year till you are debt free by retirement age. As far as expenses, you could look to relocate someplace more affordable, it sucks living in Connecticut. Heck I’m paying $5,500 a year in property taxes alone. If I move down south that cuts expenses by $5K a year. How much are you paying?

Friend: About $6,200. But my wife probably won’t want to move. She wants to be near the kids and her family.

Me: You could keep the house and let one of the kids live there and pay the taxes. It still gives you an anchor to the area for your wife.

Friend: Yeah but I don’t have two nickels to rub together to buy another place.

Me: You can rent.

Friend: And where do I get the money for the deposit and moving expenses?

Me: So you set a savings goal for that like $10,000 or something. You got what, 15 to 17 more years till retirement? That’s like $60 bucks a month.

Friend: That might work.

Me: Talk it over with your wife. If you guys are good with it come back and talk with me and my wife. Maybe we could co-ordinate a move to the same area.

Friend: That would be cool.

A couple minutes after our conversation a few other guests arrived and we did not speak of it again. Throughout the night my friend seemed more chipper than normal and it reminded me of how he used to be in our younger days. I don’t know if I was our conversation that put him in a good mood or the alcohol but hopefully he found some solace and a way out of his problem. - Comments: 0

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