Dividends For The Long Run

Hiatus

2012-12-21T10:08:00.002-10:00

Dividends For The Long Run will continue to be on hiatus as I spend the next few months going through a major career change.

Accumulating Cash, Staying Patient

2012-10-14T12:24:00.000-10:00

The lack of posting activity here has been mirroring my lack of investing activity over the last month or so. I'm continuing to run screens and analyze new stocks however at this point in time attractive bargains are few and far between. Aside from opening a small position in Caterpillar and taking some profits by selling a third of my Medtronic shares I have just been sitting on the sidelines and accumulating cash.

Right now that cash position sits at 11% of the portfolio. Given that we are now in earnings season and that the market as a whole has been very choppy for the past few weeks the correct strategic move from my perspective is to lay low and wait for opportunities to develop. That might well mean waiting until November to make significant purchasing moves.

That said, I remain committed to the dividend strategy (with a wary eye directed toward Congress) and continue to be a net buyer. Despite the gloom and doom in the financial media keep in mind we are less than 5% off the S&P 500's high for the year. Frankly I would welcome a 10% correction in the market right now as it would create beaucoup buying opportunities. Such a correction would suck for older investors as well as day traders but hey, that's not my problem.

My inactivity aside, the dividends keep rolling in. Coca-Cola, Kimberly Clark, Altria, Illinois Tool Works, and Phillip Morris have already delivered this quarter's dividend payments.

Looking for more financial advice but getting tired of me going on and on about dividend stocks all the time? Head on over to 6400personalfinance.com and follow me on Twitter @6400PF for a broader approach to building your net worth.

Quarter 3, 2012: Net Worth Analysis

2012-09-30T20:50:00.000-10:00

It's that time of year again, time to go through the numbers and see how the PIG and my overall net worth improved over the last quarter.

First up, the roll call of new buys, increased positions, and sells.

New Buys:

Cliff Natural Resources

Staples

Seagate

General Dynamics

Increased Positions:

Phillips 66

Altria

Sold:

Hawkins

Cliff Natural Resources (fixing a bad decision)

I also have an order in to add to my Intel position however that will technically fall under Quarter 4 once it is executed.

Below is the PIG's income report for the third quarter of 2012. It maintained it's very young streak of quarterly increases in dividend income and has broken the $1,000 level for dividend payments. The goal of $1,500 by year's end looks attainable at this point. Right now the PIG has a market value of $61,470.24.

2012 Dividend Tracker (Goal is $1500)
2011 Dividend Income	$307.90

Quarter 1, 2012 Income	$211.23
Quarter 2, 2012 Income	$331.70
Quarter 3 (July 1 – September 30)
Company	Dividend Payout
Coca-Cola (July 1^st)	$33.22
Kimberly Clark (July 3^rd)	$11.95
Illinois Tool Works (July 10^th)	$7.98
Altria (July 10^th)	$29.34
Phillip Morris Intl (July 12^th)	$12.44
Leggett & Platt (July 13^th)	$52.52
Medtronic (July 27^th)	$22.51
AT&T (August 1^st)	$28.83
Air Products & Chemicals (August 13^th)	$8.32
Abbott Labs (August 15^th)	$9.69
Procter & Gamble (August 15^th)	$8.99
Cliff Natural Resources (August 31^st)	$15.63
Intel (September 1^st)	$19.45
Aflac (September 4^th)	$24.49
ConocoPhillips (September 4^th)	$35.74
Phillips 66 (September 4^th)	$1.40
WalMart (September 4^th)	$8.00
Chevron (September 10^th)	$9.00
Emerson Electric (September 10^th)	$9.20
Johnson & Johnson (September 11^th)	$29.45
Wal-Green (September 12^th)	$18.70
Microsoft (September 13^th)	$8.06
McDonald’s (September 18^th)	$16.86
Waste Management (September 21^st)	$22.96
Guess (September 21^st)	$8.00
Pepsi (September 28^th)	$8.67
QUARTER TOTAL	$461.40

Year To Date Total	$1,004.33
67% of Goal

Net worth wise this was a very good quarter for my net worth. It dipped a bit when the market stalled at the end of the month but nonetheless no complaints. I missed my goal of a 10% increase by all of 0.3%, an acceptable miss given that we spent a weekend in Maui during the quarter. For the fourth quarter I'll stick with the 10% increase goal even though trips to the Big Island as well as home for Christmas will make that a challenge.

ASSETS
Cash	(-17.0%)
Taxable Investments	(+14.6%)
Roth IRAs	(+6.9%)
*Total Assets*	(+11.7%)
PERSONAL NET WORTH
(+9.7%)

Finally, using the same model budget first put together a year ago, here is a representation of how my current dividend income translates into covering my expenses. The income total listed below the month/year is an annualized figure.

Expense	Yearly Expense	PIG Portion	Expense covered?
			SEP 2012	MAY 2012	OCT 2011
			$2,056	$1,540	$962
Rent	$15,600	$445,714	NO	NO	NO
Groceries	$3,000	$85,714	NO	NO	NO
Dining Out	$1,800	$51,429	NO	NO	NO
Car Insurance	$1,260	$36,000	NO	NO	NO
Gas	$960	$27,429	NO	NO	NO
Cable/Internet	$900	$25,714	95%	33%	NO
Power	$600	$17,143	YES	YES	50%
Phone	$600	$17,143	YES	YES	YES
TOTAL	$24,720	$706,286	8.3%	6.2%	3.9%

Well, that was fun. Remember, dividends are boring, but cash is still cash.

Related Post: Quarter 2, 2012: Net Worth Analysis
Related Post: Quarter 1, 2012: Net Worth Analysis
Related Post: Quarter 4, 2011: Net Worth Analysis
Related Post: Quarter 3, 2011: Net Worth Analysis

Looking for more financial advice but getting tired of me going on and on about dividend stocks all the time? Head on over to 6400personalfinance.com and follow me on Twitter @6400PF for a broader approach to building your net worth.

Dividend Income Progress

2012-09-17T03:00:00.000-10:00

Back in July I wrote a post breaking down where each dollar I receive in dividend income comes from and what I would need to do in order to get the PIG to accomplish its goal of pumping out $1,500 in dividends this year. So there I was, looking for undervalued dividend stocks, when this happened:

Given that most of my likely targets are the large cap corporations that dominate the S&P 500 you can imagine how this rise in the market took most of them out of the price ranges within which I would consider them worthwhile purchases.

Oh well.

Nonetheless I kept digging and continued to pick up shares where I saw value and dividends coming together in a way to boost my brokerage account. More details on which companies in particular benefited from my cash will be forthcoming at the end of the month (here is a hint: Staples was one of them) with the usual net worth analysis post.

So on Saturday I sat down and did about two minutes of work with a spreadsheet and calculated that if I do nothing more with the PIG this year that I will miss my dividend income goal of $1,500.

By 40 bucks.

On the other hand the PIG, on an annualized basis, is already capable of beating next year's goal of $2,000 in dividend income. How can this be?

As I wrote back in July if you continually purchase new shares for your dividend portfolio then the dividends you actually receive will be a lagging indicator of how much income your portfolio is capable of generating. If you buy the shares after the quarterly dividend payment has been made, or even just after the record date, then you won't get any cash from your investment until the following quarter. This is why right now the PIG is on pace to slightly under-deliver on income this year but beat the goal next year.

