Thursday, December 6, 2018

November 2018 Portfolio Summary

The market has been volatile recently. It has been range bound for several weeks primarily on fears of the escalating trade war with China and the slight slow down of the American economy. There rae discussions about the rise in interest rates slowing things down, and talk about how the boost from this year's tax cut will not be so evident next year.

The S&P500 looks like it's testing its lows again. Dollar is relatively strong. And oil is very cheap, appearing to bottom at around $50. Overall things look quite unpredictable right now in terms of where the index will head. There are too many outside variables that happen on the news day to day. For example, the American government arrested the CFO of Huawei today in Vancouver for violating Iranian sanctions. This increased uncertainty due to escalating tensions between China and the US. This type of event happened with Chinese ZTE in the past and it did not help the market calm down.

Since it is impossible for me to predict the market, my objective is very simple. Acquire high quality companies that pay dividends with very safe payout ratios. For every dollar that I earn from my vocation, I save a good percentage and allocate them to income producing stock. I don't time the market but instead deploy capital periodically (i.e. every 2 weeks to every month). The graph I focus most on is the growth of the forward annual dividends my portfolio will generate, not the net worth of my portfolio. I expect the net worth of my portfolio to climb steadily over time as the shares I own will continuously increase their dividend year after year. Net worth is secondary to income growth. If an asset generates more income, the more valuable it will become.

Additionally, any dividend income I get I reallocate back into the stocks that paid them. Since I am young and in the accumulation stage of my life, my goal is to collect as many shares as possible and then let the shares compound on their own. I expect each of the shares I purchase will be able to increase their dividend year after year, further amplifying the income compounding effect.



Monday, December 3, 2018

Recent buy: large purchase

I decided to deploy around $44,000 across my various positions today. I could of bought a nice car or down-payment for a house but I decided to plop it in income investments. This is a large purchase for me and will boost my dividend income quite noticeably.

It is hard for me to time the market. I do not foresee needing this cash in the next year and my vocational income comes in every 2 weeks. My emergency cash fund is sufficient for my low expense lifestyle and the dividend income now per month is large enough to pay for a lot of random things if needed. So I decided to deploy it sooner than later as I am focusing on increasing my passive income. I sprayed it across basically all my positions.

*edit: I did not pay for trades as I get several a month from my broker
Trade  Action  Security  Quantity  Last Price  Total Paid
Buy   GIS  84 $41.19 $3,459.96
Buy   GD  6 $181.21 $1,087.26
Buy   ABT  10 $73.99 $739.90
Buy   MDT  5 $98.66 $493.30
Buy   HON  3 $149.26 $447.78
Buy   MCD  3 $185.26 $555.78
Buy   CL  46 $63.49 $2,920.54
Buy   SYK  5 $174.25 $871.25
Buy   SBUX  14 $67.67 $947.38
Buy   MSFT  6 $111.80 $670.80
Buy   D  10 $74.80 $748.00
Buy   TJX  22 $48.37 $1,064.14
Buy   CHD  10 $65.82 $658.20
Buy   WEC  27 $72.65 $1,961.55
Buy   KMB  13 $112.88 $1,467.44
Buy   KO  20 $49.39 $987.80
Buy   PG  32 $92.68 $2,965.76
Buy   T  16 $31.60 $505.60
Buy   ITW  7 $139.37 $975.59
Buy   CLX  12 $164.10 $1,969.20
Buy   ADP  5 $146.77 $733.85
Buy   APD  14 $165.08 $2,311.12
Buy   XEL  34 $52.60 $1,788.40
Buy   MMM  5 $208.59 $1,042.95
Buy   MKC  3 $150.91 $452.73
Buy   MA  5 $207.33 $1,036.65
Buy   ROST  14 $85.07 $1,190.98
Buy   BDX  3 $252.15 $756.45
Buy   NEE  5 $181.94 $909.70
Buy   PEP  15 $118.13 $1,771.95
Buy   HD  3 $181.42 $544.26
Buy   V  10 $144.70 $1,447.00
Buy   PM  25 $86.69 $2,167.25
Buy   JNJ  10 $145.70 $1,457.00
Buy   MO  17 $55.56 $944.52
TOTAL:  $44,052.04

Sunday, December 2, 2018

November 2018 Dividends Received

Dividends received are shown below.
November is a light paying month due to my portfolio holding less positions that pay then.
Due to recent additions to the portfolio, for December I am aiming for around $1350 and January $1620 in monthly dividends.

