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.

Tuesday, October 8, 2019

September 2019 Dividend Stock Purchases

As I write this, it's the last week of September and I'm at the tail end of recovering from my wisdom teeth removal a few day ago.

With that said, my purchases for the month of September are etched in stone at this point as I don't anticipate any additional investments until October.

I know I had indicated in my inaugural post for this series that I didn't believe I would be making any large investments in the near future, but I'm front loading my investments now. This decision can be explained by the fact that I was trying to get myself through my wisdom teeth extraction earlier this month, as well as my inability to delay my source of gratification, which is investing (ironic that a DGIer is that impatient, I know).

As we'll discuss below, September was a massive month in terms of capital deployment and dividend income added since the previous post.



I started off my buying spree by adding to my stake in Philip Morris International (PM) on September 9, purchasing 1 share for $73.50. This added $4.56 in annual forward dividends at the time of my purchase.

The next day I added a unit to my position in Energy Transfer (ET) at a cost of $13.95, which added $1.22 in annual forward distributions.

I began a buying spree on September 12, adding a unit to my Enterprise Products Partners (EPD) stake at a cost of $28.93. This purchase added $1.76 in annual forward distributions.

Later that day, I added to my position in Albemarle (ALB), purchasing 2 shares at a cost of $69.95 a share, which added $2.94 in annual forward dividends.

I continued my buying spree that day, adding 3 more shares to my Altria Group (MO) position at an average cost of $44.96 a share. This purchase added $10.08 in annual forward dividends.

I concluded my purchases that day by adding 2 more shares to my PM position at an average cost of $75.40 a share, adding $9.36 in annual forward dividends due to PM's dividend increase the prior day.

I added to my position in ET again on September 20, at a cost of $13.64 on the unit I purchased, adding $1.22 in annual forward distributions.

Besides the developments in my taxable accounts, the contributions and dividends in my retirement account added 4.372 shares and $9.36 in annual forward dividends.

I concluded the month with my largest purchase of the month. 

I finally initiated a 10 share position in British American Tobacco (BTI) on September 23 (the day of my wisdom teeth removal), at an average cost of $35.74 a share. This purchase increased my annual forward dividends by $26.80.

Summary:

My annual forward dividends increased by $67.30 as a result of my capital investments and another $0.65 in dividend increases in September, increasing my annual forward dividends by $67.95, from $649.56 to $717.51.

September was an incredible month in terms of capital deployment, with $1,181.26 invested during the month. The $67.30 added from capital investment and reinvestment equates to a 5.70% yield. 

Overall, September was a great month in terms of both dividend income added and capital deployed. 

I'm looking forward to reaching the $1,000 annual forward dividend mark, and believe that will occur sometime next spring.

Discussion:

How was capital deployment for yourself in September? What did you purchase during the month? Did you initiate any new positions? 

As always, thanks for reading and I look forward to replying to any comments you may leave below.

Tuesday, October 1, 2019

September 2019 Dividend Income

As I write this, we're in the final week of September and it will be the first day of October when this post is published. Overall, I'm making incredible progress on my goals for this year, and I'll probably be releasing an update on my progress with all my goals for the year.

At the very least, I'm on track to accomplish all of my goals, and I'm on track to crush some of them (which really warrants revisions to a few of the goals). The first day of October also marks the last quarter that we have to work toward achieving our goals for this year, so I'd encourage others to examine their goals. You may be as surprised as I am at the progress you've made thus far.

With that aside, we'll now delve into our dividend income for the month of September.




During the month of September, I collected $70.00 in dividends in total between my Robinhood account, retirement account, and M1 Finance account. Overall, that figure is good enough for a 10.9% quarterly growth rate compared to June 2019's dividend income, and a 58.2% YOY growth rate compared to September 2018's dividend income.

