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 Buys KHC and VER plus some last minute selling - 28 Dec 2018 11:04

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On Monday I decided to trim back my portfolio and sold three stocks; Versum (VSM), Keurig Dr. Pepper (KDP), and Analog Devices (ADI). All three stocks were acquired from buyouts or spin-offs, however, their position in my portfolio was so small that it was becoming a labor to track all three so I decided to cut them loose. These sells reduced my forward annual income by $66.

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On Wednesday I bought Kraft-Heinz Corp (KHC) at a price of $42.52 with an annual dividend yield of 5.88%. At this price it was just too cheap to ignore so I made the move to capitalize. This buy adds $58 to my annual forward dividend income,

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My second purchase was a small increase in my VEREIT position inside of my ROTH IRA at a price of $7.10/share and a yield of 7.89% which adds $24 to my forward annual dividend. Luckily I bought this a day ahead of the ex-dividend date so it will immediately start contributing next month.

Overall between the sells and buys my forward dividend netted out to an additional $16. Not the greatest jump but and increase none the less. I still have a little cash left over from the selling action so not sure if these are the last buys of 2018. - Comments: 2

Weekly Portfolio Summary - 22 Dec 2018 14:35

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Portfolio Activity

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The last week has been pretty rough for the markets and many a portfolio. But now is a time to relax and enjoy time with family and friends. Thanks to all the readers and have a great holiday!

Portfolio News - (In Case You Missed These Headlines)

AbbVie (ABBV)

Air Products (APD)

Preferred Apartment Communities (APTS)

General Mills (GIS)

Hasbro (HAS)

Merck (MRK)

Newtek Business Services (NEWT)

Pfizer (PFE)

Qualcomm (QCOM)

Ryder System (R)

Sabra Health Care (SBRA)

AT&T (T)

Interesting Blog Posts or Articles

Five lessons I learned while making a documentary film about FIRE by Get Rich Slowly
HOW “NO” HAS CHANGED MY LIFE by Mr Free at 33
This is exactly how much families must earn in each state to afford housing, child care and food
Dear Young Boys: Let’s Talk About Money - Comments: 0

New Buy R - 21 Dec 2018 21:57

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Transports have been getting whacked on the markets as of late and it is hard to ignore when big names like UPS & FedEx are dropping to new 52 week lows. I already have a sizable position in UPS so I opted to place a limit order for Ryder System (R) and it only took two days to trigger my limit buy order.

On Friday I increased my position in R at a price of $45.60/share and a dividend yield of 4.74%. This new purchase will increase my forward annual dividend income by $47 and represents my last stock purchase for the year as I am out of cash until 2019 kicks-in.

For those not familiar, Ryder System provides transportation and supply chain management solutions worldwide. The company operates through three segments: Fleet Management Solutions (FMS), Dedicated Transportation Solutions (DTS), and Supply Chain Solutions (SCS). Ryder System also has a 15 year dividend growth history and a 13 year inflation beat record and a 10 year dividend growth rate of 8.76% with its most recent 3.85% increase announced back in July. - Comments: 0

New Buy WY - 21 Dec 2018 13:05

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I’ve been patiently waiting to buy the timber REIT Weyerhaeuser (WY) and my opportunity came on Thursday’s market drop as I purchased a small position in WY at $22.75/share and a 5.98% dividend yield that will increase my forward annual dividend by $60.

The purchase of WY rounds out my REIT diversification as I now have REIT exposure to the following real estate sectors:

  • Data Storage
  • Entertainment Facilities
  • Hospitals
  • Hotels
  • Industrial Facilities
  • Residential Apartments
  • Retail Stores
  • Senior Housing
  • Timber
  • Warehouses

The only area with no exposure is self-storage companies like Public Storage (PSA) or Cubesmart (CUBE) but that is something I am struggling to understand as the market is so crowded and until I have a better understanding I am avoiding it.

WY recently converted to a REIT in 2010 and has since had a stable dividend payout and had grown their quarterly dividend from 0.15 in 2010 to 0.34/share in 2018. While the dividend has been stable since 2010 there are potential risks going forward.

