Thursday, August 18, 2016

My Current Portfolio

My intention is to regularly update this post with my current portfolio as I add/remove positions from it. Also, I'll focus on my non-401(k) investments. With my 401(k), I only have a limited pool of index funds to choose from, and have set up an allocation that works for my age and risk tolerance.

Anyway, on to my current portfolio of taxable accounts and Roth IRA:

Non-401(k) Portfolio as of 8/18/16:

CompanySymbolTotal Shares% PortfolioTaxable Acct SharesRoth IRA Shares
Abbott LabsABT60.1459.25%3525.145
Cardinal HealthCAH246.86%1113
Cisco SystemsCSCO192.01%190
Company Stock60.746.08%60.740
Emerson ElectricEMR81.52%80
Flower FoodsFLO673.52%670
iShares Large Cap S&P 500 ETFIVV118.39%011
iShares Small Cap S&P 500 ETFIJR72.98%07
New ResidentialNRZ391.90%390
Omega Healthcare InvestorsOHI273.43%027
Prospect CapitalPSEC225.8376.62%225.8370
Toronto Dominion BankTD223.39%022
Vanguard Growth ETFVUG20.78%02
Vanguard High Yield Dividend ETFVYM48.04912.21%13.04935
Vanguard REIT ETFVNQ6.0671.87%6.0670

12-month forward dividend income: $1,159.35

Some thoughts about the above table:

This includes some holdings from a couple years ago, when I started and was admittedly yield chasing. Some of these I have sold and reallocated, others I have just held, collecting the dividends and reinvesting in safer stocks. Also I recognize that the REITs that I own should have been put in my Roth IRA, and not in my taxable account, However, I started with a taxable account, and did not start a Roth IRA until April of this year. I have learned quite a bit in the last couple years, and intend to keep learning, and apply these lessons to become a better investor.

Also, I have started Dividend Growth Investing as of March of this year, in addition to starting a Robinhood commission-free account to gain some traction. My plan is to make weekly buys with my Robinhood account, and then add to my cash position in the Roth IRA to then deploy to individual stocks once the cash exceeds $1,000 (since my Roth IRA account charges a $9.99 commission fee, and I want to pay no more than 1% in a commission fee). When I do buy, I look at companies that are currently fairly valued or undervalued, among other factors. The same goes for my dividends when I reinvest them (I only turn on the DRIP in the Roth IRA and taxable account for holdings I deem to be of good value at the moment). I may also add smaller amounts to the Roth IRA account  of ETFs that are commission-free.

As time goes on, I expect to maintain a better quality of holdings, as I learn more about what makes for a quality investment.

I invite you to follow me on this journey!

Do you hold any of these in your portfolio?

Tuesday, August 16, 2016

Regret and Hope

My feelings while engaging in investing, seem to exist on the spectrum between these two extremes:


I've only been investing outside of my 401(k) for a couple years. Once I started (a year before turning 40), and began understanding what I was doing, my initial feelings, beyond the initial excitement of "getting in the game", were feelings of regret.

I was virtually kicking myself multiple times for starting this so late.

First off, by this time I could have had a much bigger portfolio, paying much higher in dividends by now, if I had started upon employment after college. I might even be close to that early retirement number by now.

Second, I think of all the money up to this point that was spent on nonsense that is either gone down the drain, or tied up in things that are sitting in my place of residence that I no longer use (my girlfriend and I will be soon starting a de-cluttering activity for my place to rid myself of such items).

Now, I understand that one ought not to live in the past, but it is oh so difficult not to do, when I see the current opportunity in front of me. The opportunity to earn income just by doing some research on companies and making the right choices on which ones to invest in. Plus, the opportunity for that income to grow just by these companies choosing to increase their dividends, essentially giving you a raise, much higher than you would get in a typical job. It can be intimidating when looking at the small payments now, knowing that they could have been much larger by now, and comparing them to the value needed to cover my expenses to be able to reach financial independence.

Instead of this I chose to chase a couple of business opportunities and was too naive about it and sunk lots of money into them as well as other things with very little to show for it (I actually ended up in the red for years, even bleeding my 401k at the time, before digging myself out, which definitely slowed any progress I could have made)

I constantly think of all the compounding I missed out on. Although, not constructive at all, I keep thinking what might have been.


Then on the other hand, now that I have been investing for a couple years (this is outside of my 401(k), I actually restarted my 401(k) investing about 5 years ago), and am starting to see some real momentum, my dividend train is picking up steam. I have also been seeing some good capital appreciation (then again, who hasn't in this current bull market?).