Breaking it down by account, I collected $34.28 from the 13 companies in my Robinhood account that paid dividends during September, which is a $0.07 improvement from the $34.21 collected in June 2019. I also collected $35.24 in dividends from my retirement account during September, which was a $6.82 increase from June 2019. Finally, I collected $0.48 in dividends from the 24 companies in my M1 Finance account, which remains the same compared to June 2019.

Quarterly growth in each account is as follows:

Robinhood:

The quarterly growth in the dividends collected in my Robinhood account stemmed from receiving a dividend increase from Realty Income (O), which boosted dividend income by $0.01.

The remaining $0.06 of increased income originated from JM Smucker's (SJM) raised announced a couple months back.

Retirement:

The $6.82 in additional dividends from my retirement account originated solely from reinvestment of the previous dividend in June and additional contributions.

YOY growth in each account is as follows:

Robinhood: 

I received an additional $0.05 from Pepsico (PEP) due to its dividend increase a while back.

I netted $0.02 less from British Petroleum (BP) due to the ADR fee associated with dividends from BP.

I was paid an extra $1.16 from Dominion Energy due to the purchase of an additional share of the company following my decision to sell off my remaining shares in Omega Healthcare Investors (OHI) at a nice profit.

Realty Income paid me an additional $0.03 in dividends as a result of a number of raises since last September.

Home Depot (HD) sent an additional $0.33 my way due to its massive raised announced a number of months ago.

Johnson & Johnson (JNJ) also paid me an additional $0.10 in dividends due to its raise that was announced in April.

International Business Machines (IBM) sent me an extra $0.15 due to its dividend increase announced in April.

Exxon Mobil (XOM) paid me an extra $0.30 as a result of its dividend increase announced in April as well (we can notice a trend that April is a fantastic month for dividend increases).

Southern Company (SO) paid an additional $0.10 to me from its dividend increase announced in...you guessed it - April.

Amgen (AMGN) sent an additional $0.15 to me because of its dividend increase announced last December.

JM Smucker paid an extra $0.06 as a result of its dividend increase.

Last but not least, Pfizer (PFE) paid me an additional $0.16 from its dividend increase announced last December.

Retirement:

The entirety of the $22.75 in additional dividends received from my retirement account originated from the sole holding in my retirement account, which is the mutual fund, CAIBX.

Conclusion:

September was yet another record month for me in terms of total dividend income. In fact, I actually passed my dividend income for 2018 this month!

Fortunately, I'm not quite done yet with record total dividend income as December still remains, and that will likely include a special dividend of some sort from my mutual fund holding, which may possibly push dividend income over $100 in December to end the year. Talk about ending the year with a bang! Triple digits would be a great way to end 2019 and usher in 2020!

Discussion:

Was your September a record month for you as well? Did you benefit from as many dividend increases I have have since June, and especially since last September?

As always, thanks for reading! I look forward to replying to any comments you leave below.


Tuesday, September 24, 2019

Expected Dividend Increases for October 2019

It's hard to believe that another month is just days away from ending as I write this post. Football season is well under way and through the first couple weeks, the Packers have got off to a 2-0 start. While the first week was ugly from an offensive perspective and week two wasn't great aside from the first 15-16 minutes, the Packers have played fantastic defense thus far. And that's an encouraging sign given that defense wins championships. Meanwhile, the Bucks are just a few weeks away from playing their first regular season game in Houston. Aside from the excitement in the world of sports, it's time to examine the dividend increases we received in September and how they stacked up to our expectations. We'll also examine the dividend increases we're expecting for October.



Dividend Increase #1: Realty Income (O)

Realty Income (O) announced a 0.2% increase in its monthly dividend from $0.2265/share to $0.2270/share just as I was expecting in my previous post in this series. Across my 4 shares, this increased my annual forward dividends by $0.024.

Dividend Increase #2: WP Carey (WPC)

WP Carey (WPC) announced a 0.2% increase in its quarterly dividend from $1.034/share to $1.036/share. This was yet another dividend increase that was exactly what I was expecting, and I have to say, I love that! Across my 3 shares, WP Carey's dividend raise boosted my annual forward dividends by $0.024.

