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).


Image Source: imgflip

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.

Tuesday, June 18, 2019

My First Major Dividend Growth Investing Revelation

Since I began dividend growth investing in September 2017, I've primarily been an investor that focuses more on yield than on dividend growth. While I own plenty of companies with high dividend growth, such as Home Depot (HD), Lowe's (LOW), and Williams Sonoma (WSM), it's no secret that my portfolio is chalk full of companies with high dividend yields and low single-digit dividend growth or maybe even no growth, such as AT&T (T) and Royal Dutch Shell (RDS.B). Recently, I've come to see the value in low yield, high growth companies, such as Visa (V), TJX Companies (TJX), and Lockheed Martin (LMT).


Image Source: imgflip

As I've grown older and more experienced as an investor, and as my dividend income has continued to grow, I've become less fixated on yield and more focused on the dividend growth aspect of investing. After all, it's the dividend growth of a portfolio that helps an investor crush inflation and build long term wealth that can be generational.

While I believe it's important to own high yielding companies like AT&T, I'd argue it's equally as important to own low yielding, high growth dividend companies.

The case for an investment in companies like AT&T is obvious. The higher amount of current income one receives, the more they can reinvest, which acts as one of the three growth mechanisms for dividend income, with the other two being dividend increases and fresh capital contributions.

At the time of writing, AT&T offers a 6.31% dividend yield and ~2% dividend increases each year, which will probably accelerate to 3% a year once AT&T has completed its deleveraging plan. For the sake of calculation purposes, we'll assume that 2% dividend increases continue to be the norm. According to BuyUpside's dividend payback period calculator, it would take 14 years for one to recover their initial investment in dividends from AT&T, which they could also reinvest in other attractive buying opportunities along the way. While investors with a 30, 40, or 50+ year time span are better off with a low yielding company, high growth company like Visa, it's quite easy to see why high yielders with reasonably sustainable dividends like that of AT&T received my preference for the past two years, and why companies like AT&T are crucial to a dividend investor.

At the time of writing, Visa offers a 0.59% dividend yield and the potential for 16% dividend increases each year for the next couple decades due to its lucrative, high growth business, and low payout ratio. If we assume a very conservative 12% CAGR for earnings over the next 20 years, Visa could increase its dividend each year by 16% and its payout ratio would double from 19% to a still manageable ~38%. Before we plug in how long it would take to recover an investment in Visa in dividends, I'd like you to estimate how long it would take for this to occur.

If you properly considered the power of compounding dividends, you would have replied it would take 22 years to recover your investment in Visa.

When we consider that Visa's starting yield is less than a tenth of what AT&T's is, this is absolutely mind boggling and I never gave enough merit to companies like Visa until I was configuring a model dividend growth with a 3.3% yield, a 9% 5 year DGR, and a 8% 10 year DGR. I found that companies like Visa were like adding gasoline to the dividend growth fire, so to speak.

Even if we assume AT&T manages to achieve a long-term dividend growth rate of 3%, the yield on cost of AT&T after 25 years barely doubles from the current 6.31% to 12.83%, using the yield on cost calculator.

If we take Visa and plug in an even more conservative dividend growth rate of 14% a year over the next 25 years, we arrive at a monstrous yield on cost of 13.70% from the current 0.59%.

While I always understood the power of compounding dividends, I never truly understood it until I stopped and took a few moments to analyze what a comparison like the one above looks like in action.

Admittedly, there may be flaws in the above long-term projections (AT&T's long-term dividend growth could be 3-4%, and Visa's could be a bit lower than the 14% over the next 25 years), but I think the illustrative nature of this example could help other investors to let go of their shortsightedness and fixation on yield like I recently did.

I've always been a long-term thinker, but until I did this experiment, I would typically only think about 5 years from now or 10 years from now. Sure, it may be difficult to predict what the future holds two decades from now for AT&T and Visa, but it's quite enlightening to see that each company holds its own purpose in a DGI portfolio.

It is my hope that the above demonstration will prevent others from chasing yield too often like I did in the past. It's understandable for one to question "how can I increase my dividend income faster" when one is just starting out and they receive their first dividend check for a few dollars like the $1.35 I received from Genuine Parts Company in October 2017.

But I believe as one continues to invest and their dividend income grows, they feel less of a need to chase yield and they start to include high growth dividend payers in the mix. This is my perspective as a relatively new investor, and I'm thrilled to share with readers how my overall thoughts on DGI change as I become a more experienced investor.

Discussion:

Did you have a tendency to chase higher yields when you first began dividend investing? Or were you already well aware of the power of rapidly growing dividends? As always, thanks for reading and I look forward to replying to your comments.

Tuesday, June 11, 2019

May 2019 Dividend Income

It's incredible to think that summer is unofficially here (we had our first 90 degree day of the year in Wisconsin) and that the MLB All-Star Game is just around the corner. With that said, it's time for us to discuss how much May provided for us in terms of dividend income.




Analysis

Overall, I collected $44.04 in dividends during the month of May. Of this, $43.70 came from 12 companies in my Robinhood portfolio. The remaining $0.34 came from 15 companies in my M1 Finance portfolio. The $44.04 in dividends represents a 2.1% quarter over quarter growth compared to February 2019, and a 30.1% YOY growth compared to May 2018.

There were a number of changes from February 2019 to May 2019 including the following that accounted for the $0.95 increase in dividend income:

Williams Sonoma's (WSM) dividend recent dividend increase accounted for an additional $0.30 in dividends per quarter for me, which showed up in May.

I also received dividends on an additional 5 shares of Energy Transfer (ET), which increased my dividend income by $1.52 from February to May.

