Dividend Noob

How am I doing?

2012-09-06T16:01:00.000-07:00

Some of the questions that most of us wonder is:

How is my investment style doing?
Am I doing well?
Am I happy with my returns?

Of late those questions have been on my mind. I have every confidence with the style of investing that I have settled on. This style suits my mindset perfectly in my mind. I pick good dividend stocks with good secondary numbers and DRIP the heck out them to leverage the power of compounding.

However the logical part of myself had to ask:

"Sure your happy with the style of investing, but is it working?"

I had to know. I went back over all my statements and complied the results from the time when I started to actively manage my own investments.

The results are in:

2010 - 21.76%
2011 - 9.78%
2012(so far) - 29.79%

For a to date total annualised return of 19.06%

I guess the results so far have to be a very emphatic "Yes" to all the above questions.

I will stay the course! :-)

This was done using the very handy XIRR function of Excel - very cool. With a little time and effort I was able to put together a spreadsheet with which I will keep an ongoing tally of my progress.

Moving Forward - Ever Onward

2012-08-26T15:20:00.000-07:00

Back in June of this past year I made the decision to unload two mReits - TWO and ANH. My basis for this was a simple realization - I did not understand how they made money. Simple really - I felt that since I could not understand what they were doing - how would I understand when they were in trouble and it was time for me to sell. I made an 18% and 11% percent profit on TWO and ANH respectively.
I had held them for less than six months and it was not a matter that they were not looking to be a good investment - I really wanted to go back to the KISS method and they were not simple investments.

I then took the proceeds of those two sales to take positions in Intel (INTC) and Pure Energy Services (PSV).

My average share cost of Intel was $27.29 and as of this writing I am down about 9% on that one, but I am not too worried about it - it's a solid company with great cash flow. DRIP over the next couple of quarters will average down that per share cost for me.

My second purchase, Pure Energy Services, worked out to a per share cost of $7.39. I was happy with this purchase as it was a company steadily growing earnings and cash flow and were paying a good dividend. As an added bonus I was just under the ex-dividend date and so I soon picked up my first dividend payment and DRIP shares.

A little over a month after my purchase of Pure Energy - they were snapped up by a bigger company out of Houston at $11.00 a share. I decided to sell out and pocketed a nice little 47.45% profit for holding the stock for just over a month - nice!

My investment style does not plan for me to flip a lot of stocks, however the chance to lock in such a big win so fast was too good to ignore - and freed up funds to find a another long term holding.

When do you consider selling a position?

2012-06-21T21:13:00.001-07:00

New Tack -

The other day I sold my positions in two mReits, ANH aand TWO.
I decided that since i did not really under stand how they made their money I could not really assess when the investment not no longer a good one.

So now looking to add a new position, maybe increase my bond fund holdings, or finally start building a posiion in a true Blue Chip stock, JNJ, PEP, KO, or PG

2011-09-21T17:06:00.000-07:00

MSFT - raises it dividend by 25%!!

With so much money on the books - some 63 Billion - and a stock that looked to be stuck in the same range for the last ten years - Microsoft has been under alot of pressure to start returning more monies back to investors. They have rasied the dividend to $0.20 per share per quarter - really good news.

I am glad I decided to up my stake in MSFT on Monday - at the time it seemed to me that it was under valued and I wanted to get enough stock in hand to make use of the synthetic DRIP in my TD account.

MSFT on Barrons

Motley Fool

2011-09-19T14:00:00.000-07:00

Hello -

Love this article from Seeking Alpha:

MSFT - set to jump?

I really like this as I picked up another 77 shares of this this morning....

Some good stories from the Web

2011-09-18T12:31:00.000-07:00

Hello Folks -

Today I thought I would post a couple of links to some articles that I read and found interesting

The Ultimate Sustainable Dividend Portfolio

The strange tale of the Permanent Portfolio

10 Commandments For Dividend Growth Investors

And for those of us just getting started, here is great site run by the same fella that runs The Dividend Guy blog : Whatisdividend.com

DRIP math experiment

2011-09-16T13:51:00.000-07:00

Hello Folks - it sure has been a bit of a crazy ride in the markets the last few weeks - as we are all aware.

RY.TO up well over one dollar yesterday and today down over a dollar today - no real reason for it that I can see.

As part of why I think Dividend investing is they way to go for me, I conducted a little math experiment on a spreadsheet with my KEG.UN holdings. The holding I have in this are enough for me to do the synthetic DRIP offered by TD Waterhouse, and as a result I get 1 unit each and every month, with a couple of extra dollars left over to accumulate in my account.

The assumptions of the experiment are:
1) - The stock price stays the same throughout
2) - The dividends are accumlated within the account were not DRIPped
3) - Only ran the numbers for three years

I found it interesting that by simply DRIPping my gains of three years outpaced that of Non-DRIPping by nearly 1.8% - by really doing nothing. This of course does not account for the added gains that my occur in the stock itself over that time, or for that matter any increases in the dividend itself.

Have a look:

Good News

2011-08-04T09:20:00.000-07:00

Seeking Alpha has a great article about safe dividends on the S&P - good for me anyway.