So, what to do? Well for starters continue to add to the PIG as opportunities arise. I am not going to buy shares of overvalued companies just to get my hands on enough cash flow to beat my self-imposed income goal. That would be moronic. With cocaine now flowing through the veins of the market in the form of QE3 opportunities might be harder to come by but nonetheless I will continue to look.

Second I will revise next year's income goal up to $2,500. Why set goals for yourself that you already know you can achieve? Goals should force you to work hard in order to meet them. In this case I already know that the PIG can deliver $2,000 next year so the challenge now becomes finding another $500 in annual dividends. Using a target yield of 3.5% this would imply additional contributions worth more than $14,000 would need to be added to the PIG.

But wait, there's more! Don't forget about the dividend growth rate. Using a projected average growth rate of 8% that $2,000 in annualized income for 2012 turns into $2,160 in 2013, meaning I am only on the hook for ponying up enough cash to generate $340 in additional dividends (a little under $10,000). Any excess cash would set the portfolio up for beating 2014's goal, so on and so forth. Welcome to the beauty of compounded returns.

Looking for more financial advice but getting tired of me going on and on about dividend stocks all the time? Head on over to 6400personalfinance.com and follow me on Twitter @6400PF for a broader approach to building your net worth.

Dividend Investing Is Boring

2012-09-15T09:59:00.000-10:00

Seriously, it can be like watching paint dry.

Selecting dividend stocks has nothing to do with looking at candlestick charts or checking the MACD indicator. You can even get away with not having stop loss orders in place due to the beta for most of the quality candidates hanging around in very close proximity to a value of 1 (although it doesn't hurt: see "Staples"). Instead successful dividend investing is based on pulling numbers from 10-Ks, punching them into a spreadsheet and then identifying the ideal price to make your purchase OR to declare the stock a bad investment.

Then every three months (sometimes monthly, go Canada!) you get a deposit in your brokerage account.

Rinse, wash, repeat. As long as a company does not freeze, cut, or eliminate its dividend it will most likely remain in your portfolio for a very long time. You will be a net buyer, focusing on income, rather than being buy/sell neutral focused on capital gains.

Dividend investing is so boring that with the exception of getting into the stock analysis game only so much can be written about it. After all there are only so many criteria that can be talked about as ideal for an investment opportunity. Once those have been identified and discussed there isn't much left to do other than put the theory into practice.

Now if we go off the fiscal cliff next year then the tax implications should bring some new flavor into this discussion.

Until that happens we will continue on this relatively straight and narrow path, collecting increasing dividend payments as we go.

Yawn. Shouldn't making money be harder than this?

Looking for more financial advice but getting tired of me going on and on about dividend stocks all the time? Head on over to 6400personalfinance.com and follow me on Twitter @6400PF for a broader approach to building your net worth.

Book Recommendation: The Dividend Toolkit

2012-08-31T11:14:00.000-10:00

Matt Alden, the man behind the curtain over at Dividend Monk, has produced something very rare in the blogging world: an E-book that is actually worth reading.

The topic, surprise, is dividend growth stock investing, and Matt approaches it with the comprehensive approach that those of you who read his stock analysis posts should be very familiar with. The book, which is a respectable 200 pages of material, takes a soup-to-nuts approach to investing. Novices can start at the beginning where he explains the basics of corporations, dividends, and the workings of the stock market while more advanced investors can start a little further on in the asset allocation section. Halfway through the book he starts laying out an analytical approach to evaluating dividend stocks that carries through the last 100 pages of the book.

This book was not written for speed-readers nor should it be read in such fashion. The method for selecting quality investments goes well beyond dividend yields and growth rates and digs into the balance sheets of the companies being examined. Towards the end Matt does you a huge favor by telling you what to look for in a stock depending on which industry it is in. This is critical for you to understand in order to avoid eliminating a stock from your watchlist because you misunderstood why it had such a high debt/equity ratio.

The final section provides a checklist for you to use when making your own stock selections AND it comes along with some Excel based valuation calculators. Essentially Matt has given you the keys to the castle. The only remaining question is whether you will use them properly.

The Dividend Toolkit: How To Efficiently Analyze Dividend Stocks can be found here over at DividendMonk.com. And yes, it is Kindle compatible.

Looking for more financial advice but getting tired of me going on and on about dividend stocks all the time? Head on over to 6400personalfinance.com and follow me on Twitter @6400PF for a broader approach to building your net worth.

Margin Of Safety In Action

2012-08-25T11:55:00.001-10:00

Clothing companies are not high on my list of potential dividend investment opportunities. Markets are already fickle, adding in a fickle consumer base just makes things even more difficult. Yet while that fickleness can blow up short-term traders come earnings seasons it also creates buying opportunities for more patient investors.

I opened a position in Guess? (GES) back in June at a price of $25.44. Its yield was lower than my entry criteria so I offset that by pairing it up with a purchase of a higher yielding stock so that the average yield met my target. The position was opened based on my estimating that the stock was trading with more than a 20% margin of safety to its fair value.

Now while I don't expect Guess to ever be a core holding in my portfolio along the lines of Coca-Cola or Johnson & Johnson I do plan to hold it for as long as it continues to pay an increasing dividend. Even so major short-term movements, either up or down, should be paid attention to. Major movements up could provide an opportunity to sell and invest the gains in a different (and undervalued) dividend stock while major movements down can indicate either a buying opportunity or a need to exit the position post haste.

When Guess missed earnings this week it resulted in a massive sell-off that left the stock closing more than 18% down at Friday's bell from where it opened on Monday. Here is what that looked like in picture form:

The blue line is my entry price and the green dashed line is 25% above that level. The area between the two is my margin of safety. What does this mean? Even IF I was making a short-term play on Guess I would still be in positive territory after this week's events (I might have even taken some profits after getting a 20% return).

There it is folks: margin of safety in action. Learn it, live it, love it.

Looking for more financial advice but getting tired of me going on and on about dividend stocks all the time? Head on over to 6400personalfinance.com and follow me on Twitter @6400PF for a broader approach to building your net worth.

Opportunity in Staples

2012-08-19T14:41:00.003-10:00

Dividend Ninja wrote an excellent post explaining why he took the opportunity to sell Staples when it missed earnings in order to look for more fertile dividend ground. Keep in mind my post below approaches Staples as a speculative play, not as a long-term investment. As always your investment decisions are your responsibility.

Yep, a Sunday post. Mainly because some of the numbers involved are time sensitive. Let's get to it.

Last week Staples (SPLS) came through with a big swing and a miss for its quarterly earnings report and was summarily beaten by the market to the tune of 14% in a single day. Apparently investors like it better when you grow your business as opposed to taking a 32% hit to year over year quarterly earnings (they also missed on revenue). Who knew?

The stock closed out the week at $11.34 after descending as far as $10.99, a 52-week low. Volume spiked into the stratosphere as investors took their money and headed for the door. The stock had been trading in the $12-$17 range for much of the past year and this negative report was the impetus needed to push the stock straight through the floor and into new negative territory...where it now yields 3.88%.

