Thursday, December 31, 2015

Dividend Report 2015

This year my dividend investing went to the next level. I am writing about it, which forces me to structure my thoughts just that much more. In addition, I'm more actively planning how I put money into my portfolio, with automatic deposits, and recently my car fund. My Active Passive screener keeps evolving, but the basics remain the same: pick out companies with a great track record of paying and growing dividends. I take some risks with higher yielding stocks, and I certainly feel the pain when my two highest yielders (ARLP and TAL) tanked in valuation. ARLP has been paying dividends, but TAL cut theirs and is looking at a merger. Uncertainty is not what we want in our dividend portfolio. On the other hand, the majority of my portfolio paid and increased dividends on the expected time line. There's nothing better than getting paid for past decisions and seeing that pay increase.

My goal this year was to build out my portfolio with a mix of higher yielding and faster growing (but lower yielding) stocks. I now hold some well-known dividend aristocrats, some utilities, and some other industry to diversify. My goal was to end the year with a forward dividend income of $ 4850. This was based on a long term schedule of goals that puts me at $25k by 2028. I'm pleased that I was able to beat this and reach $ 5,638.17 of expected income. Of course this was mostly due to putting a ton of money into the portfolio. I kept an eye on growth though, and even if I put no new money in, I expect this to grow by $250 next year, which would put me just shy of my 2016 goal of $ 5900 of expected income.

Monday, December 28, 2015

Dividend Report December 2015

All my dividends for the year have come in.  December saw a special dividend from CINF, a lowered dividend from TAL. Also, unlike others years, PEP is paying out early January. This may skew the month to month numbers a bit, but it's not material otherwise.
December was huge for investments. I put close to $18k into my portfolio, prepaying three years worth of fresh cash. This was half money I saved up to buy a new car.

December overview:
  • I received $ 380.07. More than I expected, thanks to the extra off-cycle CINF payout.
  • Trailing 12 months $ 4,522.11
  • Forward 12 months $ 5,638.17
In January I expect $ 282.53. 

Thursday, December 24, 2015

Buy: NEE

This week's purchase may be a lesser known company. NEE is a utility with a broad coverage from coal to solar. I think their diversification is what makes them a better option that some other utilities. NEE meets my purchase criteria of a good div growth history, payout ratio, and yield. They scored 18 out of 20 on my Active Passive screener. I purchased 57 shares of NEE, adding $ 175 to my dividend income in the next 12 months.

Friday, December 18, 2015

Buy: JNJ

My car money is being put to work in my dividend portfolio. By 'pre-paying' my dividend investments and paying off my car over three years, I benefit from being in the market the extra time, picking up dividends while paying a low interest.

I'm building out my portfolio by adding to existing positions. After my HCP purchase my focus is now on some smaller positions that I want to grow. I added 62 shares of JNJ to my existing 9, building up that position significantly.  A Dividend Growth Stocks analysis on JNJ was just posted and confirms how strong JNJ is.

Wednesday, December 16, 2015

Buy: HCP

As was the plan, I'm investing the money I didn't immediately have to use to pay off my new car into my dividend portfolio. My first purchase is adding to my HCP position. HCP has been doing very well for me. I picked up 183 shares, which makes HCP my largest position. HCP now brings in over $1,000 of dividend income annually. I don't expect to add to this position any further, and will instead balance out the portfolio by adding to some smaller positions.

Div history for HCP looks great, which consistent growth on top of a great yield already.

Wednesday, December 2, 2015

Car Loan means Dividend investments

I closed on my new car loan. The interest came in at 0.9%. For the roughly $ 40k balance this means under $ 600 in finance charges over three years. This also means that if I put $10k in my dividend portfolio now, I and I make 3-4% on it, I'll make roughly $1000 in dividends over the three years of the loan. The risk is that the price of the shares may fall, but I plan to hold on to the stocks for the long run. I will probably invest before the end of the year. And I may put in $18k total or half the money from the car fund. I will stop the regular automatic cash transfers -- that money will go the the car payments.

What I really like about this set up is that after my car is paid off, I will still have my dividend stocks. For the 36 months, normally I would have put in $ 500 per month, or $18k. If I put in the $18k right now, I instantly benefit from the dividend machine. The remaining money from the car fund and the additional fresh cash will be drawn down for the car payments. I will also have a higher insurance and property tax bill that I will need to cover. As I mentioned before, I have two 0% loans that will be paid off in November 2016, at which point I plan to split those payments into funding a new car fund and adding fresh cash to the Active Passive portfolio. My wife's car will be three years old by then, and I'll assume we can drive it for 10 years. Conservative, as the previous car lasted 13 years for her, and 15 years for me. Saving up the money in a interest savings account (or CD if rates become attractive) will give me piece of mind that I can buy a car if and when needed. Puts me in a much better position if it's possible to say no to financing.

Roughly my dividend investment plan is as follows
  • 2015: invest $18k in dividend portfolio, halt fresh cash transfers
  • 2016: no additional capital input until other loans are done. Reinvest dividends only.
  • 2017, 2018: slowly add in half of prior loan payments as new investments.
  • 2019: all loans done, evaluate financial situation. Split new car payments into funding new car fund, and dividend investments.
Of course all this can change if significant events happen. Extra bonus, or lack of bonus, extra income or extra bills. Life's unpredictable, but it's good to have a short term plan that gets us closer to the long term goal.