Saturday, May 31, 2014

Added pages: Goals and Portfolio Plans

I added two new pages to the Young Dividends website. You can click and see them from the top links.

The Goals explains what my objectives are and how I will execute them. It lists out some of my thought processes of how I think I can achieve my goals realistically.

The Portfolio Plans include a fancy table of what sectors I want to get into in the future. It includes some names in certain sectors that I have been researching. The companies I choose in the future may be different as the market is always changing. I gave Google spreadsheet a go and I have to admit, it is a really good way of listing my stocks :)

I also updated the Portfolio page so that it is linked to a Google spreadsheet. This way the updates can come in faster. I updated it to have a fancy pie chart as well :)

Friday, May 30, 2014

Purchases Week of May 26, 2014

A couple of more purchases this week. I had an additional $1500 check sent to my brokerage last week and it arrived this week. I still have over 200 free trades so I have been using them liberally!

I have some added positions, some are new positions and some are additions.

PetSmart - PETM
6 shares @ 55.51

4 shares @ 54.72

Seadrill - SDRL
22 shares @ 37.16

Kinder Morgan Management - KMR
12 shares @ 72.21

McDonalds - MCD
4 shares @ 101.85

Philip Morris - PM
10 shares @ 87.78

Chuch and Dwight - CHD
8 shares @ 68.70

Kinder Morgan Inc - KMI
5 shares @ 33.57

The current portfolio breakup is shown below. See the Portfolio page for more information. I plan to add $2000-2500 a month to the brokerage account every month, which should help me better divide up the portfolio sectors. Currently I'm heavy on consumer staples (especially tobacco) and MLPs. The retail sector has been doing very poorly this year, so I hope the buys into ROST and TJX work out in the next several years. PETM is a very small holding since I felt it is severely underpriced, and I don't plan to add more to this. I want to try and avoid low yield stocks like these in the future unless they offer growth opportunities, which ROST and TJX seem to be. I have skipped out on Target since I do not want to overexpose myself to retail and I am not confident I will see any improvements for a very long time.

Sunday, May 25, 2014

Stock Watchlist: May (late) 2014

I feel that Target (TGT) is extremely well priced at the moment. The price has nearly fallen to February levels. I believe in buying when blood is in the streets and the Target street is definitely bloody this week.

The knife is still falling and I am thinking of adding an initial position in this dividend champion. I will probably continue to add until the price starts to climb.

After the security breach, the company took a large hit. Their Canadian division is also not helping. But I feel that with their proven track record and new management, their business will get back on track. I remember Buffett saying that he likes to buy companies that are solid enough that even stupid managers will not be able to kill the company. Target happened to have stupid management for the last couple quarters. The stock is currently being offered at 2012 values. Their yield has grown from 2.79% to 3.02% after the massive sell spree.

Overall, Target offers a strong track record (46 years of increasing dividends!) at an attractive price and yield and I will consider adding this to my portfolio after due diligence.


In addition to Target, Walmart also had a crappy quarter. Walmart isn't suffering as  hard as Target. WMT blamed cold weather for last quarter. Revenue increased though, but not EPS.

The price of the stock appears appealing at the moment. I have initiated a small position in Walmart after the price drop this month. I will continue adding if it falls further. The yield is currently 2.54% which isn't bad.

Saturday, May 24, 2014

Purchases Week of May 19, 2014

The following lists stocks I purchased this week. This list will provide a record for me to look back on in the future so that I can understand my best picks and stupidest decisions.

The stocks may be purchased on different days. For the last 2 weeks, I was focused on transferring my funds from my Vanguard index funds to my brokerage account. The Vanguard funds were not held for very long so the profits (around $160) will be taxed short term. Usually my purchases every month will not be this large as I prefer dollar cost averaging.

The market is very high right now and it is hard to find good deals. Most of my purchases are what I consider fair market value, ie PE price averages that have been established for the several months or year. My purchases for now will be centered around safe blue-chip stocks or low beta dividend stocks, with a small portion in what I consider riskier equities. At the moment, I also have around $4000 in Vanguard Total Bond (VBMFX) and slightly more in cash equivalents. When the stock market sees a large correction over 20% I will begin transferring these bonds to equities. Likewise, I will be converting more of my cash into equities.

I have decided to avoid the financial and insurance sector for the time being since they are too volatile to my taste.

Walmart - WMT
8 shares @ 75.57
After the earnings report, the stock took a drop which. I feel that I got this stock at a slight discount. I took this time to buy. I decided to have a small starting position in this stock and add more if it drops further. This is one of my sleep well at night (SWAN) stocks.

Ross - ROST
13 shares @ 68.42
The stock was very cheap when I purchased it. I felt I got it at a discount. Their financial history has been great, although their dividend yield is low. Dividends are increased by large % every year. I consider this one of my growth stocks. I do not have a large position in ROST.