I still have a good 25 yrs until the conventional retirement age. I have been recently able to max out my 401(k) contribution, and next month I anticipate a personal best in crossing the $100 threshold in dividend income. So I definitely have hope for the future, as I see things building up.

Though I continually have thoughts of what might have been, I also have thoughts of what could be for the future.

I have a good 25 years from this point to compound, but am thinking I might be able to get it done within 15 years as I have been able to build up my savings rate to just below 50%. I am also looking at potential side hustles to add income to help move things along. At this point, I am very hopeful and faithful that I will get it done. I am also getting better at saving, understanding necessities vs. wants, and trimming down what I spend in a typical month.

As I become more knowledgeable about my investments and money in general, I think proceeding in a better than linear fashion with respect to income and overall poftfolio value is very possible. I'm excited now to see how this turns out!

On this "Regret vs. Hope" spectrum, I feel like I am now slightly beyond the midpoint, headed toward the side of hope. With each increasing month of dividends received and other positive developments, however, I am moving ever so much closer to that "Hope" end of the spectrum, leaving a little bit of regret behind.

Somehow I feel I am not alone in this, as we all have made mistakes in our younger years which we might regret, but are making amends for better future. Am I right?

Where are you on this Regret vs. Hope spectrum?

Let me know about it in the comments below.

Recent Transactions - 8/16/16

It's been a while since I summarized my recent transactions, so I'll do that here, and the list is longer than usual, as I am including all transactions since my last recent transactions post. This is a combination of new positions opened, as well as adding to existing positions. There were no sells for this period, so these are all adds to my portfolio.

New positions:

  • FLO: Flower Foods. SureDividend opened my eyes to this one, as it had not previously been on my radar. I had been on the lookout for adding companies in slower changing industries (to where moat sizes do not change overnight, such as what may occur within the technology industry), and it turns out that you'll find few slower changing industries than bread, as Flower Foods is a company specializing in bakery products. They are also looking to incorporate healthier organic foods into their products, which is a plus for me. Most of the metrics looked very favorable (P/E less than 20 and comparing well to its historical P/E, yield over 3.5%, dividend growth for 10 yrs, dividend growth rate of about 10%, etc). The only metric that gave me pause was the payout ratio which is high at over 60%. However, with most of the other metrics looking attractive, it shot to the top of my watch list. Then a good buying opportunity surfaced when reports of the drivers lawsuit surfaced a day before they reported that they missed earnings, which resulted in an almost 20% decline of the stock price, when it dropped to below $15/share. As a result, I loaded up with a total of 67 shares (cost basis of $15/share, giving a me a Yield on Cost of over 4%!), buying some the day of the lawsuit report, and then the remainder the day after when they reported the earnings miss. I expect to add to my position through the month of August.

  • VUG: Vanguard Growth ETF. Even though I am "Seeking the Dividends" and deep into research of traditional dividend stocks, I have harbored thoughts of getting some exposure into growth stocks, at least in my Roth IRA account for more capital appreciation. However, I could not see dropping $700+ for a share of Amazon or Google/Alphabet. I also was on the fence on whether to add a low yielder like Disney that also had growth potential. As a result I decided to start a position with this ETF which has coverage in these companies plus many others. Another plus is that this is a commission-free ETF for my TD Ameritrade Roth IRA, so I picked up a couple shares, and my intention is to keep adding to this up until I have maxed out my Roth contribution for 2016. As there are some dividend payers within this ETF, there is a small yield of about 1.4%. I expect this to provide a good balance with the other more conservative holdings in this account (ie ABT, CAH, TD, OHI, etc)

  • TGT: Target. This is by far the retail establishment I spend the most time and money in, as it is my defacto grocery store as well as department store. I really didn't think of it as a strong investment until I did some research on it from a DGI standpoint. Attractive 3+% yield, and impressive double digit percentage dividend growth. The one drawback had been the valuation. Although I was not able to take advantage of the Brexit drop to the high 60s, I did decide to start a position as I deemed it at fair value at 74, and the yield and dividend growth to pass up. I did pick up 3 shares in my Robinhood account, and I figure I will add on pullbacks to strengthen this position. In the meantime, I'll be happy to wait, collecting some dividends in the meantime.