I also received dividends on an additional share of AbbVie (ABBV), which was a result of my recent sale of Omega Healthcare Investors (OHI) shares to close my position. This increased my dividend income by $1.07.

Speaking of OHI, the two sales of OHI reduced my dividend income by $5.94 and were used to buy a share in ABBV, Dominion Energy (D), and Magellan Midstream Partners (MMP).

The addition of MMP shares to my portfolio increased dividend income by $3.02.

I also benefited from both a dividend increase from Tanger Factory Outlet Centers (SKT) and an additional share. This increased my dividend income by $0.41.

A dividend increase from EQM Midstream Partners (EQM) also raised my dividend income by $0.06.

An additional share of Enterprise Products Partners (EPD) and a dividend increase raised my income by $0.46.

Conclusion:

While this month wasn't spectacular growth compared to February, it was still growth and I consider that decent progress for where I'm at in life. I'll soon be graduating college and I'll have significantly more capital to invest next year after I have a car paid for in cash and a small emergency fund established.

Discussion:

How was your month? Did you have any new dividend payers? Close any positions like I did? As always, thanks for reading and I look forward to replying to your comments.


Tuesday, June 4, 2019

Expected Dividend Increases for June 2019

The Milwaukee Bucks had a disappointing end to their otherwise strong season after taking a 2-0 lead in the Eastern Conference Finals against the Raptors. Despite the heartbreaking ending, I don't believe this will be the last we see of Giannis and Co in the ECFs for quite a few years. Aside from that, yet another month is nearly over and that means it's time to examine the dividend increases we've received for May (so far) and look ahead to June.



May Dividend Increases:

Dividend Increase #1: Lowe's Companies (LOW)

As I predicted LOW would, they increased their quarterly dividend by 14.6% from $0.48/share to $0.55. This increased my annual forward dividends by $0.56 across my 2 shares.

Dividend Increase #2: Leggett & Platt Incorporated (LEG)

LEG did exactly as I predicted they would, increasing their quarterly dividend by 5.3% from $0.38/share to $0.40. This resulted in a $0.40 increase to my annual forward dividend income across my 5 shares.

Expected Dividend Increases:

Expected Dividend Increase #1: Realty Income (O)

I am expecting O to continue its trend of increasing its dividend by roughly 0.3% in the last month of each quarter, in addition to the 3-4% increases in January. Therefore, I'd expect a raise in the monthly dividend from $0.2260/share to $0.2265. That would increase my annual forward dividends by $0.024 across my 4 shares.

Expected Dividend Increase #2: WP Carey (WPC)

I am also expecting WPC to remain predictable with the $0.005/share quarterly increases. An increase in the quarterly dividend from $1.032/share to $1.035 seems to be a likely occurrence, which would increase my annual forward dividend income by $0.036 across my 3 shares.

Expected Dividend Increase #3: Philip Morris International (PM)

This one is a complete wildcard. Although PM increased its dividend last June, it has historically raised its dividend in September. Given the reputation PM has for increasing its dividend around mid-single digits, I'd assume a dividend raise from the current quarterly dividend of $1.14/share to $1.20 seems like a reasonable prediction. This would increase my annual forward dividends by $0.96 across my 4 shares.

Conclusion:

While the month of May didn't come close to April in terms of dividend increases, I still received two strong increases that were exactly what I expected they would be. These two raises increased my annual forward dividends by $0.96, which is equivalent to an investment of $24.00 at a 4% dividend yield.

Overall, June could result in a $0.06 increase to my annual forward dividends or a possible $1.02 increase in my dividends if PM announces a second consecutive dividend increase in June. Overall, the $1.02 in expected dividend increases for the month of June would take $25.50 of fresh capital invested at a 4% dividend yield. The trifecta of dividend increases, reinvestment, and occasional fresh capital continues to work its magic, and I couldn't be more pleased.



Tuesday, May 28, 2019

Why Others May Not Choose Dividend Growth Investing

As a follow up to my article on why I chose dividend growth investing, I thought it would be useful to examine the other side of the argument and determine why people don't choose DGI as their investment strategy. After all, the thing about personal finance and investing is that there isn't a one size fits all approach, as with just about anything in life.



First Reason: Maybe They Have No Strategy And Underestimate DGI

It's entirely possible that one may underestimate the power of DGI and feel the need for a get rich quick strategy. Sadly, no viable get rich quick strategy exists. If it did, do you really think some "expert" would teach you for just 5 easy payments of $19.95? The dreaded short-term trader mindset is unfortunate because there are hundreds of fantastic companies out there for investors to choose from and own over the long-term, rather than rent for the short-term with the hope of making a profit. This short-term mindset is the very reason most investors underperform the market.

It's the long-term mindset coupled with aggressive savings that have allowed idols of mine such as Jason Fieber to unlock financial independence at such an early age to enable them to live their ideal life. Jason's story is absolutely incredible and really demonstrates the power of DGI better than I could even put it into words. It's absolutely breathtaking what a high savings rate and DGI is able to accomplish in such a relatively short amount of time.

Sure, you probably won't be able to support a lifestyle in which you buy a Lamborghini for each of your vacation homes on every continent besides Antarctica while also maintaining closets full of $5,000 suits through DGI. DGI isn't exactly a way to a quick windfall like winning the lottery or anything, but it's actually a viable and reproducible way to build wealth unlike winning the lottery.

But the real takeaway is that regardless of whether you need $20,000 a year to meet your expenses or $500,000, the concept of DGI is viable for both of those needs. You simply need to be able to identify excellent companies and what the fair value is for those excellent companies. Then it's just a matter of consistently investing capital in those types of companies at or below fair value for 5, 10, 15, or 20+ years, and the results become meaningful.

