Tuesday, May 24, 2016

Recent buy: ADP, VZ, SO

Added my second tech company in my portfolio today. I will be starting position in ADP and adding more as it goes down. ADP is a dividend aristocrat with a long established earnings and dividend history spanning decades. ADP does payroll and has quite a large moat in that area, many large companies use ADP.  ADP is one of the highest credit rated companies. They used to be AAA but are now AA.

ADP: $1000
VZ: $300
SO: $700

Wednesday, May 18, 2016

Recent buy: XEL

Added $1000 of XEL to my taxable account.

XEL yields 3.35% today so this is $33 added to my yearly income.

Thursday, May 12, 2016

Sold HCP for VZ

Before going forward, I rarely sell. My philosophy is to buy a company and hold onto it for its cash generating abilities forever. However I am open to selling when it's appropriate. Usually I sell during spin offs or acquisitions, dividend cuts, or fundamental degradation. Today I exited my HCP from my IRA account and swapped the funds for Verizon. Verizon has dipped off its peak recently and provides a healthy yield of 4.4%, HCP has a higher yield at the moment at 6.70% due to the high risk nature of HCR Manorcare. I added VZ instead of T because T has not pulled back yet and I have more T than VZ.

I have exited HCP because of the announcements of their spinoff of their troubled unit. I personally feel this company is the lowest quality company I own and that spinning off its cancer will not be too favorable for me since I do not want to hold that spinoff with a ten foot pole.

In terms of quality rankings here is a comparison of HCP and VZ:

S&P Financial Rating: BBB+
Value Line Financial Strength: B++
Value Line Safety: 3

S&P Financial Rating: BBB+
Value Line Financial Strength: A++   (A++ is the highest)
Value Line Safety: 1   (1 is the best)

The majority of the companies I own have a safety of 1 and financial strength above A or BBB+ so HCP has been a yield-chase purchase from my earlier days when I was chasing yield over quality.

Tuesday, May 10, 2016

Recent buy: KMB

I added $3832 in KMB today, an American dividend aristocrat specializing in making personal care products like toilet paper.

KMB is one of the higher quality companies I own and I see it as an essential core holding in my portfolio. It yields around 2.9% today so I'm getting $111 a year more from this investment.

Tuesday, May 3, 2016

Recent buy: HRL and SO

Due to uncertainty in the company I work for I have decided to postpone the down payment of a place to live for another year to see how the restructuring plays out. This will allow me some more freedom to allocate my cash since I do not need a large emergency fund to last for more than a year. Were I to lose my current job, I would still receive a severance package and I think an emergency fund in the $10,000-$15,000 will be sufficient for my needs since I only have to worry about myself.

I do not feel that renting is any worse than buying, and postponing the property purchase another year will not be any set back. In fact I estimate that renting will put me ahead. From the calculations I have done for my area (Silicon Valley in California) the property values to rent ratio are quite high so you are not getting much ahead by buying unless you are relying on capital gains on property purchases.

So today I resumed my routine portfolio contribution:

SO : $2000 (yield 4.44%)
HRL: $3000 (yield 1.51%)

Sunday, May 1, 2016

April 2016 Portfolio Summary

Compared to last month my net worth has increased a tiny bit. Almost scraping the $200k surface.

There have been improvements in the US Dollar strength. The dollar has been getting weaker which helps my portfolio since a lot of my companies are multinationals that benefit from selling more goods from a weaker dollar. The SP500 has maintained appreciable highs so there are not any decent bargains. The price of oil also seems to be stabilizing somewhat which helps my smaller positions in energy companies. Oil was down all the way at $26 earlier this year. But now it is around $46.

There have been slight pullbacks in the technology sector but not many of those companies fit my investment philosophy. The consumer staples sector has run up considerably. Since my portfolio is mainly consumer staples I have benefited from that run up. REITs and utilities and industrials too have run up a lot.

This portfolio's goal is income replacement. Most people wake up everyday to go to work. They are reliant on that paycheck to survive. My end goal is to have multiple sources of income besides my work paycheck. Eventually my alternate income sources will be able to sustain my living costs. My investment philosophy is to purchase assets that generate consistent and growing income. This can be either from purchasing parts of public companies, real estate rental, or other forms of business. At the moment I am more heavily pursuing the purchase of publicly traded companies but eventually want to diversify to other forms of business.

Currently the businesses that I buy are predominantly non-cyclical. They offer products and services that people need no matter the economic condition. These include products like food, drinks, utilities, medicine, toilet paper, tobacco, and soap. I like to emphasize quality. I usually will only consider companies that are investment grade, preferring to buy only those that are rated A- or above. The chart below summarizes my holdings. The highest quality companies in my portfolio, in my opinion, are highlighted with their entire row in green at the top of the chart. These are the businesses that I find least likely to fail based on their financial strength and moats.