Ticker      Total    Taxable         401k
T $208.73 $208.73
CLX $80.46 $80.46
APD $72.67 $72.67
PG $72.27 $72.27
O $58.69 $58.69
SBUX $46.24 $33.98 $12.26
GIS $36.35 $3.47 $32.88
CL $28.94 $28.94
ABT $24.45 $24.45
MA $21.95 $10.05 $11.90
GD $20.69 $20.69
PG $11.22 $11.22
INTEREST $3.52 $3.52

$686.18 $555.71 $130.47

Steady as she goes. The portfolio climbs bit by bit every quarter.


Friday, November 30, 2018

Passed $600,000

My portfolio passed the sixth hundred K mark today due to non-periodic income from my profession. Company restructuring and departure benefits from my previous employer have helped boost my contributions despite the recent market volatility. It's been a stressful few months but in the end it all worked out.

I will save all of this cash for further investment into the stock market. I do not expect anymore large one-time income additions in the next several months unless there are items that need to be accounted for during tax season around March of next year.

To reach my goal of $1MM I am relying on both my income, high savings rate, and the growth of my portfolio. Since I am approaching the latter period of my goal, I will be relying more on my portfolio than in the beginning years. If the portfolio cannot carry itself forward, then my goal will likely be pushed out a year or two.

Right now the portfolio sits at around $55K in cash. It is nearly 10% of my portfolio and to me this is getting a bit too much as I am always looking to find ways to get those dollars to generate income. I have been watching the market but recently it has run up again, although still lower than the peaks. I think there will be more volatility due to Trump's tax policies against China and the higher interest rates the Fed is currently pressuring with, and this weekend there is a G20 meeting between Trump and Xi. I will wait to see what materializes next week before making my next decision.



-YD

Sunday, November 25, 2018

My compound growth goals

This post is a summary of my analysis on how compound interest will affect me, read more below for graphs and pictures.


"Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it."
- Albert Einstein

I am a fond believer in the power of compound growth. In the beginning it is like watching paint dry. But once it gets going, each year's growth dwarfs the beginning contributions. I sometimes compare the nature of compound growth to a snowball rolling down a hill. The beginning quotes of this book illustrates it quite well:


"Warren is catching snowflakes. One at a time at first. Then he is scooping them up by handfuls. He starts to pack them into a ball. As the snowball grows bigger, he places it on the ground. Slowly it begins to roll. He gives it a push, and it picks up more snow. He pushes the snowball across the lawn, piling snow on snow. Soon he reaches the edge of the yard. After a moment of hesitation, he heads off, rolling the snowball through the neighborhood."
- The Snowball: Warren Buffett and the Business of Life by Alice Schroeder

I am far from what is traditionally retirement age. I began investing when I was 19 but really started contributing heavily when I was 23. As of this post I am aging steadily and am now 28 with $580,000 invested. Although this blog highlights my goal to hit $1MM sometime when I am 30 years old, my real goal is to grow my portfolio into tens of millions of dollars using largely the best asset I have right now which is time. Ironically, if this blog is still alive, the name "Young Dividend" is probably a bad choice... In the beginning the only thing I can do is accumulate and invest as much cash as possible and then let the snowball go. Time and compounding is the most important element of my strategy after that.

Wednesday, November 21, 2018

Portfolio's 2018 dividend increase performance

All of the companies in my portfolio have finished announcing their dividends for 2018. The last one was BDX which announced a small 2.67% raise. They are busy working down the debt of their BCR acquisition. In the past BDX usually raised like clockwork at 10%. I think it's a good idea to focus on the acquisition since their credit rating and debt are in worse condition than before.

Below is the chart of the companies I hold and their increases. The cells show how much (in US dollars) each share pays on that given month. The gray boxes are regular payments and the light green show increases announced. The red text mean that the company decided to not announce an increase, on those months I was expecting an increase given their past history. GIS and KHC (food stocks) did not announce a hike this year. They have both kept constant given the challenging environment they are in. Both have safe payout ratios so I am not worried so far. GIS has held the dividend constant in the past but they have paid dividends constantly for a hundred or so years, so this is not the first time.

Tuesday, November 13, 2018

Recent buy: HD

I added 10 shares of Home Depot today ($1778) after they announced earnings. Was impressed with the beat and raise. Dividend yield is modest but I can see this dividend growing quite fast in the short term. They have a good track record of dividend payments as well.

Home Depot is cyclical on the housing business side, but for the super long term housing has done well in America and I believe it will be here to stay. It is very hard to "Amazon" this type of business and they have a duopoly across the states with Lowes (another dividend aristocrat). I do believe HD is the better managed company of the two.

