Tuesday, December 31, 2019

Review of 2019 Goals

Now that I have provided my goals for 2020 and that the year is coming to a close in just a few days at the time of writing this post, I'll be examining the goals that I had for 2019 and whether I was able to accomplish each of them.

My financial goals for 2019 were as follows:

1. Collecting $550+ in dividends
2. Ending with $600+ in forward annual dividends
3. Amassing $15,000 in investments
4. Buying a used compact car in cash (i.e. Chevrolet Cruze)

Starting with the first goal of collecting $550+ in dividends for the year, I managed to collect $615.29 in dividends during 2019. This will be reflected on the dividend income page once I post my dividend income for December 2019 next week.

I was easily able to achieve this goal as a result of the $5,976.95 in capital invested in my taxable accounts and the $2,914.07 invested in my retirement account all the while paying tuition for the first 7 months of the year.

Although I invested like there was no tomorrow, this did come at the cost of one financial goal as we'll get into a bit later.


I am also poised to end 2019 with forward annual dividends of $873.51 as a result of the significant investments made in 2019 and the dividend increases announced during the year, which was something I couldn't imagine in even my wildest dreams.

On the investment goal front, I was able to amass $20,700 in investments as of December 30th. This represents a doubling of the $10,000 that I entered the year with, which is well beyond what I was expecting.

Unsurprisingly, it comes as a result of both a great year in the stock market and my capital deployment during the year.

Rounding out my financial goals for the year, I intended to purchase a used compact car to fix up in 2020.

While my father and I haven't been able to find a car for purchase yet, I am pleased to share that I have the capital necessary to make such a purchase.

This was the only financial goal that it could be argued I didn't technically achieve, but that could change at any point in the next few weeks now that I have the capital for us to start seriously browsing for cars.

Moving to my personal development goals for 2019, they were as follows:

1. Continue to publish at least one blog post each week
2. Publish at least 50 articles on Seeking Alpha
3. Secure an entry level accounting/finance position

Starting with the goal of publishing at least one blog post each week, I did the absolute minimum on this front to achieve the goal as this post is the 52nd of the year.

Overall, I feel that publishing once a week on my personal blog is adequate for me to document my journey to financial independence for myself and others. I could write more frequently, but I suspect that this would lead to burnout and cause me to despise the blog.

As far as writing for Seeking Alpha is concerned, I managed to publish 83 articles this year (possibly 84 or 85 if the ones that I am currently working on and will have finished by December 29th are published on New Years Eve).

Starting in May, I began to regularly write 2 articles each week, which really helped up the article count in a hurry.

I also believe that 2 articles a week on a fairly regular basis represents an optimal workload for me going forward. Any more than 2 a week would be too overwhelming given that I write for this blog, work 40+ hours a week at my day job/commute 2 hours a week, exercise regularly, and have a couple other side hustles going on.

Rounding out my personal development goals for the year was my goal to secure an entry level accounting and finance position.

Fortunately, I was able to do so and I have split my job responsibilities between accounting responsibilities and my responsibilities as a medical summarist at the Social Security Disability and Work Comp law firm that I work at.

Just as I had predicted, my day job pay increased significantly from around $28k annually with benefits included to $35k once I assumed my new responsibilities with the company this past June.

Given that I live in a relatively small and stagnant town in the Midwest, I believe this is a pretty decent starting wage for the first job relating to my major out of college. It was exactly what I expected and slightly below the $38k that I invested to receive my 4 year accounting degree.

Concluding Thoughts:

In retrospect, maybe I set a few of my goals too low given that I actually accomplished the majority of them several months ago. Going forward, I am going to set my goals much higher and account for the fact that I sometimes tend to be too conservative in setting goals. If I need to readjust the goals that I set for 2020 lower at some point during this year as they do seem a bit lofty, I will post an update with my updated goals.

Overall, 2019 was a year filled with accomplishments that I able to hang my hat on as I really begin to embark on my journey in life.

I'm especially looking forward to enjoying the grind of next year and trying to accomplish my lofty goals while I also look to maintain a healthy work life balance.

Discussion:

Although most of us still have a few more hours to go before the year is over in our respective time zones as this is published, how was your 2019? Were you able to accomplish all of your goals for the year?

Thanks for reading and I look forward to replying to any comments that you are welcome to leave in the comment section below. Let's all keep hustling and have a great 2020!

Tuesday, December 24, 2019

My Personal & Financial Goals for 2020

In a bit of a twist, I decided to switch it up and rather than first reviewing whether I was able to achieve my goals for 2019, which I outlined the first few weeks of 2019, I thought I would start with my goals for 2020 as we head into the New Year next week.

Overall, 2019 was my first full year of being a Seeking Alpha contributor and a blogger. It marked the second full year that I exercised on a regular basis. Perhaps most encouraging is that 2019 will be remembered as the year that I finished undergrad, which feels like a weight off my shoulders.



That's enough reminiscing for one post, so we'll delve right into what my specific goals are for 2020, starting with financial goals.

1. Collect $1,500+ in dividends for the year
2. End 2020 with $2,000+ in forward annual dividends
3. Amass $45,000+ in investments/end 2020 with a net worth of $60,000+

Starting with the first goal of collecting at least $1,500 in dividends in 2020, I believe this is a goal that isn't unrealistic to achieve. On the other hand, I believe the goal will push me to the limit and help me strive to reach my full financial potential in 2020, and position me very well in the years beyond.

I don't want to spoil next week's post where I discuss whether I achieved all of my goals for 2019 (spoiler alert: anyone could check my dividend income page if they'd like for a good idea on if I achieved my goal), including if I collected $550+ in dividends for the year. But for context and without giving it away, collecting $1,500 in dividends in 2020 would be well over double what I collected in 2019.

The second goal of reaching at least $2,000 in forward annual dividends by the end of 2020 is once again what I believe to be a lofty, but attainable goal.

Without blatantly giving away what I'm entering 2020 with in terms of forward annual dividends (another spoiler alert: my portfolio page would give this away), I will once again say that ending 2020 with more than $2,000 in forward annual dividends would represent more than a doubling over 2019.

My third and final major financial goal for 2020 is to amass at least $45,000 in investments at the end of 2020 and achieve a net worth of $60,000+.

Whether I achieve this goal will probably be indicative of my ability to achieve the other two goals. That's because in order for me to end 2020 with forward annual dividends of $2,000+, I realistically need to have over $45,000 in investments if I want to stick around the 4-4.5% average yield that I target for my investments.

Factoring out the unpredictable whims of Mr. Market, reaching $45,000 in investments would take close to $2,000/month in investments. While this is reasonably manageable given my income and expenses, it will be somewhat difficult given that I also have to save for a couple more months to purchase and help fix a 3-4 year old Chevrolet Cruze with my father, who has 35+ years of experience in the auto industry. The total cost of such an endeavor will probably end up around the $7,000-$8,000 mark depending upon how new of a car I end up buying and how many miles are on the car.

If I'm able to save up the funds by the end of February for the first car that I'd actually personally own, this would require $2,500/month in investing the rest of the year to achieve. That becomes a bit more difficult to swing with my income and expenses, although it still could prove to be manageable with an increase in my income through my day job or side hustles.

Reaching the $60,000 net worth also should be a manageable goal given that I'm already about a third of the way there and a low mileage car that's 3-4 years old brings me a bit past half way there. That means I have to invest about $2,500 a month to surpass $60,000 in net worth.

Fortunately, this isn't factoring in any appreciation that is likely to occur in the stock market over the next year, so capital appreciation could aid me with this goal. Of course, the markets could just as easily work against me if we enter a major correction near the end of the year as was the case in December 2018.

Now that I've discussed my key financial goals heading into 2020, I'll take a bit of time to focus on my personal goals for the year.

1. Continue to publish one personal blog post each week
2. Publish at least 100 articles on Seeking Alpha in 2020 and reach 6,000 followers
3. Write at least 26 blog posts on I Prefer Income in 2020

Starting with the personal blog, I'm pretty content with the frequency with which I post. It's for that very reason I intend to continue posting once each week. I feel it strikes a nice balance between documenting my journey for both myself and others, but it isn't too excessive to the point that I don't find enjoyment in it anymore. That's precisely because I'm able to write about what's important to me and what I find interesting. If I ramp up my publishing frequency, it could become much more difficult to maintain the enjoyment factor and it could start to feel like work, leading to burnout.