Okay, so now this stock is on my radar. The yield exceeds the criteria for becoming a part of the PIG and the dividend growth rate is respectable. Revenue, earnings, and cash flow growth rates aren't great but that is partly the reason this opportunity exists in the first place. Return on equity is below 15% and debt to equity is over 20%. So in other words this isn't a contender for being a core holding however the income opportunities it offers make a strong case for it being part of an income portfolio. On a positive note the current ratio is over 1.5 and the payout ratio is low which indicates protection for the dividend.

I crunched some numbers for three different valuation models, two based on cash-flow and one on dividends, and came up with an averaged fair value of $16.64 for the stock (assuming a conservative core growth rate of 1%). This would indicate that the market had it just about right when it topped the stock out at $16.93 back in the spring. Using $16.64 as an upside limit that would leave the stock with more than 40% of room to recover.

The caveat to all this is that the market is not going to look favorably on such a disappointing earnings report and plenty of former investors won't come back to the stock because they perceive it to be in a death swoon. Frankly that $16.64 level (the green dashed line on the price chart above) could be overly optimistic. A 25% appreciation from current levels would get the stock back to $14.18 which was the mid-point of its trading range for the last year. As far as counting on the market to provide price appreciation while the company kicks out dividends I would be willing to acquire a position at current levels with very modest expectations going forward.

Before jumping on Staples make sure to check out their competitors: OfficeMax (OMX) and Office Depot (ODP). As a group they have been less than inspiring this year although OfficeMax recently broke away from the pack with a big earnings beat and is now up 24% on the year. The Max also pays a dividend with a current yield of 1.42%.

On balance I would look to Staples as the best opportunity in the group for income as well as short-term price appreciation. Longer term Staples is better situated for survival in the face of the growing consolidation of retail domination by Amazon (AMZN), Wal-Mart (WMT), and to a lesser extent Target (TGT) thanks to the success of its e-commerce business. That said I think the office supply sector as a whole has an uphill battle to fight in order to remain relevant and profitable. Therefore I recommend taking a look at Staples for a short-term value play but saving your long-term retail sector cash for Wal-Mart and Amazon.

Looking for more financial advice but getting tired of me going on and on about dividend stocks all the time? Head on over to 6400personalfinance.com and follow me on Twitter @6400PF for a broader approach to building your net worth.

Would You Accept A 50% Loss?

2012-08-14T21:17:00.000-10:00

Value investors are constantly on the hunt for companies that are trading at valuations below what they are actually worth. Dividend investors often look for similar discounts while searching for a steady stream of income. Successful dividend investors are the ones who repeatedly find companies that pay increasing dividends and purchase them at a discount to their fair value. This approach boosts not just the passive income stream but total returns as well.

Since dividend investing is by design a long-term strategy dividend investors tend to be less sensitive, almost to a fault, of price fluctuations in their holdings when compared to more short-term oriented investors. Small fluctuations are of little concern and can mostly be covered by that year's dividend. It may not be exciting to break even on the year but it is preferable to a loss.

Larger declines in price though can get dividend investors in trouble. Let's assume that the holding in question has not acted in a way to provoke a typical red-flag (as in a dividend freeze, cut, or elimination). Perhaps it missed earnings or had a shake-up in its senior leadership. As an individual investor it is on you to use the resources available to you to determine whether such events invalidate your original investment thesis. However after making the call to hold on to the stock (or perhaps buy more) how would you react to your position getting cut in half within the year?

Don't make a kneejerk response. For some stocks a 50% decline puts them in "screaming buy" territory (think Coca-Cola in March of 2009). For others it is a sign that the market doesn't have faith in the company's prospects and that your cash is best invested elsewhere. Again that is going to have to be an evaluation that you make on a case-by-case basis. However now that the stock has declined well below a level where the dividend yield could provide you a short-term buffer you need to start thinking in terms of opportunity cost.

Time to go hypothetical: you invest $1,000 in ABC company which has a yield of 4% and somehow manages to increase its stock price at a reliable 6% per year. Unfortunately the day after you buy the stock a competitor comes out with a better product and the stock starts a 3-month decline that cuts the stock price in half.

But at least you collected that 4% yield.

If we assume the company's stock price is going to continue to appreciate at 6% per year while the annual yield remains at 4% (its so much simpler to do things hypothetically) you stand to get back to even in seven years. After that you can start making a profit off of your investment. Talk about delayed gratification.

Consider the likelihood of you taking what was left of your investment after that first year and doubling it in seven years. You'd have to earn a little over a 10% annual return in order to be able to do so which requires a bit more than beginner's luck but is not unattainable. Just a couple of solid selections can get you back to even in much less than seven years.

Think 10% is to hard for you to attain? Think given this situation you would rather take the slowly recovering stock? Fine but now forget the hypothetical and embrace reality: how many companies that take 50% hits due to a serious change in the business environment can maintain a 4% dividend yield when faced with declining cash flow? Not to mention that a 6% annual return on the stock price alone in this scenario is unlikely as well. That means that the time required to recoup your investment will stretch well beyond the aforementioned seven years.

And that means you need to look for a better place to put your money.

Related Post: Opportunity Cost: Or Why I Should Have Sold Ford
Related Post: The Rule of 72
Related Post: Understanding Return on Equity
Related Post: Manually Reinvest Your Dividends

Looking for more financial advice but getting tired of me going on and on about dividend stocks all the time? Head on over to 6400personalfinance.com and follow me on Twitter @6400PF for a broader approach to building your net worth.

Three Stocks For Weekend Research

2012-08-11T10:44:00.000-10:00

I am happy to announce that this humble blog is now a member of the The Dividend Investing and Value Network, a group of bloggers dedicated to investing based on....well, dividend and value strategies. The members of the Div-Net have made multiple appearances in my recently dis-continued Monday roundups and will continue to be featured in the new posting format that I am putting together.

Now for some dividend stock talk.

This week I decided to run a screen instead of using more time-intensive search methods to find investment ideas. The screen was an intense one and had the following criteria for common stocks:

Dividend Yield: 3%-7%
5 Yr Dividend Growth Rate: Greater than 7%
Dividend Payout: 20%-60%
Return on Equity: 15%-50%
Current Ratio: Greater than 1.2

I also made sure that the 3 year averages for cash flow growth, revenue growth, and earnings growth all were greater than 5%.

Here is what the screen produced:

Symbol	Yield	5 YR Div Growth Rate	ROE	Current Ratio
INTC	3.37%	14.87%	26.43%	2.4
WAG	3.05%	28.83%	17.29%	1.5
AMAT	3.03%	8.45%	15.41%	2.4

Remember when I went over determining a sustainable growth rate versus an unsustainable one? The only growth rate above that I see having any potential for remaining constant or potentially increasing is the 8.45% average for Applied Materials (AMAT). Actually its more like a 3 year average since the company didn't raise the dividend in in 2008 or 2009. In any case the dividend growth rate trails the revenue growth rate by a hair and is well behind the earnings and cash flow growth rate so the dividend has significant protection and room to grow.

While Intel's dividend growth rate will be tough to keep up going forward (as is evidenced by its recent deceleration) it does have an excellent Return on Equity. Remember that means they can make invested dollars go a lot further to create growth than the other two corporations on the list. It also has a solid current ratio (assets/liabilities) and the highest yield of the three. If you are willing to accept some slowdown in the dividend growth rate Intel deserves some further attention this weekend.

