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.

Updated Watch List - 11 May 2018 20:45

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No new additions or changes to the list just updated prices as of Fridays close. The market has been just nudging up in small enough increments that keep reducing the number of stocks in my buy price range. Even REITs have been inching upwards and even here they are in the upper end of my buy range.

I already invested all I had for this month so I am nothing but a spectator at this point. PepsiCo (PEP) still looks to be the best bargain out there, not sure how long it will last but it has not gone unnoticed with other dividend growth investors and currently is one of the most popular stock buys this month. Prudential Financial (PRU) has dipped below $100 and may be another bargain, too bad I won't have enough to buy until next month.

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Same Old Cliché Helps No One - 06 May 2018 17:07

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One thing I despise are when articles discuss the lack of savings and the author brings up the old cliché ”if you just cut back on going out to eat…” and like magic all your problems are solved. That is what one recent author published in a Motley Fool article.

The article focused on a recent Capital One survey which asked its survey participants why they weren't saving. The top 2 results were; not earning enough money at 41%, and counting on Social Security at 18%. The thesis was that these are bogus and nothing more than excuses because people have failed to give up non-essentials. I really cannot believe people like this are allowed to write these articles. They sit up high, act self-righteous and provide no facts for their position.

I will admit a percentage of people fall into the category where better budget skills will improve their saving habits but I bet dollars to doughnuts that percentage is smaller than these opinionated authors or experts think. Here are a few facts to help support my position.

The Federal Reserve Bank of Atlanta posted this metric that tracks the percent of people that have not seen wage growth for the year and as of Mach 2018 that figure stood at a whopping 14.3%. As a side note; my wife falls into this category as she was told no raise for this year. Overall for 2018 the median increase in earnings is foretasted to be 3%. The Bureau of Labor Statistics currently has inflation pegged at 2.4% so real wage growth is closer to 0.6%

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Overall unemployment numbers are down but not if your education level is high school or less according this statistic from the Labor Department’s Bureau of Labor Statistics.

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Finally, inflation is not the only item eating away at our wages. In a recent study by the Kaiser Family Foundation found that the average amount enrollees paid toward their deductible rose a whopping 229%, from $117 to $386, between 2005 and 2015 while wages rose just 31% during the same period.

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After all this I did not even factor in tax increases from local and state governments which vary from an increase of 1% to 4% depending on where you live. At the end of the day folks are dealing with low wage growth, inflation, rising health care and rising taxes. We are being asked to live on less money, exactly how does someone save more?

All of the folks I know that are struggling know where every single dollar is being spent and have already eliminated non-essentials. The last thing they need are lectures or to be reminded of where they should be in life. If you are one of these authors that writes these articles and believes you are helping then please do us a favor and go back to your ivory tower and stay there. We don’t need you! These folks need encouragement and positive reinforcement that they can achieve something.

One thing I can agree with is if you have a job no matter your expenses there is always an opportunity to save something just not as much as many of these articles claim. You may not believe it but just a couple dollars a week can change your life. Wouldn’t it be nice if you had a $100 or $200 emergency fund you can raid in a time of need? To take advantage of these opportunities you need to have a couple things.

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First thing you need (beside a job) is a checking account.
Not just any checking account but a free checking account with online bill paying capabilities. It may sound hard but they do exist. One of the first places to try are local banks. Local banks tend to offer much better accounts with free or small service fees that beat the big banks (like Wells Fargo or Bank of America). I never understood why so many people are willing to take the fee abuse from these big banks. If there are no banks in your area then try online banking. You can find a recent review of online banking sites at Nerdwallet.

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Second thing you need is internet access.
This doesn’t have to be a computer, a smartphone plan works just as well. If you cannot afford to pay for internet or a smartphone plan then try your local public library. Most public libraries offer free internet access and computers to use, this is not the most secure option but it can serve you until something better comes along.

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Once you have these two things the world opens up to you. To begin everyone can dig to find a small amount to save and you can start with $6 a week. I realize it doesn’t sound like it can make a difference but it can if you keep the faith and maintain a steady saving habit. First split the $6 into two categories: emergency savings and investing (yes you can start to invest with $3). After one year you will have $150 in emergency money and $150 in investments. Think a $150 a year will not make difference? Think again. If you are 30 years old and invest $150 a year till retirement (age 68) you could earn $165 a month in retirement to supplement your social security. How is that for $3 a week! The best part is this is the minimalist approach and if your situation improves then it only gets better over time as you can save more.