Next, I'd like to publish at least 100 articles on Seeking Alpha in 2020 and reach 6,000 followers. To date, I've published less than 100 articles and I recently managed to surpass 2,700 followers on SA.

Assuming my average of 33 followers per article continues through 2020 and I'm able to achieve my goal of at least 100 articles for the year, I should have no problem at least reaching 6,000 followers on SA.

As far as my goal of 100 articles for the year is concerned, I managed to come pretty close in 2019 and this was all the while having to focus on finishing up undergrad through the first 7+ months of the year. That leads me to believe that 100 shouldn't be extremely difficult to attain.

One thing that astute followers of the blog may have noticed is that on my blogroll page, I have included a link to the website I Prefer Income.

Last month, I entered into an agreement with founder of I Prefer Income, Rich Hill.

I Prefer Income is a website that offers database programs for preferred stocks, REITs, Dividend Diamonds 25+ (an alternative name for Dividend Champions/Aristocrats), MLPs/Midstream stocks, and eventually, high yield commercial REITs and BDCs. Until further notice, each program is currently free. Each program will thereafter be billed at $8/month.



Image Source: I Prefer Income

These programs are specifically designed to cater to the preferences of each individual investor using dividends, earnings, payout, debt, and other metrics.

Utilizing the metrics that are most important to them, users are able to use I Prefer Income's filter to narrow down the list of potential investments. This allows a user to hone in on the investments that are most attractive to them and that fit their investment preferences.

They can then conduct their own independent research to determine the stocks that best fit their investment needs, as well as checking out Seeking Alpha articles that are selected by I Prefer Income for specific stocks to get the thoughts of others on those stocks.

Users can also rank stocks by industries or sub-industries to see how they stack up against each other and aid in the decision making process.

Overall, I would recommend that investors who often find themselves spending excessive amounts of time trying to generate investment ideas for further research check out I Prefer Income. It helps me generate ideas for my articles on Seeking Alpha and personally. I've found the programs to be capable of meeting the needs of long-term income investors of all preferences, whether that is high yield or dividend growth investing.

As part of our agreement, I'll be providing feedback to Rich and his team of developers to improve the user friendliness and usefulness of the program. I'll also be posting under my own blog on the website with the Kody's Dividends name. These posts will provide my investment rationale to readers and I will also be examining stocks for investment that I was able to find using the I Prefer Income programs.

I feel as though posting every couple weeks and providing feedback on the programs will be a great way for me to help I Prefer Income deliver on its motto of Rely On Yourself Investing.

Through I Prefer Income's fantastic data driven programs, as well as my investing insights, I believe we will be able to help thousands of investors reach their financial goals through a deliberate and informed investing approach that works with their preferences.

Concluding Thoughts:

As great of a year that 2019 has been for myself, I believe that it will prove itself as a stepping stone to the many exciting things that I believe lie ahead in the future.

Although some of my goals for 2020 appear to be a bit daunting at first glance, the great thing about setting goals that are on the high end of attainable is that it challenges you to keep your focus on the task at hand, and to enjoy the journey.

I managed to accomplish quite a bit in 2019, but 2020 is sure to be even more promising. I really just want to thank everyone that has supported me over the past year and a half! Your readership and comments on this blog and on my Seeking Alpha articles are a large part of what drives me to become a better investor and a more well-rounded person overall.

Discussion:

What are your goals for 2020? Are there any goals that you believe will be more difficult than the others?

Thank you for reading and I look forward to any comments that you may leave in the comment section below.







Tuesday, December 17, 2019

Expected Dividend Increases for January 2020

As I write this post, the Milwaukee Bucks' streak of 18 straight wins was finally snapped by the Dallas Mavericks. It was interesting that the Mavs were able to grind out a win against the Bucks without their MVP candidate, Luka Doncic. The Mavs won despite Giannis Antetokounmpo's 48 points, but the Bucks were bound for a disappointing game at some point this season.

At the very least, it was encouraging to see the Bucks battle back from what was a 16 point deficit at one point to make the game a 120-116 loss. The last few minutes of the game were far more interesting than I thought they would be, and that's the true mark of a contending team.

Aside from all this basketball talk, another month will soon be coming to a close. With that in mind, it's time for us to examine the dividend increases that I received in December, and to preview the increases that I am expecting for the month of January.

Before we delve into December's dividend increases, I'd like to begin with a couple side notes. While WP Carey (WPC) hasn't yet announced an increase in its quarterly dividend at the time of writing, I still expect the company to increase its dividend 0.2% from $1.036/share to $1.038/share.

When this dividend increase does occur, it will boost my annual forward dividends by $0.024 across my 3 shares.

The other side note is that Ventas (VTR) opted not to increase its quarterly dividend this year, which was a cautious approach in light of the company's guidance for next year. Considering the yield of the stock, I can understand and I'm willing to be patient with it.



Dividend Increases for December:

Increase #1: Realty Income (O)

As the beautifully predictable company that O is, the company announced a 0.2% increase in its monthly dividend from $0.2270/share to $0.2275/share just as I predicted in my previous post of this series.

While this may appear to be a small raise, it's important for us to remember that O raises its dividend 3-4 times a year by around 0.2% and opts for a solid 2-3% increase in its monthly dividend each January.

Across my 4 shares of O, my annual forward dividends were boosted by $0.024 as a result of this announcement.

Increase #2: AT&T (T)

Similar to O, AT&T announced a dividend increase that was in line with what I outlined as my expectation in the previous post of this series. T announced a 2% increase in its quarterly dividend from $0.51/share to $0.52/share.

As T has done for quite a few years now, they opted to stick with the customary $0.01 quarterly dividend increase.

I'm entirely fine with that decision and I'll go on the record by saying that I expect one more year of the customary $0.01 quarterly dividend increases before we see an acceleration in that dividend growth for the first time in quite a few years.

T has been doing a great job of deleveraging after its acquisition of Time Warner last year, but that's no reason to stop deleveraging quite yet.

Across my 17 shares of T, this announcement increased my annual forward dividends by $0.68.

Increase #3: Pfizer (PFE)

Pfizer delivered a 5.6% increase in its quarterly dividend from $0.36/share to $0.38/share. This one came as a bit of a surprise and at the same time, it represented the status quo. The $0.02 increase in the quarterly dividend was the same as the increase last year in absolute terms, but I was expecting PFE to possible increase its dividend by only $0.01 because of its deal with GlaxoSmithKline (GSK) to combine consumer health businesses, and its deal to spin off its off-patent business to form Viatris with Mylan.

There's a lot going on at PFE, but it's great that management announced a very solid increase in spite of all of the activity.

Across my 8 shares of PFE, this resulted in an $0.64 increase to my annual forward dividends.

Increase #4: Amgen (AMGN)

Amgen continued to deliver very strong dividend growth, announcing a 10.3% increase in its quarterly dividend from $1.45/share to $1.60/share.

When we take into consider that Amgen's earnings payout ratio is still barely above 40% and that the company is projected to grow its earnings 7-8% annually over the next 5 years by Yahoo Finance, these types of increases appear to be likely to continue over the next few years.

This dividend increase boosted my annual forward dividends by $0.60 across my single share of AMGN.

Increase #5: Dominion Energy (D)

As I anticipated based upon Dominion's company guidance issued a few months back, D increased its quarterly dividend 2.5% from $0.9175/share to $0.94/share.

Although this is a departure from the high-single digit to low-double digit dividend increases of the past few years, it's great that D is committed to the sustainability of its dividend. Lowering its earnings payout ratio to the 70% range will enhance the safety of D's dividend over the long-term, and allow D to invest more in growth projects going forward.

Across my 4 shares of D, this increase added $0.36 to my annual forward dividends.