But it's completely understandable that many just go by what the financial media tells them and maybe some of these people without a real strategy simply don't have the time to educate themselves enough to be disciplined and rational with their investment strategy, which leads me into the next point.

Second Reason: Maybe They Don't Have The Time Commitment Or Passion Necessary

In the world we find ourselves in, many people simply don't have the time and/or passion necessary to commit to learning an investing strategy such as DGI or growth investing. It is very time consuming initially and there is quite a bit to learn in terms of analyzing companies and determining reasonable prices to pay for ownership in such companies, not to mention the occasional monitoring that goes into all these investment holdings.

While Americans technically benefit from the marvelous advances in technology over the past century, many have used that extra "free time" to grind it out at work in the hopes of moving up the corporate ladder and generating more income. And as long as they are keeping their major 3 expenses (housing, food, transportation) under control, I certainly don't blame them for doing so. After all, you can only cut expenses so much before there is nothing left that you can realistically cut.

While I'm not going to say income is completely infinite, just about all of us could be doing more to increase our income for the better of our financial futures if that is a priority for us in our own lives.

Learning new skills can increase one's value to society and if they would like a more hands-off approach to investing, index investing is absolutely, without a doubt, the best investment strategy for them to do.

If Warren Buffett advises most people to choose index investing, who the heck am I to disagree? In the words of famed economist Gene Fama Jr., "Your money is like a bar of soap. The more you handle it, the less you'll have." Index investing takes out all of the emotion that often goes into investing, which reduces the risk of stupid decisions that basically all of us as humans are susceptible to. Simplicity is incredibly powerful and the utility of index investing can't be overstated.

Third Reason: Perhaps They Equate GE Dividend Cuts With A Failure Of The Strategy

Yet another reason people may not choose DGI as their investing strategy is that maybe they hear horror stories of companies like GE and steer clear of DGI because of these stories. They fail to realize that a well-diversified DGI portfolio can withstand massive dividend cuts or even dividend suspensions.

Even if a company whose dividends account for 3% of an investor's income decides to completely suspend its dividend, the likely 5-7% dividend growth from the other 97% of dividend payers. So even in a worst-case scenario with a couple of outright dividend suspensions, an investor can roughly tread water excluding inflation. It's also important to note that these dividend cuts can often be predicted.

As was the case with GE, Simply Safe Dividends predicted GE's dividend cuts by issuing dividend safety scores of 18 and 10, before the cuts in 2017 and 2018. Simply Safe Dividends has predicted 98% of dividend cuts since its formation in 2015. While there are some exceptions like small caps which have more dynamic capital allocation policies and the Pacific Gas & Electric Company wildfire disaster that have led to dividend cuts and suspensions, these are abnormalities and are the exception to the rule that investing in excellent companies with strong fundamentals over the long-term works wonders when one is properly diversified.

Although sticking with only companies of dividend safety scores higher than 60 likely won't prevent an investor from experiencing a single dividend cut over the course of their investing lifetime, it will go a very long way in doing so. After all, the selection process is arguably just as important as the occasional monitoring of investments.

If you're looking for dividend ideas, you can even visit Seeking Alpha for great ideas (including mine, I mean I had to fit that in there). I generally only present actionable and timely ideas for companies with dividend safety scores of 60+, which indicates the dividend is safe or very safe for the foreseeable future.

Conclusion: 

While dividend growth investing is an incredible investment strategy for many, it simply won't be the appropriate strategy for everyone, and that's perfectly fine. The overall takeaway is that regardless of your investment strategy (be it growth investing, index investing, you name it), you absolutely MUST have the courage and conviction to stick with it through both good and bad times. You can certainly tweak or refine your strategy here and there, but abandoning a strategy every time you encounter adversity is a recipe for failure.

Discussion: 

Are you a DGIer? Or are you an index fund investor? A growth investor? As always, thanks for reading and I look forward to replying to your comments.


Tuesday, May 21, 2019

Recent Purchases - Albemarle (ALB) and Eastman Chemical (EMN)

It's been about 4 months since I last made a splash and invested several hundred dollars at a time, so I figured there were decent opportunities that presented themselves recently and I would look to change my recent inactivity/small purchases by initiating positions in both ALB and EMN.


I won't go into too much detail for the rationale into these purchases as I already have on Seeking Alpha.

The main reason for acquiring shares in ALB is due to my optimism toward the future of lithium and its applications in our world, along with the fact ALB is the largest lithium producing company in the world and is trading at an appealing valuation. For more of an in-depth analysis on ALB, feel free to read my recent SA article on ALB. My $70.25 cost basis on each of my three shares represents a decent 2.09% entry yield that will likely grow in the high single digits to low double digits for years to come. This purchase added $4.41 in annual forward dividends.

The rationale for the EMN investment is similar to ALB in that EMN is among the largest chemical companies in a world that is dependent upon chemicals across a variety of industries and EMN is trading at an attractive valuation. My $73.25 cost basis on each of my three shares represents a 3.39% entry yield with high single digit dividend growth likely in the years ahead. This purchase added $7.44 in annual forward dividends.

Conclusion:

These purchases added $11.85 to my forward annual dividends and represent an entry yield of 2.75% based on the $430.50 that I invested. They also brought my annual forward dividends to just under the $560 mark. This brings me one massive step closer to my goal of ending 2019 with annual forward dividends of $600+. In hindsight, I don't believe I set my annual forward dividend goal high enough and I believe a revision to $650 is justified here, given that there is still 7 months left in the year. This will likely be my last major purchase for several more months, so dividend reinvestment, dividend raises, and continued retirement contributions are expected to be the main drivers of my dividend growth until later this year.