For you visual types out there lets check out the charts. First up is Intel, which I own but have refrained from buying more of in the last few months:

Source: StockCharts.com

Keep in mind as you look at these charts that even with dividend stocks you make your money going in, not on the way out. Yes, I know you think you are going to hold onto your blue-chips from now until the day you die. Just keep in mind that if you take a 20% hit to your investment and the stock price fails to recover it is going to take years for those dividend payments to get you back to even. The bottom line is to go after total returns, not just dividend returns. Should you ever have to sell one of your holdings because it no longer has a place in your portfolio doesn't it make sense to set the conditions to ensure you do so for a profit instead of a loss?

Next up is Walgreens, which is one of the more recent additions to my portfolio:

Source: StockCharts.com

That jump up in July of this year was in response to the signing of a multi-year deal with Express Scripts. Notice how it pulled the stock price out of its decline and pushed it back above its 50-day moving average (blue line)? Also notice how the 50-day is fixing to cross above the 200-day moving average (red line)? Both the price action and the work I have done on placing a fair valuation for the stock is telling me now is not the time to buy if you are aiming for purchasing dividend stocks when they are under-valued.

Last up is Applied Materials:

Source: StockCharts.com

From the company website:

Applied Materials, Inc. is the global leader in providing innovative equipment, services and software to enable the manufacture of advanced semiconductor, flat panel display and solar photovoltaic products.

In other words the company has its hands in smartphones, flat screen TVs, and solar panels. The stock had a rough year in 2011, perhaps you're research this weekend will show that there is plenty of upside waiting to be taken advantage of.

As always, screens are just a starting point. You might dig deeper into these three companies and find that none of them meet your investment criteria at this time. That's fine, sometimes the best action is no action at all.

On the other hand if you find that one of three is currently trading at a price that provides you with a significant margin of safety then go ahead and back up the truck.

Related Post: Understanding Return on Equity
Related Post: How To Use A Margin Of Safety
Related Post: What Can Dividend Investors Learn From CANSLIM?
Related Post: Yield On Cost Is A Waste Of Time

Looking for more financial advice but getting tired of me going on and on about dividend stocks all the time? Head on over to 6400personalfinance.com and follow me on Twitter @6400PF for a broader approach to building your net worth.

Do You Buy Low?

2012-08-01T20:31:00.000-10:00

In the spirit of all of the analysis I have been doing on my stock purchases (and sales) from the past couple of years I wanted to broaden the scope a little bit to see how well I did at actually buying when the market as a whole was at a low point. You may have heard the axiom that a stock's price activity owes 50% of its action to the market as a whole. I'll let you debate the math on that one however as a general rule big days for the general market do a pretty good job of spreading the green while the big down days distribute the red far and wide. So let's do some quick analysis (okay, I'm just throwing some color onto a chart) and see how well/poorly I've done.

At first glance results are mixed: I've bought when the market is low and when it is high. I transitioned the portfolio from growth stocks into dividend stocks in August of 2011 which is why that circled area is purple (both buying and selling occurred). Here is a quick explanation of each numbered item (circles cover multiple days or even weeks of buying while dots indicate one or two day concentrated buying periods):

1: Bought Ford, Dolby, and Interdigital from March 10 through March 28.
2: Three separate buys of Ford (this play did not work out well for me) in June.
3: Beginning of August: Cleared out the growth stocks and added to Coke position.
4: Late August/Beginning September: Bought AT&T, Hawkins, Kimberly-Clark, Waste Management, Aflac, Intel, Microsoft, and Wal-Mart.
5: End September/Beginning October: Exited Ford and Apple, bought Altria, Johnson & Johnson, Medtronic, McDonald's, Pepsi, and Phillip Morris.
6: October 17-19- Bought ConocoPhillips, Leggett & Platt, and Abbott Labs.
7: November 22- Bought Medtronic.
8: December 28- Bought Illinois Tool Works.
9: January 19- Bought Leggett & Platt and Medtronic.
10: April 18- Bought Aflac, Intel, and Leggett & Platt.
11: May 17-22- Bought Aflac, Air Products and Chemicals, Johnson & Johnson, Leggett & Platt, AT&T, Altria, ConocoPhillips, Procter & Gamble, and Chevron.
12: June 7-28 - Bought ConocoPhillips, Emerson Electric, Guess, McDonald's, and Walgreens.

On the plus side some of my heaviest buying did actually occur at market bottoms (points 3,4,5, and 11) while on the other hand some occurred at market highs. Part of this is because in addition to seeking out undervalued stocks I also attempt to buy fairly regularly. If an opportunity just isn't there during a given month I won't force the issue but if one stock out of thirty on the watchlist is trading at a discount I'm inclined to buy it.

So what are the takeaways from this? Based on how the individual stocks have done after I bought them it clearly makes the most sense to make the purchases both when the stock is undervalued and when the market has taken a dive.

Yeah, duh, I know.

Looking for more financial advice but getting tired of me going on and on about dividend stocks all the time? Head on over to 6400personalfinance.com and follow me on Twitter @6400PF for a broader approach to building your net worth.

Monday Blog Roundup: July 30th, 2012

2012-07-29T21:05:00.001-10:00

Friday was a big day for the markets as everybody got excited that the Europeans are thinking and talking about getting their act together. It wasn't market manipulation at all, nope, not one bit. I'm calling this an uptrend under pressure and waiting for the top to come (and buying opportunities to emerge).

Here is what some of the other dividend bloggers are saying:

Dividend Growth Stocks took a look at Brady Corp and was less than impressed with the size of its dividend increases.

Dividend Monk ran an analysis on Republic Services, Waste Management's biggest competitor, and found its current valuation to be reasonable if you are okay with a sub-10% return.

Finally Barel Karsan brings up another flag that investors should pay attention to: auditor changes.

Some links from my other piece of the Internet at 6400 Personal Finance:

Why Aren't You In Shape Yet?

Carnival of Financial Discipline: 'Merica! Edition

Amazon Prime: Worth $79 A Year?

Looking for more financial advice but getting tired of me going on and on about dividend stocks all the time? Head on over to 6400personalfinance.com and follow me on Twitter @6400PF for a broader approach to building your net worth.

Garmin (GRMN): A Humbling Experience

2012-07-27T06:09:00.001-10:00

Every investor who seeks capital gains is going to make a bad trade from time to time. Whether the market disagreed with your analysis of a company's fundamentals or you misread the same company's competitive advantage in its industry at some point you are going to make a mistake. All you can do at that point is cut your loss short, learn your lesson, and move on.

On the other hand sometimes the mistake is not trusting your own work. When I bought Garmin back in October of 2010 it was based on its strong margins and cash flow growth rates. Sure it was going to get hit hard by free car navigation apps on smartphones but it still had other revenue streams (ie marine navigation). At the time I told myself that the timeline on this investment would be three-years (it also paid a decent dividend, and still does).

Just over one-year later it was trading about 10% below my purchase price (the chart below is misleading because my market order purchase got me in at a high point during that trading day). The dividend clearly did not offset that and so the shares were sold to free up cash for other investments. I gave in to the thesis that standalone GPS devices were doomed and gave up on Garmin entirely.

