I purchased 22 shares at $65.96 today in my 401k. Commissions were $8.95
MO will yield around 3.7% after their recent 8% dividend hike announcement some days ago. I found this raise to be conservative and prudent. They could of done more but they decided to keep with their usual 8%. They have consistently raised their dividend around 8-9% for many years already and this machine continues to increase dividends at a very consistent rate. I expect dividends to be raised by 8% again next year as well considering they will easily be able to cover this from the proceeds of the SABMiller sale.
MO has a forward P/E of 19.74 and with a yield of 3.7% and a dividend growth of 8%, that makes it have a growth in dividend of 3.7+8=11.7% which is very good. I think shares are decent value today and going forward MO will offer high income growth and high yield. Not many high yield (greater than 3% yield) can show such a high growth.
Wednesday, August 31, 2016
Friday, August 26, 2016
Upcoming buys: BCR, MO, SJM, & Utilities
| Symbol | Description |
Total
|
|---|---|---|
| BCR | BARD C R INC | $200.00 |
| MO | ALTRIA GROUP INC | $200.00 |
| SJM | SMUCKER (JM) CO THE | $600.00 |
| SO | SOUTHERN CO | $200.00 |
| WEC | WEC ENERGY GROUP INC | $500.00 |
Sunday, August 21, 2016
My financial updates: Emergency fund & Layoffs
The company that I work for is undergoing some large restructuring. It may be that I could potentially lose my job due to their cost cutting. This is something that is completely out of the control of the employees and we just have to sit it out and see what happens. I already can see people from Human Resources booking large conference rooms for the whole day so things are bound to go down. To prepare for this I have reduced the rate I invest and am accumulating cash for any emergencies. I will still be using the cash accumulated in my employer's 401k to invest in dividend stocks since I cannot use this cash either way. However, my taxable account will have decreasing activity since most of my after tax cash will be held in my bank.
On a side note, I am currently hoping that the utilities will continue to correct. They have decreased quite healthily over the last several weeks and utilities is a sector I want to be overweight in. My favorite trinity is Staples + Healthcare + Utilities for dividend stability, consistent growth, and predictability. I think large money managers are moving away from utilities and other high dividend paying stocks (such as consumer staples) and moving towards technology and industrials. This is a sector "shift" where fund managers cash in their profits and move towards other areas of the economy. I have noticed that these large money managers often change and rebalance their balance in the August and September months. As a result I hope the large selling would continue to go for the utility space since I have been wanting to add more to this category but it has been too overpriced. Names I am watching include SO, WEC, XEL, and NEE.
The emergency fund is very important and I feel that the amount one should have stored up for emergency depends on your age and circumstances. Speaking for younger investors who don't yet have so much monetary responsibilities (a mortgage, supporting a family, lifestyle costs, etc) I think a 3 to 6 month emergency fund is reasonable. I myself am planning an emergency fund that will last me 6 to 12 months. At the moment I have around $11,000 in usable cash and were I to get laid off, I am estimating my severance to be around $20,000. A cash position of $30k should last me a year and during that time I can look for a job without worrying about going homeless. In the mean time, my monthly dividends and employment benefits can continuously purchase more shares to expand my portfolio.
California's unemployment benefit checks will be able to help add more money to the amount I can invest in stocks every month. From my calculations, I will be able to get $450 per week for up to 26 weeks. With $1800 a month from unemployment checks plus $400-500 from dividends every month (this amount increases every month as my portfolio grows), I can add around $2300 to stocks every month while unemployed for 6 and a half months. I have paid an exorbitant amount of taxes over the last 3 years working in my job, and it is good to enjoy some of those benefits when times get rough.
For those that are middle age and have larger monthly spending requirements, I recommend at least a year in emergency cash that cannot be used for investing. For those that are older and closer to retirement, if you cannot survive off your dividends or passive income, I would recommend having several years of expenses in cash.
In addition to living costs, food, and other expenses, older investors need to calculate their expected medical costs every month while unemployed. I am a believer in always having medical insurance. A large medical emergency can completely destroy one's financial goals. More often than not, these medical emergencies are 100% out of the control of the individual. Those with money should enjoy the privilege of purchasing insurance and having that safety net in case things go really wrong. It is not worth penny pinching on health insurance. For my employer, they have agreed to pay for my health insurance for 6 months after I am unemployed. You can also continue using your employer's group health insurance plan under COBRA. COBRA is in effect up to 18 months.
