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

New Buy LEG - 12 Aug 2018 17:55

Tags:

logo_leg.jpg

Friday I added to my Leggett & Platt (LEG) position by picking up some shares at $43.40 and a yield of 3.51% which will add another $68 annually to my dividend income. Currently my LEG holdings is at a two-thirds position so my next buy should place me at a full position.

This was at the upper end of my buy price and probably could have been a bit more patient but more than happy to grab shares at a 3.5% yield. I realize these are not big purchases but the best thing for me is to continually invest and steadily work towards my retirement goal. - Comments: 0

Long Term Goals Seem Too Big, Bring’em in Closer - 11 Aug 2018 19:00

Tags:

The advantage of being older is the benefit of experience which I occasionally get to impart on others. One area I would like to touch on is primarily for young or new investors is to simplify long term goals.

Over the years I have witnessed many an investor being too aggressive where goals are set so high that they expend massive amounts of energy (or money) and then get burned out and if life throws a couple of curve balls it can bring you down even further making you feel like this little cartoon…

uphill.PNG

The secret to long term investing is to remember this is a marathon and you have many years to go. The easiest approach is to break-up your long term goals into progressive smaller goals. Take for example retirement, retirement goals are typically a set dollar amount ($1M, $2M, or more) or some percentage of cash flow (% of expenses or % of income) via passive income investing. Those are some pretty intimidating numbers and it is not hard to see how one can feel like they are not making progress.

Because this blog is about dividend growth investing we will take the passive income route where you need to replace 100% of expenses by retirement (say $60,000 a year). To keep motivated, develop smaller incremental goals that fit short term and long term goals. The table below is a simple plan to grow passive income as a percentage of your annual expenses that is segregated into achievable targets by age and still meets our intended long term goal.

sampletable.png

In this example, our young investor needs to have the equivalent of 1.5% of expenses in passive income by age 25 (0.75% from their brokerage account & 0.75% from their ROTH IRA) or $900/year. Suddenly $900 becomes a much more achievable than trying to replace $60,000. As the investor progresses, the passive income target doubles every 7 years keeping them focused on the end goal while having pride of achieving the smaller goals in between.

The intent of this approach supports the old saying of “How do you eat an elephant? One bite at a time.” Bringing long term goals closer by breaking them into smaller goals has long been a successful planning approach and is sometimes underappreciated or forgotten. If you are an investor who feels like they struggle from time to time then do yourself a favor and try it out. - Comments: 0

New Buy NWL - 07 Aug 2018 14:55

Tags:

logo_nwl.png

On Monday I made an unplanned purchase that was not on my watch list by buying a small position in Newell Brands (NWL) at $22.56/share and a dividend yield of 4.08%.

The reason NWL was not on my watch list is because this is not a dividend growth stock. NWL from my perspective has become an income value stock which on occasion I buy when I see the market undervaluing a company. NWL’s stock price got hammered on Monday after they missed revenue estimates with a huge miss and lowered full year EPS guidance down $2.65 to $2.85 /share. However, even with the lower guidance this places NWL’s forward P/E near 9 and their price to book value at 0.91 which means the company has crossed the line where assets are worth more than their stock price.

NWL is in the middle of a transformation, they went on a buying binge over the last 5 years and have bit off a bit more than they intended to chew. NWL has evaluated all of the brands under their roof and set forth a strategy of categories that they believe will allow them to concentrate on growth. The remaining brands that do not fall into their categories for strategic growth are being revaluated as potential divestures such as their recent sale of their sporting goods (namely the Rawlings brand).

Their strategy is fairly simple, keep businesses that have similar manufacturing processes and distribution channels and to consolidate manufacturing which will result in reducing footprint which will in turn reduces operating costs and strengthen the remaining manufacturing and logistic streams. The chart below is an excerpt from their 2018 Consumer Analysts presentation in New York that shows the brands they intend to retain and the ones being considered for divestiture.

nwl_brands.PNG

It may take a couple of years to fully implement the strategy and until that time NWL’s stock price may go lower until their strategy begins to show EPS growth. Since I only opened a small position there is room to add additional shares and average down. I view this as a long term investment with a 3+ year time horizon and a target sell price of $42/share and in the meantime I will collect a 4% dividend. - Comments: 0

August Watch List - 02 Aug 2018 00:05

Tags:

I overhauled my watch list and removed stocks that I already have a full position. I also changed the format a little as I now use the U.S. Inflation Beaters Index as my source for equity stock picks and also added the inflation beat statistic to the Real Estate section of my watch list.

So here we are in the dog days of summer and it usually brings with it some interesting volatility swings as so many investors and traders are on vacation and volume drops. Though in this new world of robo-advisers, ETFs, and artificial intelligence I wonder if we will see the traditional August slumps and bumps.

Equities

Equity prices inched up yet again placing most of my watched items outside my buy zone. The lone exception is Leggett & Platt (LEG). I have enough cash this month to make one buy and if the markets remain stable I will probably increase my stake in LEG.

Real Estate

For a very brief moment in July REIT prices retreated and I picked up a position in Iron Mountain (IRM). Unfortunately that window was closed quickly and prices have since recovered. Unless interest rate fears creep in I may not make a REIT purchase this month.

watchlist_8_1.png

- Comments: 0


Unless otherwise stated, the content of this page is licensed under Creative Commons Attribution-ShareAlike 3.0 License