Home Depot is one of my largest holdings in the whole portfolio. I hold close to $26,000 in this one company now. In the consumer discretionary space, my next big holding is Ross Stores at around $19,000. That company has been on fire recently with excellent execution. ROST has become so large in my portfolio largely by itself, I do not add too much to it because the yield is so low.

Monday, November 12, 2018

Recent buy: MO, ITW, HON, GD, CL, etc

I gave my portfolio a dividend booster today. Several purchases went in this morning. Close to $15K was bought which will prop up quite a bit on my income. I try to balance some of the low yield purchases with higher yield ones. On average my portfolio seems to be around 2.7% average yield.

Description 
Symbol/  CUSIP   
Quantity 
Price 
Amount 
Buy BECTON DICKINSON CO  BDX  8 $241.36 $1,930.88
Buy REALTY INCOME CORP O 29 $63.15 $1,831.35
Buy COLGATE-PALMOLIVE CO CL 29 $63.06 $1,828.74
Buy AIR PRODUCTS&CHEM  APD  7 $160.37 $1,122.59
Buy GENL DYNAMICS CORP COM  GD  6 $184.08 $1,104.48
Buy PEPSICO INC  PEP  9 $118.22 $1,063.98
Buy HONEYWELL INTL INC DEL  HON  7 $149.69 $1,047.83
Buy AUTOMATIC DATA PROC  ADP  7 $146.55 $1,025.85
Buy ALTRIA GROUP INC  MO  16 $61.79 $988.64
Buy ILLINOIS TOOL WORKS INC  ITW  7 $131.38 $919.66
Buy KIMBERLY CLARK  KMB  8 $110.54 $884.32
Buy MICROSOFT CORP  MSFT  5 $108.60 $543.00
Buy PROCTER & GAMBLE CO  PG  5 $92.59 $462.95
TOTAL: $14,754.27

After this purchase my forward annual income hit $15,014 US dollars.


Saturday, November 10, 2018

October 2018 Portfolio Summary

Dear readers,

This post will summarize October's performance. Markets were rather volatile in the last several weeks. Recently the markets have been recovering from the October declines. The consumer staples and defensive type names have been performing well. I have noticed stock sectors that I hold large positions are doing better now and sectors that I hold less in (more cyclical ones) are getting cheaper. This is a change for the better for me as I am now able to diversify into other categories by buying stock at better prices. Previously, the consumer staples and defensive names have largely lagged the cyclical high growth companies like Technology and Industrials.

In October I received sizable one time distribution from my vocation. There will still be one last non-reoccurring payout happening around end of November. I still have not identified how I will invest all this cash, so these monies are sitting on the sidelines. I have zero debt so all this cash will be invested into asset classes that pay income. The portfolio value also saw a shoot up as markets recently have been recovering. These two factors caused October's sharp shoot upwards, almost hitting $600,000. If market circumstances remain flat I believe I can achieve the $600,000 target before New Years which will be a good boost towards my goal of $1MM.

At this point in time, my portfolio is getting large enough that market movements dominate day to day changes. The contribution from my re-occurring income does not help so much propel the portfolio forward. From $600,000 to $1MM I am expecting my portfolio will help perform much of the lifting while my periodic income contributions are there to help buffer against market declines. The $1MM timing target is quite ambitious, if the growth is purely relying on my periodic income contributions I think it will be impossible. That is why I have weighed a decent chunk of my portfolio in high growth companies that pay less dividends. As a result, my average portfolio dividend yield is less than other dividend investors who emphasize high yield. Given my age, I think having a large emphasis on higher growth lower yield companies will pay large dividends in the long term after these growth companies have grown much over their starting cost basis.


Sunday, November 4, 2018

October 2018 Dividends Received

Another month flew by. More payouts from my investments for me to use. All cash received was used to buy even more shares of the stocks that paid them.

I think this is the first month I have received over $1400 in dividends. Next month is lighter, I am expecting $700 in November and $1340 in December. My 2 / 5 / 8 / 11 months are lighter in dividends because I hold less companies that pay on those dates. I prefer to track the 3 month moving average which I plot below. Currently it's $1136 per month.

Ticker      Total    Taxable         401k
ADP $53.08 $53.08
KO $81.57 $81.57
KMB $91.39 $50.79 $40.60
ITW $88.94 $67.94 $21.00
MO $447.64 $386.02 $61.62
PM $395.25 $342.33 $52.92
MDT $34.06 $34.06
XEL $94.09 $94.09
MKC $62.98 $40.82 $22.16
SYK $20.85 $16.56 $4.29
INTEREST $1.70 $1.70
O $58.47 $58.47
$1,430.02 $1,167.26 $262.76