Discussion:

What companies have you recently invested in? Are there any companies that have your attention currently? How much progress are you making toward your 2019 goals? Did you set them too low like I apparently have? As always, thanks for reading and I look forward to replying to your comments.

Tuesday, May 14, 2019

Why I Chose Dividend Growth Investing

While I'm a huge proponent of dividend growth investing, I don't believe I've ever taken the time to explain my the rationale for why I'm a dividend growth investor. Ever since I learned about the DGI movement 5+ years ago, I've become absolutely obsessed with it and the possibilities that it can bestow upon someone that diligently and consistently invests capital over time. Without further ado, here are five reasons I'm a dividend growth investor.



First Reason: I Love To Own Companies Whose Products I Know And Love

As I alluded to in my blog post discussing the tangibility aspect of dividends, this is one of the major selling points for dividend growth investing, in my opinion. One can drive into their town and be greeted with the likes of companies such as Royal Dutch Shell (RDS.B) gas stations, Exxon Mobil (XOM) gas stations, BP (BP) gas stations, a CVS Health (CVS) store, an AT&T (T) store, and within those stores products of companies such as PepsiCo (PEP) and Johnson & Johnson (JNJ).

The core of my portfolio is comprised of companies whose products and services I use on a constant basis. As a shareholder in PepsiCo, I find myself buying Aquafina water on a weekly basis while also eating Lay's chips on a weekly basis. Simiilarly, my phone's wireless service is through Cricket Wireless, which as you might guess, is a wholly owned subsidiary of AT&T. 

Graham of Reverse The Crush had an excellent piece on method investing a couple months back, and before that article, I didn't even know it but I was also somewhat of a method investor. 

It's really great when you're able to purchase pieces of ownership in a company whose products you believe in and use on a consistent basis, which is one of the major reasons I chose DGI.

Second Reason: I Can Focus On Cash Flow To Measure The Success Of My Portfolio

The benefit to DGI is that rather than focusing on the value of your investment portfolio, you're able to continually focus on the income the portfolio is producing for you. This reduces the chances of you acting on your emotions and doing something stupid that you shouldn't do.

I believe the mere fact that most investors dramatically underperform the broader market is because they let emotion influence their investment decisions. Part of that could be because rather than seeing the companies in their investment portfolio as excellent companies to own for the long-term, they choose to rent them and try to flip them for a profit.

I view stocks in a completely different manner. While net worth is a cool metric to gauge your progress, I prefer focusing on cash flow to measure the success of my portfolio. After all, portfolio value is entirely dependent upon the mere opinions of the market over the short-term. However, as the legendary Ben Graham put it, "In the short run, the market is a voting machine but in the long run, it is a weighing machine." I believe that while the market is inefficient over the short-term and medium term (and this presents opportunities for stock pickers that indexing simply doesn't), everything evens out eventually and stocks receive the valuation that they deserve over the long-term.

At the time of my writing this article, I am receiving $544.40 in annual dividend income from dozens of excellent companies simply for owning their shares. Given that I don't plan on selling these shares ever (unless fundamentals of the companies deteriorate), I really could care less about the value of my portfolio. I'd actually prefer it go down so I could double or triple down on the stocks that I own.

Third Reason: You Don't Have To Sell Your Portfolio Off Constantly To Raise Capital

I won't explain this point in too much detail as I believe the post by Jason Fieber over at Dividend Mantra titled "Why I Vastly Prefer Dividend Growth Investing to Index Investing" so eloquently proves this point.

As one may guess, yield matters and with the S&P 500 currently yielding a paltry 1.86%, this simply isn't enough for most investors to live off of unless they have over 50 times expenses saved up. 

Having to sell of wonderful assets at valuations that are dictated by the market because of the extremely low yield seems undesirable to me when an investor could pick companies that are more fairly priced with higher yields to support one's lifestyle without having to sell off assets just makes more sense to me.

Fourth Reason: DGI By Its Nature Invests In Only Quality Companies

While there are the inevitable General Electrics in every portfolio eventually, the companies an investor invests in as a dividend growth investor are by their very nature fantastic companies. The bedrock of most DGI portfolios in this community is built upon the Johnson & Johnsons, PepsiCos, and Realty Incomes of the world.

As one could imagine, it takes a fantastic company with a great business model to sustain dividend increases long enough to become a Dividend Champion or Aristocrat. 

Even if a company contributing 3% to an investor's overall dividend income completely suspends their dividend, the other 97% of an investor's dividend income will likely increase more than enough to make up for the elimination of the dividend by that one company in the portfolio. 

Fifth Reason: I Love The Process Of Investing

While DGI may not be for everyone due to the amount of work that goes into the selection process of stocks and monitoring them periodically, I love investing. I wouldn't have it any other way. While I also enjoy following my Milwaukee baseball and basketball, and Green Bay football, there's just something about investing that I enjoy more than my other hobbies and I can't really put it into words. 

Conclusion:

Discussion: Do you DGI? If not, what investing strategy do you use? As always, thanks for reading and I look forward to replying to your comments.

Tuesday, May 7, 2019

April 2019 Dividend Income

May is already upon us, which is pretty difficult to believe. The time sure flies by between work, school, the blog, and writing for Seeking Alpha. Watching the Bucks make their deep playoff run also helps pass the time. In just three months, I'll be finished with my undergrad days and possibly most formal education aside from a certification or two. With that said, the passage of another month means it's time to examine what April provided to us in dividends.




$31.67 in total dividends, of which $31.42 were from Robinhood companies and the remaining $0.25 originated from M1 Finance.

Overall, I received $31.67 in total dividends during the month of April. Of this, $31.42 came from 10 companies in my Robinhood account while the remaining $0.25 came from 11 companies in my M1 Finance account.