Just over a month later the stock went on a tear that recorded a 40% gain in about four months. Oops.

If I had held the stock my plan would have been to let it ride up to a 20% gain, re-evaluate, and then if conditions were still good I would have let it keep running until I determined it was nearing a top.

That grand plan was all for naught though because my 36-month timeline got condensed to 13-months simply because I lacked patience. Does this mean that in a similar situation today that I would hold on to that 10% loss? As always it depends on the particular situation. The main lesson to be drawn from this is that if your investing thesis is based on a three-year timeframe then give the stock that time to make its move provided that no major negative events that alter the underlying consistency of your thesis occur.

Source: BigCharts

Have a good weekend and try not to do anything too stupid.

Related Post: Interdigital (IDCC): One Year Later
Related Post: Abbott Labs Is Breaking Up
Related Post: Two Different Ways To Spend $4,000-$6,000
Related Post: How To Use A Margin Of Safety

Looking for more financial advice but getting tired of me going on and on about dividend stocks all the time? Head on over to 6400personalfinance.com and follow me on Twitter @6400PF for a broader approach to building your net worth.

What Can Dividend Investors Learn From CANSLIM?

2012-07-24T21:29:00.000-10:00

It's easy to poke fun at dividend investors.

To the outside world we appear boring, risk-averse, and miserly. Perhaps even a little stubborn ("No dividend? Not interested!").

I don't think that the stereotype is deserved.

Perhaps I should distinguish right off the bat the difference between "dividend investors" and "dividend growth investors." Dividend investors are essentially dividend whores: they'll take from anybody as long as the yield is high enough. If the yield is over 10% they are all over it as long as the stock can maintain its price long enough to get them to the payout date. Dividend growth investors, on the other hand, are looking for a more long-term relationship. The yields will be lower but the payouts are reliable and growing on an annual basis.

As far as risk-averse well yeah, a little bit. The mission of a dividend growth portfolio is to serve as a source of income, therefore there is a built in bias towards purchasing stocks with reliable dividend records and protection for the dividend moving forward. To go after dividends that are highly likely to be cut or frozen in an income portfolio would be extremely counter-productive.

Regarding the price of the stock I'll grant that some less than sophisticated income investors will pursue a "yield at any price" approach that significantly impairs their portfolio's returns. On the other hand you have excellent examples of how to not just analyze the fundamentals of dividend stocks but also to evaluate their value such as Dividend Monk, Dividend Growth Investor, and Dividend Growth Stocks. They all understand that in addition to finding dividends that meet their income requirements that the price at which that income is purchased matters. If XYZ company is worth $100/share and pays out $3 a share it will yield 3% at its fair value. If you purchase it at $90/share you are doing so in the expectation of earning a 10% capital gain AND the $3.00 dividend. On the other hand if you purchase it at $110 that $3.00 dividend is not going to cover your expected 10% capital loss. Price matters.

I've hit repeatedly on the importance of buying dividend stocks when they are undervalued, that is a given. However with this type of strategy is there room for the method advocated by William J. O'Neil, one of the legendary market timers, chartists, and momentum stock buyers?

I think there is.

Of the seven principles of CANSLIM (buy the book to learn the system) the one I want to muse about for a minute is the "M": Market Direction. O'Neil's argument, supported by many most likely selectively chosen charts is that by watching the price and volume action for the major indexes (S&P 500, Dow Jones Industrials, NASDAQ, and the NYSE Composite) that you can identify trends indicating a market top or market bottom in time to react accordingly.

Now how relevant is this to dividend growth investors who measure time in terms of decades? Its easy to think that if you plan on riding Coca-Cola into retirement that bull and bear markets that last months at a time are just bumps in the road for you. That is fine, but it's not great. Great is maximizing your total returns, not just your returns from dividends, and that means getting in at the right time and right price.

Yes, I just alluded to market timing. The assumption I am working under here is that O'Neil's system that identifies tops and bottoms over a course of weeks is more reliable than systems that try to make calls based on intra-day action.

Here is what I am proposing: to maximize your returns you want to make your purchases not just when your choice of a stock is undervalued but also when the market as a whole is undervalued. Did you ever notice how when the DJIA is up 100 points in a given day that the market heatmaps are green across the board while on down days they are uniformly red? Like it or not the market is composed of individual stocks that tend to, in general, move together. Certain sectors may out-perform or under-perform on any given day but overall they tend to stumble in the same general direction. By getting into your stock when both it AND the market are trading low you set yourself up to ride the stock's capital gains with the knowledge that its rise is supported by market action as a whole.

I don't think CANSLIMers have much to learn from dividend investors (or rather they wouldn't want to) but the system does have some nuggets in it that income investors could use to boost their profits. Remember you have no obligation, either legal or ethical, to hold yourself to a rigid investing system. It is perfectly okay to look over at those momentum traders and steal their good ideas if it will contribute to the achievement of your long-term goals. In the end the only person you have to answer to is yourself. That being the case, are you doing everything you can to build your wealth?

Looking for more financial advice but getting tired of me going on and on about dividend stocks all the time? Head on over to 6400personalfinance.com and follow me on Twitter @6400PF for a broader approach to building your net worth.

Monday Blog Roundup: July 23rd, 2012

2012-07-22T10:32:00.000-10:00

Earnings season is here which would normally mean that I would be looking for buying opportunities as the market over-reacts to less than awesome news in the 10-Qs. This time I am settling for placing some limit orders and letting the micro and macroeconomic forces do their thing.

Dividend Monk continues to put in the time required to do a thorough analysis of dividend stocks, this time he zeroed in on Coke's (KO) arch-rival Pepsico (PEP) in Pepsico: Estimated to Offer 9% Rate of Return. Well, half arch-rival, because almost 50% of PEP's business comes from snacks. I'm long both with a preference for Big Red, DM is long KO.

D4L at Dividend Growth Stocks looks at one of my smaller holdings in Air Products and Chemicals Inc. (APD) Dividend Stock Analysis and is turned off by the free cash flow payout percentage.

Dividend Growth Investor took a look at a company with a positively Lynchian boring name over on DivNet with Genuine Parts Company (GPC) Stock Analysis.

Here are some of the latest pieces from my other venture over at 6400 Personal Finance:

Know When To Say "No": A lesson in discretion as applied to P2P lending.

Dear USAA: Thanks, But No Thanks: Always run the numbers no matter how generous you think a company is being when they offer you a deal.

Carnival of Financial Independence: Sequel Edition : Starting this week the carnival will now be known as the Carnival of Financial Discipline. This most recent edition included two new features: the Ugly Ducking Of The Week and the $0 Workout Of The Week.

Looking for more financial advice but getting tired of me going on and on about dividend stocks all the time? Head on over to 6400personalfinance.com and follow me on Twitter @6400PF for a broader approach to building your net worth.

Got a recent piece of your own writing that focuses on wealth building? Submit it to the Carnival of Financial Discipline.

Johnson & Johnson (JNJ): Almost Three Years Later

2012-07-20T07:00:00.000-10:00

When compared to my brief involvement with Interdigital my investing experience with Johnson & Johnson (JNJ) has been extremely mundane. Aside from having the unique honor of being the only stock in my portfolio at this time to have been acquired, dumped, and then bought again there is really nothing special to say here.