Bonus Increase: Eastman Chemical Company (EMN)

It's always great to have discovered you missed out on a dividend increase a few days after you published the latest post in your dividend increase series. I somehow managed to forget about the fact that EMN was due to announce a dividend increase in December.

Given that EMN announced a 6.5% increase in its quarterly dividend from $0.62/share to $0.66/share, they certainly didn't disappoint. A 6.5% increase on a stock that I was able to secure a 3.4% entry yield on is about what I like to see. This was my first of what I believe will be many nice increases from EMN!

Across my 3 shares of EMN, this resulted in a $0.48 boost in my annual forward dividends.

Expected Dividend Increases for January 2020

Expected Increase #1: Realty Income (O)

As I alluded to above, O is set to announce a 2-3% increase in its monthly dividend next month.

I'll split the difference and predict a 2.5% increase in O's monthly dividend from $0.2275/share to $0.2330.

Across my 4 shares of O, this would boost my annual forward dividends by $0.264.

Expected Increase #2: Enterprise Products Partners (EPD)

As one of many consistent companies in my stock portfolio, I fully expect EPD to continue its trend of announcing yet another 0.6% increase in its quarterly distribution from $0.4425/unit to $0.4450/unit.

Given that EPD has increased its distribution each and every quarter for the past 61 quarters, these types of steady but small increases have really worked wonders for long-term unitholders of the company.

Across my 27 units of EPD, this would boost my annual forward distributions by $0.27.

Expected Increase #3: Magellan Midstream Partners (MMP)

Rounding out the increases that I expect in January, I expect MMP to announce a 0.7% increase in its quarterly distribution once again, raising the distribution from $1.0200/unit to $1.0275/unit.

Across my 7 units MMP, this would result in a $0.21 increase to my annual forward distributions.

Concluding Thoughts:

Assuming WPC comes through as I believe it will with the 0.2% increase in its quarterly dividend, my annual forward dividends/distributions will have been boosted by $2.808 as a result of the increases in the month of December.

This is equivalent to investing $70.20 at a 4% yield, which is really starting to show the power of dividend increases in the scheme of the DGI journey to FI.

January will once again mark a slowdown in dividend increases compared to December, which isn't a surprise if last year is any indication.

Overall, I'm expecting increases in January to boost my annual forward dividends/distributions by $0.744, which would be equivalent to investing $18.60 at a 4% yield.

Discussion:

Was December a strong month for you as well in terms of dividend increases? Did you receive any increases from companies for the first time as I did with EMN?

As always, thanks for stopping by and following my progress for dividend increases during the month of December. I look forward to replying to any comments that you leave in the comment section below.




Tuesday, December 10, 2019

November 2019 Dividend Income

It's official! By the time this post is published, we will have entered the last month of 2019. It's time for each of us to start setting our goals for the next year. At the same time, we can't lose out on the month that we still have left in this year. We all need to stick to our game plans of deploying capital in wonderful companies at fair valuations and making every dollar count as the Dividend Diplomats put it.

Without further ado, I present my dividend income for the month of November 2019.




Analysis:

During the month of November, I collected $63.68 in total dividends. This equates to a 30.1% quarterly growth rate compared to the $48.93 in dividends that I collected in August 2019. Even more impressive is the fact that I was able to post a 53.7% YOY growth rate compared to the $41.42 of dividends that I collected in November 2018.

Breaking it down further, I collected $48.83 in dividends from my Robinhood account, $14.51 from my Webull account, and $0.34 from the 15 companies in my M1 Finance account that paid dividends during the month of November.

The $14.75 increase in dividend/distribution income from August to November 2019 was driven by activity such as dividend increases and dividend stock purchases, which are as follows:

The $0.61 in distributions received from 2 units of Energy Transfer (ET) in the Webull account are a new addition since August 2019's dividend income update. Moving to the Robinhood account, I was able to add 6 units of ET between the payment of the distribution in August and the ex-distribution date. This increased distribution income by $1.83 in my Robinhood account.

I also benefited from a $6.52 increase (net of the $0.005/share ADR fee) in my dividend income in the Webull account through the purchase of 10 shares of British American Tobacco (BTI) that I made in September.

In addition, I received a raise from Enterprise Products Partners (EPD) and benefited from the purchase of an additional unit of EPD within the Webull account since the payment of the last distribution. This accounted for a $0.46 increase in distributions. Focusing next on the Robinhood account, the distribution increase accounted for a $0.03 boost in my distribution income.

Building upon the theme of receiving dividends from new positions, I received my first dividend from The GEO Group (GEO) since I initiated my position in both my Webull and Robinhood accounts. This increased dividend income in my Webull and Robinhood accounts by $3.84 and $1.44, respectively.

I also received an additional $0.02 from Magellan Midstream Partners (MMP) as a result of its 70th consecutive increase to its quarterly distribution, which was announced in October.

Concluding Thoughts:

November marked the second strongest month of the year to date in terms of dividend income (slightly trailing September 2019's $70.00 in dividend income), and it is sure to finish this year as my third strongest month of the year once December is in the books (I'm anticipating December will be around the $100 mark), which I couldn't be happier about!

As the next few months draw to a close, I have a feeling the annual dividend income will surpass the $1,000 mark. The most exciting part about that milestone isn't even the milestone itself, but the prospect of finally being able to let loose and hopefully deploy $2,000+/month in capital to purchase ownership in wonderful businesses! At that rate, it won't take long for the next $1,000 to accumulate!

Discussion:

Were you fortunate enough to receive dividends from any relatively new positions in your portfolio (as I was with GEO and BTI)? How did November stack up for you in terms of dividend income compared to previous months this year?

As always, thanks for stopping by and reading my progress. I look forward to any comments that you may leave in the comment section below cheering me on and/or discussing your progress in the exciting DGI journey that we're on!

Tuesday, December 3, 2019

November 2019 Dividend Stock Purchases

As I write this post, the last day of November is ticking away. The Packers suffered an expected, albeit disappointing pummeling at the hands of the San Francisco 49ers, which leads me to believe there is no chance they advance past the NFC Championship Game in a best case scenario.

Fortunately, the Bucks have won 14 of their last 15, and enter the last game of November in first place in the Eastern Conference with a record of 16-3. Giannis has started the season with a whopping 18 straight triple doubles, and there appears to be no end in sight to this marvelous feat!

However, most exciting is the fact that we get to discuss my dividend stock purchase activity for the month of November.

Find a cup of coffee, glass of water, or whatever beverage you're into and pull up a seat because this month was rather busy in terms of capital deployment (mostly in the last couple weeks as a spoiler alert)!




The first investment that I placed to start the month of November was Energy Transfer (ET). Throughout the month, I ended up purchasing 14 units across my Robinhood and Webull accounts at an average cost/unit of $11.94 or a total cost of $167.16, bringing the total number of units that I own to 43. These purchases boosted my annual forward distributions by $17.08.

This equates to a 10.22% entry yield on this block of units, which I believe provides a very attractive risk/reward ratio when we consider that ET's distribution is covered nearly 2 times over, ET's operating fundamentals continue to improve, and although its balance sheet isn't on the level of Enterprise Products Partners' (EPD) or Magellan Midstream Partners (MMP), the company still maintains an investment grade credit rating from the major credit rating agencies.

The next investment that I made during November was in EPD. I invested $211.30 in capital to purchase 8 units of EPD, which works out to a $26.41/unit average. That implies a 6.70% entry yield on the block of units purchased in November. The purchase increased my ownership in EPD to 27 units, and increased my annual forward distributions by $14.16.

Similar to ET, EPD's distribution coverage is nearing 2 while its DCF continues to grow, which implies a very safe distribution going forward. Adding to my rationale for investment in EPD is the fact that the company also maintains an investment grade credit rating from the major credit rating agencies.

The third company that I increased my position in during November was Altria Group (MO). This purchase was a small fraction of my overall purchasing activity for the month, but the 1 share of MO purchased at a cost of $49.25 helped maintain its status as the third largest holding in my portfolio in terms of dividend income, bringing my number of shares to 13. This means that the entry yield on the single share of MO that I purchased for the month is 6.82%, which added $3.36 in annual forward dividends.