This is an incredible 196.3% YOY growth rate compared to the $10.67 that I collected in April 2018. Moreover, it's a 22.7% quarterly growth rate compared to the $25.81 in dividends that I collected in January 2019.

Breaking it down, the $5.86 difference in April's dividend income versus that of January's dividend income include the following:

An additional $1.60 received from Altria (MO) due to my first dividends received on the two shares I purchased shortly after the ex-dividend date.

An additional $0.01 received from WP Carey (WPC) from the most recent dividend increase.

An additional $0.02 received from Realty Income (O) from their most recent dividend increase.

An additional $0.76 from GlaxoSmithKline (GSK) as their dividend fluctuates from quarter to quarter.

The notable subtraction from January to April is Pepsico (PEP) as their dividend schedule is a bit wacky with a dividend being paid in January and then March rather than April, and then June and September as expected. This made a $1.86 difference.

Notably, I received my first dividend from my 4 share position in Philip Morris International (PM) stock. This provided an additional $4.56 for me in dividends.

An additional $0.61 from Iron Mountain (IRM) as I received my first dividend on one of the shares I bought a couple months back.

An additional $0.13 from Genuine Parts Company (GPC) from their most recent dividend increase.

An additional $0.02 from PPL Corp (PPL) from their most recent dividend increase.

I also received an additional $0.01 from my M1 Finance account compared to January.

Summary: 

Overall, April marked my first $30+ month for the first month of the quarter. I also am continuing to make strides in increasing my income for the first month of the quarter with some anticipated purchases in the near future, which I will discuss in more detail soon. While my first month of the quarter income will never equal the other months, it would be ideal to come close to evening out my dividend income with the middle and end month of the quarters just for a steadier, less lumpy dividend income.

Discussion:

Did you reach any significant milestones in April? Did you add any new dividend payers like I did? As always, thanks for reading and I look forward to reading and replying to your comments.







Tuesday, April 30, 2019

Expected Dividend Increases for May 2019

Can you believe it? It's the end of April and the year is officially one third of the way over. The Milwaukee Bucks are continuing to make their push toward their first ECF appearance in 18 years and I believe they'll do us loyal Bucks fans proud this season despite that nasty blowout loss in Game 1 against the Celtics. With that said, it's time for us to analyze our dividend increases from April. Buckle in because this was quite the month!



April Dividend Increases:

Increase #1: Exxon Mobil (XOM)

Exxon Mobil (XOM) announced a 6.1% increase in their quarterly dividend from $0.82 to $0.87/share. This was actually slightly higher than the raise that I was expecting from them. This increased my annual forward dividends by $1.20 across my 6 shares.

Increase #2: Johnson & Johnson (JNJ)

Johnson & Johnson (JNJ) announced a 5.6% increase in their quarterly dividend from $0.90 to $0.95/share. This community has always said JNJ is as steady as they come and having received my first raise from them, I certainly back that statement! This increased my annual forward dividends by $0.40 across my 2 shares.

Increase #3: Enterprise Products Partners (EPD)

Enterprise Products Partners (EPD) announced a 0.6% increase in their quarterly dividend from $0.435 to $0.4375/share. This was another increase that was exactly as expected and it increased my annual forward dividends by $0.10 across my 10 shares.

Increase #4: Southern Company (SO)

Southern Company (SO) announced a 3.3% increase in their quarterly dividend from $0.60 to $0.62/share. This was yet another increase that was exactly as I expected it to be, and I couldn't be happier with it. My annual forward dividends increased by $0.40 across my 5 shares as a result of this increase.

Increase #5: EQM Midstream Partners (EQM)

EQM Midstream Partners (EQM) announced a 1.3% increase in its quarterly dividend from $1.13 to $1.145, which was slightly below my expectation. This increased my annual forward dividends by $0.24 across my 4 shares.


Expected Dividend Increases for May:

Expected Dividend Increase #1: International Business Machines (IBM)

It appears as though IBM is breaking from its usual pattern of announcing dividend increases in April, so I'd expect IBM to announce a raise in May. Given the Red Hat acquisition last year, I'd assume management will deliver a raise to the tune of around 4%, increasing the quarterly dividend from $1.57 to $1.64/share. This would increase my annual forward dividends by $0.84 across my 3 shares.


Expected Dividend Increase #2: Lowe's Companies (LOW)

LOW is a wild card and could also be announced in June. Nonetheless, I would expect that LOW will continue its trend of strong dividend increases, with a 15% dividend increase. This would mean the quarterly dividend would increase from $0.48/share to $0.55/share. If this does happen, my annual forward annual dividends will increase by $0.56 across my 2 shares.

Expected Dividend Increase #3: Leggett & Platt Incorporated (LEG)

I expect that LEG will continue its recent trend of increasing its quarterly dividend by $0.02 per share. This would equate to a 5.3% increase in the quarterly dividend, from $0.38/share to $0.40/share. If this does occur, my annual forward dividends would increase by $0.40 across my 5 shares.

Summary:

April provided me with $2.34 in increases, which would take $58.50 in fresh capital deployed at a 4% yield to match. This is really the power of DGI on a small scale at work here! Overall, I'm expecting $1.80 in dividend increases for May due to IBM likely delaying their dividend increase from April to May. This would take $45.00 of fresh capital to match, assuming a 4% yield.

Discussion:

How many dividend increases are you expecting in May? Do you have any stocks that aren't mentioned on this list?





Tuesday, April 23, 2019

My Recent Financial Epiphany Involving Seeking Alpha And My First Job

The past couple of years have been a renaissance of sorts in financial terms for me. It was just the other day that I stumbled upon a financial epiphany. I have essentially worked my way up from a two year degree in accounting to a four year degree in accounting. I went from a cashier job at the soon to be closed retail chain Shopko that barely paid above minimum wage to my current position that pays over 60% more than that. I'll even soon be achieving one of my goals for 2019 as this June I will be moving into an entry level finance/accounting position at my current employer, with a new wage that will be over double what I was making preceding July 2017.