Dividend Increase #3: Philip Morris International (PM)

Philip Morris International (PM) announced a 2.6% increase in quarterly dividend from $1.14/share to $1.17/share. This increase was a bit less than what I was expecting, but given that PM is considering a merger with Altria Group (MO), it's understandable that the dividend increase was a bit on the conservative side this year. Across my 5 shares of PM at the time of the announcement, this increased my forward annual dividends by $0.60. Shortly after PM's dividend increase, I increased my position a bit. I outline my rationale in my recent article on PM on Seeking Alpha.

Expected Dividend Increase #1: Iron Mountain (IRM)

I'm expecting Iron Mountain to replicate it's 4% dividend increase from last year, which would result in an increase in the quarterly dividend from $0.611/share to $0.638/share. Across my 4 shares, this would result in a $0.432 increase in my annual forward dividends.

Expected Dividend Increase #2: Enterprise Products Partners (EPD)

When I take into consideration that Enterprise Products Partners is among the most consistent MLPs in terms of distribution increases, I would be shocked if the company doesn't continue its trend of increasing its quarterly distribution by 0.6% from $0.44/unit to $0.4425/unit. Across my 19 units, this would increase my annual forward distributions/dividends by $0.19.

Expected Dividend Increase #3: EQM Midstream Partners (EQM)

Despite EQM Midstream Partner's rough past couple months in terms of capital depreciation, I expect that the company will continue to deliver with another 1.3% increase in its quarterly distribution from $1.16/unit to $1.175/unit as the company nears completion on its Mountain Valley Pipeline. Across my 4 units, this would boost my annual forward distributions by $0.24.

Closing Thoughts: 

September was by in large what I expected it would be in terms of dividend increases. While Philip Morris' dividend increase was a bit less than I thought it would be, I can understand why the company exercised caution. My other two dividend increases were exactly what I was expecting. Overall, my annual forward dividends increased by $0.648 for the month of September. This is equivalent to investing $16.20 at a 4% yield.

Fortunately, I'm expecting October to ramp up, with $0.862 in dividend increases expected. This would be equivalent to investing $21.55 in fresh capital at a 4% yield.

Discussion:

How many dividend increases did you receive in September? Were they about what you expected, more than you expected, or less than you expected?

As always, thanks for reading and I look forward to your comments below!

Tuesday, September 17, 2019

Hobby Versus Side Hustle: Breaking Them Both Down

As a relative newcomer to actually implementing side hustles, it wasn't until I started this blog that I began to notice the key differences between side hustles and hobbies. It was for this reason I thought it would be helpful to identify my observations of the key differences between side hustles and hobbies.

We'll start by offering my definitions of both a hobby and a side hustle and describe the key similarity between a hobby and a side hustle before delving into the key differences.

Hobby: An activity performed solely for the enjoyment and not for monetary gain.

Side hustle: Activity performed for monetary gain, and possibly for enjoyment.

The major similarity between a side hustle and a hobby is the fact that they both could be performed for enjoyment. Another element is that as long as the hobby or side hustle isn't overdone, both can provide an outlet for us to escape the everyday monotony that is often associated with a day job.

In my particular case, two of my primary hobbies include this blog and watching sports.

While it's entirely possible that this blog could one day make money, that isn't the primary motivation. If it was a major motivation, I would have gave up long ago because this blog has yet to technically make a dime on its own (although it may have theoretically funneled a bit of traffic to my side hustle on Seeking Alpha). But regardless of whether this blog does or doesn't eventually make money, it's quite clear that it doesn't matter to me.

The sole purpose of this blog when I started it was to serve as 1) a creative and productive outlet for me so that 2) I could someday look back on it as I document my journey to financial independence and 3) proof that an average guy or gal can attain financial independence in a relatively quick amount of time with the right mindset and that you don't have to be a successful pro athlete, musician, actor, or startup billionaire to attain financial independence and security.