On a side note, I am currently hoping that the utilities will continue to correct. They have decreased quite healthily over the last several weeks and utilities is a sector I want to be overweight in. My favorite trinity is Staples + Healthcare + Utilities for dividend stability, consistent growth, and predictability. I think large money managers are moving away from utilities and other high dividend paying stocks (such as consumer staples) and moving towards technology and industrials. This is a sector "shift" where fund managers cash in their profits and move towards other areas of the economy. I have noticed that these large money managers often change and rebalance their balance in the August and September months. As a result I hope the large selling would continue to go for the utility space since I have been wanting to add more to this category but it has been too overpriced. Names I am watching include SO, WEC, XEL, and NEE.
California's unemployment benefit checks will be able to help add more money to the amount I can invest in stocks every month. From my calculations, I will be able to get $450 per week for up to 26 weeks. With $1800 a month from unemployment checks plus $400-500 from dividends every month (this amount increases every month as my portfolio grows), I can add around $2300 to stocks every month while unemployed for 6 and a half months. I have paid an exorbitant amount of taxes over the last 3 years working in my job, and it is good to enjoy some of those benefits when times get rough.
For those that are middle age and have larger monthly spending requirements, I recommend at least a year in emergency cash that cannot be used for investing. For those that are older and closer to retirement, if you cannot survive off your dividends or passive income, I would recommend having several years of expenses in cash.
In addition to living costs, food, and other expenses, older investors need to calculate their expected medical costs every month while unemployed. I am a believer in always having medical insurance. A large medical emergency can completely destroy one's financial goals. More often than not, these medical emergencies are 100% out of the control of the individual. Those with money should enjoy the privilege of purchasing insurance and having that safety net in case things go really wrong. It is not worth penny pinching on health insurance. For my employer, they have agreed to pay for my health insurance for 6 months after I am unemployed. You can also continue using your employer's group health insurance plan under COBRA. COBRA is in effect up to 18 months.
Friday, August 12, 2016
Tuesday, August 2, 2016
Recent buy: BCR, RAI, ADP ...
I am dripping into several stalwart dividend companies and then adding a new position in medical instrumentation supplier C R Bard Inc (BCR) and consumer staples company Clorox (CLX). Both are dividend aristocrats.
| Symbol | Description |
Total
|
|---|---|---|
| ADP | AUTOMATIC DATA PROCESSING INC | $800.00 |
| BCR | BARD C R INC | $1,400.00 |
| CLX | CLOROX CO | $1,400.00 |
| HRL | HORMEL FOODS CORP | $1,000.00 |
| KHC | KRAFT HEINZ CO COM | $600.00 |
| KMB | KIMBERLY CLARK CORP | $800.00 |
| PG | PROCTER & GAMBLE CO | $1,600.00 |
Monday, August 1, 2016
July 2016 Portfolio Summary
The objective of this blog is to generate multiple sources of income to the point that the money flow is more than enough to support my annual expenses. At the moment, I am primarily reliant on my professional job to pay for my food, housing, and other bills. I take a large chunk of each paycheck and invest them in income generating assets. The focus of this blog is on dividend paying stocks with reputable track records. These are known as dividend aristocrats, companies that have paid increasing dividends to shareholders for the last 25+ years.
The portfolio I hold emphasizes earnings consistency, anti-recessionary businesses, dividend consistency, and strong financial credit ratings. My favorite industries are in the Staples, Healthcare, and Utilities businesses. These businesses offer products and services that everybody needs in order to live a modern lifestyle. In recessions, people will still use the bathroom, eat food, and pay for electricity. I want to have income generated from these types of businesses since they have a higher guarantee on dividend safety and dividend growth. In the past recessions that have hit the world, many of the companies that have went bankrupt or nearly collapsed offer products that nobody "must have". These can include subprime lenders, restaurants, theme parks, movie theaters, coffee baristas, auto manufacturers, jewelry, and home builders.
At the time that I am writing this post, the S&P500 has hit an all time high. Even after the Brexit drop, the S&P500 was relentless in climbing back up. We have broke the resistance levels that have kept the market range bound for the last 2 years.
