January 2017 Dividends Received

I started 2017 with a large set of dividend checks from my portfolio of companies. This month by far is the largest in terms of dividends received, largely because of my weighting in Altria and Philip Morris. All dividends were reinvested except Nike (NKE) since that is no longer in my portfolio due to 2016 tax loss harvesting.

I have three accounts currently: my main taxable account, my Roth IRA which doesn't have very much, and my employer's 401k. If I were to leave my employer, I would transfer the 401k funds into a Traditional IRA and have it stored in my preferred broker. My employer's self directed brokerage does not offer very good service and the interface is terrible, but at least they let me buy individual stocks instead of restricting me to only index funds.

I received a meager $15 of interest this month because of my House down-payment cash fund held in a 1.05% savings account :)  I can use that to buy two hamburgers.

Ticker	Total	Taxable	Roth IRA	401k
MO	$341.35	$267.71	$29.28	$44.36
PM	$117.41	$86.92		$30.49
PEP	$57.46	$33.21		$24.25
KMB	$57.32	$36.93		$20.39
RAI	$45.48	$45.48
O	$39.46		$32.37	$7.09
MKC	$34.55	$15.19		$19.36
XEL	$30.58	$30.58
ADP	$24.33	$24.33
NKE	$22.97	$22.97
Interest	$15.53	$15.53
MDT	$12.10			$12.10
SYK	$11.22	$7.39		$3.83
	$809.76	$586.24	$61.65	$161.87

The graph indicates my monthly dividend moving average is slowly climbing upwards. Eventually these payments will allow me to pay for my living costs so I no longer have to worry too much about having a job to survive. When my passive income starts crossing my monthly living expenses, that will be my turning point to financial independence. In the mean time, I am trying to funnel as much money as I can from my paycheck to passive income generating sources.

January, April, July, and October are my largest dividend paying months. In a given quarter, certain months will receive substantially more than other months because of the way I weighted my portfolio. I try to look at my income on a quarterly moving average basis instead of a monthly basis to tune out the noise.

Check my Dividend Calendar page to see how much dollars I plan to receive going forward for each month of the year.

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.

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.

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.

Summary

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.

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

-YD

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

Symbol	Description	Total
BDX	BECTON DICKINSON & CO	$2,090.00
CHD	CHURCH & DWIGHT INC	$1,200.00
MKC	MCCORMICK & CO INC	$3,000.00
MO	ALTRIA GROUP INC	$500.00
ROST	ROSS STORES INC	$2,900.00
SBUX	STARBUCKS CORP	$3,490.00

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.

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.

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.

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

-YD