I originally bought my first position in JNJ in September of 2009, about 2 minutes after closing my purchase for Coca-Cola (KO) (first stock purchase I ever made). At the time I was thinking that these two stocks could be the long-term bedrocks of whatever my portfolio turned into. KO became exactly that while JNJ....eh.

This is no fault of JNJ. Yes they've had some bad press more regularly than I would like in terms of recalls and such but in terms of being an investment you can't knock their stability. In fact the stock was so stable that when I went through my "100% growth stock" phase at the end of 2010 this dividend monster got the boot so I could free up cash to buy exciting stocks like...Interdigital...which actually worked out because I made a significant profit off of Interdigital.

You read that correctly: I understand that capital gains are important for wealth building (gasp). If you are so narrow-minded in your investing approach that you only try to make money one particular way then you are leaving money on the table. That is not smart.

Back to the story: I deployed, did some reading, and decided to take the mountain of cash that the taxpayers were giving me in return for getting shot at to build a portfolio that could generate income on its own through dividends instead of through me working to earn some capital gains (most of the time at least). It was due to this new strategy that JNJ was permitted to receive my investment dollars once more. When the price remained stable (and still undervalued) over the next few months I added to the position just before the stock broke out. Whether it keeps flirting with $70 or not is of little interest to me: I'm in it for the dividends. As long as JNJ doesn't try to throw a giant capital loss in my face then I am perfectly content to collect its growing dividend payments from now until I retire early, rich, and young. If it quintuples in price then I'll take that too (and look to take the capital gains and invest them in some other undervalued dividend stock).

For those of you who like pictures (meaning me), here is the four-year play-by-play in chart form:

Source: Big Charts

Have a good weekend and try to tune out all the noise coming from CNBC as earnings season heats up.

Interdigital (IDCC): One Year Later

2012-07-18T20:53:00.003-10:00

Investing is about building future wealth but learning tends to have a rearward facing bias. Today I contribute to that with a look back at my brief roller-coaster ride with Interdigital (IDCC). The play-by-play of the experience with that stock can be read here.

The short version of the story is displayed by this chart:

The price spike was driven by rumors of a bidding war involving Google while the sudden drop-off was fueled by rumors of Google leaning toward picking up Motorola Mobility instead. As you can see in the year since I made my exit the market has lost its love for IDCC's patent portfolio.

As a brief aside I should mention that IDCC paid out its dividend in between the first and second sales that I executed. Like an idiot I had not changed the default option from "automatically reinvest" to "invest in core account" and as such I was able to add to my position in IDCC just as I was trying to get out of it. Not to mention that the stock was way overvalued at that point and not worth buying.

Did I make the right call? The chart would say yes, I got out with a big profit instead of a 30% or so loss. More importantly I got out of an investment that I was no longer comfortable with. Preserving wealth is good, building it is better, and both are infinitely better than losing money.

Related Post: How Interdigital Kept Me Up At Night
Related Post: How Did Your Portfolio Do During The Correction?
Related Post: Manually Reinvest Your Dividends
Related Post: Do You Know What You Are Investing In?

Looking for more financial advice but getting tired of me going on and on about dividend stocks all the time? Head on over to 6400personalfinance.com and follow me on Twitter @6400PF for a broader approach to building your net worth.

Article Postponed

2012-07-18T04:00:00.000-10:00

Wednesday's post is going to be postponed till Thursday due to me spending 15 hours at work today and frankly preferring food, time with my girlfriend and rest over editing a post. You should still head on over to 6400personalfinance.com and follow me on Twitter @6400PF for a broader approach to building your net worth though.

Monday Blog Roundup: July 16th, 2012

2012-07-15T14:48:00.000-10:00

Short roundup this week, here we go:

Andrew Martin wrote a guest post over at Dividend Ninja about dividend tech stocks entitled, surprise, Dividend Paying Tech Companies. This is a sector to keep on eye on moving forward as far as dividend increases are concerned.

D4L at Dividend Growth Stocks provides a real-world example of how to decide when to cut loose a dividend stock from your portfolio in What To Do When A Stock Fails To Raise Its Dividend.

This week's stock analysis nod goes to Dividend Growth Investor for United Technologies (UTX) Dividend Stock Analysis.

Here are the highlights from 6400 Personal Finance from last week:

Broken Stocks And Broken Companies: Part I and Part II. Know the difference between a cheap stock and a poor business.

Carnival of Financial Independence: Inaugural Edition : The first of many. If your writing has the chops go ahead and submit it, find the instructions here.

And we're done. Follow me on Twitter @6400PF and check back in on Wednesday for some original writing from your humble blogger.

Dividend News

2012-07-13T18:10:00.001-10:00

As an investor who looks for stable companies with reliable dividend payouts I don't need to stay on top of the hour-by-hour events that influence more short-term focused traders. Even so it is good to know what the companies in your portfolio are doing in order to take advantage of potential buying opportunities as well as being aware of the signs of a looming dividend freeze or cut. Here are stories I found that related to the companies in my portfolio this week:

Abbott Laboratories (ABT): Abbott Laboratories Introduces One-Lab, a Novel...Platform
Aflac (AFL): Nothing major found.
Air Products & Chemicals (APD): Nothing major found.
Conoco-Phillips (COP): Conoco-Phillips Announces Quarterly Dividend
Chevron (CVX): Chevron sees stronger refining, marketing results
Emerson Electric (EMR): Emerson Automates Jubilant Life Sciences Plants In India
Guess (GES): Nothing major found.
Hawkins (HWKN): Nothing major found.
Intel (INTC): PC Sales Stall Despite Push to Ultrabooks
Illinois Tool Works (ITW): Nothing major found.
Johnson & Johnson (JNJ): J&J to tighten up oversight in wake of recalls, lawsuits
Kimberly Clark (KMB): Nothing major found.
Coca-Cola (KO): Coca-Cole eyes Myanmar, no immediate prospects
Leggett & Platt (LEG): Nothing major found.
McDonalds (MCD): McDonald's is Betting on Lower Cost Chicken as Economic Growth Stalls
Medtronic (MDT): FDA Expands Clearance of Medtronic Implants for the Treatment of Snoring
Altria (MO): Nothing major found.
Microsoft (MSFT): Microsoft Says It's A PC+ Era, "Apple Has It Wrong"
PepsiCo (PEP): Pepsi Adapts to Chinese Snack Tastes
Procter & Gamble (PG): Activist Investor Ackman Buys Into Procter & Gamble
Phillip Morris International (PM): Nothing major found.
Phillips 66 (PSX): Buffett Says Berkshire Has Invested in Phillips 66
AT&T (T): AT&T Reaches Union Pact With 7,000 Wireline Workers
Walgreens (WAG): Walgreens Names Former McDonald's CEO Skinner As Chairman
Waste Management (WM): Nothing major found.
Wal-Mart (WMT): Wal-Mart Stores On Hiring Drive

Looking for more financial advice but getting tired of me going on and on about dividend stocks all the time? Head on over to 6400personalfinance.com and follow me on Twitter @6400PF for a broader approach to building your net worth.