While the company wrote down its investment in Juul Labs by $4.5 billion (what I personally believe is a strategic play for the company to eventually purchase the remainder of Juul Labs at a favorable valuation), it was business as usual at MO. The company reaffirmed its guidance of 5-7% growth in adjusted diluted EPS for the current fiscal year compared to last year's figure of $3.99/share, while also adjusting its expectations for future growth from 7-9% to 5-8% for 2020-2022.

It doesn't take much dividend growth for a near 7% yield to rapidly grow over time, and MO appears poised to at least deliver mid-single digit dividend growth over the next several years as it works toward deleveraging, which is why I'm comfortable holding this as the third largest position in my portfolio.

The fourth position of the month that I invested in is actually a new position for the portfolio, bringing the number of companies in my portfolio to 43 in whole shares (and there are 23 other non-overlapping names in my fractional share M1 Finance portfolio).

The position that I'm referring to is L3Harris Technologies (LHX). I initiated a 2 share starter position in LHX at a total cost of $402.40 or an average cost/share of $201.20, which is a 1.49% yield. The purchase increased my annual forward dividends by $6.00.

Without going too much into detail on my rationale for the investment in LHX (that will come some time in the next couple weeks on Seeking Alpha for those interested), what LHX lacks in yield, it makes up for in spades with its growth potential and overall quality.

With a payout ratio at about a third of its earnings and FCF, as well as the thesis that communication systems, electronic systems, and space and intelligence systems aren't going anywhere, LHX appears to have a long runway of high-single digit to low-double digit EPS growth in its future, not to mention at least as much dividend growth in its future.

The fifth and final company that I invested in during the month of November was MMP. I increased my position in MMP from 3 units to 7 units and to my 6th largest position in terms of distribution income, paying an average of $58.60/unit and a total cost of $234.40. This equates to a 6.96% yield on the units purchased in November. Across the 4 units added during the month, this boosted my annual forward distributions by $16.32.

While MMP possesses a coverage ratio of ~1.3 compared to the near 2 coverage ratios of ET and EPD, the company's balance sheet is stronger than ET's and about even with EPD's. Like both ET and EPD, MMP is also continuing to grow its DCF on a consistent basis, which reinforces the safety of its distribution.

Aside from my investments above in my taxable accounts, I also invested $366.00 into my CAIBX mutual fund holding within my employer sponsored retirement plan via both my contributions and my employer's 3% dollar for dollar match (you gotta love 3 paycheck months!).

Accounting for the sales charge, this allowed me to increase my position in CAIBX from 76.756 shares to 82.332 shares.

Assuming the same quarterly dividend of $0.50 and a $0.14 special dividend paid at the end of the year, these purchases increased my annual forward dividends by $11.93.

Summary:

In my taxable accounts, I deployed a respectable $1,064.51 in capital during the month of November, which added $56.92 in annual forward dividends/distributions, for an average yield of 5.35%. 

In my retirement account, I invested $366.00 in capital for the month of November, which boosted my annual forward dividends by $11.93. This equates to an average yield of 3.26%.

In total, I put $1,430.51 to work during the month of November, which increased my annual forward dividends/distributions by an astounding $68.85! This works out to a 4.81% yield, which offsets last month's average yield on invested capital of 2.72%

Over the past 2 months, I have been able to invest $2,930.22 in capital and add $109.61 in annual forward dividends/distributions from investments alone, which is right around that 4% yield that I would like to consistently average from quarter to quarter. 

Entering the month of November, my annual forward dividends were at $758.46 and will end November at $828.92.

This $70.46 increase in my annual forward dividends/distributions is accounted for through the $68.85 in annual forward dividends/distributions, the $2.20 increase in annual forward dividends as a result of AbbVie's (ABBV) raise during the month, and minor downward adjustments to ADR holdings such as British American Tobacco (BTI) and British Petroleum (BP) as I didn't accurately take into consideration the ADR fees that were deducted from the dividend income to arrive at net dividend income on those holdings.

If the past few months have taught me anything, it would be that no longer having to pay tuition or dedicate countless hours to my formal education is so damn great both financially and in terms of free time!

Discussion:

Were you able to deploy as much capital as you have been lately? Did you add any new names to your portfolio?

As always, I appreciate your readership! I'm looking forward to reading and replying to any comments you may have that provide insight into your DGI journey during the month of November.

Tuesday, November 26, 2019

Expected Dividend Increases for December 2019

As I'm writing this post, we're in the final week of the month and Thanksgiving is just days away! It's hard to believe that the year is only five weeks away from drawing to a close. I guess time flies when you're having fun watching the Packers and Bucks win on a consistent basis while you're also blogging, not to mention writing for Seeking Alpha?

Given that we're nearing the end of November, that brings us to the purpose of this post. Of course, we'll be examining the dividend increases that we received in November while also previewing the dividend increases that we are expecting for December.

Buckle in because while November was relatively slow for yours truly on the dividend increase front, December will be a very busy month on the dividend increase front and I suspect it will be for many of you too because there are many common dividend growers slated to increase their dividends this month!




Dividend Increase #1: Hormel Foods Corporation (HRL)

At the time of writing, HRL has yet to announce a dividend increase. Given that HRL has typically increased its dividend in late November, I would expect a dividend increase to be on its way any day at this point. I would also reiterate my expectation for a 9.5% increase in HRL's quarterly dividend/share from $0.21 to $0.23 that I outlined in my previous post in this series. As I had also mentioned before in my previous post, this would have a rather negligible impact on my dividend income (less than $0.005, but really $0.00 because I already get the benefit of rounding to the nearest cent on quarterly dividends in my M1 Finance account) given that HRL accounts for less than 0.1% of my income.

Dividend Increase #2: Starbucks (SBUX)

Technically, SBUX announced a 13.9% increase in its quarterly dividend from $0.36/share to $0.41/share on October 30.

I'm willing to give myself a pass on this one since SBUX is a rather small position within my portfolio, so I wasn't aware that the company was announcing earnings in October rather than in November.

In retrospect, my prediction of a low to mid-teen percent range from SBUX proved to be correct.

Similar to HRL, as great as this raise was for many in the community, I sadly didn't benefit from it in a meaningful way due to my very limited position in the company through my M1 Finance account.

Dividend Increase #3: AbbVie (ABBV)

AbbVie announced a 10.3% increase in its quarterly dividend from $1.07/share to $1.18/share. AbbVie also lifted its non-GAAP EPS from $8.82-$8.92 to $8.90-$8.92. Total revenues increased 3.0% YOY to $8.479 billion in Q3 2019 while non-GAAP EPS increased 8.9% YOY. AbbVie's dividend increase shows that management remains confident in its ability to make up for declining Humira sales, which is comforting as an investor whose position in AbbVie is in my top 10. Across my 5 shares, this boosted my annual forward dividends by $2.20.

Expected Dividend Increases for December:

Expected Dividend Increase #1: Realty Income (O)

Realty Income will once again likely be announcing a small increase in its monthly dividend in the month of December. I am expecting O's monthly dividend to increase from $0.2270/share to $0.2275/share, which would represent a 0.2% dividend increase.

While this may seem small, we need to keep in mind that O typically announces 4 small dividend increases throughout the year, and announces a larger 2-3% increase in January.

Across my 4 shares, this would result in an additional $0.024 in annual forward dividends.


Expected Dividend Increase #2: WP Carey (WPC)

Similar to O, WPC announces 4 small quarterly dividend increases throughout the year. I am expecting WPC to announce a 0.2% increase in its quarterly dividend from $1.036/share to $1.038/share.

Across my 3 shares, this would increase my annual forward dividends by $0.024.

Expected Dividend Increase #3: Ventas (VTR)

Unlike O and WPC, VTR is a REIT that has historically announced dividend increases only in December. I don't see any reason why this trend won't continue this year, so I'm expecting a 0.3% raise in the quarterly dividend from $0.7925/share to $0.7950/share.

With the somewhat weak guidance from VTR and the fact that the senior housing market hasn't appeared to bottom yet, I would expect VTR to be very conservative with its dividend increase once again this year as they proved to be last year.