As far as investing, there are free trading apps out there that can help. The one I recommend is M1 Finance as you can access using a computer or smartphone and it allows you to buy fractional shares. The only drawback is you need a minimum of $100 to open an account ($500 for a retirement account) however once you reach that milestone you can make any size investment after that. The beautiful feature of M1 Finance is that it lets you create a basket of ETFs and/or stock where you set the allocations and it automatically buys everything at those percentages all for free.

In conclusion here the steps to take:

  • Get a checking account
  • Get internet access
  • Save regularly even it is just a few dollars a week
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New Buy PEP - 03 May 2018 00:29

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5 years ago when I was hard at work building out diversification of my portfolio I was down to choosing between Coca-Cola (KO)), Pepsico (PEP), & Dr. Pepper Snapple (DPS). I went with DPS thinking they had better growth prospects but PEP came in second. Fast forward five years later and I had the opportunity to buy my runner-up.

Today I purchased a small position in PEP at 97.50/share which adds $37 annually to my dividend income. PEP is 20% off of its 52 week high but its current P/E 28 is still higher than its 5 year average of 24. I may have slightly over-payed however it is a small position and if prices retreat further I can add more shares.

The positive of PEP is its stable of top brand names and consistent dividend growth history. The negatives are PEP is far from breaking growth speed records and with a 72% payout ratio future dividend growth will need to come from revenue growth or share buybacks. PEP will have to perform near flawlessly to keep its consistent dividend growth of 6-7% a year. - Comments: 0

Update to my Watch List - 02 May 2018 20:06

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Market volatility is continuing and quickly creates (and takes away) opportunities to buy stocks on sale! The big news for April was the word inflation. Anyone mentioning inflation, pricing pressure or rising material costs was not treated well with respect to share price opening more opportunities. This month 5 new stocks have made it onto my radar; Air Products (APD), Fastenal (FAST), Johnson & Johnson (JNJ), 3M (MMM) and McDonald’s (MCD).

Air Products & Chemicals
APD Recent Dividend Yield: 2.71%
Most Recent Dividend Increase: 15.79% announced January 2018

Air Products & Chemicals engages in the manufacture and distribution of atmospheric gases such as oxygen, nitrogen, argon, and rare gases; process gases such as hydrogen, helium, carbon dioxide, carbon monoxide, syngas, and specialty gases. The also produce equipment for the production and processing of gases such as air separation units and non-cryogenic generators.

Fastenal

FAST Recent Dividend Yield: 2.99%
Most Recent Dividend Increase: 15.6% announced January 2018

Fastenal engages in the provision of fasteners, tools, and supplies which can help in the manufacture of products, build structures, protect personnel, and maintain facilities and equipment. Products include cutting tools and metalworking; fasteners; material handling, storage and packaging; power transmission and motors; tools and equipment; electrical; abrasives; hydraulics and pneumatics; plumbing; lifting and rigging; raw materials; fleet and automotive; welding; office products and furniture; janitorial; and lighting.

Johnson & Johnson

JNJ Recent Dividend Yield: 3.48%
Most Recent Dividend Increase: 20% announced February 2018

Johnson & Johnson, researches and develops, manufactures, and sells various products in the health care field worldwide. Its Consumer segment offers baby care products, oral care products, beauty products, over-the-counter medicines, women's health products, and first aid products. The company's Pharmaceutical segment offers various products in the areas of immunology, infectious diseases and vaccines, neuroscience, oncology, cardiovascular and metabolic, and pulmonary hypertension diseases. Its Medical Devices segment provides orthopedic products; general surgery, bio-surgical, endo-mechanical, energy products, sterilization and disinfection products, diabetes care products, and vision care products.

3M Company

MMM Recent Dividend Yield: 2.79%
Most Recent Dividend Increase: 15.7% announced January 2018

3M Company operates as a diversified technology company that produces products which serves automotive, electronics and automotive electrification, appliance, paper and printing, packaging, food and beverage, construction, medical clinics and hospitals, pharmaceuticals, dental and orthodontic practitioners, health information systems, food manufacturing and testing, consumer and office retail, office business to business, home improvement, drug and pharmacy retail, and other markets directly, as well as through wholesalers, retailers, jobbers, distributors, and dealers worldwide.

McDonald's Corporation

MCD Recent Dividend Yield: 2.47%
Most Recent Dividend Increase: 7% announced September 2017

McDonald's Corporation operates and franchises McDonald's restaurants in the United States and internationally. Its restaurants offer various food products, soft drinks, coffee, and other beverages, as well as breakfast menu. As of December 31, 2017, the company operated 37,241 restaurants, including 34,108 franchised restaurants comprising 21,366 franchised to conventional franchisees, 6,945 licensed to developmental licensees, and 5,797 licensed to foreign affiliates; and 3,133 company-operated restaurants.

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