Tuesday, July 16, 2019

Perspiration, Persistence, & Patience: The Three Traits Key to Success

Patience, persistence and perspiration make an unbeatable combination for success. - Napoleon Hill
Image Source: BrainyQuote

Often attributed to a quote by American self-help author Napoleon Hill, I believe that perspiration, persistence, and patience are three traits an individual can develop over time that when properly harnessed can lead to unbelievable success. I'll discuss each of these traits in more detail and describe why each is as important as the other.

The Willingness to Perspire Is the First Step to Greatness

If you do the work you get rewarded. There are no shortcuts in life. - Michael Jordan
Image Source: AZ Quotes

The first step to greatness is the willingness to put in the work. As the saying goes, "every master was once a beginner. Every pro was once an amateur." Whatever you decide is worthy of mastering, you're going to have to put in a tremendous amount of work. Michael Jordan put in tens of thousands of hours into his game, which led to his eventual succession into the GOAT discussion. 

How often have we been told by infomercials and people trying to sell us stuff that you can lose 10 pounds in a month without watching your diet or exercising, or that you can earn more money working from home than you can at your day job and put in 10% of the effort? Not surprisingly, the foundation of America has been built upon convenience. If I told you that you could achieve all you ever want in life with very little work, you'd probably be skeptical but you'd still watch my infomercial and maybe even buy my product. 

The inconvenient universal truth in life is that in order to be the best, you need to work unlike anyone else is willing to work. If it was easy to be great, don't you think everyone would do it? There is only one Michael Jordan because he was willing to dedicate tens of thousands of hours of his life to his craft. The same goes with Warren Buffett and any other wildly successful person you name.

The Ability to Persist Separates the Best from the Rest

Image result for churchill if you're going through hell, keep going quote
Image Source: izquotes

While hard work is absolutely necessary to building success, it is only the starting point. Although the quote often attributed to Churchill was quite literally referring to the hell of war and what the British endured during World War II, we're all probably aware that life isn't always going to be a picnic at all times. Even if you're doing what you love, there will undoubtedly be days that you don't want to do it. 

Do you think that Michael Jordan ever felt like taking it easy or slacking off? I think we can agree that Michael Jordan is a human, so he has in fact felt that way before. 

A key difference between someone that is successful and someone that could have been successful is in their ability to persist through the obstacles that life throws at them. We've probably all experienced in our own lives or witnessed someone embark upon a goal only to give up when meeting a slight bit of resistance. 

Think of the New Year's resolutions that that many of us set and then give up on within a few weeks. Maybe we had a goal to lose 10 pounds for the year and a month into the year, we actually gained 5 pounds. We're going to encounter trying times where we feel like giving up, but we need to realize that with every setback comes opportunity (link to post about why I embrace failure). 

The Capability to Remain Patient Allows One to Stay the Course 

Image result for warren buffett patience babies
Image Source: AZ Quotes

Among my favorite quotes of the sage Warren Buffett, is undoubtedly the one illustrated above. Applying his quote from an investing standpoint, I often think of the example that when I was starting out as a dividend growth investor. I invested a bit over $2,000 and my annual dividends at that time were around $80. 

While I'm still in the early innings of my investing career, the incredible thing is that I've managed to amass an investment portfolio worth about $14,000 which generates over $600 a year in dividends for me. Between dividend reinvestment and dividend increases, my annual dividend income is practically increasing by that $80 mark I started at. This will only accelerate as time progresses and compounding does the heavy lifting for me.

Unless you're basically a millionaire already, you won't be a millionaire tomorrow, next week, next month, or next year. Outside of winning the lottery or inheriting a fortune from a long lost uncle, it doesn't matter how hard you work in the next few months or the next year. 

If you have the expectation of achieving success in a very short time span, you'll eventually give up when you inevitably don't achieve the results you desire. The only way to achieve your financial goals or any goal in life for that matter, is to remain patient and stay the course. Nobody ever achieved success by giving up.
Conclusion:

The first step in achieving any success is the willingness to work harder than everyone else. There are no shortcuts to achieving incredible goals. Expanding upon this, you have to be willing to endure your fair share of challenges and obstacles along the way. Life is not a linear progression. There are peaks and valleys throughout life. And, finally, nothing in life worth achieving is going to be able to be achieved in the time it took for me to write this post or for you to read it. Great things take time, and no amount of effort is going to change that. If we're able to develop and implement these three traits into our lives over time, there is very little that isn't possible for us to achieve. I believe we're only limited by our willingness to put in the work, our ability to endure adversity, and to remain patient.
Discussion:

What do you think of the three keys to success? Are there any others that come to your mind? As always, thanks for taking time out of your schedule to read this post. I look forward to any comments you may have.

Tuesday, July 9, 2019

Net Worth Versus Dividends: Why I Prefer Measuring Dividends

As a dividend growth investor and a personal finance enthusiast in general, I track both my net worth and my dividend income. While I track both of these figures, I place more emphasis in one over the other. One can probably deduce which figure I support more than the other (hint: it's in the name of the blog).


