Saturday, July 26, 2014

End of July watchlist

At the moment there is $1000 being transferred to my taxable. The current stocks are on my watchlist. Since the market is at an all time high, I prefer investing in blue chip securities that have a high yield. Below is a table that highlights the stocks I am tracking. I prefer stocks with a Chowder # higher than 12. Those tickers highlighted in green show stocks that meet that criteria.

I was looking to add more to Industrials to diversity my holdings. RTN and DE look appealing. DE is quite volatile though (beta 1.26). I have a very small position in both and will continue to average down. RAI is looking appealing after the acquisition of LO but I am very heavy on tobacco already (MO and PM). Perhaps I will start a middle entry position in RAI. The yield of RAI is very attractive and the Chowder is around 12 as well. For industrials, GWW is a dividend champion with a lower yield but very high dividend growth. It has taken a 7.7% correction this year so far.

I wanted to add some REIT to my portfolio since I don't have any REITs. ARCP and O pay monthly dividends. ARCP has a very chunky yield and is a very large company, but their management is questionable. I would prefer O anyday but O is very expensive right now. Also, in lieu of rising interest rates, O doesn't look too appealing. ARCP has some safety since it's already so run down in price.

CB is looking attractive after the recent dip after earnings. The stock will still have to drop further before it interests me as the yield is kind of low and the Chowder # is only 8.4.

In addition to the stocks above, I am also eyeing KMB, KO, and T. These are standard solid dividend champions that have dipped a bit in the last couple weeks. The Chowder # of these stocks are lower because they have lower dividend growth.

Out of all the stocks on this list, the ones I want to own the most are KMB, KO, T, and O. However, I will only buy stocks that have a decent deal.

TickerYieldRSIMy Target Buy RSIChowder #

New buys 7/22

KMB dropped by a large amount over the last day. The yield is a nice 3.1%. KO dropped as well after earnings report.

KMB - 3 shares - $109.79 ea
KO - 7 shares - $41.21 ea

These are starting positions and I will continue to add if they fall further.

Wednesday, July 16, 2014

New buys 7/15-7/16

I added to my positions in the following companies:

MO - 7 shares @ $42.21 - $295.47
JNJ - 5 shares @ $102.38 - $511.90

JNJ has taken a recent 4% drop. MO took a similar dip. These are not big dips but good enough to convince me to add a bit more to my positions. I already know these are solid companies with extremely strong records.

I wanted to make these companies more like full positions. JNJ is now pretty much full. MO still has some ways to go.

Friday, July 11, 2014

New buys July 11

I have over 200 free trades I have to use up soon. I have started some small positions and will continue to add to those that continue to drop.

ARCP - 13 shares - $162.53
CVX - 3 shares - $385.77
GIS - 7 shares - $370.09
RTN - 4 shares - $371.88
DE - 4 shares - $352.24

RTN is priced attractively right now. The RSI is in the buy zone. Same with DE. I was planning on entering when DE fell to 88$. I entered my position in GIS since I think it's a great solid dividend growth that is fairly priced at the moment with a high 3% yield.

Monday, July 7, 2014

New buys & sells

I sold some shares of Apple (AAPL)
I bought some more shares of General Mills (GIS)

I spent around $1800 to initiate a position on AAPL several weeks ago. I did it as a speculative investment for fun. The speculation has paid off and the stock is up 10.69% from what I paid for it. I am not a fan of tech stocks and I needed to shed off some  AAPL since it was overallocated. The yield of AAPL is decent at 2.0% but not near what I would like. I sold 5 shares of AAPL (no commission). At the end of the day I was satisfied to lock in the 10.69% gain (not including taxes!). I still have around $1530 in AAPL that will pay 2% in dividends.

With the money I purchased General Mills. The price dipped recently but has recovered by a large degree. The yield is over 3% which is very nice and I feel GIS satisfies all of my DGI objectives. With the $2500 funds being added to the brokerage account I may add more to GIS if the price is still low.

Saturday, July 5, 2014

Next year plans - Downsizing, save more!

The easiest way to increase one's portfolio is to reduce the bills that have to be paid every month. Currently my monthly budget is listed below. I live in a one bedroom complex that is quite nice and very close to work. I live in a very expensive location since it is in the Bay Area.

Rent - $1756
Electricity - $35
Internet - $38
Water/Trash - $63
Renter insurance - $15
Food - $230

As you can see my expenses are very high. I moved into this apartment since I had no time to shop around for the best deal when I moved to the Bay Area for my first job. I needed to find a place to move into ASAP so I did not have time to look for a shared house or 2 bedroom apartment.