Name Ticker Sector       Value   Weight        Divies      Yield S&P Fin VL Fin VL Safety
Johnson & Johnson JNJ Health $9,983.98 5.06% $267.24 2.6767% AAA A++ 1
PepsiCo PEP Staples $6,786.91 3.44% $185.23 2.7292% A A++ 1
Visa Inc V Financial $6,194.63 3.14% $44.91 0.7250% A+ A++ 1
Exxon Mobil Corp XOM Energy $4,874.65 2.47% $161.02 3.3032% AAA A++ 1
The Coca-Cola Co KO Staples $4,367.51 2.21% $136.48 3.1250% AA A++ 1
Procter & Gamble Co PG Staples $3,769.97 1.91% $126.10 3.3450% AA- A++ 1
3M Co MMM Industrial $3,889.09 1.97% $103.16 2.6526% AA- A++ 1
Kimberly-Clark KMB Staples $2,772.85 1.41% $81.51 2.9395% A A++ 1
Colgate-Palmolive Co CL Staples $2,472.84 1.25% $54.39 2.1997% AA- A++ 1
Abbott Laboratories ABT Health $1,960.79 0.99% $52.42 2.6735% A+ A++ 1
Nestlé NSRGY Staples $1,131.76 0.57% $35.31 3.1200% AA A++ 1
Altria Group Inc MO Staples $11,967.02 6.07% $431.28 3.6039% BBB+ B+ 2
Realty Income Corp O REIT $9,224.13 4.68% $372.39 4.0372% BBB+ A 2
Philip Morris International Inc PM Staples $9,315.10 4.72% $387.34 4.1582% A B++ 2
General Mills, Inc. GIS Staples $7,186.66 3.64% $215.58 2.9997% BBB+ A+ 1
Dominion Resources, Inc D Utilities $6,623.88 3.36% $259.51 3.9177% A- B++ 2
Church & Dwight CHD Staples $5,293.88 2.68% $81.09 1.5318% BBB+ A+ 1
AT&T Inc T Telecom $4,869.88 2.47% $240.86 4.9459% BBB+ A++ 1
Kraft Heinz Co KHC Staples $4,136.80 2.10% $121.87 2.9461% BBB- A 2
McCormick & Company MKC Staples $3,845.20 1.95% $70.52 1.8341% A- A+ 1
Reynolds American Inc RAI Staples $3,891.91 1.97% $131.82 3.3871% BBB- A 2
Novo Nordisk NVO Health $3,766.33 1.91% $64.81 1.7207% AA- A++ 2
Becton Dickinson and Co BDX Health $2,995.29 1.52% $49.04 1.6371% BBB+ A++ 1
Southern Co SO Utilities $2,668.04 1.35% $115.56 4.3313% A- A 2
NextEra Energy Inc NEE Utilities $1,736.81 0.88% $51.40 2.9597% A- A 2
Air Products & Chemicals, Inc APD Materials $1,298.79 0.66% $30.62 2.3579% A A+ 1
Anheuser Busch Inbev BUD Staples $658.66 0.33% $18.14 2.7541% A- A++ 1
Mastercard Inc MA Financial $4,573.20 2.32% $35.83 0.7836% A A++ 2
Verizon Communications Inc VZ Telecom $3,424.26 1.74% $151.92 4.4366% BBB+ A++ 1
Chevron Corporation CVX Energy $2,380.41 1.21% $99.71 4.1887% AA A++ 1
HCP, Inc HCP REIT $2,232.07 1.13% $151.75 6.7987% BBB+ B++ 3
Praxair, Inc PX Materials $2,061.75 1.05% $52.66 2.5541% A A 1
McDonald's Corporation MCD Discret $2,006.40 1.02% $56.47 2.8145% BBB+ A++ 1
AbbVie Inc ABBV Health $1,961.59 0.99% $73.32 3.7377% A A 2
United Technologies Co UTX Industrial $1,910.75 0.97% $46.87 2.4528% A- A++ 1
CVS Health Corp CVS Health $1,380.74 0.70% $23.36 1.6915% BBB+ A+ 1
Xcel Energy Inc XEL Utilities $739.12 0.37% $25.11 3.3975% A- A 1
Ross Stores Inc ROST Discret $3,640.35 1.85% $34.62 0.9510% A- A 2
Apple Inc AAPL Tech $2,108.88 1.07% $46.79 2.2189% AA+ A++ 2
TJX Companies Inc TJX Discret $2,339.40 1.19% $32.09 1.3717% A+ A++ 1
Starbucks Corporation SBUX Discret $2,169.50 1.10% $30.87 1.4227% A- A++ 1
Misc Type ……….. Partial Totals Weight Yrly Dividends  Avg Yield …..832 …..9 …..82
Equity Stocks $160,611.77 81.43% $4,750.99 2.9581%
Liquid US Dollars $34,073.02 17.27%
Non-Liquid Assets $2,557.60 1.30%
. .. Equity + Misc Weight …..2 ….. …..222 …..2222 …..223
Total $197,242.39 100.00%

In April 2016 I generated $341 in dividends. The dividend report is in the earlier post. My Dollar cash position has grown from $29k to $34k. My monster positions are in Cash, MO, JNJ, PM, O, and GIS. Some readers may be wondering why I have such a ginormous cash position. I am in the process of saving for my first property purchase, so I need to save up enough for the 20% down payment. It's an annoying process but I want to eventually move away from renting to building some equity in a place that I can call my own.

That is the conclusion of this month's report. Everything seems to be going as planned and there hasn't been much surprises so far. Happy investing.    -YD

April 2016 Dividends Received

I received $341 in dividends in April. My dividends have not been growing lately because I have been saving up cash to purchase a place to live. Compared to last year's April month, this year's April is around 24% more. So not too shabby.

Ticker      Total    Taxable    Roth IRA         401k
KHB $30.24 $30.24
KMB $20.24 $20.24
KO $33.87 $33.87
MKC $17.55 $17.55
MO $106.87 $78.66 $28.21
O $30.91 $30.91
PM $95.87 $66.27 $29.60
XEL $6.23 $6.23
$341.78 $235.51 $30.91 $75.36