Altria - MO
24 shares @ 40.53
I purchased this stock for the very very long term. The stock is not well priced right now and I am aware that I may suffer losses from a correction (in which case I will buy more!). The purchase was more to establish a beginning position in MO and to have a solid dividend yield stock in my portfolio. This is one of my SWAN stocks.

Apple - AAPL
3 shares @ 605.77
The stock has a very attractive PE which I think is a discount. I was going to buy it at 585 but the funds were still being transferred. I like the yield and their revenue for the last 10 years have been fantastic. Although this does not predict future performance, I feel that their iPhone 6 will be a huge hit. International expansion to countries like China will also increase their sales. Apple has become a legend and nearly everyone I know uses an iPhone.

ConocoPhillips - COP
15 shares @ 78.53
I feel that this stock has an attractive PE ratio and has promising growth. The yield is also solid at 3.52%. This stock is more volatile and has already climbed very far.

TJX Companies - TJX
12 shares @ 56.19
Like ROST, this stock took a large plunge this when I purchased it. I feel that I got a discount. Their past 10 years have shown consistent revenue growth and solid dividends. Although the dividend yield is a bit low. TJX is like a big brother ROST. I have both in my portfolio in small quantities.

Genuine Parts Co - GPC
10 shares @ 85.20
Was fairly priced when I bought it. Solid stock. Has been stuck in the same price for a while. Is a dividend champion. Will keep this for a very long time unless they decrease dividends. This is one of my SWAN stocks.

Comcast - CMCSA
16 shares @ 51.49
I feel this stock has an attractive PE and has a lot of growth potential. It has been declining since this year after their purchase of Time Warner Cable. They have a strong monopoly for internet in many areas where I've lived and I feel that their revenue will continue to grow like in the past.

Verizon - VZ
22 shares @ 49.44
I purchased this stock instead of AT&T for the growth potential. VZ has less yield than AT&T but it is still a large yield. I will want to own AT&T one day as well. When I purchased it I didn't think it was overpriced or underpriced. I'm a little worried about their debt compared to AT&Ts.

Phillips Morris - PM
12 shares @ 86.35
I bought this stock at fair value I felt. Like MO, I purchased this stock to setup an initial position. I feel this stock has room to grow and that it offers an attractive yield. If the stock price drops I will increase my position. This is one of my SWAN stocks.

Procter and Gamble - PG
21 shares @ 80.36

The stock had a small drop this year. However the PE is basically the same as it's been for a very long time. I felt I got this at a very small discount, more like fair value. Stable stock with good dividend. This is one of my SWAN stocks.

Church and Dwight - CHD
28 shares @ 68.18
I bought this at fair value. I wanted to establish an initial position. CHD has a great revenue history as far back as I can check. Although the yield is lower, CHD has been increasing dividends very quickly in the last couple years.This is one of my SWAN stocks.

Johnson and Johnson - JNJ
22 shares @ 100.47
I purchased this at fair value. The stock has been climbing fast but the PE has been relatively the same between 19 and 19.5. I wanted to have an initial position in this stock. This is one of my SWAN stocks.

Kinder Morgan Inc - KMI
60 shares @ 33.64
I bought this at fair value. The stock offers a great yield and strong business. I own KMI to avoid having to do additional tax forms for MLPs. My brokerage does not support dripping KMP.

Saturday, May 17, 2014

Stock Watchlist: May 2014

May is a hard time to pick stocks. The S&P500 hit record highs and most stocks are above 20 PE. There are still some decent picks. Below is a list of stocks I am eyeing with my short comments. I am trying to prioritize the dividend champions on my watchlist page: Watchlist. I am also eyeing other stocks that aren't traditional dividend growth stocks. The charts below show the price history and PE history. PE should not be the only way to see if a stock is a buy, but it helps me screen out stocks quickly.

The Duck is on my radar! There have been a lot of posts stating that this stock is severely undervalued. I think the the stock is fair value to slightly undervalued. The stock had a PE of 15-20 before the financial crisis. After the 2008-2009 recession, it went back up to around 15 but has been dropping down ever since. The duck has a large business in Japan. It didn't help that Japan got hit with a Tsunami that blew up their nuclear power plant. The weakening Yen isn't helping the stock either. It now hangs at around 9 to 10 for the last 2 years. I think the Japanese crisis is overstated and this stock should be worth more. It's a dividend champion that has solid dividends increasing every year.

Comcast is priced quite well right now. Their earnings growth is projected to be double digit percents in near year and 5 year timeframe. The PEG is really low at 1.08. The only problem is the dividend is a measly 1.79%. They started dividends in 2008 and the growth is in the double digits so I think this would be a good growth stock in my portfolio. Their EPS and income and dividends all rose over the last 10 years even during the great recession of 2008. They also have acquired Time Warner for 45 billion. For anyone who has lived in California for many years, you would know the monopoly these companies have on cable internet. When I moved back, there was literally no other cable provider except Comcast and AT&T. Nobody will buy AT&T in silicon valley due to their ridiculous reliability and abysmally slow speeds. Comcast is the only solution and if you want anyone else, there is nobody else. They essentially have a monopoly and everyone is at the whim of their pricing scheme. As a result, I am forced to pay 60$ a month for internet. People cannot live without internet, so I don't see this company losing income and dying anytime soon.

