Sunday, April 6, 2014

March 2014 Dividend Income Update

Time for the March 2014 dividend income update:

Dividends Received

  • WFC: $25.20
  • AFL: $21.83
  • PSX: $10.53
  • TGT: $9.89
  • NSC: $8.10
  • IBM: $7.60
  • CVX: $11.00
  • JNJ: $11.22
  • MSFT: $14.84
  • MCD: $22.68

Total dividend income for March: $142.89 

A nice improvement compared to last years $96.47 I received in March 2013

You can see my progress here.

Sunday, March 9, 2014

Latest Buy: BRK.B

On March 1st Warren Buffett, CEO of Berkshire Hathaway, released his annual stockholder letter. If you haven't read it, I suggest you do. It's a very well written, easy to understand piece. It gives you a peak into the mind of one of the most successful investors in history.

On monday 3/3/2014 I bought:

  • 13 Shares BRK.B @ $116.16

Why now? Warren Buffett said it himself: The intrinsic value of Berkshire Hathaway shares exceeds 120% of book value by a meaningful amount.
A quick calculation, using numbers from the annual report, puts the value of BRK.B shares at $107.98. I basically picked up some shares at 129% book value ($116.16 a share) which is probably a good deal is 120% of book value is cheap.

This buy will not give me dividends. I think it's highly likely BRK.B will start paying a dividend in the future, it may be 5 years, it may take 10 or 25 years. When Berkshire grows bigger and bigger, it will become exponentially harder for the director's to find good use with the incoming cash, to the point it starts to make sense to send a piece of the profits to shareholders.

Berkshire doesn't grow, or even pay a dividend, but its ability to pay out a dividend grows over time.

Buffett passing away doesn't scare me too much. Berkshire is a very decentralized business where every manager is focusing on his specific area of expertize. If Buffett passes away you still have the dozens of high quality, privately held businesses, hand picked by Buffett, bringing in cash to the headquarters. Buffett has two capital allocators working for him. Todd Combs and Ted Wescher, who actually outperformed Buffett's portfolio by a wide margin.

Berkshire is a great collection of businesses, there are very talented people in charge and the price seems good too. It's great to finally be a shareholder of Berkshire Hathaway.

Sunday, March 2, 2014

February 2014 Dividend Income Update

Antoher month gone, another dividend update, my favorite type of post. It shows you the cold, hard cash a dividend portfolio can produce. I added some Coca-Cola beginning this month. Only a few weeks later the Board announced a healthy increase in the dividend! Long term shareholders of great businesses get rewarded with a dividend raise.

Without further ado, the dividends for February 2014:

Dividends Received

  • GIS: $14.06
  • T: $17.48
  • MA: $3.30
  • ABBV: $8.00
  • ABT: $4.40
  • PG: $10.83
  • KMI: $34.03
Total dividend income for February: $92.10

I set my dividend goal for 2014 at $1500. So far I'm 12.9% of the way there, my progress is tracked here.

Thanks for reading

Tuesday, February 4, 2014

Latest Buy: KO

The stock market is having a nice pullback! Coca-Cola hit a 3% dividend yield, I couldn't pass that up. Better yet, this month Coca-Cola will announce a dividend raise, just like it did the last 51 years.

Today's buy:

  • 40 Shares KO @ $37.31

This purchase will add $44.80 to my yearly income. This is based on the $0.28 dividend KO pays every quarter, but like I said, they will announce a raise very soon. My total position in Coca-Cola is now 76 shares.

I purchased some Coca-Cola stock earlier in december 2013, where I talked a bit about the company.

Coca-Cola is the first stock that comes to mind when someone asks me what a good dividend growth stock is. It is a must have for every dividend growth investor in my opinion.

I found a fun article a while back. Charlie munger is explaining Coca-cola's strategy how to become a 2 Trillion dollar company in 150 years. A very good read.

Thanks for reading.

Saturday, February 1, 2014

January 2014 Dividend Income Update

The first month of 2014 is over. And what a month it was, for the first time in a while the soaring stock market took a breather. I have not bought anything yet, but my trigger finger is itchy. A lot of things look nice now. KO, PM, CVX, WMT all had decent pullbacks and are in the buy range for me. Problem is, I can't buy them all because I don't have the funds! I only have enough for one, I have more ideas than money at the moment. Without further ado, the dividends for January 2014:

Dividends Received

  • WMT: $9.87
  • DPS: $25.84
  • PM: $33.84
  • MO: $16.80
  • GE: $14.52
Total dividend income for January: $100.87

I set my new dividend goal for 2014 at $1500. So far I'm 6.7% of the way there, my progress is tracked here. Will I make it? Whatever the total dividends I will receive this year, I'm proud where I am in live and the portfolio I have build.

Thanks for reading!