Check it out : Safe Dividends

I have not been super active on this blog for the past couple of months, but that is part of the beauty of this style of investing for me. I can focus on my personal life, which has become "interesting" - and not worry too much about my investments - and still watch my dividends roll in and or DRIP adding to my portfolio.

Simple Learnings

2011-05-09T15:16:00.000-07:00

Going back to my "Doh!" moment, I come to the conclusion that if I am going to make the most of compounding the returns I can gain from this investing style, then I must make certain that any stock that I will wish to make use of DRIP with; I must be sure to purchase enough shares/units to make certain the dividends earned are enough to buy more shares/units.

With that simple concept, I feel as though a light, albeit a small one, has come on.

I have today added another 165 units of HCR.UN bringing my total to 320 which will earn in the ballpark of about $25 a month, enough to get another "free" unit every month, maybe even two....

Newest Step

2011-05-08T17:08:00.000-07:00

Heyo Folks -

I have had a bit of a "Doh!" moment this week. I realized that I cannot DRIP part units of most of my stocks - I simply do not have enough dividends coming in to get new shares for the dividends earned.

This now seems like an obvious thought - but like I said I am still learning.

This week I picked up some payments from my REITs - every little bit adds up.

I have spent a good portion of the week reading and learning from a couple of blogs out there notably:

The Passive Income Earner
Dividend Money
and of course
The Dividend Guy Blog
and many others that I visit on a regular basis.

I had some money moved over from an RRSP I had with an old employer - and more to move as I get clearance to move over the profit sharing portion.

With that money just sitting there and not paying it's way; I have been looking for somewhere to put it. That in mind and applying what I have learned from the blogosphere I created a screener and tried to locate a stock to put to work for me.

My screener looked for the following:

Yield > 4.5%
EPS growth over previous year > 10%
Dividend 5 year growth average > 8%
Dividend Coverage (EPS/Dividend*100) of at least 115%

This screener returned three possibles

Emera Inc (TSX:EMA) witha a 57.7% 5 year annualized return
Wisconsin Energy Corp (NYSE:WEC) with a 48.1% annualized return
Altria Group Inc (NYSE:MO) with a 142.6% 5 year annualized return

I ruled out Altria right away as it is a tobacco company - as it turns out that matters to me.

That left me with Emera and Wisconsin Energy

Both are in the utilities world. Emera has the much higher yield and the better dividend growth rate. Wisconsin Energy has the better EPS growth and better dividend coverage.

Name	EPS Growth (Projected This Year vs. Last Year)	Dividend Yield	Dividend Growth Rate 5 Year Average	Dividend Coverage
Emera Inc	16%	11%	70%	145%


Wisconsin Energy Corp	30%	5.10%	36%	244%

Ultimately I decided on 100 shares of WEC for a couple of reasons

A chance to leverage the strength of the Canadian dollar
WEC looks to have better long term prospects to grow the dividend

Now with both Algonquin and WEC in my portfolio I am a little utility heavy so now need to find my next target. I found a couple of articles which may help one about Microsoft, Dell and Cisco at Frank Voisin and another at The Dividend Pig about Intel.

Let me know what you think!

Getting Started

2011-04-30T16:06:00.000-07:00

Hello Folks -

My name is Neil and I am at the early stages of investing. I am, as the title suggests, a beginner to investing.

I have done some studying of investing in growth stocks, value investing and even options trading.

The purpose of my writing this blog is to participate in the online community from which I have read and learned so much. I am NOT advocating that you follow and do what I do; I am NOT an investment professional - so please before you invest consult with a professional - and do your own due diligence.

After much reading and coming to a realization as to what my comfort level is, and my goals, I have arrived at my personal investing strategy.

So here is my mid term goal : Earning $12,000 a year from dividend paying stocks.

My strategy to get there is quite simple - everything in my portfolio must pay. Each stock or unit MUST give back - provide income of some sort or another.

I use TD Waterhouse and Royal Bank Direct Investing for my investing needs and research. I find the TD Waterhouse stock screener easier to use, but use both to research what my next buys will be.

As of today's writing I have about $21,000 in existing investments.

Some of the rules for picking what I put my money into are as follows:

The dividend payout ratio, should indicate that the dividend paid out is sustainable - while leaving enough money on the books to invest back into the company - I am going to look for stocks which have payout ratios of around 60%. (dividend/EPS)

As I am getting a bit of a late start; I am going to be chasing yields a little - going forward the yield has to be over 5% or the stock has to have the potential to increase the dividend and increase the stock price - thus giving me the return I want.

I am going to take advantage of DRIPs where possible - TD Waterhouse does this painlessly - allowing me to pick up more shares or units and not have to pay the broker, taking advantage of compounding my returns over the long term. Currently I am not DRIPing all my stock just MSFT, AQN and HR.UN - the remaining dividends will accrue in my account to give me a nestegg from which I can rebalance or take advantage of buying opportunities.

I will add to this over time and as I learn more.

This should be fun - I look forward to interacting with the online community..