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 at 60.

September Dividend Income - 28 Sep 2018 23:06

Tags: monthly_income

clocking_in.png

After 31 years of clocking in and out of work and religiously saving 10% annually every year, in good times and bad, I have decided to share my monthly dividend income to show what regular saving and investing can accomplish.

This Month I made $2252 with 83% coming from my IRA and 17% coming from my traditional brokerage account.

Most of the income is currently coming from a retirement account as the bulk of my savings were generated through workplace retirement savings that I recently rolled into an IRA and went full throttle income investing. When I first started saving in 1987 there was no mass concept of F.I.R.E. (financial independence retire early). I never had a big salary or did the proverbial “balls to the wall” extreme savings and investing. The only thing I knew was that I wanted to retire at 60 and the initial advice I got was to sock away 10% and retirement would take care of itself so that is what I did and here are the results.

I am still working today and have started to contribute to a new workplace 401K plan and will continue to do so for the next 9 ½ years so this adventure is still continuing and I hope you follow me on my journey to when I retire at 60.

divchart.png

- Comments: 3

New Buy LEG - 27 Sep 2018 21:51

Tags:

logo_leg.jpg

The markets contracted just enough to provide a buying opportunity as I added to my position in Legget & Platt (LEG) at $43.80/share and a dividend yield of 3.47%. This pickup will add $33 annually to my dividend income and inch me ever so closer to my long term goals.

This purchase was a pleasant surprise as I did not expect to make another buy this month with valuations where they were. REIT prices also retreated a bit after the fed rate increase announcement and I will admit I was tempted to pull the trigger on a few buys but resisted the temptation until prices come down further. - Comments: 0

Recent Buy & Sell – ABBV and PFE - 20 Sep 2018 20:59

Tags:

moneymachine.PNG

AbbVie (ABBV) continues to be range bound and on Wednesday its stock price bounced along the bottom of that range and I just couldn’t resist adding to my position so I purchased ABBV at $90.80/share with a 4.23% dividend yield.

Unfortunately I already have a full position in Healthcare Pharmaceutical stocks with sizable positions in J&J, Pfizer, and Merck. The purchase of ABBV threw my sector weightings out of balance and instead of being overweight I simply rotated out of one company and into another by selling 20% of my Pfizer (PFE) position at $43.75/share on Thursday.

This was not a hard decision as I bought PFE two years ago and the price has since gained 36% not including dividends. At $43.75/share PFE had a dividend yield of 3.11% versus my ABBV pickup at 4.23%. By using a rotation instead of using new funds I was allowed to increase my income, maintain my sector weighting and add diversity to my pharmaceutical stocks. You gotta love it when your money is working hard at making money so you don't have to. - Comments: 0

Done with Credit Card Debt - 09 Sep 2018 16:37

Tags:

debt.png

On Saturday I logged onto the website of a credit card company and finally paid off my credit card! This was the last goal I had set for myself to accomplish by age 50 and now it is behind me and closes one of the darker financial chapters of my career. Mentally this was incredibly relieving and has really energized my ambitions to retire in 10 years. Debt is no longer a burden and obstacle for moving forward!

How we got here

Living within one’s means is an age old mantra for fiscal wellness but sometimes there are things out of your control. In my case it was expenses increasing at a rate faster than my pay. Up to the year 2010 my family of 5 was supported on a single income, we never had credit card debt and we maintained a balanced budget.

Beginning in 2011 things outside my control began to accumulate. First, state income taxes were increased dramatically and then local property taxes increased significantly and then in 2013 our state income taxes increased yet gain. If taxes were not enough, the percentage I had to contribute to my healthcare was increasing annually at a rate of 12% during these years. The final cost topper was when the Affordable Care Act was introduced and now I had to contribute an additional amount to a Health Savings Account (HSA).

Initially the debt started small. The increase in taxes moved me from a balanced budget with no debt to being short $100/month. At the end of 2011 I had a credit card balance of $1300. The amount seemed small and I figured I can catch up after I get an annual raise. Unfortunately it became a widespread industry pattern to give minuscule raises and this was my first indicator that expenses were rising faster than my income.

Like any responsible adult I tightened the belt but then additional tax increases and rising healthcare kept coming and by the end of 2012 my credit card balance was sitting at just over $3,000. Suddenly I was short $250 month (yikes!) and seeing this shortfall would eventually lead to stress and then depression. The stress of not just keeping me financially stable but the welfare of my wife and 3 children began settling in and was the start of an emotionally dark time because I knew the debt was growing not because of a lavish lifestyle or uncontrolled spending but simply to cover monthly bills. At this point we were already living a frugal lifestyle and there was nothing left to cut.