As great as all of that news is, the point of this article is to discuss my experience with Seeking Alpha and how it compares to my experience at my former cashiering job with Shopko.

Since I began writing for Seeking Alpha in December 2018, I've been incredibly blessed to build up the following that I have thus far. The 20 articles that I have wrote to date have allowed me to build a base of nearly 1,000 followers. While this is still a small number of followers compared to the more popular writers on Seeking Alpha, the significance is not lost on me in a few ways.

First, that many followers is actually more followers than people that live in smaller towns. Secondly, I've only been writing for Seeking Alpha for 4 months and the momentum is starting to snowball much in the same way a dividend portfolio snowballs with each passing month and year.

Aside from the benefits which include making me a better writer, researcher, and investor, writing for Seeking Alpha has proven to be somewhat financially rewarding. How rewarding, you ask?

In Q1 2019 alone, I earned over $1,200 gross income on the 16 articles I wrote while spending around 100 hours writing, editing, and replying to comments on those articles. While earning $12/hr on side hustles isn't exactly going to make me a millionaire in my 20s, it's important to note that even after the roughly $300 in self-employment, federal, and state taxes, I'm earning $9/hr.

The significance of that is that it's still more than the $7.51/hr I earned dealing with disgruntled customers at my former workplace as a cashier. While a lot of people wouldn't feel comfortable giving this much information, the reason I do this is as a sort of time capsule for me to look back on some day and more importantly, to inspire others.

Writing for Seeking Alpha was something I thought about doing for over a year (credit to my friends and family for encouraging me to do it btw), but I kept putting it off with the excuse that I wasn't qualified and didn't know what I was doing.

It's important for us all to remember or to have someone remind us that dreams are worth pursuing for the reasons I outlined in this post.

Takeaways:

The lesson in this are 1) the master at anything was once just a beginner like you, so great things take time and dedication 2) once you find your hobby or your passion, it becomes pretty manageable to monetize it in the Information Age we live in 3) Side hustles like Seeking Alpha are a great way to not only earn more income, but to invest more, become a better investor, and ultimately be able to possibly become financially independent much faster and 4) Side hustles also could evolve into lucrative enough work for you to ditch your day job and focus on your side hustle with your investments to back you up, if you please.

Discussion:

Do you earn more from your side hustles or hobbies than you earned from your first job? How does that make you feel? As always, thanks for reading and I look forward to replying to your comments.







Tuesday, April 16, 2019

Portfolio Update: The Reason I Closed A Position

As a dividend growth investor, I like to think that my strategy tends to provide more guidance to me than those that simply trade stocks. While this is likely to be the case, it doesn't mean that I don't make mistakes and end up having to close a position for one reason or another. I recently completed the sale of my entire remaining position in Omega Healthcare Investors (OHI), and redeployed the proceeds from the sale into a couple other companies already in my Robinhood portfolio.





A Brief History:

When I initiated my position in OHI back on November 28, 2017, I was focused on the income that it would provide to me and the long-term thesis that OHI would do well in an environment with an aging population that will use more healthcare in the years ahead.

I ended up selling 7 of my 16 shares on February 23, 2018. I held on to my remaining 9 shares until earlier this year. I then ended up selling another 4 shares and redeploying the proceeds into other companies within the portfolio this year. Finally, on March 26 of this year, I sold my remaining 5 shares.

The Rationale:

While it isn't always fun to discuss the closing of a position within barely a year of initiating the position, I believe mistakes are life's greatest teacher.

Overall, the position produced a 27% gain for me with dividends included, so it wasn't as if it was a mistake in that regard. However, I have the goal of holding my positions for decades, unless an issue arises that makes that not feasible.

Image Source: Simply Safe Dividends

The first issue that I had with continuing to hold OHI was that the dividend safety score is currently ranked as 43, per the reputable research firm, Simply Safe Dividends. A score of 41-60 indicates that the dividend is average and at a borderline risk of being cut in the years ahead. When we add to the fact that the industry in which OHI operates is facing very anemic growth in the short to medium-term, OHI doesn't fit the objective of my portfolio, which is to create as safe of dividend income as possible while also growing, on average, at a clip of 6% per year (with higher yielding companies like OHI in the lower single digits and lower yielding companies such as Lowe's and Home Depot making up for those lower increases).

Ideally, I'd like to have nearly 90% of my dividend income originate from companies with a dividend safety score of greater than 60. This allows a portfolio to grow its dividends and distributions, regardless of economic or political conditions.

It was this very reason that led me to reinvest my proceeds into companies such as Dominion Energy, AbbVie, and Magellan Midstream Partners. All three companies have dividend safety scores greater than 60 and while none quite offer the yield of OHI, the safety and growth profiles of the dividends more than make up for that, in my opinion.

The other reason that led me to close my position in OHI was the fact it was also trading well above its 5 year average in terms of price to adjusted funds from operations or price to AFFO. The price to AFFO at the time of my final sale of shares was around 13.6 compared to the 5 year average of 11.6. This type of overvaluation on a company with a dividend that is by no means a safe bet was a great time for me to take a profit and get out of a company that I view as less certain than the three I redeployed my capital into this year and Southern Company that I deployed proceeds from last year's sale to.

