Monday, December 19, 2016

Recent sells & buys

For tax loss harvesting I sold three companies. Commission was about 21 bucks for all 3.

Stock  Amount   Net Loss
MDT: $2096       (-$421)
NKE: $6471        (-$359)
HRL: $4491        (-$342)

Around $1122 of losses were harvested.

I swapped MDT with BDX
I swapped NKE with SBUX and ROST
I swapped HRL with MKC, MO, and CHD

The buy amounts are listed below. I plan to start buying back MDT, NKE, HRL back after the 30 days wash rule since I like all 3 companies. Nike reports earnings in a few days. I hope nothing drastic happens while I am out of Nike... Selling usually comes back to bite me.

The purchases cost 1$ each so totally it's 6$ for buying.

Your Plan Investments

Recent buy: O

I purchased 35 shares today of Realty Income today for around 1,978.55

I believe O is cheap after the huge pull back. The rates have been increased and the news is over. Going forward, I believe O is prepared and ready for a rising rate environment is is still set to profit. Now that the rate hike uncertainty is largely baked in I decided to enter in on more O, the best monthly dividend paying stock.

O yields 4.3% right now. This amount will add $85 more to my annual income.

Friday, December 16, 2016

Tax loss harvesting plan

At the end of the year, I perform tax loss harvesting to get a larger tax return in the following year. I usually try to hit -$3000 in net losses, which in my tax bracket allows me to get +$1000 back on my tax refund (state + federal).

You can only claim up to -$3000 in net losses per year and any more can be moved forward to the next year. Last year I had around -$4000 in losses so I carried forward -$1000 which can be used this year.

Currently I'm sitting at +$1869 in net gains for 2016. I need losses to offset that down to negative territory. I don't want to sell every little position that has small losses since the commission adds up. I will only sell large losses. The one's I am considering are:

MDT: -$414
HRL: -$392
CLX: -$148
SJM: -$102
NKE: -$287
KMB: -$103
I don't have any other names worth considering since it's not economical due to commissions.

Give or take this is only around -$1500. Frankly, my portfolio does not have as many losses as gains.
If I were to carry forward the -$1000 from last year with the -$1500 from the names above, I will only net -$631 in tax loss harvesting for 2016 which will only give me $157 cash I get back on my tax refund...

The other option I have is to just not do any selling this year for tax loss harvesting and keep those 6 high quality companies I listed above since they are all doing very well still. I can carry forward the -$1000 from last year and offset this year's +$1869 gains to only be a net of $869.  I will have to pay tax on this amount and I guestimate after all of my tax deductions it may be around $260 that I have to pay the IRS.

There are several negatives with tax loss harvesting. One is you will be out of your position for at least 30 days. If your position rises then you will not benefit unless you find an equity that performs in lockstep. The second issue is that tax loss harvesting lowers your basis even further. If you sell the stock at a loss and then purchase it back 30 days later at the same price you sell it, you will have a lower cost basis than you started with. In the future if you decide to sell the shares, you will have a higher tax to pay due to the lower cost basis. The other disadvantage is commissions. Selling 6 companies will cost for most brokerages 6x $7 = $42 in commissions. Tax loss harvesting is usually accompanied by buying as well since most investors want to stay invested. Commissions can total $100 for a scenario like this which isn't cheap.

In the end I am leaning towards not doing anything for 2016 and just using my carry over -$1000 from last year to offset my gains in 2016.

Disclaimer: Before taking any action on your assets, please consult with your tax advisor on what course of action is best suited for your investment plans.

Wednesday, December 14, 2016

November 2016 Portfolio Summary

Here is where my portfolio stands on the end of November. It has been hard to accumulate any gains in my portfolio because investors are switching from higher yielding stocks like consumer staples and utilities into areas that will benefit from the Trump administration, like industrials. I hold the majority of my stocks in consumer staples since they are the most reliable dividend growth companies.

The investment philosophy I follow is relatively straight forward. I only invest in high quality businesses which is determined by their economic moat, their large scale presence, credit rating, increasing earnings consistency, and dividend increase consistency. I also try to invest primarily in non-cyclical businesses. These types of businesses offer products and services people use everyday regardless of the economic situation. These types of businesses help ensure that my dividend increases year after year are consistent. The last thing I want is a decrease in my dividend payout because the company does not have enough free cash flow to sustain the dividends.

Saturday, December 10, 2016

November 2016 Dividends Received

I'm a bit late to post this and have been inactive for some time. I have been on travel overseas and now I have some more time to post about my progress. I will give a summary of my dividends in this post and shortly after I will post my portfolio updates for the month of November 2016.

I re-balanced my portfolio several months ago. Due to the movement of positions, November does not have many dividends. My Feb, May, August, November months have less dividend paying companies at the moment. Most of my dividend checks will be received in Jan, April, July, October. For the upcoming December I am expecting around $500 and January I am looking at around $830 in dividends. Overall, the moving average of dividends received is growing slowly upwards.

Ticker      Total    Taxable    Roth IRA         401k
GIS $59.53 $46.57 $12.96
T $34.81 $34.81
O $32.06 $32.06
VZ $25.09 $25.09
APD $22.84 $22.84
HRL $18.61 $18.61
PG $17.67 $17.67
ABT $15.45 $15.45
CL $13.74 $13.74
CLX $11.18 $11.18
MA $10.80 $1.87 $8.93
BCR $1.88 $1.88
$263.66 $184.62 $57.15 $21.89