This would result in a $0.04 boost to my annual forward dividends across my 4 shares.

Expected Dividend Increase #4: AT&T (T)

T is yet another name that I am expecting to continue its trend of increasing its dividend in December. And similar to previous years, I am expecting the customary $0.01 raise or ~2% raise in its quarterly dividend from $0.51/share to $0.52/share.

While T is making great progress in its deleveraging efforts (the company expects its leverage to decrease to 2.5 times by year end) and Simply Safe Dividends upgraded the company's dividend from borderline safe to safe recently, T is still a ways off of its goal of hitting 2.0 to 2.25 times leverage ratio by the end of 2022.

Across my 17 shares, this dividend increase would raise my annual forward dividends by $0.68.

Expected Dividend Increase #5: Pfizer (PFE)

PFE is a company that is a bit of a wildcard this year compared to last year. Aside from the deal with GlaxoSmithKline to combine to consumer health businesses of the two, PFE is also creating a ~$20 billion a year in revenue global pharmaceutical company with Mylan, which will be called Viatris and focus on the off-patent medications of the two companies.

While PFE expects dividend investors to offset the cut in PFE's dividend through the dividend of Viatris, it's difficult to really predict whether PFE will increase its dividend this year with so much going on.

If PFE does increase its dividend this year, I expect it will be smaller than last year's 5.9% raise. I would expect a 2.8% raise in the quarterly dividend from $0.36/share to $0.37/share if the company does decide to increase its dividend.

Across my 8 shares, this would boost my annual forward dividends by $0.32.

Expected Dividend Increase #6: Amgen (AMGN)

Continuing in the pharma/biotech space, another dividend increase that I'm expecting is from AMGN.

Given the company's payout ratio has a bit of room to expand and the company is expected to deliver mid-single digit earnings growth next year, I believe it's reasonable for us to expect a 9% raise in AMGN's quarterly dividend from $1.45/share to $1.58/share.

This would equate to a $0.52 increase in my annual forward dividends with my single share of AMGN.

Expected Dividend Increase #7: Dominion Energy (D)

D is another wildcard dividend increase because of the fact that while the company announced its dividend increase in December last year, they could revert to their previous trend of announcing a dividend increase in January.

Unlike its 9.9% raise last year, this year's raise will be much lower because of the company's announcement that dividend growth will be in the 2-3% range to lower the company's payout ratio over the next few years to a more sustainable level.

It's for this reason that I'm expecting a 2.5% increase in the company's quarterly dividend from $0.9175/share to $.9400/share.

Across my 4 shares, this would boost my annual forward dividends by $0.36.

Conclusion:

Overall, my dividend income increased by $2.20 in November as a result of the dividend increase from AbbVie. At a 4% yield, this is equivalent to investing $55.00 in dividend stocks!

If dividend increases turn out as expected for the month of December, I will receive a $1.968 boost in annual forward dividends. This would require an investment of $49.20 at a 4% yield to replicate!

The next few months of dividend increases will be very strong as we're entering that sweet spot of this year and the next year, which is why I'm very excited to write about all of these raises coming our way from now until next April.

December will be a great month in terms of volume and the number of dividend increases, but April will be just as packed with expected raises from XOM, IBM, and JNJ to name a few.

Discussion:

Are you expecting any significant changes in dividend increases from this year to last year as I am? Are you expecting any raises from new companies in your portfolio compared to last year?

As always, thanks for reading and I look forward to replying to any comments that you may leave in the comment section below.


Tuesday, November 19, 2019

Why Investing Is My Favorite Activity

Aside from writing and spending time with family, watching sports and YouTube are a couple of my favorite hobbies. However, there's another activity that surpasses all the joys in my life with the exception of spending time with family.


That activity is of course placing investments!

I would attribute this affinity toward investing to three reasons that we'll discuss below:

Reason #1: Investing Will Eventually Buy My Time Back

As someone with numerous interests that I mentioned above, I often find that weekends disappear before they even seem to begin.

As such, I feel as though I never have enough time to do what I'd like.

One of the primary benefits to dividend growth investing, is that with each stock purchase, I'm that much closer to the end goal of buying back my time.

Take for instance the fact that I recently added $40.95 in dividend income through dividend stock purchases with the deployment of fresh capital, reinvestment, and dividend increases.

I know that my semi-FI number of $12-15k could increase within 5-10 years if I decide to have kids, get married, etc., but there's no doubt that last month brought me a step closer to at least semi-FI.

Once I've bought back my time, I'll obviously have the freedom to do what I'd like, when I would like, and with whom I like.

This includes going to bed and getting out of bed whenever I please.

For someone that's naturally geared toward staying up late and that seems to be most productive past midnight, this alone is a huge selling point for me to pursue financial independence, and DGI is my mechanism to do so.

Reason #2: Investing Is A Game To Me

As someone that also enjoys the occasional game of Monopoly, investing in high quality dividend stocks (and especially REITs) is like a real life game of Monopoly.

Every time I buy shares in a great company like Realty Income (O), PepsiCo (PEP), or Lowe's (LOW), I'm buying ownership in world class businesses.

There's something neat about the thought that an average guy like myself is able to buy ownership in dozens of businesses with no commissions considering trading commissions were somewhat cost prohibitive a couple decades ago!

And as someone that is looking to achieve financial independence, it's quite clear that simply keeping my money in a savings account isn't going to create any meaningful wealth for me.


After all, the Paul Allen quote about the lack of savings account millionaires rings true.

Whether one decides to go into business as an owner/operator or as a shareholder, it's an undeniable truth that the only viable way to build wealth is through ownership of some sort.

The great thing about dividend growth stocks, is that I reap the rewards of a company's success regardless of what I do as long as I hold my shares.

The passive nature of DGI is one of the primary reasons that I chose the strategy, and its simplicity is why I enjoy it.

As an investor, I'm simply looking to build a portfolio of companies that I believe will be able to consistently grow their earnings and dividends, and I then monitor those investments a couple times a year.

Reason #3: Investing Is A Virtuous Process Of Improvement

As with anything else in life, we learn as we go regardless of our past experience or lack thereof.

Even though Warren Buffett is arguably the greatest investor of all time, he still spends countless hours learning about investing.

Investing allows us to research investment opportunities, form investment theses, and then evaluate over time whether we were correct.

When we're inevitably wrong and our theses doesn't pan out, we then get a chance to go back and learn where we went wrong.

It's this process that allows us to continuously improve, so that we become better investors.

As further proof of how much of a continuous process investing is, I should note it's time for another post on what I've learned in my second year of investing.

While what I learned in my first full year of investing still applies, I've made at least a few small mistakes in the past year that have contributed to my growth as an investor that I'm excited to share with others.

Concluding Thoughts:

While there are several aspects of life that I enjoy, investing is right up at the top of the list.

Investing will ultimately allow me to buy back my time and live life on my terms.

Investing is also enjoyable to me in the sense that it allows me to buy ownership in wonderful businesses.

The great thing about this ownership is the only condition for me to continue reaping the rewards is that I need to hold onto my shares.

Investing also forces me to continue honing my craft through research, forming investment theses, and evaluating how those theses play out.

Discussion:

Did I miss any other factors that make investing fun? What do you enjoy most about investing?








Tuesday, November 12, 2019

October 2019 Dividend Income

Can you even believe it? The fourth quarter of 2019 is well under way, with one month under our belt and only two remaining!

That means we'll be examining what my dividend portfolio was able to produce in dividends during the month of October.



Analysis:

Overall, I collected $41.91 in dividends during the month of October.

This represents a 23.8% quarterly growth rate compared to July 2019's $33.84 in dividend income, and a 96.6% YOY growth rate compared to October 2018's $21.32 in dividend income.

Breaking this during further, $35.63 originated from 12 companies in my Robinhood account, 2 in my Webull portfolio totaling $6.03, and $0.25 from 13 companies in my M1 finance that paid dividends during the month.

There were a variety of developments that accounted for the $8.07 increase in dividend income from July to October.

I received a $0.12 increase in my dividend income as a result of Philip Morris' (PM) dividend increase announced in September.

