Friday, June 24, 2016

So This is Brexit...

So along with many of you, I heard the name "Brexit" many times over the last month or so. For the longest time, though I let it go in one ear and out the other. I didn't even know what Brexit was. Then a few weeks ago I decided to do what we all do now, when we want to learn more about a subject: Google It. In my search, I came upon the explanation that simply, it was the upcoming vote on whether the UK will leave the European Union.

Personally, I'd rather the news outlets just say that instead of coming up with some cute word combination/buzzword, but whatever, we're already here. So after learning about it, and enduring the onslaught of speculation of all the news outlets, it seemed to be something that would be a tremendous waste of energy to continue worrying about, going through all the scenarios with the vote not even happening yet. By the way, I am not a big fan of extensive worrying about things you cannot control. So after a few segments on Brexit before the vote, I already had my fill of journalistic speculation. I'm also not a big fan of speculation, as I have come to realize that when the experts speculate, it turns out that most times they know just about as much as I do, very little.

So fast forward to this morning. I went to bed, believing the reports that the UK would probably remain in the EU. I woke up, checking my phone only to find out that David Cameron was resigning, and that the UK was indeed leaving the union. Next I checked my Seeking Alpha app, to see what was happening pre-market. Knowing the result of the vote, I wasn't really surprised that the pre-market prices were on the downside. However, the fact that they were down by so much was a bit of a surprise. So I figured, today must be a great day to buy! Let me get my watchlist ready!

A couple problems with this exuberance:

  • Cash on Hand - My monthly bills are rather imbalanced. The majority of what needs to be paid comes in the second half of the month. So the majority of my savings to go into the market comes in the first half of the month. Also, I had not been stockpiling cash for this event as others have, so there isn't a whole lot to go shopping with. Lesson learned.

  • My Watchlist Bargains Were Very Few - I keep a watchlist of stocks I want to buy, but I also pay attention to valuations, and I have computed target prices where I would pull the trigger and buy if the opportunities presented themselves. Shockingly, very few came within my target price. I counted 2 companies: Polaris (PII) and Cummins (CMI). That's 2 companies out of the 60 plus companies on my watch list. Cummins ranks higher on my list, but I believe it is likely to go lower, so I am waiting. Polaris, I really have not done a lot of research on, and was not ready to go whole hog on it right now. Target (TGT) did get close, but not quite at the "target" price I wanted. Interestingly I read something today where even given the nosedive of many stocks today, when compared to where they were at the beginning of the week, it was not that much of a dropoff. It is more like we are just reversing the exuberance of the last few days when most thought Brexit would not succeed.

I think the largest opportunities today would be had with bank stocks. This is great, but I am admittedly skiddish to pull the trigger on any big bank stocks, mainly due to the fact that at any financial crisis, they tend to be front and center, and with the consensus being that we are nearing the end of a bull market, I don't want to test that theory. If you held a gun to my head, and told me that I must invest in a bank stock to save my life, I'd probably go with Wells Fargo (WFC). My portfolio at the moment does lack some financial representation, but I would prefer to satisfy that with something in the insurance space, rather than banking. Aflac (AFL), I need you to come down a bit more for me! 

So although I was all excited to jump in today on the news, when I examined it a little more carefully, it was not quite the right time for me to jump in, given the cash available, and the valuations of the stocks on my watch list. I could have broken from my plan, and bought something by shifting some money around (thereby lowering my emergency fund amount) or reaching for stocks at still not-so-good valuations, but I decided to hold off, and follow my plan. I hear bad things happen when go off-course from your plan in this endeavor, as with many other things. So I shall wait, gather more cash, and wait for more opportunities down the line. 

Did any of you go shopping today, because of the effects of Brexit? Let me know what you bought in the comments!

Wednesday, June 22, 2016

Recent Buys - June 16, 2016

I'm still a relative newbie to Dividend Growth Investing, so I'm all about accumulating shares in great companies now to reap the benefits in the future. I have been using my Robinhood account to take advantage of commission-free trades over the past few months, depositing a weekly surplus and making purchases. I also have a higher cost brokerage account and Roth IRA account elsewhere, so my game plan at the moment is fund the Roth IRA as well as the Robinhood account.

My most recent buys were pretty small, but mainly because a majority of my savings are going to the Roth IRA account until I reach the $5500 maximum contribution for 2016. Currently half of my savings go to the Roth, a quarter goes to the Robinhood, and the remaining quarter goes to my online savings account. Anyways, on to the buys!

Cardinal Health (CAH) has been a company I have been eyeing as they are in the Healthcare space, and have been growing their dividend at a substantial pace. with their latest dividend announcement, the yield starting at their next dividend payout will go up to 2.3%. Also in addition to growing their dividend, EPS is projected to grow over the next 5 years a little over 10% annually. I think that is a nice balance between dividend payout and growth. Also, it appears to be undervalued at the moment, as I have seen fair values estimated anywhere between $90 and $100. CAH is currently trading under $80/share.