Summary:

While the 16 shares I initially owned of OHI provided annualized dividends of $42.24, I simply wasn't comfortable having such a large amount of my overall dividends rely on one company that doesn't possess at least a safe dividend safety score from Simply Safe Dividends. I am pleased to own 4 other companies all with dividend safety scores over 60, that still produce annual dividends of $29.52 and that grow their dividends in the mid single digits like Southern and Magellan Midstream Partners, high single digits like Dominion, and low double digits like AbbVie.

Discussion:

Have you ever closed a position? Was there a perfect storm brewing leading to the closure of that position like in my case? Did you learn your lessons from it? As always, thanks for reading and I look forward to replying to your comments.

Tuesday, April 9, 2019

March 2019 Dividend Income

April is upon us and I'm set to turn 22 on the 15th (I know, what a coincidence that I was born on the day that is typically Tax Day in the US and that I enjoy personal finance). The NBA Playoffs are set to begin in just a few days, with my Milwaukee Bucks looking like a legitimate contender in the East. With that said, it's time to examine our dividend income for March.





Analysis:

We received a total of $57.53 between our Robinhood account, our retirement account, and our M1 Finance account. This represents a total YOY growth of 192.5% compared to the $19.67 collected in March 2018. We also had a QOQ growth of 6.9% compared to the $53.84 in dividends collected in December 2018, although as we'll discuss later this growth is a bit inflated because of an additional payer in March.

The $57.53 received in March represents yet another personal best in dividends collected to date.

Of the $57.53, a total of $33.51 originated from our Robinhood account, with 13 companies paying me during the month of March. This is compared to the $29.85 collected in December from 12 companies. We'll discuss the math behind the $3.66 increase from December 2018 to March.

I received $1.86 in dividends from Pepsico (PEP) in March compared to no dividend in December (due to it being paid in January).

I benefited from a dividend raise from Dominion Energy (D) and was paid dividends for an additional share of D as I reduced a position in my portfolio to add to D and AbbVie (ABBV), which is a subject I'll discuss in a few weeks. This resulted in a $1.16 increase in dividends collected from D.

I also benefited from another dividend raise from Realty Income (O) to the tune of $0.02.

While on the subject of dividend increases, I also received a massive dividend raise from The Home Depot (HD), which helped increase my dividends from HD by $0.33.

Yet another dividend increase that increased dividend income was the raise from Amgen (AMGN) which increased dividends by $0.13.

The last activity pertaining to the Robinhood account was the raise from Pfizer (PFE) that increased my dividends collected by $0.16.

Moving on to the retirement account through my employer, I received $23.54 in dividends from my mutual fund holding CAIBX compared to the $23.55 in dividends from December, when including the $5.15 special dividend.

Finally, the M1 Finance account provided $0.48 in dividends compared to the $0.44 in December.

Summary: 

March was yet another record month in dividends collected for me. I continue to inch closer to the $100 month mark, although that likely won't happen until early next year. Even when we factor out the Pepsi dividend and the additional share of Dominion that resulted in higher income for March and will result in lower income in May for the position I partially sold a few weeks back, we still arrive at close to $55 in dividends.

Although this is very little growth, any growth is welcomed while I finish out the last 4 months of undergrad and continue to focus on paying tuition, in addition to paying for a car in cash later this year, as per my 2019 goals.

Discussion: 

What was your dividend income for March? What was your YOY and QOQ growth? As always, thanks for reading and I look forward to replying to your comments.

Tuesday, April 2, 2019

The Two Profiles In Finance And Life

As a dividend growth investor in the accumulation phase of my journey to achieve financial independence, I have realized over time, that there are two types of profiles in finance and life. For one that is seeking financial independence, they should lean more towards one of these profiles rather than the other. The two profiles in finance and life that I am referring to include the producer/provider/investor and the consumer.

Although it's impossible to purely fit the characteristics and preferences of either one of these profiles, I do believe that there is a balancing act that must go into ensuring that either one of these preferences don't become too powerful in one's life. 

With that said, let's first delve into each of the profiles in finance and life by first defining what each profile is and what the characteristics of each encompasses.



Profile #1: The Producer/Provider/Investor

The producer can take on many different forms, but for the intents and purposes of this post, I will define the producer as follows:

Producer: Anyone that provides value to society through various channels.

The first channel that a producer provides valuable goods and/or services through is their labor at their employer or through self-employment. I refer to this as a direct channel, with the rationale that they are directly producing the valuable goods and/or services for society. This is how most of us are able to pay our bills and survive in our society that uses "money" as a trading mechanism. Rather than produce everything ourselves, we purchase goods and services from others because it would be incredibly difficult to hand produce all of the things that we take for granted these days. 

Without the society we currently have, we would all have to grow our own food, produce our own clothes, produce our own entertainment/leisure, and in the process of fulfilling such arduous tasks, we would lose the free time that many of us also take for granted. We value the goods/services that someone provides to us by the price we pay to attain those goods/services. 

The second channel of providing valuable goods and/or services to society is on a more passive basis, primarily through investments that produce dividends, interest, and rent.

As a dividend investor, you're an owner in some of the most vital businesses to our everyday functioning in our modern economy. As an owner of Exxon Mobil, you're providing the world with the fuel necessary to allow hundreds of millions of consumers around the world to commute to work via their own vehicle or public transit. As an owner of Johnson & Johnson, you're providing the world with valuable consumer staples, such as Band-Aids, Neutrogena, and Listerine. You're also providing patients with medical devices that drastically improve their health, and ultimately, their quality of life. As a lender, you are extending credit to a consumer or a business to purchase their first home or to expand their business, possibly providing more value to others. Finally, as a landlord, you are providing a tenant with a safe, comfortable place to live. 

It's the combination of the direct channel of production and the financial benefit provided to you, in combination with the utilization of the indirect channel of production that can allow you to rapidly amass wealth, and passive income as a result. 