I also received an additional $3.51 in dividend income as a result of my purchase of 3 shares of PM before the ex-dividend date in my Webull account.

In addition, I received $2.52 in additional dividends from Altria Group (MO) because of my purchase of 3 shares of MO before the ex-dividend date in my Webull account.

I also benefited from a $0.28 increase in dividends as a result of MO's dividend increase announced in August, as well as an additional $1.68 in dividend income from my purchase of 2 MO shares in my Robinhood account following its dividend increase.

WP Carey (WPC) increased its quarterly dividend and with that increase, my dividend income was boosted $0.01 following WPC's dividend increase in September.

GlaxoSmithKline (GSK) paid $0.05 less in dividends compared to July 2019 because of its varying dividend rate.

Summary:

October was yet another month of significant progress for the portfolio, and there's a chance that this will be the portfolio's final month of dividend income coming in under $50.

We're so fortunate to be living in a time of low/no cost trading commissions.

At the time of writing, the portfolio now consists of 65 stocks and my mutual fund holding, CAIBX. I'm receiving 272 dividend payments each year as a result of the portfolio's diversification.

Not many years ago, this level of diversification for a portfolio worth less than $20k wouldn't have been economically feasible.

Heck, I'm not even sure if a $100k portfolio in that many names would have been possible a decade ago due to the fees of building out such a diversified portfolio.

Discussion:

How was your October for dividend income? Did you have any new dividend payers during the month?

As always, thanks for reading and I look forward to any comments that you may leave in the comment section below.

Tuesday, November 5, 2019

October 2019 Dividend Stock Purchases

Another month has passed us by and for those of us in the Midwest, arctic temperatures, massive snowfalls, and dangerous driving conditions are just around the corner.

On that poignant note, we'll be examining a much more upbeat and exciting topic - which is of course, my dividend stock purchase activity for the month of October. Let's delve into it, shall we?




As illustrated above, I started October by adding to my position in Energy Transfer (ET) by purchasing a unit at $13.00. I added to my a unit to my position in ET two more times in my Robinhood portfolio, and opened a position in ET in my Webull account, purchasing a couple more units, bringing my total unit count to 29 to end the month.

In total, this increased my annual forward distributions by $6.10 across the 5 units that I added. My cost basis on each unit for the month was $12.66 against the $1.22 annualized distribution, for a yield of 9.64%. For a more comprehensive rationale on my decision to add to my position in ET, I would refer interested readers to my most recent article on the company on Seeking Alpha.

The next purchase for the month was UnitedHealth Group (UNH). I began the month of October with a bang, opening a position in 3 different companies in the first couple days of the month.

My 1 share starter position in UNH was initiated at a cost of $216.68, for an entry yield of 1.99%. I detailed my thoughts on what would eventually support my decision to open a position in UNH in a guest post on Sick Economics for those that would like a more detailed analysis of the company.

This purchase increased my annual forward dividends by $4.32.

The second position that I would open during the month of October was Wells Fargo (WFC).

I opened a 5 share starter position in WFC at an average cost basis of $48.58 a share, for an entry yield of 4.20%. This purchase boosted my annual forward dividends by $10.20.

Yet again, I would refer interested readers to my recent article on WFC on Seeking Alpha.

The third position that I opened during the month of October was Lockheed Martin (LMT).

My 1 share starter position in LMT was initiated at a cost of $375.45, for an entry yield of 2.56%, which increased my annual forward dividends by $9.60.

I also covered my thoughts which led to me initiate a position in LMT the week prior to my article being published on Seeking Alpha for those interested in an in-depth analysis of the company.

The final position that I initiated in my taxable accounts came in the last week of October, with a 2 share purchase to initiate a position in Visa (V).

For readers that have been paying particularly close attention to my blog posts and my articles on Seeking Alpha, they'll notice that over the past 4 months or so, I've very positively mentioned V at least 3 separate times while writing about other companies.

While I've known V to be a great company for years now, it wasn't until I was writing an article discussing my first major investing revelation in a blog post a few months back that I began to truly appreciate the likes of companies such as V.

Until I actually did the math and looked at the payback periods on a company like V versus AT&T (T) and the yield on cost of both after a couple decades, I never fully realized how necessary rapid dividend growers like V are to a dividend growth portfolio.

T may bring the massive dividend at this point in time, but there's no doubt V brings tremendous growth through the secular tailwind of actual cash becoming a rarer and less preferred commodity to pay for goods and services.

I've since adopted more of an affinity to evenly split my investments between low yield/high dividend growth, moderate yield/moderate dividend growth, and high yield/low dividend growth companies.

In the days ahead, I anticipate writing an article on Seeking Alpha with a more detailed analysis of what led me to specifically choose V as a fast growth investment now that we've discussed in a bit more detail my recent shift in dividend investing strategy.

My 2 share starter position in V was initiated at an average cost per share of $178.69, for an entry yield of 0.67%, adding $2.40 in annual forward dividends.

The other activity in my investment portfolio, but more specifically in my retirement account, is that I I was able to add 3.806 shares of my mutual fund holding, CAIBX during the month of October.

This increased my annual forward dividends by $8.14 (assuming the same $0.14 special dividend that was paid last year).

Summary:

My annual forward dividends/distributions increased were boosted by $40.76 due to the $1,499.71 in capital that I deployed during the month of October.

This equates to an average yield of 2.72%, which demonstrates my commitment to adding more of the classic companies when one thinks of a DGI portfolio to balance out the heavy hitters in the portfolio in terms of yield.

The four new positions that I initiated this month brings the number of whole share positions in my portfolio to 42 while I also own 23 different names in my 50 stock M1 Finance portfolio with fractional shares, bringing the total number of stocks in my portfolio to 65 and CAIBX.

Overall, the portfolio continues to make massive strides in being built to the ultimate goal of about 100 different stocks.

At the time of writing, the only dividend/distribution increase that I have received during the month of October is the 0.6% increase in Enterprise Products Partner's quarterly distribution from $0.44/unit to $0.4425/unit.

I do believe that Iron Mountain (IRM) will increase its dividend in the course of the next few days, however.

At any rate, my annual forward dividends/distributions increased $40.95 as a result of my investments and EPD's distribution increase.

Over the past month, I was able to increase my annual forward dividends/distributions by 5.7% from $717.51 to $758.46.

I will also have enough saved up to fully finance the purchase of a 3 to 4 year old car with less than 30k miles by early to mid-January in spite of my strong investments the last couple months.

Besides that, I will also have a small emergency fund built up by this spring and the ability to pay off my ~$2,000 in credit card debt that is interest free until next June.

Discussion:

Are you dreading the thought of winter weather as much as I am? Did you add any new names to your portfolio? How did you do in terms of deploying capital in the month of October?

Thanks for reading and I look forward to replying to any comments that you leave below!




Tuesday, October 29, 2019

Expected Dividend Increases for November 2019

As I write this post, the NFL season is in full swing and the Packers are looking impressive thus far. I'm not sure how this season is going to end for the green and gold, but I'm certainly excited to find out after the past couple seasons have been uncharacteristically disappointing.

Meanwhile, my true passion of NBA basketball, and more specifically, Bucks basketball is back! Despite the new faces of Kyle Korver, Robin Lopez, Thanasis Antetokounmpo, and Wesley Matthews, the Bucks appear to have retained much of that same chemistry from last season as evidenced by their win over the Rockets to open the season in Houston. It may only be one game, but given the outcome of last season and the lessons from it, I'm brimming with optimism that this will be the year that the Bucks win it all!

But that's enough of the football and basketball talk for now. We'll be discussing the dividend/distribution increases I received during the month of October and looking ahead to dividend increases that I'm expecting for November.



Distribution Increase: Enterprise Products Partners (EPD)

EPD extended its streak of consecutive quarterly distribution increases to 61, having raised its quarterly distribution from $0.44/unit to $0.4425/unit a couple weeks ago. It's this level of consistency from EPD that prompted me to write another bullish article on the company on Seeking Alpha recently, and this consistency is also why EPD is the largest energy position in my portfolio in terms of portfolio weighting.