  • OHI: Omega Healthcare Investors. I already had a couple of REITs (NRZ, VNQ ETF), but had added these in my taxable accounts, before understanding the benefit of having them in a tax-advantaged account. For a while, though, I had been wanting to add a healthcare REIT, as they operate in a space that I envision not going away anytime soon. It combines the stability of healthcare with that of real estate, and then with the fact that you have an aging boomer generation that will need these services. Although HCP is the more well known REIT in this space, it has been facing substantial headwinds, and there is an expectation that although they are the only healthcare REIT dividend aristocrat, that the dividend will be cut at some point, as a result of the impending spinoff. OHI, though in possession of a not as long dividend increase streak, appears to have a more stable outlook with regard to the dividend. There is some risk with uncertainty of the healthcare situation with the next election approaching, but these services will be needed regardless, so I feel pretty good about this purchase of 27 shares for my Roth IRA account.

For existing positions, based on my criteria, I decided to add shares of the following companies, as I like the businesses that they are in, their market/moat position, and they appeared to be either undervalued or fairly valued.

  • CSCO: Cisco Systems - 1 share
  • CMI: Cummins - 1 share
  • EMR: Emerson Electric - 5 shares
  • QCOM: Qualcomm - 1 share

For valuations, I employ a simplistic approach of computing fair values based on P/E ratio comparisons with industry and history, and averaging them with fair values computed via the Dividend Discount Model, and fair values looked up using Morningstar. I may have a future post going into more detail my strategy for determining my entry point, as well as ranking which stocks to focus on.

With all these additions, my forward 12-month dividend income is now: $1,159.20

What were your recent buys/sells?

I always enjoy about others' choices, so feel free to leave a note below in the comments.

Tuesday, August 2, 2016

July 2016 Dividends

So just like that we're into another month, August, so that means it's time to look back on progress made in the previous month. So for July 2016, let's look at the numbers:

Taxable Accounts:
Viacom (VIAB) 7/1/16 - $6.40
Cardinal Health (CAH) 7/15/16 - $3.59
Prospect Capital (PSEC) 7/21/16 - $18.76
Cisco Systems (CSCO) 7/27/16 - $4.68
New Residential (NRZ) 7/29/16 - $17.94

Taxable Account Total: $51.37

Roth IRA Account:
I received no dividends from my Roth IRA holdings, although I was expecting to get a payment from one of my newer holdings, Toronto - Dominion Bank (TD) on 7/31. According to and a few other sources, the ex-dividend date was 7/6/16, the record date was 7/8/16, and the payment date was 7/31/16.  On 7/5/16, I purchased 22 shares of TD, so I figured I was in line to receive my TD dividend for July, but nothing has appeared as of yet. I'm hoping it will show up in the first week of August (not sure if there is some delay since it is a Canadian bank, and I am in the US), and then it would be applied to my dividend income post for August 2016.

Roth IRA Total: $0

Overall Total Dividend Income for July 2016: $51.37

Forward 12-month Projected Dividend Income: $1,028.74

My Thoughts:
After hitting my all-time high in dividend income for the month in June 2016 at $90.97, it is a little disappointing to see a substantial decrease, but July does seem to be a light month for dividends. I get this impression from reading other blogs and their monthly dividend summaries as well.

A better way to see what progress has been made would be to look at my overall dividend history and more specifically what was earned the previous quarter (April 2016) and the previous year (June 2015). Below is my overall dividend history since I started dividend investing:


Ok, now I feel a little better. Since starting out, my July dividend income has gone from $0 to $18.99 (July 2014 to July 2015), and then $18.99 to $51.37 (July 2015 to July 2016). This would be a Y/Y increase of 270.5%!!! I'll take it!

Then also comparing to the last quarter, April 2016, dividend income has increased from $27.91 to $51.37, which would be a Q/Q  increase of 184.1%. Not too shabby...

So, I started out being doubly disappointed that my TD dividend has not appeared yet, and that my July 2016 dividend income did not come close to my June 2016 dividend income, but after looking at the Q/Q and Y/Y results, I am encouraged by the progress I have made, and will definitely keep going (actually I'd keep going anyway even if I hit a setback, as the ultimate goal of financial independence is pulling me forward).

I started on this DGI train back in March of this year (after allowing myself to take my eye off the ball, spending to meet my net income, and not consistently investing outside of my 401k for the few months prior), and it took a few months to get the dividend train going again. It is great to see it picking up steam. Also I am super excited for August, as many of my companies will be paying this month. Giddyup!

Things are definitely on the right track, as I recently figured out that I am able to max out my 401(k) contribution, and still allocate a good amount of funds to my Roth IRA and taxable accounts every month, so I will continue enthusiastically down the road to financial independence.

Thanks for reading, how did you do last month? Let me know with a comment below (rhyme not intended)