Friday, January 11, 2019

December 2018 Portfolio Summary (Year End)

This summary will be for data up to January 12, 2019.

The latter part of 2018 was very volatile. My portfolio experienced drops as large as $50K and some daily movements were $10K. The dollar remains strong. There were several Fed rate hikes in the year and this has put downward pressure on stocks and increased demand for the US dollar. Strong dollar and high rates are not good for dividend paying stocks, a lot of which do business internationally. Fed Powell's prospect of future rate hikes in 2019 also created unease as the economy in the USA and China were already showing signs of cooling. Oil prices remained severely depressed which is a positive for many of my investments as oil is an input resource. I am not invested in oil companies due to the volatility and dependency on oil prices.

Recently the market has recovered moderately from the lows after Powell suggested that the Fed will take a more observatory approach to see if future rate hikes are needed. Things on investors minds include what will materialize from the China and USA trade negotiations, Powell's view on future rate hikes, and the recent government shutdown due to disagreement between the President and the government on the border wall.

Thursday, January 3, 2019

December 2018 Dividends Received

The last month in 2018 has finished. Here is the tally of what I received in December. $1403 in dividend cash payments were received, and this amount was reinvested back into the stocks that paid them. I think a lot of the purchases were done at depressed prices since the market is correcting, so that is good for acquiring more dividend income per dollar utilized.

Ticker      Total    Taxable         401k
JNJ $225.73 $219.82 $5.91
NEE $143.64 $103.98 $39.66
HD $143.05 $113.36 $29.69
D $122.14 $76.05 $46.09
MMM $119.85 $95.05 $24.80
KO $95.91 $95.91
WEC $87.62 $75.26 $12.36
BDX $70.89 $70.89
O $65.07 $65.07
V $54.26 $40.34 $13.92
ROST $44.48 $44.48
KHC $43.72 $43.72
MCD $42.01 $42.01
MSFT $39.77 $14.77 $25.00
HON $36.18 $36.18
TJX $35.06 $35.06
CHD $33.56 $19.59 $13.97
INTEREST $0.58 $0.54 $0.04
$1,403.52 $1,127.01 $276.51

For January I am expecting $1700 and February around $900.

Monday, December 31, 2018

The year is over

What a volatile end of the year December was. Here's a screenshot of past yearly returns for the S&P500 and how this year compares.

After the market closed on the final day of 2018, my portfolio sits at $570,687 with the stock position I hold averaging a 3.01% yield. Right now the portfolio outputs $16,481 in future annual income. The cash position now sits at $15,895 or 2.79% of weighting.

I will post a full summary in a report soon after the holidays. Happy new years to everyone. Let's make 2019 a good year and increase the dividend income even further!


Tuesday, December 18, 2018

Thoughts on market correction

The S&P500 has pulled back around 13% from its highs. For those that only focus on price, 2018 has not been a good year. My portfolio has pulled back from the $600K levels and is now sitting in the high $500k's :(  I made a vow to myself that I will climb myself back up!

The lower prices a lot of companies are dropping by is creating a lot of good value. Each share I can purchase now contributes more dividend income compared to when the S&P500 was at its peak. Although this site says my goal is to reach $1MM by some time, the real goal of the portfolio is income appreciation. Since I am still in my accumulation stage in life, I want my dollars to be put to their best use. A market sale provides are more efficient way for me to deploy cash as yields will be higher. I am developing a list of stocks I am planning to purchase after the holiday season. I do not expect to purchase anything from now until the end of the year as I will be going on vacation.

After New Years I plan to have around $15,000 in capital around mid January. Hopefully values are still attractive by then. My feeling is that since the S&P500 is ending the year quite negative, tax loss harvesting is going to exacerbate a lot of the losses. I do not plan to tax loss harvest as I do not like selling any stock. February is traditionally a bad month as well. And since the trend now is downward without any recovery, I am feeling rather patient waiting for a floor of resistance before deploying anything quickly. This may mean waiting in January or waiting until February. After my recent large purchase a few weeks ago, my portfolio has had a large swing upward in dividend income so I do not feel a need to increase it as quickly in the interim.

My focus is on defensive type businesses with conservative yields and conservative payout ratios. There are discussion about recessions and slowdowns. A defensive portfolio with business types that still function very well under larger unemployment will preserve capital and pay dividends better than cyclical industries like oil & gas, industrials, transports, banks, and discretionary. Defensive industries include sectors like consumer staples, healthcare, and utilities.

Eventually stocks will fall hard enough during hard times and the dividend yield will be the only thing keeping a stock from falling any further. The yield acts as a floor. If JNJ or Clorox falls in price to a 4% yield, then that will be a huge bargain as those payout ratios are safe and the business is defensive in nature. When a stock like Netflix or Tesla falls 60% there is no dividend to pay you to hold along, there is no floor of protection. The only thing keeping you in is the prospect or hope that the price will rise back up again.

I don't believe I can invest in a business just based purely on price speculation, hope that the price will go up one day. I need to have some form of payment periodically to allow me to hold it comfortably during a recession. The dividend is reassurance to me that the business is still profitable and that I can still rely on it to provide income even during bad economic times. Dividend aristocrats are examples of companies that have survived countless recessions while still maintaining a increasing dividend year after year, these companies RAISED their dividends during recessions. This is why my portfolio is heavily concentrated towards dividend aristocrat types of businesses that are in defensive sectors. Dividends don't lie and at the end of the day if a company is cash flow negative, there will be no dividends.

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.


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.