The portfolio I hold emphasizes earnings consistency, anti-recessionary businesses, dividend consistency, and strong financial credit ratings. My favorite industries are in the Staples, Healthcare, and Utilities businesses. These businesses offer products and services that everybody needs in order to live a modern lifestyle. In recessions, people will still use the bathroom, eat food, and pay for electricity. I want to have income generated from these types of businesses since they have a higher guarantee on dividend safety and dividend growth. In the past recessions that have hit the world, many of the companies that have went bankrupt or nearly collapsed offer products that nobody "must have". These can include subprime lenders, restaurants, theme parks, movie theaters, coffee baristas, auto manufacturers, jewelry, and home builders.
At the time that I am writing this post, the S&P500 has hit an all time high. Even after the Brexit drop, the S&P500 was relentless in climbing back up. We have broke the resistance levels that have kept the market range bound for the last 2 years.
July 2016 Dividends Received
Another month passes and another month of checks fly in to my accounts. This month I earned $444 without having to do anything! The proceeds are reinvested back to the company so that their incomes can continue growing. The purpose of this is income replacement. I one day hope to use this monthly cash stream to support my lifestyle. Today, I am funding the growth of this income stream from my daily job. One day this passive income stream will surpass my monthly job income.
| Ticker | Total | Taxable | Roth IRA | 401k |
| MO | $107.82 | $79.36 | $28.46 | |
| PM | $96.83 | $66.94 | $29.89 | |
| KMB | $47.74 | $27.50 | $20.24 | |
| KO | $41.83 | $41.83 | ||
| RAI | $32.96 | $24.98 | $7.98 | |
| O | $31.28 | $31.28 | ||
| KHC | $30.47 | $30.47 | ||
| MKC | $17.63 | $17.63 | ||
| ADP | $17.59 | $17.59 | ||
| XEL | $14.51 | $14.51 | ||
| MDT | $6.15 | $6.15 | ||
| $444.81 | $309.33 | $39.26 | $96.22 |
Monday, July 25, 2016
Recent buy: SYK $3040
Tomorrow morning I will be buying $3040 of SYK. SYK is an extremely steady and consistent medical devices maker. Take a look at Stryker's earnings history in the graphs below. In the past they have paid dividends once a year. They have recently paid dividends quarterly. Overall, they have increased dividends to shareholders every year. Healthcare medical devices makers are one of my favorite industries. Their industry has consistent earnings and will improve as the aging American population starts visiting the hospitals more. People will pay for medical care even during harsh economic times.
Tuesday, July 19, 2016
Recent buy: JNJ
On short notice, I have added $2500 to JNJ after they announced an earnings beat. I bought 20 shares for $2499 total which includes one buy trade commission. I now have $15,600 in JNJ. It is my largest holding at 6.45% weighting.
Monday, July 18, 2016
Recent buy: MDT, MCD, UTX ...
These buys will be executing Tuesday morning.
I have in the last month been trying to reduce my cash positions since my cash weightings have been continuously rising as my paychecks come in. My purchases in the coming weeks will most likely be less and will be more in line with whatever remaining money from my regular paycheck I allocate for investing. Although $10k is a lot of cash, my cash reserves are replenished rather quickly as long as I continue having my daily job. Since my cost of living is a small percentage of my take home income and my debt to income ratio is basically 0, I have large flows of money I can deploy every month to my investments.
Edit: Account didn't have enough funds to execute the Clorox buy.
I have in the last month been trying to reduce my cash positions since my cash weightings have been continuously rising as my paychecks come in. My purchases in the coming weeks will most likely be less and will be more in line with whatever remaining money from my regular paycheck I allocate for investing. Although $10k is a lot of cash, my cash reserves are replenished rather quickly as long as I continue having my daily job. Since my cost of living is a small percentage of my take home income and my debt to income ratio is basically 0, I have large flows of money I can deploy every month to my investments.
| Symbol | Description |
Total
|
|---|---|---|
| MCD | MCDONALDS CORP | $2,000.00 |
| MDT | MEDTRONIC PLC SHS ISIN#IE00BTN | $1,250.00 |
| NEE | NEXTERA ENERGY INC | $1,500.00 |
| UTX | UNITED TECHNOLOGIES CORP | $1,250.00 |
| XEL | XCEL ENERGY INC | $1,500.00 |
Monday, July 11, 2016
Recent buy: JNJ, RAI, MMM, KHC
I will be executing the following purchases tomorrow:
| Symbol | Description |
Total
|
|---|---|---|
| JNJ | JOHNSON & JOHNSON | $1,900.00 |
| KHC | KRAFT HEINZ CO COM | $2,751.00 |
| MMM | 3M CO | $2,000.00 |
| RAI | REYNOLDS AMERICA INC | $2,000.00 |
Tuesday, July 5, 2016
Recent buy: BDX and MDT
Today I added the following two healthcare stocks:
MDT $1250
BDX $1900
I have another order placed in my 401k for more MDT but the limit order didn't execute successfully today since the price wasn't met.