My lease expires in October and my plans for next year is to downsize my rent bill by sharing a 2 bedroom apartment with another engineer or to find a house to share. As long as I have my own bedroom, I think the quality of life will remain relatively similar since I have shared apartments with people in the past during my college and graduate school years. In addition to the decrease in rent cost, I will also be able to split on the utilities. I estimates that this plan will help me save around half on my housing bills, or $954 every month!

In the past my food bill has approached $450-500 when I ate outside. I'm glad to say the learn-to-cook strategy is paying off. Cooking at home has already allowed me to save ~$270 a month.

In addition to decreasing housing costs, I plan to use my credit to open a mortgage in the coming months to aid in the purchase of property for family. The occupants of the property will pay for all the monthly payments and interest while I collect the tax returns which should be around $3700 per year or a saving of $308 per month.

Adding all the savings together, next year looks much more promising. Here is what I estimate I can save every month using this strategy:
          Rent + Utility savings: +$954
          Tax return additions: +$308
This amounts to around $15000 more that I can put into my dividend stock portfolio or emergency fund.

Progress compared to Goals

I have updated the Progress page to show how I am doing relative to the goals I setup earlier. So far my decision to stop eating out for lunch and dinner have greatly improved the amount I save per month. I also limited my credit card expenditures every month for things I don't need. My goal for the end of this year is just shy of 50,000 with annual dividends of 1425. So far I am confident I will be able to make this goal. 

If the market corrects I am confident I can reach the annual dividends goal, but my balance may not hit the goal due to stock price fluctuations.

July Portfolio Update and Watchlist

Check this page for all portfolios:

A couple of updates since the last June updates. I have finally opened my Roth IRA with an online broker. The cash has been invested in the following companies:

Kinder Morgan Management (KMR) - $1528
Verizon (VZ) - $1480

Both are high yield. KMR provides a current yield of 7.2%. They distribute stock dividends. Verizon has a current yield of 4.3%. I originally had VZ in my taxable account but I transferred it over to the Roth for the tax benefits. I plan to house a lot of high dividend stocks in the Roth IRA first since the dividends can be protected from dividend tax. Stocks that come to mind that fit in this category are REIT and utility stocks. I do not plan on adding anything to the Roth IRA this month.

I continue to contribute the required minimum to receive all my employee 401k benefits. The company currently contributes 7% of my salary for free as long as I keep meeting their personal contribution requirement. These stocks are currently in Vanguard index funds since that is all my 401k offers that is reasonable (I tend to avoid mutual funds with ripoff expense ratios). I am paying around 0.05% for the Vanguard institutional fund expense ratios. My current allocation is a 92/8 equity/bond split. I do not mind the volatility of such a low bond allocation and a 50% correction in the market can easily be offset by my monthly contributions (the 401k balance is not high enough for me to worry yet). I also do not feel bonds will have desirable returns in the coming years since interest rates are so low right now. My 92% in equities is similar to the large/mid/small cap allocation of the VTSMX fund. My emphasis is mainly on large cap which have a dividend yield of ~2%.

I continue to contribute monthly to my taxable account. This month I am still looking at companies to buy. There are already funds being transferred that should be available by next Friday morning for purchase. June was a good month and my portfolio rose but these short term gains or losses do not concern me. At the end of the day as long as the companies continue paying increasing dividends, then their share price do not concern me as I am a buy and hold investor. Currently my taxable portfolio is providing 846$ in annual income and I have 16% of my portfolio in cash that still needs to be put to work. My portfolio currently has a yield of 3.4% and a low beta of 0.68. 

Some recent changes in my taxable since the month of June:
I moved VZ to my Roth IRA and added $400 to the stock.
I sold PETM (I was not comfortable with having so much in retail and the yield is low)
I sold GPC to add more to PG and MCD and PEP
I trimmed down CHD to get more PEP

I cannot find obvious deals in this market at the moment. S&P500 is approaching 2000 and DOW has recently passed 17000. I was eyeing BAX but it has recently shot up. PM has taken a dive but I am overallocated. GIS has recently taken a dive as well and I hope it remains low when my cash funds are ready. Currently stocks that I am looking at possibly adding to the taxable account:
ED - conservative utility stock with high yield, rising interest rate worries me though
SO - conservative utility stock with high yield, rising interest rate worries me though
RTN - defense company that has taken a drop, yield below 3% though
LMT - defense company that has taken a drop, good yield above 3%, higher PE than RTN
GIS - solid consumer staples company with yield > 3%, PE a bit higher than historical PE
CVX - big oil, yield >3%, PE attractive but recently has jumped up in price
BAX - solid healthcare company with stable increasing revenue but recently jumped in price.
GE - am a bit hesistant on this company due to past div cuts, but it looks fair valued.
DE - the price is very attractive right now but its yield is only 2.6% and the stock is quite volatile