87% WY’s income is generated from timber and as such its success is without a doubt tied to lumber commodity prices. With the floor dropping out from underneath lumber prices in the second of half of 2018 it does introduce the possibility of a future dividend cut if lumber prices drop further. In WY I was looking for 5% yield but did not want to initiate a position until the stock yielded at least 6% due to the risk of a possible dividend cut. As such I initiated a small starter position in the current $22/share range which gives me protection for a 25% dividend cut and still maintain a 5% dividend yield. Because I do not have a crystal ball where lumber prices are going I probably will not initiate another buy unless the stock price drops below $20/share to help further reduce risk if a dividend drop does occur.

With my gloomy risk position out of the way there are some positives going forward. First, WY is the most efficient publicly traded timber company that allows them to have the best margins in the business that will allow them to whether the downturn in lumber prices.

Another potential is exports. WY’s west coast lumber operations currently has a stable export relationship with Japan but their southern operations have virtually no export exposure and is something they are working on expanding.

The final positive is WY’s reduction in pension liability. In the 3rd quarter WY made a significant pension payment of $300M to improving the funding profile. This action will allow them in 2019 to offer a lump sum payout option to members and for all remaining members those assets will be transferred to an insurance company annuity contract and eliminate their liability going forward.

In summary, regardless of the positives I listed, as an investor you have to recognize and respect the potential volatility in this company with both their share price and dividend payout due to its relationship to lumber pricing. I initiated this position more as diversification than dividend growth so that I have all areas of the REIT economy covered to help stabilize my dividend income. - Comments: 0

Weekly Portfolio Summary - 15 Dec 2018 13:38

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Portfolio Activity

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Portfolio News - (In Case You Missed These Headlines)

AbbVie (ABBV)

Air Products (APD)

Preferred Apartment Communities (APTS)

Iron Mountain (IRM)

Johnson & Johnson (JNJ)

Leggett & Platt (LEG)

Pfizer (PFE)

Prudential (PRU)

Phillips 66 (PSX)

T. Rowe Price (TROW)

United Parcel Service (UPS)

Waste Management (WM)

W.P. Carey (WPC)

Interesting Blog Posts or Articles

The Best Investors Spend Their Lives Asking Why, Why, Why by the Conservative Income Investor
Chasing Experiences (Not Money) by FI Fighter
Top Investment Picks Contest for 2019 by Roadmap2Retire
12 Free Resources to Find a Job, Start a Side Hustle or Change Careers
Robinhood tempts savers with 3% interest on checking accounts — should consumers hand over their cash?
Forbes Publishes 2019 Just 100 List - Comments: 0

Weekly Portfolio Summary - 08 Dec 2018 14:23

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Portfolio Activity

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Portfolio News - (In Case You Missed These Headlines)

Analog Devices (ADI)

Chatham Lodging (CLDT)

Newell Brands (NWL)

PepsiCo (PEP)

Sabra Health Care (SBRA)

W.P. Carey (WPC)

Interesting Blog Posts or Articles

Not a lot of articles this week as most folks were busy posting their monthly results. For a summary of monthly dividend income checkout the well maintained page at our fellow blogger’s site Dividend Driven - Comments: 0

New Buy R - 06 Dec 2018 23:29

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It feels like forever since I last bought a stock but today ended that drought as I started a small position in Ryder System (R) at $52.55/share and a 4.11% annual dividend that will increase my annual dividend income by $43.

Ryder has 15 year dividend growth history and a 13 year inflation beat record and a 10 year dividend growth rate of 8.76% with its most recent 3.85% increase announced back in July. It currently has a forward PE of 8 and is lower than FedEx at 10 and UPS at 13.

Over the last 10 years Ryder has been aggressively investing in growth through acquisitions, technology investments, and process improvement. Their recent acquisition of MXD Group last spring folded a new "Last Mile" delivery service into their portfolio. What makes their last mile delivery service unique from other delivery services like the USPS, UPS or FedEx is that they are focused on bulky deliveries (furniture, appliances and electronics) and something referred to as over threshold services where they bring the product into a customer's home and have the ability to assemble or install the product. This is a great bolt on acquisition that continues on their vision to provide efficient outsourcing to businesses. Delivery and installation of bulky items is so fragmented with small delivery companies and is ripe for consolidation. If Ryder plays this right it may drive future growth through new customers like Home Depot and Lowes.