Suffice to say, the more value you provide to society, the more you will economically benefit. This will allow you to eventually become financially independent, indirectly providing value to those around you in a passive manner. This isn't to say you should stop your efforts to provide value in an active manner, but it extends more freedom to you to be able to choose how you want to provide that value to society. In my case, I have found that I enjoy writing and inspiring others to take action toward living their best life, as well as providing viable investment ideas over at Seeking Alpha to allow readers to eventually unlock financial freedom.


Profile #2: The Consumer

As we've discussed already discussed above, the producer is actively providing value to others through the provision of goods and/or services.

As you can imagine, the consumer is the one on the other end of the spectrum that is benefiting from the goods and/or services they are obtaining from the producer. 

The consumer would be the customer that is benefiting from the Exxon-Mobil branded gasoline they purchase from an Exxon-Mobil gas station, the Band-Aids, Neutrogena, or Listerine they are indirectly purchasing from Johnson & Johnson, and the house or apartment they are renting from their landlord, or the mortgage payments they are paying to their lender. 

Although there is nothing wrong with being a consumer and it's a necessary part of life (unless you'd like to be completely self-sufficient, living in the mountains or something), one must be careful to balance being a consumer and a producer.

This is to say that if you are consuming more than you are producing (i.e. spending more than you earn), you will go into debt. It is this debt that will require you to actively produce more (primarily work at your day job). 

The takeaway is that if you are unable to produce more than you consume, you will never have the luxury of attaining financial independence. This would mean that you're never able to live your life the way you would like, which is on your terms. Of course, if you enjoy your life the way it currently is with whatever job you currently hold, the reason for producing more than you consume would be in the event that you are eventually laid off from the job you love or are unable to perform the job anymore, you would still have the financial means to be able to consume the vital goods and/or services that are necessary to one's basic survival. 

On the other hand, this isn't to say that you should blindly produce tremendous value for society while depriving yourself of the necessary goods and/or services in life. 

As with everything in life, I believe one must strike a balance between producing and providing for their future needs while also meeting their current needs. After all, investing is worthless if you are depriving yourself of what you need today for what you need tomorrow.

Discussion:

What are your thoughts on the balance between being a producer and a consumer? Are you balancing your production and consumption adequately, in your opinion? As always, thanks for reading my thoughts and I look forward to reading yours in the comment section below.











Tuesday, March 26, 2019

Expected Dividend Increases for April 2019

The month of March is nearly complete as I write this and warmer, more pleasant weather is finally upon us here in the Midwest. The Milwaukee Bucks are gearing up for what I'm hoping will be a deep playoff push and the Brewers are beginning what should be another exciting season as well. With March nearly complete, it's also time for me to examine the dividend increases I received for the month and look ahead to the increases expected for April.


March Dividend Increases:

Increase #1: Williams Sonoma (WSM)

Williams Sonoma (WSM) announced an 11.6% increase in their quarterly dividend from $0.43/share to $0.48/share. This was a bit above the 9.3% increase I was expecting for my dividend increases in March 2019 article. Overall, my annual forward dividends increased by $1.20 across my 6 shares.

Increase #2: Realty Income (O)

Realty Income (O) announced a 0.2% increase in its monthly dividend from $0.2255/share to $0.226/share. This was exactly what I was expecting. Overall, my annual forward dividends increased by $0.024 across my 4 shares.

Increase #3: WP Carey (WPC)

WP Carey (WPC) announced a 0.2% increase in its quarterly dividend from $1.03/share to $1.032/share. This was actually a bit below what I predicted. Overall, my annual forward dividends increased by $0.024 across my 3 shares.


Expected Dividend Increase #1: Exxon Mobil (XOM)

I'm expecting XOM to raise its quarterly dividend by 4.9% from $0.82/share to $0.86/share. This would increase annual forward dividends by $0.96 across my 6 shares.

Expected Dividend Increase #2: International Business Machines (IBM)

Given the $34 billion acquisition of Red Hat last October, I'm expecting a lighter dividend increase from IBM than in past years. I'm projecting a quarterly dividend increase of 1.9% from $1.57/share quarterly dividend to $1.60/share. This would mean an increase in annual forward dividends of $0.36 across my 3 shares.

Expected Dividend Increase #3: Johnson & Johnson (JNJ)

I'm expecting a 5.6% increase in JNJ's quarterly dividend from $0.90/share to $0.95/share. This would increase annual forward dividends by $0.40 across my 2 shares.

Expected Dividend Increase #4: Enterprise Products Partners (EPD)

I'm expecting a routine 0.6% increase in EPD's quarterly dividend of $0.435/share to $0.4375/share. This would increase my annual forward dividends by $0.09 across my 9 shares.

Expected Dividend Increase #5: Southern Company (SO)

I'm expecting a 3.3% increase in SO's quarterly dividend of $0.60/share to $0.62/share. This would increase my annual forward dividends by $0.40 across my 5 shares.

Expected Dividend Increase #6: EQM Midstream Partners (EQM)

I'm expecting an increase of 1.8% in EQM's quarterly dividend of  $1.13/share to $1.15/share. This would result in an increase of $0.32 across my 4 shares.

Summary: 

The month of March produced $1.248 in dividend raises, with one raise being above what I expected, one being exactly what I expected, and one being below what I expected. It would take $31.20 invested at 4% to replicate the increases I received during March. Looking ahead to April,  I'm expecting a $2.53 increase in annual forward dividends from dividend raises alone. To match this increase in dividend income by investing fresh capital, this would require an investment of $63.25, assuming a 4% dividend yield.

Discussion:

Are you expecting April to be as busy a month as I am? Are you expecting dividend increases from any names not mentioned in this post?