Thursday, January 19, 2017

Recent buy: PM & MO

Today I bought:
14 shares PM: $1318
84 shares MO: $5835

The RAI shares were sold today to purchase the MO shares. Since RAI is being bought out, I wanted to replace a US based tobacco company with another US based tobacco.

PM shares were done in my retirement account. I believe PM in the future will be able to grow faster than domestic US tobacco. It is only because of the temporary headwinds due to the strong dollar that PM is lagging behind MO.

These two company purchases will yield for me $264 a year in dividends.

Tuesday, January 17, 2017

Next purchase thoughts

For my next purchase I am considering adding more to my higher yielding companies. Since my contribution in 2017 will be less since most of my money is being put into a savings account for a down payment, I want to get more dividends for every dollar invested.


Recently, BTI has announced that they will purchase Reynolds American (RAI). I hold some shares in RAI and they have run up quite a bit due to this takeover. I am very sad to see my RAI shares go and I do not have an intention to hold BTI because BTI is a British company that pays dividends in pounds. I want all my dividends paid in dollars since foreign currency exchange rates can affect the dividends received from BTI. Also BTI pays their dividends biannually and the amount paid in the first half is always substantially more than the second half. I prefer the American company's norm of quarterly US Dollar payments with one quarter being increased every year.

The sell of my RAI shares will likely be used to purchase MO + PM. I am still debating if I should buy only PM or only MO. RAI yields now only 3.19% after all the price appreciation. MO yields 3.56% and PM yields 4.50% so the trade from RAI to MO and/or PM will be small bump in yield. I currently have around $5700 in RAI. My positions in MO and PM are much larger at $39,100 and $10,500 respectively. I have so far profited quite well from my shares in MO and PM.

There are suspicions that PM may purchase MO. BTI's purchase of RAI now makes BTI the largest tobacco company in the world. PM may likely join in so that it can continue to be the dominant force in the world's tobacco economy. To merge or not, I will let the management at MO and PM decide since they have a very impressive track record of making decisions that best benefit shareholder wealth.

My 401k will also have some funds for my next purchase. There is around $1360 in cash. It's not a large amount but I will put this money to work soon. My first choice is Realty Income (O) which recently announced a healthy 4% dividend increase from $0.2025 to $0.2105 (this is very large for a monthly dividend paying REIT). O has pulled back recently. Alternatively I am also thinking of just adding more into MO and PM although MO is quite expensive now. PEP, KMB, CL, and MKC have also pulled back and are high quality companies that I like to add to. The first two are possible choices since they yield over 3% and the latter two are not too high yielding so I have less interest for them.

I have largely ignored the Industrials, Energy, and Materials sectors at this time since they have run up quite a lot. Utilities do yield higher but they haven't pulled back enough for me considering the interest rates will be continuously increasing going forward. Tech has run up a lot and I largely ignore tech in my portfolio.

Thursday, January 5, 2017

December 2016 Portfolio Summary (Year End)

Happy new years fellow investors. A few days ago marked the beginning of 2017. I took a few days to look over what happened in 2016 and how I did. This post will summarize what my results were and what my future plans for 2017 are.

The S&P500 surprisingly rallied very hard towards the end of the year. This year we had a lot of action from the crash in oil prices to Brexit to Trump becoming the president elect. After the Brexit event, markets took a tumble as seen in the notch around the end of June 2016. The markets however quickly recovered to new highs. After the Trump victory, world markets including the US took a nose dive. However that dip was short lived, similar to Brexit and the market continued to make new highs.

After Trump got elected, the dollar climbed to new highs. Interest rates rose. The Federal Reserve raised rates in December and suggested more to come in 2017. All in all, a lot of action. Below are graphs of several indices.

What all these events indicate is that one needs to stay the course and tune out the noise. If one sold on the lows after Brexit fears or Trump fears, then one would have missed on a lot of potential gains (plus dividends). It's all about the dividend and dividend safety. As long as the payout can be maintained, one should be worried more about how that dividend can increase in the future. Daily market price fluctuations should be tuned out. At the end of the day, companies that can generate cash to pay dividend checks and have the earnings growth to increase such dividends year after year will experience increases in share price. One must be patient as the increase in dividends are not normally instantly followed by an increase in share price. However, in the long run investors will eventually push the price up of companies that steadily maintain and increase their payouts with good financial credit ratings to back the dividend up.

Tuesday, January 3, 2017

December 2016 Dividends Received

December 2016 was a good quarter for dividends. There are a lot of companies that I hold that pay in December. I got $588 this month across my 3 accounts. Top payers are Johnson & Johnson, Home Depot, Kraft Heinz, Coca Cola, and Dominion Resources. I reinvested all my dividends this month.

Slowly but steadily the dividends are increasing. 12 months ago, I was only able to receive $335 in dividends for December 2015.

For the new year of 2017, I am expecting my dividend accumulation to stay relatively flat because most of my cash is going towards a down payment. I need a place to live with a constant living cost since my rent keeps increasing, so I'm deciding to take a year to stabilize my housing which will momentarily hurt my dividend growth. That down payment cash will sit in a savings account earning a measly 1.05% yield.

The only cash I will be investing in will be in my 401k retirement account which will be roughly around $2700 every 2 months. Nevertheless, I predict that each of my holdings will increasing their dividends by some amount in 2017, and I hope to average 8% dividend increases across my entire portfolio.

Ticker      Total    Taxable    Roth IRA         401k
JNJ $78.02 $73.04 $4.98
HD $65.27 $16.28 $48.99
KHC $55.13 $55.13
KO $42.51 $42.51
D $41.18 $5.62 $35.56
MMM $38.62 $38.62
O $32.18 $32.18
SO $31.56 $31.56
SBUX $30.48 $22.23 $8.25
MCD $30.16 $30.16
NEE $26.13 $26.13
BDX $22.69 $22.69
V $20.80 $15.02 $5.78
CHD $20.16 $9.12 $11.04
ROST $16.36 $16.36
TJX $14.00 $14.00
WEC $11.92 $11.92
WTR $5.94 $5.94
SJM $5.68 $5.68
$588.79 $442.01 $32.18 $114.60