Tuesday, December 31, 2013

2013 Reviewed

The end of the year is when many investors reevaluate how they did during the previous year. Dividend growth investing is an investing strategy where the investor buys stocks of companies that consistently pay and grow their dividends, then reinvesting those dividends to compound the income stream.

My primary goal as an investor is to build a well diversified stock portfolio that produces a sustainable and rising income stream. Below I will review the changes that happened to my portfolio in 2013.

I started the year with 15 stocks, this reflects purchases I made in 2011, 2012 and one spin-off (ABT spun off ABBV). During the course of the year I made the following purchases:
  1. Jan 14: GIS 37 Shares at $40.90
  2. Feb 11: MA 3 Shares at $524.00
  3. Feb 11: AFL 30 Shares at $50.23
  4. Feb 19: WFC 43 Shares at $35.14
  5. Feb 25: WMT 21 Shares at $71.00
  6. Mar 7: WFC 41 Shares at $36.38
  7. Mar 28: MSFT 53 Shares at $28.24
  8. May 9: GE 66 Shares at $22.85 
  9. Jun 24: DPS 33 Shares at $45.00
  10. Jul 25: KMI 39 Shares at $38.67
  11. Oct 9: DPS 35 Shares at $43.70
  12. Nov 12: TGT 23 Shares at $65.50
  13. Dec 31: KO 36 Shares at $41.35

For a grand total of $19,608.35. Most of this money came from deposits, but about $1000 came from dividends my stocks paid. The portfolio ended with 23 different positions.

I'm a buy and hold investor. I plan on holding my positions for decades, enjoying the dividends they pay me every three months. It's not a buy and forget strategy though, you have to monitor your positions, to make sure the fundamentals remain excellent and the dividends keep growing. This year I sold one company:
  1. Sep 30: INTC 50 Shares at $23.00

The reason for the sale was the dividend freeze. I felt uneasy holding onto this Tech company and bought a beverage company with the proceeds.

I received $1,068.62 in dividends from my portfolio. This is an amazing 55.31% increase compared to 2012 income, $688.06.

Dividend Growth
Below a table of the amount my current holdings paid in 2012 and in 2013:

Some observations. 
I took ABT and ABBV together, ABBV didn't pay a dividend in 2012 and ABT lowered its dividend. When you take both stocks together, you get a healty raise of almost 8% compared to 2012. ABBV paid out 5 quarters the same amount, I have to investigate this further.

MasterCard knocked it out of the park with a 90% increase. I'm expecting this to continue for the mid term. I expect MA to expand its payout ratio and pump the dividend in the foreseeable future. It's a shame the shares trade at a high valuation, I'd like to add more. For now I just hold the 3 shares.

PSX only paid out twice in 2012, that explains the 195% increase.
 Wells fargo is increasing its payout ratio after it got permission from the FED to do so. This dividend growth rate will not continue. I'm hoping for 10% increases the coming years, until the payout ratio is about 60%, management's target.

The average dividend growth rate is 23.65%. If we take out the 3 big ones (PSX, MA and WFC). The average is 9.94%. This is very nice. If I reinvest dividends, at a 3% yield, I'm looking at about 13% organic income growth. Meaning, if I wouldn't make deposits and just reinvest dividends, my income would grow at a 13% annual clip.

The paper value of my portfolio has grown considerably in 2013. Jan 1st, 2013 The value of my portfolio was $20,795.26. I ended the year with a portfolio worth $46,565.43. This represents an increase of 123.92%  As I said above, about $19,600 from the raise in value came from new purchases, the rest, about $6,000 came from stock price appreciation.

2013 was a great year for me. My dividend income grew considerably, the value of my portfolio grew more than a 100% and I deposited more than I could dream of.  Last but not least I overshot my goal for $1,000 in dividends!

How did your 2013 go?

Thanks for reading.

Latest Buy: KO

Right before the ending of the year I decided to buy some shares of this beverage behemoth.

Today's buy:

  • 36 Shares KO @ $41.35
This purchase will add $40.32 to my yearly income. This is based on the $0.28 dividend KO pays every quarter, I'm expecting a dividend raise in February, so the real income amount is higher.

This company needs no introduction. It's the biggest beverage company on the planet. As far as I know, you can get a Coke in every country on the planet (except North-Korea). Coca-Cola is an invaluable brand name and the distribution network is irreplaceable. In the coming years, 700 million people will enter the middle class all around the world, this is where Coke's growth opportunities are.

The stock is a classic dividend growth stock, it has paid a dividend since 1919 and raised it dividend for more than 50 years. You can almost say, there are three things certain in this world, death, taxes and Coca-Cola's dividend every quarter.

The stock isn't cheap at 21x earnings, but in the last 15 years its price moved out of the stratosphere, in 1998 investors paid more than 40x earnings for a share of KO!

Thanks for reading