There are numerous other examples of hobbies that many of us engage in on a daily basis, such as watching sports, spending time with family, and so forth. As a very casual sports fan (aside from NBA basketball where I have more of an intermediate understanding of the game), sports is another way to escape from the day to day grind that is important to our mental health.

As I alluded to above when defining a side hustle and a hobby, the key difference is the ability for monetary gain. A hobby is often a side hustle without the earning capability and a side hustle is often a hobby with earning potential (if you're doing it right, as I believe your side hustle shouldn't feel like actual work or it negates one of the purposes of a side hustle which is to escape the feeling of tedious work).

In my case, I generally write a couple articles a week over at Seeking Alpha. It has proven to be a fairly decent side hustle when we consider that I enjoy the process of researching and writing about investment opportunities.

It's generally a nice way for me to spend part of my weekend finding investment opportunities for both myself and others, which helps from a mental health standpoint as I feel I am doing something productive with my life, even with part of my downtime.

Concluding Thoughts:

As we've shown, both side hustles and hobbies serve as a respite from the sometimes dull nature of our day jobs. I couldn't even imagine working 80+ hours a week at a job you despise while having no time for yourself. Perhaps it's immature and misguided of me to believe that side hustles and hobbies can serve as distractions from our day jobs, especially when we spend so much of our lives at our day jobs, but I've found that hobbies and side hustles can bring meaning to our lives in ways that jobs often can't because they aren't designed for our pleasure.

Discussion:

What are your side hustles? What are your favorite hobbies? Are there any new side hustles or hobbies that you are soon considering participating in?

If you've made it this far through this sometimes aimless rant, I applaud you and thank you for reading. This post served as a bit more of one from the soul with less of the formal writing style that I often include in my posts. As always, I welcome any comments you may have below.

Tuesday, September 10, 2019

August 2019 Dividend Income

The month of August has come to a close and that means that the beginning of the NFL regular season will be upon us in a matter of days. My Green Bay Packers are set to open the season against the Chicago Bears two days after this blog post will be published.

More importantly, the end of August means two additional things. It means that we only need to get through September and half of October before the NBA preseason begins, and the regular season begins two weeks after that. I'm more excited now for the Milwaukee Bucks than I ever have been in the 15+ years that I have been a fan. This very well could be their season to win it all.

Secondly, it's time for us to examine the amount of dividend income our portfolio generated for us in the month of August.

Before we delve into that, I'd just like to announce that I opened a Webull brokerage account last month and have since purchased 7 additional units in Enterprise Products Partners (EPD) and I initiated a new position position in The GEO Group (GEO), which I recently discussed in a Seeking Alpha article on GEO.





Analysis:

I received total dividends of $48.93 during the month of August, which is an 11.1% growth rate compared to the $44.04 in dividends that I received in May, and an 18.8% YOY growth rate compared to the $41.19 in dividends I received in August 2018.

Breaking it down a bit further, $45.51 originated from 12 companies in my Robinhood account, $3.08 from EPD in my Webull account, and the remaining $0.34 from 15 companies in my M1 Finance account.

The $4.89 increase in my dividend income compared to May is due to a variety of factors discussed below:

Since May, I have purchased an additional 3 units of Energy Transfer (ET), which accounts for the additional $0.61 of distributions received from ET.

Magellan Midstream Partners (MMP) also provided an additional $0.02 in distributions due to a distribution increase it announced since the distribution paid in May.

Realty Income (O) also paid an additional $0.01 in dividends compared to May 2019 due to its quarterly dividend increases doing their magic.

I also collected an additional $0.06 in distributions from EQM Midstream Partners (EQM) compared to May.

I benefited from both a distribution increase from EPD and the purchase of an additional unit, which explains the additional $0.46 in distributions.

Lowe's (LOW) provided an additional $0.14 in dividends compared to May due to its massive dividend increase it announced at the end of May.