My rating for my favorite healthcare stock is JNJ in first place, then MDT, then BDX, then ABT.
Both JNJ, BDX, and MDT appear to be recession-proof in terms of earnings and dividend growth. The earnings and dividend growth is extremely predictable (by analysts) and is always steadily increasing. That is my type of business. Stable and highly important in today's aging Baby Boomer population.
MDT $1250
BDX $1900
I have another order placed in my 401k for more MDT but the limit order didn't execute successfully today since the price wasn't met.
My rating for my favorite healthcare stock is JNJ in first place, then MDT, then BDX, then ABT.
Both JNJ, BDX, and MDT appear to be recession-proof in terms of earnings and dividend growth. The earnings and dividend growth is extremely predictable (by analysts) and is always steadily increasing. That is my type of business. Stable and highly important in today's aging Baby Boomer population.
Friday, July 1, 2016
June 2016 Portfolio Summary
At the moment of writing this, it is the morning on 6/30/2016.
*******************************************************
Market Summary:
*******************************************************
Market Summary:
The June month was focused strongly around the Brexit vote. The market was rather uncertain coming up to the vote but eventually believed that Britain would vote to stay, leading to a rally right before the votes. The resulting vote was for Britain to exit the EU. This cause a lot of shock and the pound dropped instantly and many markets including the USA had their indexes plummet. We saw the S&P drop from $2113 to $1992. Eventually the S&P rebounded. I really hope this rebound is temporary as I was really hoping for a Brexit to cause tanking share prices for bargain basement deals.
Brexit or not, I will continue investing in companies that are decent value. I will be willing to pay a premium for high quality companies. I believe in dollar cost averaging my investments since I don't think that I am smart enough to time the markets.
June 2016 Dividends Received
I received a nice paycheck this June. It was much larger than the last. The total is $473.49
My 5 largest payers this month are:
Johnson and Johnson (JNJ)
Dominion Resources (D)
Southern Company (SO)
Pepsi (PEP)
Exxon (XOM)
All of the cash was reinvested back into the companies that paid them. January, March, June, and December are the months that have more of my companies paying their dividends. Looking forward, I will now have Home Depot paying in the 1/3/6/12 months, a position I started recently this month.
My 5 largest payers this month are:
Johnson and Johnson (JNJ)
Dominion Resources (D)
Southern Company (SO)
Pepsi (PEP)
Exxon (XOM)
All of the cash was reinvested back into the companies that paid them. January, March, June, and December are the months that have more of my companies paying their dividends. Looking forward, I will now have Home Depot paying in the 1/3/6/12 months, a position I started recently this month.
Saturday, June 25, 2016
July Watchlist with Price Targets
Did some research this evening after the drop in the market on what my desirable price targets are for specific stocks in different sectors.
The names in Bold are higher priority companies I want to get first.
The names in Bold are higher priority companies I want to get first.
Friday, June 24, 2016
My post-Brexit watchlist
The UK has done it. They voted to leave the EU. This creates uncertainty in the market and the market hates uncertainty.
S&P futures are looking bleak at -5%
The pound has crashed by 10% relative to the dollar.
Pound to USD:
S&P futures are looking bleak at -5%
The pound has crashed by 10% relative to the dollar.
Pound to USD:
Tuesday, June 21, 2016
Recent buy: NKE, ABT, HRL ...
I added several companies this week. Below is a summary of my buys.
| Symbol | Description |
Total
|
|---|---|---|
| ABT | ABBOTT LABORATORIES | $3,000.00 |
| APD | AIR PRODS & CHEMS INC | $2,500.00 |
| HD | HOME DEPOT INC | $3,000.00 |
| HRL | HORMEL FOODS CORP | $800.00 |
| NKE | NIKE INC CL B | $1,800.00 |
| PM | PHILIP MORRIS INTL INC COM | $800.00 |
| T | AT&T INC | $800.00 |
Today I also swapped AbbVie (ABBV) in exchange for its parent company Abbott Labs (ABT). Note that Abbott in the past spun off AbbVie so shareholders in Abbott got both shares in AbbVie and Abbott. I prefer Abbott's stable medical device business, nutritional food items, and diagnostics products instead of the more uncertain AbbVie pharma products and AbbVie's high reliance on their one hit wonder drug Humira (and the expiring patent rights). AbbVie has the potential for more capital appreciation but comes with more risk. I don't feel that I need to take such risks to achieve my goals so I am performing this swap. I am not very fond of hoping that AbbVie management is capable of continuously pumping out one hit wonder drugs from their pipelines and prefer straight forward simple boring companies. AbbVie occupied less than 2% of my portfolio and my net return including dividends was around -$3.00 which includes trade commissions, so it was basically flat.