Yield On Cost Is A Waste Of Time

2012-07-10T21:38:00.003-10:00

During the short existence of this small blog I have written on numerous occasions about the criteria I look for when searching for dividend growth stocks to invest in. I have also written about the importance of not basing your investment decisions on a single metric by itself. That last part should be obvious to experienced investors but for the novices out there you need to squash that little voice inside of you that says "ooh, shiny!" whenever you see a 10% yield or higher yield. We have also looked at dividend growth rates and how they really are the driving force behind the income machine that is your dividend growth stock portfolio (I am seriously considering just saying DGS all the time in place of "dividend growth stock", writing that phrase out just looks like a bad attempt at SEO doesn't it?). What we haven't touched on yet are numbers that you can afford to ignore.

Yield on cost is one of those metrics that can turn the generally boring world of dividend investing into something that is mildly entertaining...for about five minutes. Seriously, the beauty of dividend gro...screw it, DGS investing is that it is boring. You might get a rush when you see one of your watch list companies head into undervalued territory and as you submit your buy order but other than that its pretty mundane. Dividends come in every quarter and get re-invested, ho hum, we can all be rich in 30 years. In the meantime though lets make like a teen sitcom and argue about a metric that represents absolutely nothing useful.

Seriously, lets argue about it. Controversy drives ratings right?

Here is the breakdown. Yield on cost is calculated by dividing the current annualized dividend of a stock by the average cost basis of your purchases. Simple math right? Except that it doesn't provide you any meaningful information unless you want a big number to look at in a decade or two from now so you can pat yourself on the back. You can probably tell without me providing a table filled with numbers that if the stock you bought continues to raise its dividend on an annual basis (and at a faster rate than any additional accumulation of shares increases your cost basis) that your yield on cost will rise. Since this is the most likely scenario with any dividend growth stock any decent selections on your part will have impressive looking yields on cost twenty years down the line.

Except that twenty years from now you won't care about yield on costs. You are going to care about your income.

I've written about investing goals a lot: when have I ever defined my long-term goals in terms of percentages? Answer: never. When you try to define what financial independence means to you is it increasing your current dividend income by 530%? Or is it having a certain dollar amount spun off from your portfolio every quarter (with zero effort expended on your part) that covers your expenses and allows you do what you want?

Yield on cost is a backwards looking performance metric that is out of place when applied to portfolios that are oriented around generating cash that will sustain your current and future lifestyle. Don't waste your time on it.

If you can convince me that I am wrong I will write a post next week admitting the error of my ways. Any takers?

Related Post: Dividend Yield vs Dividend Growth
Related Post: Understanding Return on Equity
Related Post: What Is A Dividend?
Related Post: How To Use A Margin Of Safety

Looking for more financial advice but getting tired of me going on and on about dividend stocks all the time? Head on over to 6400personalfinance.com and follow me on Twitter @6400PF for a broader approach to building your net worth.

Monday Blog Roundup: July 9th, 2012

2012-07-08T14:35:00.001-10:00

Yep, back on schedule with the roundup after last week's snafu. In case you haven't heard I have started up a new carnival over at 6400 Personal Finance. Its small, its picky, and it needs submissions so I don't spend hours reading drivel trying to find some quality writing every week. Click here if you are interested.

Speaking of lots of reading here are some solid posts that I pulled from the sites of my fellow dividend stock bloggers:

Dividend Growth Investor runs an analysis on the blue-chip that gave us the Post-It in 3M Company (MMM) Dividend Stock Analysis.

Mike at the Dividend Guy goes for a takedown of the "100-your age" asset allocation rule of thumb in Investing Myth: 3 Reasons Why Age Doesn't Matter When Investing.

Dividend Monk looks overseas again in search of dividends, this time ending up in Switzerland for Novartis: Strong Stock.

D4L at Dividend Growth Stocks likes what he sees valuation wise in ConcoPhillips Co. (COP) Dividend Stock Analysis.

Over at 6400 Personal Finance I wrote the following three articles last week:

Gas Buddy Isn't Your Buddy: How big of a spread between gas prices is needed to make going out of your way for cheaper gas worth your time?

Be Your Own Bank: My entry into the world of P2P lending.

Help Me Find Money: I'm tired of folks thinking they can get rich by saving nickels and dimes. Its time to start thinking big.

That completes the roundup, come back on Wednesday for an original article here and check out 6400 Personal Finance throughout the week for additional content. If you want to submit your article to the Carnival of Financial Independence check out the rules page either here or here and send it in.

Looking for more financial advice but getting tired of me going on and on about dividend stocks all the time? Head on over to 6400personalfinance.com and follow me on Twitter @6400PF for a broader approach to building your net worth.

Can I Meet My Dividend Income Goal?

2012-07-06T05:59:00.000-10:00

As I have mentioned a couple of times this year I revised my dividend income goal from $1,000 up to $1,500 a few months ago. I did this because it became clear that the $1,000 goal would be easily achieved and I wanted to test myself by setting the goal at a level that would take some work. Now I could just take a pile of cash right now, dump it on a basket of stocks yielding 4%, and be good to go however such an approach would not provide long-term income security.

The challenge I am holding myself to is to reach the $1,500 dividend income goal by December 31st, 2012 while at the same time restricting my purchases to stocks that have the potential to provide increasing dividend payments for years into the future. I am not interested in buying high-yielding stocks that are only high-yielding right now because they are temporarily flush with cash. Such stocks do not offer "safe" dividends and thus will hinder your attempts to build a reliable stream of passive income.

In the quarterly breakdown of how the Perpetual Income Generator (PIG) portfolio did last quarter I showed that the accumulated dividends at this point in the year are below the $750 mark that would indicate that I am on pace to hit $1,500 for the year. However the portfolio as it stands now is set up to produce a little more than $1,780 in dividends on an annualized basis. Why the discrepancy? It is because some of my purchases last quarter were made after the record date for some of the stocks so I was not qualified to receive the dividend payments. That will change this quarter so I am projecting a minimum dividend income of about $445 for Quarter 3, 2012. This will leave me $510 short of my goal going into Quarter 4. In order to hit my yearly target I am projecting that I will need to invest enough additional cash to produce another $70 in dividend income.

To get that extra $70 bucks (lets break it down to $35 per remaining quarter) I need to find stocks with dividends that will pay $140 on an annual basis. Using a standard portfolio yield of 3.5% we get the nice round number of $4,000 as the required contribution. Next week we will go over a screen that could potentially turn up the 2-4 stocks that can provide this income for the portfolio. It might also happen that no stocks are out there that present buying opportunities right now and I'll just have to miss my goal by $70. If that happens that is fine: goals are useful when investing however you should never force yourself into a less than ideal investment simply to meet an arbitrarily determined income number.

For you number crunchers out there here is a more detailed breakdown of the PIG than is available on the Portfolio Holdings tab. Annualized dividends per share are included along with each stock's contribution to my dividend income compared to its weight in the portfolio. My ultimate goal is to build a portfolio where no one stock has more than a 2%-3% share of my dividend income.