Across my 19 units of EPD, this increased my forward annual dividends/distributions by $0.19.

Distribution Freeze: EQM Midstream Partners (EQM)

Readers will notice EQM actually opted to keep its quarterly distribution steady at $1.16/unit rather than continuing upon its recent trend of raising the quarterly distribution by $0.015.

While this isn't quite what I was expecting to occur, I can understand in hindsight why EQM opted to freeze its dividend for the time being.

EQM recently announced that its key Mountain Valley Pipeline project is expected to experience yet another delay and increase in costs. The project's completion date was pushed back from mid-2020 to late-2020 while expected costs rose from $4.8-5.0 billion to $5.3-5.5 billion.

Meanwhile, EQM's distribution is hanging on by a few threads at a coverage ratio of 1.03. For context, Simply Safe Dividends considers a coverage ratio of 1.10 or greater to be ideal for MLPs such as EQM. Assuming the eventual completion of MVP (which accounts for about 2/3 of EQM's organic growth going forward), EQM's distribution coverage would increase to help the company meet its long-term coverage ratio goal of 1.20.

Fortunately, I believe that because MVP is about 90% complete, the sunk cost of the pipeline to date will be a motivating factor for management to complete this project in the next year to year and a half.

Admittedly, this is more of a speculative position within my portfolio and it's arguably the least safe dividend/distribution in my portfolio. I have weighted it as such in my portfolio, with it accounting for barely 2% of my dividend/distribution income and less than 1% of my portfolio value. It certainly isn't on the level of EPD or Energy Transfer (ET), but I still believe it's a good midstream company.

Not Yet Announced Dividend Increase: Iron Mountain (IRM)

While IRM has announced its dividend about a week before the end of October the last couple years, the company has apparently decided to depart from this trend to establish a new one as it has yet to announce a dividend increase as I'm writing this on October 26.

I don't really have any doubts that IRM will fail to deliver a dividend increase in the realm of what I was expecting in my previous dividend increase post, but it's just a matter of waiting until the week that this blog post is published before I'm able to update this section of the post when the company will presumably announce its dividend increase.

Until that time, I'm assuming that IRM will increase its quarterly dividend from $0.611/share to $0.638/share. Should IRM follow through on my prediction, this would increase my annual forward dividends by $0.432.

Bonus Distribution Increase: Magellan Midstream Partners (MMP)

I somehow forgot all about the fact that MMP increases is distribution at near the end of the first month of each quarter. MMP increased its quarterly distribution 0.7% from $1.0125/unit to $1.02/unit. Across my 3 shares, this increased my annual forward distributions by $0.09.

With consistent raises each and every quarter, I wonder how much longer I'll forget about MMP.

Expected Dividend Increases for November

Hormel Foods Corporation (HRL):

HRL is one of only two dividend increases that I'm expecting within my 65 stock portfolio (including 23 M1 Finance holdings that each account for less than 0.1% of my net worth and dividends) for the month of November.

With that said, I believe HRL is in a great position to reward its shareholders with a 9.5% increase in its quarterly dividend from $0.21/share to $0.23/share.

When we consider that HRL is paying out a bit less than half of its earnings, possesses a nearly flawless balance sheet, and is likely to grow its earnings in the mid to high-single digits over the long-term, I believe the above dividend growth estimate is reasonable.

This will have no impact on my dividend income (a bit less than $0.005) because HRL is less than even 0.1% of my total dividend income.

The reason that this will actually have no impact on my dividend income is that M1 Finance rounds to the nearest cent for quarterly dividends/distributions and I'm already getting the benefit of rounding in this case.

Starbucks (SBUX):

SBUX is the second of two dividend increases that I'm expecting for the month.

Similar to HRL, SBUX accounts for less than 0.1% of my total dividend income and the impact that this raise will have on total dividend/distribution income will be nothing.

However, I do expect a very strong dividend increase from SBUX in the low to mid-teen percent range given the company's fairly strong balance sheet and projected earnings growth.

Concluding Thoughts:

As of the last few days of October, this month has brought a little bit of everything between EPD delivering as expected, EQM freezing its distribution (as I should have expected in hindsight), and IRM seemingly trolling shareholders by going back to a late October or early November dividend announcement.

Thus far, my annual forward dividends/distributions have increased by $0.28 while I await the increase from IRM. It will be interesting to see whether the company increases its dividend on or before Halloween or if it will increase its dividend on Friday, November 1. The $0.28 in increases for the month thus far would require a $7.00 investment at a 4% yield to duplicate.

After many consecutive months of receiving at least a few dividend/distribution increases, we've reached my slowest month of the year for dividend/distribution increases, with none of my 42 whole share holdings expected to increase their dividends/distributions this month.

There are plenty of companies that are expected to increase their dividends this month aside from HRL and SBUX, such as Nike (NKE), Walt Disney (DIS), and McCormick, which I recently covered on Seeking Alpha (MKC).

Unfortunately, I don't yet own them.

However, I do believe the slowdown for November will motivate me to take action between now and next October, so that I can benefit from some of these increases next November.

The upside is that December is primed to be my strongest or second strongest month of the year for dividend/distribution increases in terms of quantity and its overall boost to income.

Discussion:

Are you as optimistic toward your favorite NFL team and NBA team as I am? Will November be a slow month for you in terms of dividend/distribution increases?

As always, thanks for reading this post. I look forward to reading any comments that you leave below.


Tuesday, October 22, 2019

Financial Lessons To Draw From The Holidays

With Halloween just around the corner, a few thoughts couldn't help cross my mind pertaining to the spooky holiday. In a society that is plagued by consumerism seemingly everywhere one can look, it's quite apparent that the commercialization of holidays for the benefit of businesses has been highly successful and has infiltrated American culture. With that said, we'll be examining the impact of this consumerism on the finances of Americans. We'll also be taking a look at how something as simple as trick or treating during Halloween could indirectly teach kids a lesson about fiscal responsibility.



Lesson #1: Americans Spare No Expense Celebrating Holidays

It really shouldn't come as a surprise that in a country that is as materialistic as the United States, Americans are spending a fortune on holidays.

But in order to fully highlight the absurdity of such spending, we'll be delving into the details of this spending, and discussing the implication that can be drawn from this analysis.

While on the topic of Halloween, it's only appropriate that we will start with Halloween specific spending first and then transition to overall holiday spending throughout the year.

For 2019, the National Retail Federation or NRF is expecting that Americans will spend $8.8 billion on Halloween costumes, decorations, and candy. Shoppers say that they expect to spend an average of $86.27 this year.

While this amount alone doesn't seem like much, it becomes considerably more when we delve into the spending on major holidays such as Thanksgiving, Christmas, Hanukkah, and Kwanzaa, whether its for gifts, decorations, candy, food, or travel.

According to Alliant Credit Union, Americans planned to spend an average of $1,007.24 last holiday season (covering Thanksgiving, Christmas, Hanukkah, and Kwanzaa), with $638 of that being allocated to gifts for family, friends, and coworkers, $215 being spent on non-gift holiday purchases such as food and decoration, and $155 being spent on other non-gift purchases for themselves and their families.

Perhaps the most glaring spending category in my opinion is the $638 being spent on gifts. It seems a bit excessive to me to spend that amount of money giving gifts to family and friends that in all likelihood, will probably end up being thrown out within a year or two anyway.

This doesn't even include holidays, such as Mother's Day, Valentine's Day, Easter, the quintessential American holiday of Super Bowl weekend, Father's Day, or St. Patrick's Day, where Americans collectively spent almost another $100 billion each year.

When we take into consideration that the average American household will somewhere in the ballpark of $1,500 this year on holiday related expenses, this equates to roughly 2.3% of the median household income of $63,688 (as of January 2019).

While it may not sound like much, that couple percent of spending could instead be allocated to saving and investing.

Even what seems like a measly 2% when applied to the average American savings rate of 8.1% as of August 2019 (keep in mind this savings rate is in the midst of the lowest unemployment numbers of 50 years and that the next recession will eat into this savings rate considerably), results in a 10.1% savings rate.