The gas giant. Or sister giant.. I want to get this stock somehow in my portfolio but it's a bit overpriced. I will patiently wait. XOM has similar figures as well. I prefer CVX over XOM for the growth; however, I will probably have CVX and XOM in a 80/20 ratio in my portfolio.

General Mills. Another champion I would like to own one day but it's a bit too pricey right now.

Genuine Parts Company. I would like to own this dividend legend one day. It is looking like fair value right now.

Honeywell has double digit growth % estimates this year, next year, and next 5 years. The PEG is an attractive 1.77. I feel the price is fair valued right now. Forward PE is 14.82. This stock has had a massive rally the last couple of years so the dividend yield has been going down steadily. It's now at 1.97% but I expect this to increase as they raise their dividends. The stock has a higher beta so it's more volatile, as seen in 2000 and 2008. I currently prefer HON over GE for a stock in industrial goods. If the Alstom deal goes through for GE, hopefully the GE stock will be lowered due to paying a premium to buy Alstom. I'll enter in GE when the PE falls. I still do not have GE's trust after what happened in 2000 and 2008.

I work in the tech industry and I don't think IBM is leaving anytime soon. They are a huge company with customers that are set in using their products. Having customers move their platform from IBM to someone else will be a large cost. However, their recent revenue stagnation worries me. It is hard to change IBM. They are slow and bureaucratic. They have been buying back shares like crazy and the PE is priced really well compared to the past (graph only shows one year). I think the stock is undervalued and would like to get in on this as it drops further.

Kimberly Clark Corp. I'm sure most readers know about this dividend champion. I think this stock is fair value right now. The PE was less than 15 back in 2011 and slowly grew to where it is today. It's been jumping between 23 and 20. This stock has a solid dividend and steady growth over the years.

Difficult to measure PE of KMI, but I feel the stock is fair value right now. I would enjoy the dividends from their lucrative business. Although they're killing the environment, I feel that the pipeline and storage of energy will always be a growing requirement in the US economy.

PG is a dividend legend in the consumer goods category. The PE is a bit high right now but I feel that it's a fair value for a solid company. I feel that owning this great company at fair value is a better choice for me than owning a smaller value company at a super low price.

ROST has a solid increase in revenue, income, EPS, and dividends year after year. Even through the 2008-2009 recession they had increases on every front. I feel that their stock is undervalued right now and this stock is a strong buy. However, the dividends is a measly 1.15%. The dividend is growing at double digit rates. Their projected growth for next year and next 5 years are double digits as well, which makes the PEG an attractive 1.53. Although I wouldn't want a very large chunk of this stock in my portfolio (since I am still looking for dividend champions) I think it will prove to be a good addition to the other blue-chip stocks I will be buying.

Seems like a good price. US Bancorp did suffer from the financial crisis in 2008-2009. I am not a fan of holding a lot of banks and insurance companies but I have WFC and USB on my watchlist. WFC is on a rally for the last couple of months, but I think WFC is still of fair value. Keep in mind both WFC and USB killed dividends during the crash so they are not reliable dividend stocks.

I think Verizon is at fair value price. After Warren Buffett announced his large purchase, the stock shot up to $49. I think this is a better choice than AT&T due to its higher growth estimate. I will most likely have positions in both AT&T and VZ eventually since both provide solid dividend yields and both will likely exist for many decades to come. Nearly every American today will need a cellphone (... make that a smartphone...), which requires service from these telco giants. People will also be forced to sign into these pricey contracts for their entire lives if they want to remain in touch with the modern world. The usage of 4G LTE and future internet technologies to keep every American online (we all know everyone uses Facebook and Google daily..... and us investors enjoy reading our blogs and stock news) will be income sources for T and VZ.

After disappointing earnings (another stock that blamed it on the cold weather.....cough cough.) the stock is not looking so hot. This is one of the stocks I want in my portfolio so I think I will enter if this drops further. Walmart is one of those stocks that will still have sales during recessions. I myself hate to admit it, but I shop at Walmart because the prices are cheaper. Everytime I go shopping at Walmart, I have to wait in the terribly long and slow checkout line. It is always full.... There will always be people who need to shop for food and soap and clothes on the cheap. There are worries that Amazon and other online marketplaces will take over Walmart, but I feel that for daily consumer goods, food, and care products, most people will rather drive 5 minutes to their local Walmart instead of waiting days for an order to arrive from Amazon. I also feel that if I were to buy clothes (not that I buy clothes from Walmart..) or shoes from somewhere, I would like to try the clothes on to see how it fits and looks which makes regular brick and mortar stores better. However Walmart also sells other goods like electronics, cookware, furniture, home maintenance supplies, etc that can be easily purchased on Amazon without having to see it in person. I still believe in Walmart's business model and their market control from their extremely cheap prices makes them like a monopoly when compared with smaller businesses.