I also benefited from owning an additional share of AT&T (T), which increased my dividend income by $0.51 compared to May.

The largest reason for the increase in my dividend income from May to August was the purchase of 7 units in EPD through my new Webull brokerage account. This accounted for $3.08 in additional distributions.

Conclusion:

I'm quite pleased with the dividend income that I collected in August 2019. I'm coming very close to approaching that $50 milestone for the middle months of each quarter, which is very encouraging. Given that I expect to invest a small amount in a new position in the near future that pays a dividend in the middle month of each quarter, this will be my last middle of the quarter month below $50 in dividend income.

More encouragingly, I continue to make progress on my goal of increasing dividend income in the first month of each quarter. I'd like to catch up my first month of the quarter income with the other months, and get those months above $50 by the end of the year. Fortunately, I believe that goal is well within reach.

Discussion:

How was your August? Did you have any new dividend payers? Was your August another record for the middle month of the quarter as mine was? As always, thanks for reading and I look forward to any comments you may have.


Tuesday, September 3, 2019

August 2019 Dividend Stock Purchases

While the past few months had been quiet on the capital deployment front for the past few months heading into August, that changed majorly because of two factors. First, I felt like I wanted to reward myself for having recently finished undergrad (and what better way to do so than by purchasing ownership in fantastic businesses that will pay me for many years to come?). And secondly, although I do still have to save up to purchase a car and I have a couple other expenses to prepare for, I did have a bit of flexibility with capital deployment for the month.

With that said, we'll take a look at how I deployed over $500 in capital in August (aside from the $231.80 in net retirement contributions) to begin my new series on my purchases each month.



As illustrated above, I started off August like how I start off many months. I was simply deploying capital I had amassed from dividends received by purchasing another unit of Energy Transfer (ET) for $14.25 in my Robinhood account.

As detailed in my most recent Seeking Alpha article on Energy Transfer a few weeks ago, I believe this company is rather mispriced given its strong operating fundamentals.

At a basic level, the concerns over an escalation in the US-China trade war and the 5 year bear market in the midstream sector, along with the industry wide concern of pipeline projects being halted by environmental activists have left Energy Transfer's unit price absurdly low.

This purchase of Energy Transfer added $1.22 in annual distributions. The yield on this purchase was 8.56%.

I then initiated a position in GEO Group (GEO) in my Webull brokerage account. I initially purchased 8 shares of the company for $17.96 a share and I added 3 shares to my Robinhood account.

Like Energy Transfer, GEO Group is also grossly mispriced in my opinion. I recently highlighted my decision to initiate a position in the company for those that would like a more comprehensive explanation on why I added GEO Group to my portfolio.

In spite of GEO Group's relatively strong operating fundamentals, my cost basis on GEO Group of $17.77 a share means that the price to AFFO that I paid for my position in GEO Group is 6.56 using the midpoint AFFO figure for 2019 of $2.71 a share.

GEO Group has been beaten down due in large part because its balance sheet is a bit lacking (although it isn't terrible per se), and that there are also political concerns, such as the uncertainty of funding from its revolving credit facilities beyond 2024, not to mention the risk that the 2020 elections are perceived to bring into the mix.

These purchases of GEO Group added $21.12 in annual dividends. The yield on my purchases to date is 10.8%.

Another position that I decided to add to just a few days ago was Prudential Financial (PRU). While I technically have a fractional share of Prudential in my M1 Finance account, this purchase marked the first purchase of whole shares in Prudential.

Since I wrote about the company on Seeking Alpha back in May, the stock price has plunged from $101 a share to a touch above $80 a share as I write this post on the last day of August.

For context, that is barely above its absolute bargain price of $75 a share when the market experienced a meltdown last December, culminating in a precipitous Christmas Eve sell off.

When we consider that Prudential is likely to generate at least $12 in EPS during this fiscal year, that implies that Prudential is trading at less than 7 times EPS using my cost basis of $77.98 a share.