Using the Mustachian time to financial independence calculator and assuming that someone is starting from $0 in net worth, that extra 2% is the difference between having to wait almost 63 years to be financially independent versus 57 years.

You read that right! When we take into consideration the rather anemic savings rating of Americans, that extra 2% in savings equates to a difference of over 5 years!

Now, obviously if one is serious about financial independence, holiday spending is going to be maybe the fifth or sixth place to look at optimizing spending.

For optimal control of one's spending, the first three categories that are beneficial to conquer are the big 3 (housing, food, and transportation).

But it just goes to show how cutting the fat on seemingly minimal expenses can make a difference of several months for even a household that has their big 3 expenses well under control.

I'm not saying that we shouldn't spend on the holidays whatsoever, but a bit more mindful and purposeful spending could go a long way in reducing that holiday spending above. If Americans take this financial lesson to heart, I believe it's entirely possible that we could cut holiday spending in half. An extra percent savings rate for many Americans would be a noticeable bump in their savings increase due to the fact that the savings rate sits at about 8%, and it would be the start of remedying the underlying retirement crisis.

The implications of this excessive spending and the excessive spending of Americans in every notable budget category in general are that these reckless spending habits are the result of financial illiteracy. This is the very reason that even in a relatively robust economy, Americans feel as if they can't get ahead.

If one doesn't have an understanding of personal finances and of their personal financial situation, then how can they ever hope to retire? It's this very financial illiteracy that is the reason many Americans will never be able to retire without the aid of the government through Social Security and/or via pensions from their employers.

Lesson #2: Trick or Treating Can Teach Kids A Valuable Lesson

Now, it seems a bit contradictory that a holiday as pointless and frivolous as Halloween (my personal opinion now that I'm a solid decade beyond trick or treating and don't have any children to take trick or treating) could actually teach kids a valuable financial lesson, but hear me out on this one.

From the time I began trick or treating to when I stopped, I remember taking stock of my massive piles of Halloween candy.

I'm not sure if I am alone in this innate behavior that I displayed as a child, but I recall my tendency to gradually eat my candy over a period of several weeks. My candy would last at least through Thanksgiving each year.

My parents never really had to tell me to slow down on the candy consumption as a kid because I've always had the saving and delayed gratification mindset.

I knew that if I devoured all of my candy in a few days, that would mean I would be out of candy and I wouldn't be able to get as much enjoyment as I would if I savored my candy.

Even as an adult, the concept remains similar. Instead of talking about candy, we're now talking about money as the primary consideration in my day to day life choices. Like candy, money is a somewhat finite commodity that we must earn more of if we would like to spend more of it.

As a rule of thumb, I generally take a couple of days to contemplate a purchase before I go ahead with that purchase, regardless of the dollar amount. If I can still justify that purchase a couple days later, chances are that the purchase will meaningfully improve my life and that the cost is worth it.

I never equated something as simple as trick or treating for Halloween candy and the decision to ration that candy as having an impact on my future financial decisions, but I truly believe it has had some impact in that it formed the foundation of how I make financial decisions.

Concluding Thoughts:

While I do enjoy the holidays and the month of October is a month that I enjoy watching reruns of Halloween movies, I've found that holidays in the United States are somewhat tainted due to the commercialization aspect. Companies spend billions of dollars every year to hype up the commercial aspect of holidays such as Halloween, Thanksgiving, Christmas, and Easter.

While I'm not saying that Americans should completely refrain from holiday spending, I believe it would be beneficial for Americans to take a bit more of a mindful and purposeful spending approach toward this budget category, along with others. I always knew there was some level of spending around the holidays, but it took me a bit by surprise that it amounted to this much for the average household.

Finally, trick or treating every Halloween and rationing candy was the foundation of what would eventually shape my spending habits and my mindset toward spending.

Discussion:

Were you surprised at the amount that Americans spend during the holidays throughout the year? Did you also conserve your Halloween candy each year rather than eating it in the span of a couple days?

As always, I'd like to thank readers for reading my thoughts on holiday spending in the United States. I look forward to replying to any comments you may leave below in the comment section.





Tuesday, October 15, 2019

My Stance on the Relationship Between Ethics and Investing

In our highly divisive and litigious society, it's becoming increasingly common to hear those around us and those in the mainstream media portraying companies as evil. There are even some investors that allegedly refuse to invest in specific sectors (i.e. tobacco, oil, pharma), citing moral or ethical reasons.

In this post, I intend to outline my thoughts on the relationship between ethics and investing.

I'll start by citing that 17.5% of the dividends in my taxable account and 13.9% of my total dividends originate from the big 3 publicly traded tobacco companies (PM, BTI, and MO).

There are some that may question why I receive a significant portion of my dividends from an industry that can be as harmful as tobacco.

It comes down to 3 reasons in my mind.


Image Source: imgflip

Reason #1: I Prioritize Making Money From My Investments

While there are those that refrain from what they believe are unethical or controversial sectors, they forget or disregard that in the most literal sense, your job as an investor is to find the most lucrative investments that you can.

It's often the most hated industries in the stock market that deliver the best returns over time because when you're buying a company with a high dividend yield, at a perpetually reasonable or underpriced valuation, and moderate earnings growth, you're positioning yourself for success.

When we take for instance that money is ultimately a tool that can be used for good or evil, we begin to understand that an investment doesn't really define us.

While there are negative consequences to the products that tobacco companies provide to their customers, they have proven to be the most lucrative industry for many decades.

The money earned from those investments over the decades have done many great things for society, whether its the tobacco companies paying taxes to the government or shareholders leaving behind massive fortunes to fund their favorite non-profit organizations.

If the wealth an investor amasses from their investments is ultimately used for good, then that really offsets the negative consequences in my mind.

Reason #2: Companies Will Profit Regardless Of If You Own Them

One thing that we often forget when we balk at investing in specific companies for whatever reason is that our not buying shares has no negative impact on the company (unless that company is issuing additional shares to raise capital for additional investments in R&D, marketing, etc, and isn't able to raise capital due to moral concerns of potential investors).

Regardless of whether retail and institutional investors shun investing in a company, this company will be largely unaffected.

In fact, when investors refuse to invest in a company for whatever reason, they are likely undermining their intent.

When a company trades at depressed valuations, share buybacks prove very lucrative to long-term shareholders, making them considerably richer in spite of ethical investors refusing to purchase shares in that company.

Reason #3: It All Comes Down To Personal Responsibility And Perspective

Everything could be portrayed as unethical or evil if framed properly. A misguided cynic could portray fast food as unhealthy and the root cause for the obesity epidemic. They could also argue that tobacco companies are the ones to blame for smoking-related deaths. We could blame oil companies for every single oil spill. However, we need to keep in mind that these companies are simply providing us what we demand.

As much as fast food, tobacco, oil, you name it is at fault for whatever ails society, we each make individual choices everyday that enrich these industries.

Whenever we purchase a supersized fry, a pack of cigarettes, or fill up our gas tank, we're funding these companies.

While it does pain me that the families of smokers are also impacted by second hand smoke and premature deaths in the family, cigarettes have never been the root cause of the nearly half million people a year in the US that die from smoking related illnesses.

It was the decisions of those individuals to partake in a vice or bad habit that negatively affected them and/or their family.

Regardless of whether cigarettes are legal or illegal, people will still obtain them. It doesn't make the tobacco company evil for supplying a product that customers demand, especially knowing all that we do about the harmful effects of smoking.

Concluding Thoughts:

As an investor, your goal should be to enrich yourself as much as possible. You can then use these funds to fight for the causes you believe in as you grow older or pass away.

Aside from refusing to purchase products from what you believe are unethical industries or companies, you have absolutely no control over the existence of unethical industries. They will profit regardless of whether or not you invest in them.

We shouldn't limit ourselves to investments that are entirely ethical because there really are none as far as I'm concerned.

We could argue all day about certain industries and for as much good they do for society, we would conclude they also harmed or wronged society in some way at some point.

Discussion:

What are your beliefs on the relationship between ethics and investing? Are there any industries you refrain from owning for ethical reasons?




As always, thanks for reading and I look forward to replying to any comment(s) below.