I have been watching Ryder for the last 3 months hoping to have the opportunity to buy near their 52 week low of $51 and today it was close enough. With potential interest rates and Ryder's considerable debt loads there may be opportunities to buy at a lower price and if that happens I'll increase my position but one of the reasons I limited the buy to small position. - Comments: 0

November Dividend Income - 01 Dec 2018 12:32

Tags: monthly_income

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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 $2,132 and was a bit surprised as I did not expect to break the $2K barrier this month but I forgot about my Fastenal (FAST), Chatham Lodging (CLDT) and Sabra Heath Care (SBRA) purchases which, combined with dividend reinvestment, moved the monthly income across the line. This is my third month of tracking so from here on forward I can start tracking a quarter over quarter growth rate.

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A little over a week ago I created a 3 year goal metric and here is the first monthly update. My percent complete only increased 0.05%. Pretty disappointing but it was only just 9 days ago that I created it and can’t read too much into it. On the positive side, after just a week without contributing any new investment money it did grow on its own so something to take pride in.

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On the expense front I have kept my credit card debt down to zero. But, it is that time of year as I received two college tuition bills in the mail and yes I have two kids in college with a third just 1 ½ years away. The first tuition bill is from my oldest and she will be taking out her very first student loan to pay so the burden is on her and not me. Luckily she graduates in Fall of 2019, with only one more semester she will have $10K in student loan debt. I actually wanted my children to assume some debt to take ownership of their decisions and $10K is pretty manageable.

The second tuition bill I have funds for and it will not impact my monthly expenses. This is something we saved towards 15 years ago so the impacts is minimal. - Comments: 2

Refining My Goals - 22 Nov 2018 12:17

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2018 is rolling up to be a nice planning year and never have I had more visibility to where I need to be to meet my goal of retiring at age 60.

The first major event was finally becoming fully invested with all of my rollovers at the end of February 2018. It took just over two years to fully invest but once I did I gained visibility into my forward annual passive dividend and how it will play into my retirement goals. In March I ran the numbers based on current expenses using an inflation rate of 3% and going out 10 years. It looked like I was on track with no issues as long as my annual dividend growth rate was 7.5%. Sounds pretty easy when you factor in dividend growth, dividend reinvestment, and added contributions of new funds. In other words, just stick to the current program and everything will be fine

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The second major event occurred by accident when I was trying to determine how much emergency cash I would need during retirement (see blog post This is 3x Worse Than a Market Crash) by analyzing how my portfolio would have done in a crash using the 2009 great recession as a data point and later a supplemental analysis of how my portfolio would perform in a long sideways trading market with high inflation using the 1970’s as a data point. What resulted was that I was off on my original goals and needed not to replace 100% of annual expenses with passive income but it needed to be 115% of annual expenses and I needed at least the equivalent of 9 months of expenses as emergency cash. Note, when I calculated passive income I am using a 20% tax rate so my pre-tax passive income is even greater. This threw me a slight curveball and suddenly it was not as an easy goal as I thought in last March. Now my modified goal requires an annual dividend growth rate of 12.5% and I need to save an additional $2,000 annually in cash for emergency money during retirement. The 12.5% growth rate might be achievable but an additional $2K may be a challenge.

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The third major event is I started to track my monthly dividend income in September. At first it was to demonstrate what a lifetime of saving and investing can achieve. Now it will become a tool to monitor my growth rate to stay on the 12.5% growth path. I cannot wait for December’s report as it will show my first quarter of quarter growth (Sept vs. Dec). I have also began setting up tracking for portfolio growth based on dividend increases, DRIP’s, and new contributions which I will start tracking in detail come January 2019. I realize most DGi investors have been tracking their income in this manor all along but the bulk of my wealth used to be tied up in mutual funds via a 401K making visualization of an income stream difficult. But that all changed when I rolled the funds into an IRA so for me it is a a new and improved metric :)

After all of this, I now have refined long term retirement goals for age 60 and annual goals for 12.5% growth & $2K cash. With this I decided to add an interim 3 year goal (by age 53) to have after-tax passive income equivalent to 57% of expenses. Using Google Sheets “Gauge” chart and here is the end product.

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Truth be told, planning for long term goals (20+ years) is not an exact science. The further we go out in time and try to predict something the greater chance of miscalculations. I have always planned on retiring at 60 but my financial goal targets for age 60 continuously changed. Now that my long term goal has turned into a mid-term goal (10 years), my ability to plan more precise financial goals is coming into play and getting me excited as I have the possibility to achieve what I have worked long and hard for. - Comments: 0


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