Abbott Labs (ABT) is another in Healthcare, that I have been buying. I like that they are into various aspects of healthcare from nutrition, to medical devices, and they have worldwide exposure. The price at the moment is depressed, over lingering fears about the impact of their latest acquisitions, Alere, and St. Jude's Medical. However, I believe these are temporary hurdles, and their long term outlook remains strong. The depressed price presents a good buying opportunity, so I had been gobbling up shares where I can since May.

I purchased 4 shares of CAH (I now own 8 shares) and 1 share of ABT (I now own 35 shares in my Robinhood account, and 25 shares in my Roth IRA), bringing my estimated forward 12-month dividend income to $955.

What are your recent buys? Or what are you eyeing for your next purchase? Let me know in the comments.

Friday, June 10, 2016

Recent Buy for the Roth

So far for 2016, I had not contributed yet to my Roth IRA account (other than the $5500 I rushed in to contribute and mark for the 2015 tax year), so I felt it was time to correct that. I had been making some good progress with my Robinhood account which I had just opened a few months ago, but since that is a taxable account, I really should have been contributing to my tax-advantaged Roth ahead of that.

So with my first official contribution for 2016, I decided to go healthcare, and I bought 25 shares of Abbott Laboratories (ABT). For my Roth, since the plan is not touch the money until I reach 59.5, I wanted to have a long term view and gain shares in a company that I had confidence in their long term vision. Abbott is such a company for me. It has been beat up a bit lately due to recent acquisitions , and taking on additional debt, but I believe these to be temporary challenges, and I think they have set themselves up well for the future. I am willing to acquire shares now at a reasonable price, get paid to wait via the dividend, until things sort themselves out with the acquisitions, leading to future growth.

At this point, I am holding IVV, IJR, VYM, and ABT in my Roth. Next month I expect to contribute again, and I'll see at that time, which company/companies I want to invest in.

Saturday, June 4, 2016

DGI Payments Are Starting to Roll In

As mentioned in my Starting Point post, I made the switch back in March 2016 to Dividend Growth Investing. It has taken a couple months or so, but I am starting to see the fruits of labor of that switch. Stocks that I had purchased at that time, are getting to their Ex-Dividend, Dividend Record Dates, and Dividend Payment dates, and am starting to see these new payments coming in. It sure is a sight to behold, as I am getting that momentum ball rolling.

This past May I received $3.42 from Apple (AAPL), $1.04 from Abbott Laboratories (ABT), in addition to the amounts I received from pre-DGI holdings AT&T (T): $12.96, Prospect Capital (PSEC): $18.50, and Amerigas (APU): $23.50. The pre-DGI holdings do have a 2 year head start on my new DGI positions, but soon enough they will catch up. For May 2016, it was a grand total of $59, not an obscene amount of wealth, but it is better than $0, and I can get the compounding machine rolling in the right direction this time. I also just received $2.86 from Intel (INTC) on June 1st. These are small amounts now, but I will build on these positions, and they will compound, and I am excited to see what they will become once they have had a couple years to grow.

May has actually been the month of adding to my small ABT position, as I like the direction they are headed, even though they are dealing with some headwinds from the acquisition of St. Jude's Medical as well as their earlier acquisition of Alere. I loaded up on 30 additional shares, after the May Dividend Record date, so I won't see these fruits until August, but am excited for the future, both of this company, and of my portfolio.

Starting point

Hello everyone, the title of this post is "Starting Point" and it pertains more to me starting on this blogging journey about my foray into Dividend Growth Investing, and not so much the start of my investing career. I have been investing for a couple years now, but only recently saw the light with respect to DGI a couple months ago.

I started dividend investing a couple years ago, with the goal of putting my money somewhere where it can be working for me, as opposed to putting it somewhere where it would be doing the opposite, such as in a depreciating asset (ie, something consumer-related). A couple of places had the suggestion of investing into dividend stocks, and after looking into it, I liked what I was seeing where one had the opportunity to get over 10% back on his/her money in regular dividend payments. Of course, with this thinking, I became a yield chaser. I put my money into a few risky investments, mainly because they were offering over a 10% yield. Back then, I had no idea of what a payout ratio was. I was able to build up positions in these companies to where I was being paid over $20 per quarter as a result. However, in the last few months in my reading, and delving into the worlds of personal finance and passive income generation, I came across the world of Dividend Growth Investing, which appears to blend 2 areas of investing that appeal to me, growth in value, as well as growth in what you are being paid. The more I read on the subject, the more it made sense to me. So, with about 25 years remaining until I hit the accepted retirement age, although I am starting late, I decided that it was a good time to make the switch and also become consistent with my investments (when the market had gone down in the second half of 2015 and the first couple months in 2016, I stopped my monthly deposits into my brokerage account and sat back on the sidelines). After doing some more reading, I decided that I needed to be in it for the long haul, and in it consistently to really make this work.

Back in March 2016, I officially made the switch to DGI, and have built up some small positions in dividend growth stocks. With the help of various resources, I have accumulated shares in what I feel to be better companies for the long haul. The yield is not as large, but now I know what a payout ratio is, and have the confidence that the dividends will continue to be there for years to come, when I'll actually need the money.

My dividend income for the month of May 2016 was $59, and I look forward to steadily increasing it. Onward and upward!