Company	Annual Div	Income Weight	Portfolio Weight
KO	$2.04	7.44%	9.44%
LEG	$1.12	11.74%	7.31%
MDT	$1.04	5.02%	6.19%
JNJ	$2.44	6.57%	6.02%
AFL	$1.32	5.48%	5.89%
COP	$2.64	7.99%	5.59%
MO	$1.64	6.53%	4.59%
T	$1.76	6.41%	4.32%
INTC	$0.84	4.05%	4.25%
WM	$1.42	5.10%	3.96%
MCD	$2.80	3.77%	3.91%
WAG	$1.10	4.19%	3.69%
PM	$3.08	2.76%	2.65%
WMT	$1.59	1.78%	2.61%
KMB	$2.96	2.66%	2.48%
MSFT	$0.80	1.79%	2.27%
ABT	$2.04	2.17%	2.26%
GES	$0.80	1.79%	2.20%
HWKN	$0.64	1.08%	2.20%
ITW	$1.44	1.78%	2.13%
PEP	$2.15	1.93%	2.09%
CVX	$3.60	2.02%	1.97%
EMR	$1.60	2.06%	1.92%
APD	$2.56	1.87%	1.91%
PG	$2.25	2.02%	1.80%
PSX	$0.00	0.00%	0.44%
CASH			5.92%

Related Post: Quarter 2, 2012: Net Worth Analysis
Related Post: Pay Your Expenses With Dividends
Related Post: Pay Your Expenses With Dividends (Update)
Related Post: Dividend Yield vs Dividend Growth

Looking for more financial advice but getting tired of me going on and on about dividend stocks all the time? Head on over to 6400personalfinance.com and follow me on Twitter @6400PF for a broader approach to building your net worth.

Wednesday Blog Roundup: July 4th, 2012

2012-07-02T03:00:00.000-10:00

Events precluded this going up on Monday, of course this makes the posts linked to no less worthy. Original content will be back on Friday. In the meantime enjoy Independence Day.

The S&P 500 closed out the quarter with a bang on Friday (window-dressing anyone?). I doubt anyone but the most optimistic bull thinks that this summer is going to be a rough one for equities. For long-term investors that is your cue to build up your cash pile and be on the hunt for consistent dividend payers that could see their stock prices drop below fair value.

Here are some solid posts from around the dividend stock blogosphere:

Dividend Growth Investor breaks down his time commitment to researching and watching his investments in How long does it take to manage a dividend portfolio?

Mike at The Dividend Guy looks at a new crop of dividend payers in Techno Stocks, The Future of Dividends?

Dividend Monk goes offshore in Vodafone Looks to be a Decent Buy.

To bring it home here's my work from this week over at 6400 Personal Finance:

Forget "The Market", Just Make Money: Don't aim to lose less than the next guy, aim to build your wealth quarter over quarter and year over year.

Offense And Defense: Direct your efforts to activities that will get you the best returns for your invested time.

Buy A Power Cage: Sometimes the best investment is in yourself.

Looking for more financial advice but getting tired of me going on and on about dividend stocks all the time? Head on over to 6400personalfinance.com and follow me on Twitter @6400PF for a broader approach to building your net worth.

Quarter 2, 2012: Net Worth Analysis

2012-06-29T11:55:00.001-10:00

Another quarter has come to an end and that means its time to figure out if I am still making money. This quarter included a lot of changes for me both in terms of lifestyle and finances so I'm going to throw an asterisk next to the net worth numbers as I establish a new basis in a non-deployed environment. I am now on the hook for taxes, rent, utilities, etc... again and no longer receive the extra pay that comes from being in a combat zone. On the flip side I did pick up a raise at the beginning of June which offsets some of those paycheck losses a bit. In April I set my goal net worth increase at 10% so lets see how I did.

First, the dividend growth portfolio. In absolute value it increased over 25% from last quarter as I poured in additional contributions as the market declined. In terms of dividend payments for the year I am behind where I want to be in order to hit my $1,500 goal for the year. This is a bit of a lagging indicator as some of the lots that I acquired in the last quarter will not pay me dividends till the next quarter. I also have cash sitting on the sidelines as well as regular contributions flowing to the portfolio every month so I still think I have a legitimate shot at hitting my goal for dividend income.

Changes to the portfolio over the last quarter include the following:

New Buys:

Air Products & Chemical (APD)

Procter & Gamble (PG)

Chevron (CVX)

Emerson Electric (EMR)

Guess (GES)

Walgreens (WAG)

Increased Positions:

Aflac (AFL)

Intel (INTC)

Leggett & Platt (LEG)

Johnson & Johnson (JNJ)

Conoco-Phillips (COP)

Altria (MO), AT&T (T)

McDonald's (MCD)

Sold:

Coca-Cola (KO, sold half my shares to free up cash and reduce its weight in the portfolio)

2012 Dividend Tracker (Goal is $1500)
2011 Dividend Income	$307.90

Quarter 1, 2012 Income	$211.23
Quarter 1 (April 1 – June 30)
Company	Dividend Payout
Coca-Cola (April 1^st)	$66.37
Kimberly Clark (April 3^rd	$11.95
WalMart (April 4^th)	$8.00
Hawkins (April 6^th)	$9.70
Illinois Tool Works (April 10^th)	$7.98
Altria (April 10^th)	$16.22
Phillip Morris Intl (April 12^th)	$12.44
Leggett & Platt (April 13^th)	$25.92
Medtronic (April 27^th	$21.00
AT&T (May 1^st	$15.63
Abbott Laboratories (May 15^th	$9.69
Aflac (June 1^st)	$16.57
Conoco-Phillips (June 1^st)	$22.54
Intel (June 1^st)	$18.15
Johnson & Johnson (June 12^th)	$29.45
McDonald’s (June 15^th)	$8.46
Waste Management (June 22^nd)	$22.96
Pepsi (June 29^th)	$8.67
QUARTER TOTAL	$331.70

Year To Date Total	$542.93
36% of Goal

I came up short on achieving a 10% net worth increase over the last quarter. Instead I clocked in at a 5.5% gain which is okay given the number of one-time events factoring into it. The major one was re-establishing myself here in Hawaii and then hosting my family as they came out here to visit for a week. I put it all on credit (paid off at the end of the month of course) but had to scale back my investing for a month in order to continue to operate completely out of my checking account. With that in the rear-view mirror and life settling into a routine I am prepared again to set 10% as the target with a deadline of October 1st.

You'll notice below major switches in my allocation of straight cash and investments. I had a large pile of cash sitting in savings accounts that I elected to move into a conservative index fund portfolio. The money is not earmarked for anything that will be purchased within the next 3-5 years so I elected to get some return off of it in excess of the 0.80% that ING offered.

ASSETS
Cash	$9,785 (-83.4%)
Taxable Investments	$100,652(+130.8%)
Roth IRAs	$22,796 (+3.3%)
*Total Assets*	$133,233 (+6.8%)
PERSONAL NET WORTH
131,534.41 (+5.5%)

That does it for this quarter. By October 1st I want net worth to increase by 10% and my dividend payments to accelerate to a pace that will get me to $1,500 by December 31st. Check back in in three months to see if I can pull it off.

Looking for more financial advice but getting tired of me going on and on about dividend stocks all the time? Head on over to 6400personalfinance.com and follow me on Twitter @6400PF for a broader approach to building your net worth.