While falling interest rates certainly aren't a boon to Prudential's business and the threat of a recession in another year or two isn't encouraging either, the company is priced quite attractively over the long-term.

The long-term value proposition has shifted dramatically from the time that I wrote about Prudential in May to now so much that I envision writing about Prudential once again in the near future.

The 3 shares of Prudential that I added to my portfolio will add $12.00 in annual dividends at an entry yield of 5.13%.

Finally, I added to my position in Altria Group (MO) following the announcement of its 5% dividend increase in the week prior.

The company is trading at a highly compelling valuation and the past week of rumors and now news that Altria and Philip Morris International (PM) are considering reuniting since they split 11 years ago has sent both stocks plunging.

While I think that the merger could be great for both in a number of ways (i.e. PM's expertise in operating in international markets and the ability for both companies to reduce redundancies within their operations), I believe that Altria is priced for favorable results regardless of whether the merger actually occurs.

At my purchase price of $44.25 a share, Altria is yielding 7.59%. With a yield that high, it simply doesn't take much for Altria to prove itself as a great investment over the long-term.

The 2 shares of Altria that I added to my portfolio will add $6.72 in annual dividends.

Summary:

I was debating starting a series summarizing my monthly purchases due to the fact that outside of this month, I won't be able to make any meaningful fresh capital contributions until early next year, once my car is funded and I have a 3 month emergency fund.

However, I came to the realization that over the past two years that I have been investing, my account has slowly been built up outside of a couple of $1,000+ buying sprees spread out over a number of stocks.

I see this as a great opportunity to encourage other newcomers to DGI that this strategy produces results for everyone. It just takes time for those results to amount to a life changing passive income.

I have also been curious to track how much my annual dividends grow from month to month as I have never actually tracked that figure.

In summary, the $41.06 in dividend income that I have added through purchases in my taxable accounts and the $8.29 in dividends that I have added through contributions to my retirement account have increased my annual dividend income from roughly the $600 mark to $649.56.

I'm very much looking forward to building upon these results and despite the lack of capital available for the rest of the year, I am confident I'll be able to end 2019 with $700+ in forward annual dividends.

Discussion:

Have you initiated any new positions lately? What positioned have you recently expanded? Was August as great of a month on the capital deployment front for you as it was for me?

As always, I thank each and every one of you for reading. I look forward to replying to any comments that you may have.

Tuesday, August 27, 2019

Expected Dividend Increases for September 2019

As this is published, the last few days of August are here and September is fast approaching. Fall is fast approaching. This means that we're in the last month of the MLB regular season as teams are gearing up for the postseason. The Bucks will be opening the season in Houston on October 24 before we know it and all the excitement that I find in watching NBA basketball will soon be here. The last few days of each month also bring with it a reflection of the past month of dividend increases and predictions of dividend increases for the next month. With that said, we'll delve into my dividend increases for August before we discuss what I'm expecting in September.


The Only Dividend Increase for August Was A Great One

Altria Group (MO) announced a 5% raise in its quarterly dividend (as was predicted by myself last month), from $0.80/share to $0.84/share. While this is well below the company's 5 year DGR of nearly 10% (due one heck of a 2018 that featured two raises!), the company managed to extend its dividend increase streak to 50 years, providing 54 raises during the past 50 years. 

When we take into consideration that Altria acquired a 35% stake in JUUL Labs for $12.8 billion and a 45% stake in Cronos Group for $1.8 billion last December, it's understandable that management is being conservative and keeping its payout ratio around the 80% long-term target payout ratio. Using the company's midpoint adjusted diluted EPS of $4.31, Altria's payout ratio is a touch below 80% at 79.8%. This allows Altria to retain the other 20.2% of its earnings to begin to deleverage to return its balance sheet to its strength prior to its acquisition spree last December aimed at reshaping the company for many more decades of dividend increases. The company will be able to reduce its net debt to EBITDA ratio of 2.7 to below 2 by both repaying debt and growing its EBITDA in the years ahead.

