Monday, October 31, 2016

Recent buy:

Today I sold my VSM shares which were spun off from the parent company APD (I got a free trade from my broker). At the moment VSM doesn't offer a dividend and it's a small 2 billion dollar company. I'm sure VSM can grow being such a small company in the coming years but I would rather deploy my capital into more solid positions with dividends, and I had no intention of adding more to VSM. Once the selling closes I will use my VSM proceeds to buy more APD which has pulled back more than 15% after the spin off and I do not think APD will ruin their dividend streak, which means the yield is becoming more attractive now at 2.6%. I'll purchase APD next week.

Tomorrow morning the orders for these companies will be placed:

BDX      BECTON DICKINSON & CO              $200.00
GIS      GENERAL MLS INC COM                 $200.00
PM       PHILIP MORRIS INTL INC COM        $200.00

Slow and steady wins the race

Tuesday, October 18, 2016

Visa dividend hike 18% !

Visa today announced a hike of their quarterly dividend payable in December from 14 cents to 16.5 cents. That is a 17.9% hike. Earlier this year I predicted a 15% hike so this increase is very welcomed.

Visa is my 4th largest position right now. Although it has a low yield I am betting on the super long term. Over time I think their yield % will grow and their dividend increase will be rapid until their business becomes a slow grower like a old blue chip. By then my position in V should have nicely grown to keep up with the huge dividend hikes.

Mastercard has also done incredibly well this year. They have boosted their dividend paid in February  of this year to 19 cents from the previous 16 cents. This is 18.8%, very similar to Visa.

This year the largest dividend hikes are from Reynoilds 28% (large increase due to their merger with Lorillard), TJX 24%, Mastercard 19%, and Visa 18% (comparing new quarter payout vs previous quarter payout ).

Thursday, October 13, 2016

Recent buy: MO

Added 48 shares of MO to my Roth IRA. This is around $3000. I think that will do nicely by the time I grow old and withdraw from my IRA accounts. MO and its high dividend can grow tax free for many decades to come :)

MO has a yield of 3.9% right now with a steady increase rate of 8% year over year.
The forward P/E is 18.8 which I don't think is too bad in today's low interest rate environment.
MO at this level is 10% off its highs.
The BUD acquisition of SABMiller is now complete and MO now owns nearly 10% of BUD. MO has also increased their share buyback to 3 Billion after this announcement which is fantastic. I expect great things with their business with BUD.

Sunday, October 9, 2016

Upcoming buy: V

The order has been placed for $1200 to be added to Visa on Tuesday morning.
Visa is my favorite high quality high growth company. The credit rating and financial safety is very high. They operate a very high margin business as the middleman of all cashless transactions in today's modern society. In the future I believe everybody will move to cashless transactions. Who likes to carry bills and coins anyways.

Visa has incredible earnings and dividend growth prospects and in my opinion Visa is rather recession resistant. Looking forward, I find Visa of good value right now even though it's hitting new highs. For those that don't need the yield right now and want a forward looking champion, Visa is best of breed.

Thursday, October 6, 2016

September 2016 Portfolio Summary

The purpose of this portfolio is income replacement. I hope to use the passive income I receive every month from my investments to cover my rent, utilities, entertainment, transportation and food. The crossover point is when all of the expenses necessary for me to survive and enjoy life can be covered without having to work at all. I want my investments to grow consistently and be less cyclical. I want my dividends from my portfolio to grow by themselves every year without me having to contribute more. The strategy I am employing here is dividend growth investing. I am more concerned with the dividend and the protection of that dividend. Share price is a secondary thought to me after I have purchased shares of a company. As long as the payout ratio is healthy and the company's underlying fundamentals are intact, I will continue to hold and deposit those quarterly dividend checks.

Markets were shaky in the early of September but overall nothing really happened. There were no changes to the Fed reserve's interest rate. The dollar is still strong. Oil prices have rebounded up to $50 from the low 40s.

Wednesday, October 5, 2016

September 2016 Dividends Received

September dividends received are listed below. I no longer hold PX, XOM, or UTX. The rest of the dividends were reinvested back into their stock.

Ticker      Total    Taxable    Roth IRA         401k
BDX $19.65 $19.65
CHD $20.09 $9.08 $11.01
D $65.07 $5.57 $59.50
HD $16.19 $16.19
JNJ $99.75 $72.55 $27.20
MCD $28.34 $28.34
MMM $38.38 $38.38
NEE $23.18 $23.18
O $31.77 $31.77
PEP $57.06 $32.98 $24.08
PX $12.75 $12.75
RAI $8.81 $8.81
ROST $8.68 $8.68
SO $60.72 $60.72
TJX $8.05 $8.05
UTX $19.96 $19.96
V $11.20 $6.30 $4.90
XOM $41.69 $32.36 $9.33
$571.34 $381.99 $49.91 $139.44

Saturday, October 1, 2016

Recent buy: MO, NKE, SBUX, V ...

The trades have been configured and the cash is ready. They will go live at around 11am Eastern Time on Tuesday (10/4) morning. This week a larger order will be placed as I finish re-balancing my portfolio and collecting tax loss harvesting for 2016.

In today's world, high yield names are very over valued due to the low interest rate environment. Many blue chip high yielders have ridiculously high P/Es when they have slow to non-existent growth. Just look at Kimberly-Clark, Procter & Gamble, 3M, ADP, Colgate Palmolive... I felt that if I have to "pay up" for such high P/E in slow growth why not just pickup the ridiculously high growing companies (growing earnings, growing revenues, growing dividends) with the same P/E. The downside is that the fast growers have a lower yield as their payout ratios are usually lower to sustain their expansion.

The purchase this week was primarily funded by re-balanced funds from slow high yielding names. I wanted to pursue more growth in my portfolio since my portfolio was heavily defensive and I feel that for my age (26) this was too conservative. My purchases recently emphasize potentially higher share price growth, higher dividend growth, higher earnings growth, and lower yield. I still try to maintain a decent yield by purchasing some higher yielding names like Altria. Altria has done historically extremely well (last 60 years) and has been able to maintain a high dividend while doing so.

I also purchased a $9100 stake in Home Depot last week and HD yields decently around 2.2% and is also expected to have high growth in revenue, earnings and dividends. I really like companies that have high yields and still grow the bottom line which leads to share price growth. You get the best of both worlds (growth and periodic dividend payments for waiting) but they are hard to find. I still want to try and maintain a overall portfolio yield of around 2.5-2.6% going forward so my Altria and Home Depot purchases helped move the yield needle up while still ensuring I get good growth.

This week I purchased hyper growth companies such as Nike, Ross Stores, TJX, Starbucks, MasterCard, and Visa. Their yields are around 1-1.5% and the dividend growth is over 15-20%. Around $14,600 this week will go to these very low yielding companies. These companies have rapidly growing earnings and revenue. The downside is that many of these companies have P/Es over 20 so they may experience P/E compression which will drive shares down even if the business is still growing. This can be seen with Nike and Starbucks recently as their P/Es have shrunk despite still growing the top and bottom line nicely. I am taking this opportunity to add to Nike and Starbucks. If they decrease further it will be more incentive to add.

I added a large stake in Altria since it has been a stable performer for the last 50 years while maintaining a high dividend. Altria has pulled back and now it's close to a 4% yield. They grow the dividend at a huge 8% rate while keeping a very steady 80% payout ratio. Cigarettes is extremely anti-cyclical and the user base is very loyal. Even if the US crashes in to a recession, tobacco usage will remain steady.