Friday, November 30, 2018

Passed $600,000

My portfolio passed the sixth hundred K mark today due to non-periodic income from my profession. Company restructuring and departure benefits from my previous employer have helped boost my contributions despite the recent market volatility. It's been a stressful few months but in the end it all worked out.

I will save all of this cash for further investment into the stock market. I do not expect anymore large one-time income additions in the next several months unless there are items that need to be accounted for during tax season around March of next year.

To reach my goal of $1MM I am relying on both my income, high savings rate, and the growth of my portfolio. Since I am approaching the latter period of my goal, I will be relying more on my portfolio than in the beginning years. If the portfolio cannot carry itself forward, then my goal will likely be pushed out a year or two.

Right now the portfolio sits at around $55K in cash. It is nearly 10% of my portfolio and to me this is getting a bit too much as I am always looking to find ways to get those dollars to generate income. I have been watching the market but recently it has run up again, although still lower than the peaks. I think there will be more volatility due to Trump's tax policies against China and the higher interest rates the Fed is currently pressuring with, and this weekend there is a G20 meeting between Trump and Xi. I will wait to see what materializes next week before making my next decision.


Sunday, November 25, 2018

My compound growth goals

This post is a summary of my analysis on how compound interest will affect me, read more below for graphs and pictures.

"Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it."
- Albert Einstein

I am a fond believer in the power of compound growth. In the beginning it is like watching paint dry. But once it gets going, each year's growth dwarfs the beginning contributions. I sometimes compare the nature of compound growth to a snowball rolling down a hill. The beginning quotes of this book illustrates it quite well:

"Warren is catching snowflakes. One at a time at first. Then he is scooping them up by handfuls. He starts to pack them into a ball. As the snowball grows bigger, he places it on the ground. Slowly it begins to roll. He gives it a push, and it picks up more snow. He pushes the snowball across the lawn, piling snow on snow. Soon he reaches the edge of the yard. After a moment of hesitation, he heads off, rolling the snowball through the neighborhood."
- The Snowball: Warren Buffett and the Business of Life by Alice Schroeder

I am far from what is traditionally retirement age. I began investing when I was 19 but really started contributing heavily when I was 23. As of this post I am aging steadily and am now 28 with $580,000 invested. Although this blog highlights my goal to hit $1MM sometime when I am 30 years old, my real goal is to grow my portfolio into tens of millions of dollars using largely the best asset I have right now which is time. Ironically, if this blog is still alive, the name "Young Dividend" is probably a bad choice... In the beginning the only thing I can do is accumulate and invest as much cash as possible and then let the snowball go. Time and compounding is the most important element of my strategy after that.

Wednesday, November 21, 2018

Portfolio's 2018 dividend increase performance

All of the companies in my portfolio have finished announcing their dividends for 2018. The last one was BDX which announced a small 2.67% raise. They are busy working down the debt of their BCR acquisition. In the past BDX usually raised like clockwork at 10%. I think it's a good idea to focus on the acquisition since their credit rating and debt are in worse condition than before.

Below is the chart of the companies I hold and their increases. The cells show how much (in US dollars) each share pays on that given month. The gray boxes are regular payments and the light green show increases announced. The red text mean that the company decided to not announce an increase, on those months I was expecting an increase given their past history. GIS and KHC (food stocks) did not announce a hike this year. They have both kept constant given the challenging environment they are in. Both have safe payout ratios so I am not worried so far. GIS has held the dividend constant in the past but they have paid dividends constantly for a hundred or so years, so this is not the first time.

Tuesday, November 13, 2018

Recent buy: HD

I added 10 shares of Home Depot today ($1778) after they announced earnings. Was impressed with the beat and raise. Dividend yield is modest but I can see this dividend growing quite fast in the short term. They have a good track record of dividend payments as well.

Home Depot is cyclical on the housing business side, but for the super long term housing has done well in America and I believe it will be here to stay. It is very hard to "Amazon" this type of business and they have a duopoly across the states with Lowes (another dividend aristocrat). I do believe HD is the better managed company of the two.

Home Depot is one of my largest holdings in the whole portfolio. I hold close to $26,000 in this one company now. In the consumer discretionary space, my next big holding is Ross Stores at around $19,000. That company has been on fire recently with excellent execution. ROST has become so large in my portfolio largely by itself, I do not add too much to it because the yield is so low.

Monday, November 12, 2018

Recent buy: MO, ITW, HON, GD, CL, etc

I gave my portfolio a dividend booster today. Several purchases went in this morning. Close to $15K was bought which will prop up quite a bit on my income. I try to balance some of the low yield purchases with higher yield ones. On average my portfolio seems to be around 2.7% average yield.