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The Practicality of Using Net Worth to Measure Financial Success

Don't get me wrong. Although I prefer tracking dividends and place more emphasis on that, I certainly see the value in also tracking net worth. Net worth is a fantastic measure of your financial success because you can only become financially independent on a sufficient asset base. There are downsides to net worth if you don't properly track it and you include everything in the number.

I prefer to only include assets that generate an income for me. While your car may help you get to work so you can make money, chances are it probably won't generate an income for you. The same concept applies to a house.

The other notable drawback to using net worth to measure your financial success is that depending upon your asset allocation, your net worth may be highly volatile and subject to market downturns.

Without also measuring the dividends that one is receiving, one may be discouraged whenever the next bear market hits and their stock holdings are down 30, 40, or even 50%.

For those that are index fund investors, market downturns are actually even more discouraging because due to the low yield of index funds, this means that any downturn in the market forces retirees to sell off their index funds at the worst time to make up the difference between the cost of their lifestyle and the amount of dividends they collect from their index funds.

Why Using Dividend Income To Measure Financial Success Is Ideal

As they the personal finance mantra goes, cash is king. More specifically, ample cash flow to cover one's expenses renders one financially independent.

One of the many great things about dividend income is that regardless of what the market does, as long as one is diversified into great companies across most sectors of the economy, the cash flow will continue to increase right through a recessionary period.

While equating one's net worth with financial success can be a recipe for disappointment in a bear market, using dividend income to measure financial success can be a factor for motivation or comfort. If an investor is a retiree, they can sleep well at night knowing their stock holdings continue to generate an ever increasing amount of dividends. If an investor is still working, they can view the decline in their net worth as an opportunity to buy dividend stocks at very appealing valuations.

Conclusion:

I view both net worth and dividend income as very important metrics to track. Without an ample net worth, one can't become financially independent. After all, $100,000 can only generate so much in dividends for an investor without sacrificing a good bit of dividend safety and growth. But at the same time, when that $100,000 seemingly evaporates to $50,000 in the midst of a bear market, investors can take solace in knowing that their dividend income is largely independent of market volatility, which can actually help them take advantage of the market turmoil.

Discussion:

Do you measure your net worth? How about your dividend income? Do you see the case for tracking both, but placing more emphasis on dividend income than net worth? As always, thanks for reading and I look forward to replying to your comments.

Tuesday, July 2, 2019

June 2019 Dividend Income

Another month has come and gone, which means that July will be my last full month of undergrad, and it may even possibly be my last full month of formalized education for the rest of my life, aside from a certification or two in the future. Adding to the excitement of the fact I only have about a month left of school, I also benefited from setting a new personal record in terms of dividend income collected during the month of June. Without further ado, we'll delve straight into my results for June 2019.






Overall analysis:

In total, I received a personal record of $63.11 in dividends between my Robinhood account, retirement account, and M1 Finance account for June 2019. This is an quarter over quarter increase of 9.7% compared to the $57.53 I collected in March 2019, and an even more impressive YOY increase of 63.3% compared to June 2018 dividend income of $38.64. I collected $34.21 from my Robinhood account for the month, $28.42 from my retirement account, and $0.48 from my M1 Finance account.

Quarter Over Quarter Growth Analysis:

Breaking it down, there were a variety of factors in play that contributed to the 9.7% or $5.58 growth over March, which included the following:

The $28.42 in dividends collected from my retirement account mutual fund (CAIBX) increased my dividend income by $4.88 compared to March 2019.

I benefited from a dividend increase from Pepsico (PEP), which increased my dividends by $0.05 compared to March.

Johnson & Johnson (JNJ) increased my dividend income by $0.10 compared to March.

International Business Machines (IBM) increased my dividend income by $0.15 compared to March.

Exxon Mobil (XOM) increased my dividend income by $0.30 compared to March.

Southern Company (SO) increased my dividend income by $0.10 compared to March.

Year Over Year Analysis:

Taking it one step further, there were a number of material developments that allowed my dividend income to grow 63.3% YOY or by $24.47, which include the following:

My dividend income collected from CAIBX increased $21.29 compared to June 2018.

PEP increased my dividend income by $0.05 compared to June 2018.

British Petroleum (BP) increased my dividend income by $0.06 compared to June 2018.

I also benefited from an additional share of Dominion Energy (D) and a dividend increase, which caused me to collect an extra $1.16 from them compared to June 2018.

I received a dividend increase from Realty Income (O), which helped me collect an extra $0.02 from them compared to June 2018.

Home Depot (HD) announced a massive 32% dividend increase since June 2018, which increased my dividend income by $0.33 compared to June 2018.

JNJ accounted for $0.10 of my additional dividend income compared to June 2018.

XOM added another $0.30 to my dividend income compared to June 2018.