Although high single digit dividend increases probably won't occur for the next few years, I believe Altria has taken the right steps in making sure it stays relevant in an industry that is rapidly changing. If there is any company that I have faith in, Altria is right up there with the best of them. Without going into too much detail, there are many reasons that Altria delivered 17% annual total returns from 1925 to 2003, and a competent company culture that is skillful at navigating the litigious and highly regulated industry of tobacco is certainly one of those reasons.

With a yield on cost near 6% on my shares of Altria, I'll gladly take mid-single digit dividend growth, especially when I'm confident the company is taking the necessary steps to stay relevant as a company. Across my 7 shares, this increased my annual forward dividends by $1.12.

Having discussed my sole raise for the month of August, we'll now transition into my expected dividend increases for September.

Expected Dividend Increase #1: Philip Morris International (PM)

I'm expecting a raise from PM similar to that of Altria. I believe its likely PM will announce a 4.4% increase in its quarterly dividend from $1.14/share to $1.19/share. Across my 4 shares, this would increase my annual forward dividends by $0.80.

Expected Dividend Increase #2: Realty Income (O)

I am expecting Realty Income to continue its trend of the first first dividend increase of the year being in the 2-4% range, with the others throughout the year being $0.005/share increases in the monthly dividend. Therefore, Realty Income's likely monthly dividend will be increased 0.2% from $0.2265/share to $0.2270/share. This would increase my annual forward dividends by $0.024 across my 4 shares.

Expected Dividend Increase #3: WP Carey (WPC)

Like Realty Income, I would expect WPC to increase its dividend by the same rate as it did in its previous increase. As a result, I'm expecting WPC to increase its quarterly dividend from $1.034/share to $1.036/share. Across my 3 shares, would increase my annual forward dividends by $0.024.

Summary:

August may have been a slow month in terms of the quantity of dividend increase, but when we consider that Altria is one of my largest positions, a 5% raise in its dividend was able to boost my annual forward dividends by $1.12. It would take an investment of $28.00 at a yield of 4% to replicate this completely organic increase in dividend income. This was a pretty typical month for me. The dividend increases continue to come in and along with reinvestment and fresh capital, compounding is becoming more noticeable with each passing month, quarter, and year. The joy of the DGI strategy is that the results continue to speak for themselves. There's no need for me to constantly stress out about my net worth because I know that what matters most to me is a growing dividend income.


Discussion:

Did you benefit from the raise from Altria as well? Was the raise from Altria satisfactory to you? Did you have receive any other dividend raises during August? As always, thanks for taking the time to read this post and I look forward to any comments you are free to leave below.

Tuesday, August 20, 2019

The Case for A Side Hustle: 3 Reasons Why Everyone Needs A Side Hustle

I was reflecting the other day on how it has been about 8 months since I began my Seeking Alpha side hustle. This reflection led me into thinking about how this side hustle has positively impacted me in several ways. I'll be discussing the three ways my side hustle has improved my finances and my life.

Reason #1: A Decent Income Generator



As a personal finance blogger, I'm all for transparency, which is why I believe in revealing the income that I have generated from my Seeking Alpha side hustle. While it's not an absolutely life changing amount, my earnings from Seeking Alpha are actually on track to surpass the income I generated at my first part-time gig in the first two years of college. That still manages to blow my mind.

As illustrated above, in nearly 8 months I've been writing for Seeking Alpha, I have earned just over $3,800 (my first article was published Christmas Eve last year). This works out to about a $500/month average, although recent months have been higher due to the fact I generally write 2 articles a week.

Even net of all taxes, I've still managed to earn about $3,000. This works out to nearly $400/month in additional income.

As I pointed out in my post on the impact of many side hustles, this income that I'm generating not only allows me to save and invest more, but it also means that I theoretically need less to eventually stop working the day job to cover my expenses.