By the end of 2015 the credit card debt had ballooned to just over $13,000 and by the end of 2016 it was a balance of $12,000. It only came down because the price of oil & gas crashed making home heating and gas for the car less expensive. At the end of 2016 I had to have a serious sit down conversation with my wife about how bad a financial position we were starting to delve into. In 2017 she started a part-time job and that is when things changed for the better. By mid-2017 her part-time job turned into a full-time job and everything became manageable after that.

I consider myself lucky during this time. I never lost my job or house and only did minor damage to my credit rating. Thankfully there were no major financial issues like medical surgeries or other catastrophes which was probably the only reasons why I did not have to raid retirement savings or the kid’s college savings or sell my house.

Milestones Accomplished by Age 50

In md-2017 I mapped out some milestones I knew I had to accomplish by age 50 if I wanted to meet my long term goal to retire at age 60. These goals were simple but significant in nature and the goals achieved were:

  1. Generate dividend income equal to 1/3 of my expenses - accomplished in June
  2. Pay off my mortgage by September –accomplished in July (2 months ahead of plan)
  3. Eliminate all credit card debt by end of year – accomplished in September

Eliminating the debt of our mortgage & credit cards have cleared the way for our final push towards retirement savings and reducing our monthly expenses. At this point the only debt we have remaining is a home equity loan which we are on target for paying off in 3 years.

On the income front, reaching the milestone of 1/3 expenses was crucial because I needed as much income as possible now to grow over the next 10 years and do the bulk of the heavy lifting via dividend growth & reinvestment which in turn will relieve some of the stress of needing to save large sums of money.

It is hard to believe that just two years ago we were teetering on the edge of falling into a hole of indebtedness and here I am today with a clear runway towards retirement. And the best feeling of all is that it now places my wife and myself in a secure financial position that will allow us to be there to help our future adult children if a crisis arises and not be a burden to them or others. Now all that is left to do is to stay on plan and grow my dividend income annually by 10% and build up a cash position equal to one year of our expenses. I feel like that x-wing pilot in Star Wars with his squad leader telling him to stay on target.

ct6ozc1.jpg

- Comments: 3

Sold LXP - 08 Sep 2018 13:05

Tags:

Friday afternoon I sold off all of my shares in Lexington Realty Trust (LXP) and banked a 9% gain. I sold on the basis of lack of visibility where the company was going based on their recent sell-off of 21 properties and formation of a joint venture for said properties with a 20% stake. article link

Of course with a loss of properties their would be a reduction in earnings and in turn a reduction in the dividend payout. But this didn't bother me as much as it was unclear as to what the company was doing with the remaining proceeds after paying debt obligations. Initially I did not sell in the hopes that the company would have an additional press release to add more clarity to the transaction and future plans but as of Friday there was nothing.

One could argue that LXP has made it's vision clear more than a year ago by refocusing its strategy towards industrial properties and that this deal simply accelerates that shift. So should investors be surprised? I agree that LXP has communicated its strategy over the last two years and that this is not that big of a surprise. What bugs me is the lack of clarity into timelines, projected targets or even possible talent acquisition for managing & acquiring industrial properties. Summed up, I sold because of their lack of communication on details of future execution.

I have learned my lesson about holding stocks with uncertainty and speculation. If things become more clearer for the positive then I'll buy back in, if not I'll enjoy the 9% gain. - Comments: 0

Plan For Sept – Be Sloth-like - 01 Sep 2018 18:18

Tags:

Sloths.jpg

The month of August produced some surprising gains in the markets and it has left me in a tough spot. Every single stock I am watching is at least 10% away from my buy price and not even worth publishing my list this month. Even with a couple days ending August on the downside did little to soften prices.

Stocks with current and historical high dividend growth (greater than 7%) are getting expensive and I hate investing for the sake of investing knowing I’m not getting the yield & growth that I want. This is not to say there are no decent companies to buy it is just that I already have full positions or something in that sector already in my portfolio. Abbvie (ABBV), IBM, Prudential (PRU), and Dominion (D) are all reasonably priced with yields above 3% and decent growth rates but I own the first 3 and already have a full position in utilities via Brookfield Renewable (BEP) so D is out.

One stock that is starting to look tempting is Illinois Tool Works (ITW) which is sitting nears its 52 week low and after a massive 28% increase in dividends announced on August 3rd is getting interesting and is a nice alternative to Fastenal (FAST) on my watch list. With the recent dividend increase this brings the dividend yield to 2.88% which is pretty close to my minimum 3% yield. However, that means I would have to wait a year for the next dividend increase to put me over my 3% target if I bought at today’s share price.

On the REIT front is there anything that hasn’t shot up in price? I really misjudged this sector, back in March I really thought REIT prices would remain depressed for the remainder of the year due to rising interest rates. At that time there was no rush to build a big position as I thought the opportunities would be available throughout the year.

With everything outside my buy zones the only thing for me to do is embrace a sloth-like investing style. I’ll make my monthly cash deposits into the appropriate brokerage accounts, maybe nibble on some ITW and take it nice and slow just watching the markets. - Comments: 0


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