The above chunk of buys averages around 2.54% yield so that is about $312 more per year in dividends.
Saturday, June 18, 2016
What to buy list : My fair value targets
I did some homework today on stocks that I can look to purchase in the coming week. Some of the fair values in my head are now perhaps out dated since earnings have gone up or guidance has changed due to macro factors such as the weakening dollar and lower oil prices.
I have done some research on Morningstar and S&P to get some fair value estimates. I also use the Jefferson Research to analyze the quality of the companies. On top of that I have the Valueline and S&P credit ratings and safety ratings on my Portfolio page. Some of the companies listed here may not have the VL/S&P Financial score or Safety rating since I don't have them in my portfolio, but you can be guaranteed this list will only contain very high quality companies. In today's market with high valuations and uncertainty (Brexit anyone?) I will only purchase the most financially secure blue chips. Speculation is not for me right now.
I like to categorize my picks into dividend paying dates (when I receive the check).
1/4/7/10 months
2/5/8/11 months
3/6/9/12 months
Note that Pepsi (PEP) and Coca Cola (KO) have some strange month paying schedule.
The analysis is quite simple. They will all follow the format.
STOCK_NAME CURRENT_PRICE
Jefferson Research: Earnings / Cash flow / Operating eff / Balance sheet / Valuation
S&P: 12month Target, Fair Value
Morningstar: Fair Value
I highlight companies I think that are good deals in Green Bold. Those in just regular Green are so-so buys I might consider. Note that I want to balance high yield buys with low yield buys since I want to average around 3% yield. So I may add high yield picks into my Green buy list even if they are a bit overvalued.
I have done some research on Morningstar and S&P to get some fair value estimates. I also use the Jefferson Research to analyze the quality of the companies. On top of that I have the Valueline and S&P credit ratings and safety ratings on my Portfolio page. Some of the companies listed here may not have the VL/S&P Financial score or Safety rating since I don't have them in my portfolio, but you can be guaranteed this list will only contain very high quality companies. In today's market with high valuations and uncertainty (Brexit anyone?) I will only purchase the most financially secure blue chips. Speculation is not for me right now.
I like to categorize my picks into dividend paying dates (when I receive the check).
1/4/7/10 months
2/5/8/11 months
3/6/9/12 months
Note that Pepsi (PEP) and Coca Cola (KO) have some strange month paying schedule.
The analysis is quite simple. They will all follow the format.
STOCK_NAME CURRENT_PRICE
Jefferson Research: Earnings / Cash flow / Operating eff / Balance sheet / Valuation
S&P: 12month Target, Fair Value
Morningstar: Fair Value
I highlight companies I think that are good deals in Green Bold. Those in just regular Green are so-so buys I might consider. Note that I want to balance high yield buys with low yield buys since I want to average around 3% yield. So I may add high yield picks into my Green buy list even if they are a bit overvalued.
Tuesday, June 14, 2016
May 2016 Portfolio Summary
I am a bit late to summarize my May portfolio performance. So I will take this post to summarize how my portfolio stands 15 days after the end of May.
May was a rather positive month. The general index has went up a little, however it has been creeping back down. Overall, the market remains expensive and is near its all time highs. In the long term view, the market has been trading sideways for more than a year. Of extreme strength recently are consumer staples and utility stocks. Those are my favorite companies and it's unfortunate they are very high since I can no longer really add to them without overpaying greatly. I have however benefited from the rise in share prices since I am heavily favored in consumer staples.
May was a rather positive month. The general index has went up a little, however it has been creeping back down. Overall, the market remains expensive and is near its all time highs. In the long term view, the market has been trading sideways for more than a year. Of extreme strength recently are consumer staples and utility stocks. Those are my favorite companies and it's unfortunate they are very high since I can no longer really add to them without overpaying greatly. I have however benefited from the rise in share prices since I am heavily favored in consumer staples.
Subscribe to:
Posts (Atom)