After all, if I am already able to write a couple articles a week working a full-time job, there's no reason I couldn't write at least another couple a week as part of my semi-FI schedule.

Reason #2: It's Something I Find Enjoyment In Doing

While I do sometimes find some enjoyment in my day job, there are just as many days where I don't, and I feel a bit stressed out to say the least.

The great thing about side hustles is that I believe there is a side hustle for just about anybody.

Are you artistic and creative? Perhaps you could start a graphic design side hustle and pull in a few hundred dollars a month doing something you enjoy as a service to small businesses.

Are you analytical and do you enjoy investing? You could start an investment research side hustle and rake in at least a few hundred dollars a month with a bit of effort while also doing something you enjoy.

Whatever it is that you enjoy, chances are there is some type of way you can monetize it and also have fun doing it.

In my case, I find that the interaction with the Seeking Alpha community has improved my knowledge as an investor and some readers have provided me with fresh perspectives that I wouldn't otherwise have came across if I didn't write for Seeking Alpha.

Financial Panther has a great blog post that discusses how side hustles are often more than just the money, and I couldn't agree more. Side hustles can distract you and take your mind off whatever other stresses you have in your life when you maintain a balance with them.

While I wouldn't suggest someone side hustle 30 or 40 hours a week on top of a 9 to 5, there's certainly a case for side hustles to be a part of everyone's life.

Some Seeking Alpha readers have even private messaged me asking for my thoughts on particular stocks, and I have wrote about stocks to address their inquiry, which leads me into my final reason.

Reason #3: Other Opportunities Are Bound To Come To You

One final thing that is interesting about quite a few side hustles is that while many stay pretty casual and as a way to release stress for the side hustler, there is often the possibility that the side hustle could eventually turn into something much bigger, and lead to other opportunities.

In my case, writing for Seeking Alpha attracted the attention of dividend research firm, Sure Dividend. While I haven't yet wrote any pieces for them, I do intend to in the near future and the option is on the table for me.

Had I never started writing for Seeking Alpha, I likely never would have received this offer to write for Sure Dividend. It's also great because besides the dividends I'm receiving from the companies I own, my paycheck from my employer, and earnings from Seeking Alpha, I'll also have an additional income source through Sure Dividend.

The more we are able to diversify our income, the better off we'll be at dealing with the loss of any one of those incomes.

The great thing about a side hustle for a site like Seeking Alpha or Sure Dividend is that you never really know who is reading your work. I even once received a private message from the CEO of a mid-cap REIT that I wrote about, which was pretty cool.

You may even receive a full-time job offer at an investment firm or if you keep at your side hustle diligently for a few years, your following could become so large that it may eventually become worthwhile to quit your job and focus on your side hustle full-time.

While I'm a long ways away from being able to consider focusing considerably more on my side hustles, I know that the longer I write, the more my online presence will grow.

As I continue to increase my income and keep my expenses fairly low, my net worth and passive income will both grow. This could eventually give me the courage to make the leap toward making my side hustle my full-time job as my following and my income both grow.

Conclusion:

Beyond just the financial benefits of a side hustle, there is also the added benefit of side hustles being able to take your mind off of any stress at work, school, or with your family/friends. Some may find side hustles as a therapeutic release to help them cope with whatever issues are going on in their life.

Obviously, the financial benefits of a side hustle are quite notable. They can be a great way to earn hundreds, if not thousands of dollars a month in extra income which can be allocated to paying off student loans, building an emergency fund, investing, or even rewarding oneself through purposeful spending.

And in some cases, side hustles can lead to other opportunities and interesting interactions with others. The possibility of one day being able to turn your small-time side hustle into lucrative full-time work is just another reason to consider a side hustle.

Discussion:

Did I miss any reasons why we all need a side hustle? Are there any examples you can think of to further support my reasons for a side hustle? As always, thanks for reading and I look forward to replying to any comments you may have.