IBM accounted for $0.15 of my additional dividend income compared to June 2018.

Amgen (AMGN) added another $0.13 in dividend income compared to June 2018.

SO accounted for $0.10 of my additional dividend income compared to June 2018.

Pfizer (PFE) added another $0.16 to my dividend income compared to June 2018.

JM Smucker (SJM) accounted for $0.14 of my additional dividend income compared to June 2018.

Finally, the creation of my M1 Finance portfolio last September added $0.48 compared to the goose egg I collected from it last June.

Summary:

It's incredible to think that a year has gone by so fast after my portfolio's first June last year. I'm very pleased with both the 9.7% quarterly growth and the 63.3% YOY growth, but next year is set to be infinitely more exciting as I'll be able to contribute more capital than I ever have before. While 63.3% YOY growth is incredible, I fully believe I'll be able to more than double my dividend income collected next June from dividend increases, reinvestment of dividends into my Robinhood and retirement accounts, and fresh capital contributions to my retirement account and Robinhood account. It has been an incredible 2 years of investing, and the best is yet to come! I couldn't be more excited!

Discussion: 

How was your June? Did you have a record month? Did you have any new dividend payers for June? As always, I very much appreciate everyone for reading this post and I look forward to reading and replying to your comments!










Tuesday, June 25, 2019

Expected Dividend Increases for July 2019

With NBA free agency set to start in just a few more days, this offseason is sure to be one that will shape the landscape of the NBA for at least several years. If things play out right, the Milwaukee Bucks could again return to their glory days in the early to mid 1970s, which is beyond exciting to me. With that said, June is nearly over and with it, the year is incredibly half over. It's time for another post detailing the dividend increases I received in June, while we also look ahead to the raises I'm expecting in July.


June Dividend Increases: 

Dividend Increase #1: Realty Income (O)

As I expected in the previous dividend increase post, Realty Income raised its monthly dividend 0.2%, from $0.2260/share to $0.2265/share. This increased my annual forward dividends by $0.024 across my 4 shares.

Dividend Increase #2: WP Carey (WPC)

WP Carey came in with another quarter of somewhat disappointing dividend growth, announcing a 0.2% increase in its quarterly dividend, from $1.032/share to $1.034/share. This increased my annual forward dividends by $0.024 across my 3 shares.

Wild Card: Philip Morris International (PM)

Unless Philip Morris announces a last minute dividend increase in June, the company didn't increase its dividend in June like it did last year. I would assume the increase last June was an anomaly as the company felt compelled to keep up with its peer, Altria and the two dividend increases it announced last year. At any rate, we should definitely be receiving a dividend increase from Philip Morris in September.

Expected July Dividend Increases:

Expected Dividend Increase #1: JM Smucker (SJM)

While JM Smucker has a very strong 5 year DGR of 8% and a most recent increase of 9%, I wouldn't be surprised to see a bit of a deceleration from prior years, with a 6-7% increase being the most likely outcome from my perspective. This would translate into an increase in the quarterly dividend from $0.85/share to $0.90-$0.91/share. Across my two shares, my annual forward dividend income would increase $0.40-$0.48.

Expected Dividend Increase #2: EQM Midstream Partners

I'm expecting EQM Midstream Partners to continue with the status quo of $0.015 quarterly dividend increases, which is fine with me considering my yield on cost is approaching 9%. A 1.3% increase in its quarterly dividend, from $1.145 to $1.16 is an outcome I am quite confident in. Across my 4 shares, this would increase my annual forward dividends by $0.24.

Expected Dividend Increase #3: Enterprise Products Partners (EPD)

Enterprise is another name that I'm quite confident will be predictable. A 0.6% increase in the company's quarterly dividend, from $0.4375 to $0.44 is yet another outcome I am confident will materialize. If this does occur, my annual forward dividends would increase $0.09 across my 9 shares.

Wild Card Increase: British Petroleum (BP) 

It was around this same time last year, BP announced a rare dividend increase on the last day of July. The real question is if it was a one time event that won't happen for another 4 or 5 years, or if it will be a repeatable event. While I believe this is like the flip of a coin, I'll assume a 2.4% increase in the quarterly dividend from $0.615/share to $0.63/share. Across my 4 shares, this would increase my annual forward dividends by $0.24.

Summary: 

Overall, I received only $0.048 in dividend increases for the month of June, which would take $1.20 in fresh capital to replicate at a 4% yield. While June was a pretty disappointing month in terms of dividend increases, my upcoming dividend income post for the month will more than make up for it. Spoiler alert: I set a new personal best for dividends received in a month! In regards to July, my annual forward dividends could increase $0.73 or upwards of $1.05, which would take investments of $18.25 to $26.25 to replicate, respectively, assuming a 4% dividend yield.

Discussion: 

How was your June in terms of dividend increases? If it was a bit disappointing like mine, did you at least have a record dividend income month as a consolation prize? As always, thanks for reading and I look forward to replying to your comments.