Symbol/  CUSIP   
Buy BECTON DICKINSON CO  BDX  8 $241.36 $1,930.88
Buy REALTY INCOME CORP O 29 $63.15 $1,831.35
Buy COLGATE-PALMOLIVE CO CL 29 $63.06 $1,828.74
Buy AIR PRODUCTS&CHEM  APD  7 $160.37 $1,122.59
Buy GENL DYNAMICS CORP COM  GD  6 $184.08 $1,104.48
Buy PEPSICO INC  PEP  9 $118.22 $1,063.98
Buy HONEYWELL INTL INC DEL  HON  7 $149.69 $1,047.83
Buy AUTOMATIC DATA PROC  ADP  7 $146.55 $1,025.85
Buy ALTRIA GROUP INC  MO  16 $61.79 $988.64
Buy ILLINOIS TOOL WORKS INC  ITW  7 $131.38 $919.66
Buy KIMBERLY CLARK  KMB  8 $110.54 $884.32
Buy MICROSOFT CORP  MSFT  5 $108.60 $543.00
Buy PROCTER & GAMBLE CO  PG  5 $92.59 $462.95
TOTAL: $14,754.27

After this purchase my forward annual income hit $15,014 US dollars.

Saturday, November 10, 2018

October 2018 Portfolio Summary

Dear readers,

This post will summarize October's performance. Markets were rather volatile in the last several weeks. Recently the markets have been recovering from the October declines. The consumer staples and defensive type names have been performing well. I have noticed stock sectors that I hold large positions are doing better now and sectors that I hold less in (more cyclical ones) are getting cheaper. This is a change for the better for me as I am now able to diversify into other categories by buying stock at better prices. Previously, the consumer staples and defensive names have largely lagged the cyclical high growth companies like Technology and Industrials.

In October I received sizable one time distribution from my vocation. There will still be one last non-reoccurring payout happening around end of November. I still have not identified how I will invest all this cash, so these monies are sitting on the sidelines. I have zero debt so all this cash will be invested into asset classes that pay income. The portfolio value also saw a shoot up as markets recently have been recovering. These two factors caused October's sharp shoot upwards, almost hitting $600,000. If market circumstances remain flat I believe I can achieve the $600,000 target before New Years which will be a good boost towards my goal of $1MM.

At this point in time, my portfolio is getting large enough that market movements dominate day to day changes. The contribution from my re-occurring income does not help so much propel the portfolio forward. From $600,000 to $1MM I am expecting my portfolio will help perform much of the lifting while my periodic income contributions are there to help buffer against market declines. The $1MM timing target is quite ambitious, if the growth is purely relying on my periodic income contributions I think it will be impossible. That is why I have weighed a decent chunk of my portfolio in high growth companies that pay less dividends. As a result, my average portfolio dividend yield is less than other dividend investors who emphasize high yield. Given my age, I think having a large emphasis on higher growth lower yield companies will pay large dividends in the long term after these growth companies have grown much over their starting cost basis.

Sunday, November 4, 2018

October 2018 Dividends Received

Another month flew by. More payouts from my investments for me to use. All cash received was used to buy even more shares of the stocks that paid them.

I think this is the first month I have received over $1400 in dividends. Next month is lighter, I am expecting $700 in November and $1340 in December. My 2 / 5 / 8 / 11 months are lighter in dividends because I hold less companies that pay on those dates. I prefer to track the 3 month moving average which I plot below. Currently it's $1136 per month.

Ticker      Total    Taxable         401k
ADP $53.08 $53.08
KO $81.57 $81.57
KMB $91.39 $50.79 $40.60
ITW $88.94 $67.94 $21.00
MO $447.64 $386.02 $61.62
PM $395.25 $342.33 $52.92
MDT $34.06 $34.06
XEL $94.09 $94.09
MKC $62.98 $40.82 $22.16
SYK $20.85 $16.56 $4.29
INTEREST $1.70 $1.70
O $58.47 $58.47
$1,430.02 $1,167.26 $262.76

Friday, November 2, 2018

Recent buys

A lot of purchases today. Here's the breakdown. This is a lot of single trades but I receive several free trades a month from my broker so it's all fine fee-wise.

Security  Quantity  Last Price  Total
KO  14 $47.58 $666.12
MA  2 $197.31 $394.62
2 $139.05 $278.10
BDX  1 $234.90 $234.90
SYK  3 $165.24 $495.72
ADP  7 $140.41 $982.87
PG  11 $89.55 $985.05
14 $69.08 $967.12
XEL  21 $47.52 $997.92
WEC  15 $66.62 $999.30
KO  21 $47.58 $999.18
PEP  9 $110.29 $992.61
KMB  9 $105.59 $950.31
CL  16 $60.40 $966.40
GD  6 $178.66 $1,071.96
ITW  2 $131.19 $262.38
HON  6 $145.08 $870.48
APD  12 $156.56 $1,878.72
SUM:  $14,993.76