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. http://www.berkshirehathaway.com/reports.html

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.

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.

http://mungerisms.blogspot.nl/2010/04/charlie-munger-turning-2-million-into-2.html

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

Latest Buy: TGT

As I mentioned in my latest dividend update, I had some capital to work with. So I decided to initiate a new position today in a big retailer, Target Corporation.


Today's buy:

• 23 shares of Target Corporation (TGT) @ $65.50

This purchase will add $39.56 to my annual dividend income.

Target Corporation is a retailer, it sells health beauty and household essentials, electronics, food and pet supplies and furniture. This dividend champion has increased dividend payments for 46 years in a row. In 2012 it generated $72 billion dollar in sales and $4.52 in EPS. Target is focusing on their "Long-Range plan": generating $100 billion in sales and $8.00 in EPS in 2017. 

They hope achieving that goal by focusing on expanding same store sales and renovating existing stores, rather than opening a bunch of new stores. Future growth can be realized by increased penetration of the red card. This decreases expenses related for transactions processing other credit cards. Target is targeting middle and upper class consumers. These groups are more focused on quality and diversity of products. That's how Target differentiate itself from Wal-Mart. The company is on track to open 125 stores in Canada this year.

The stock trades for 15-16x earnings which I think is a fair deal. I mean the company raised dividends for 46 years, that means it's a great business and management is doing something right. I'm happy with owning shares and won't mind adding more if the stock drops significantly.

Thanks for reading.

Latest Buy: DPS

Today I put some capital to work. The last time I bought something was back in July. The market pulled back the last few sessions due to the debt ceiling soap opera. The cheaper stocks get, the happier I am, because cheap stocks mean great future returns.

Today's buy:

• 35 shares of Dr Pepper Snapple Group Inc. (DPS) @ $43.70

This purchase will add $53.20 to my annual dividend income.

I already had a position in DPS, and decided to average down. The stock seems fairly valued. Management is expecting 2013 EPS to hit the $3.04 - $3.12 range. That means a forward PE between 14 and 14.4 which seems fair for this company. DPS is one a the few consumer staples that doesn't seem fully valued at the moment. The whole sector has been quite expensive the last few months.

On a different note, Coca-Cola's stock also pulled back. Buying now gives me an 3% entry yield which is something you don't get to often with Coke shares. I might pick up some shares of this great company in the near future. I'd love to have a position in Coca-Cola!

Thanks for reading. 

Latest buy: KMI

I decided to put some more capital to work in an energy business I already had a stake in.

Today's buy:

• 39 shares of Kinder Morgan Inc (KMI) @ $38.67

This purchase will add $62.40 to my annual dividend income.

Kinder Morgan Inc (KMI) owns and manages a diversified portfolio of energy transportation and storage assets in the United States and Canada. Kinder Morgan Inc operates like a giant toll road and receives a fee for its services, avoiding commodity price risk. KMI owns the general partner and limited partner units in Kinder Morgan partners (KMP). 

I already had a position in Kinder Morgan Inc. This purchase boosts the total position up to 83 shares.
Recently Kinder Morgan Inc announced to boost its dividend to $0.40 from $0.38. This pushed the current yield over 4%.

It's very likely Kinder Morgan Inc boosts the dividend at the low double digit for at least a few more years. The high current yield and the dividend growth makes this an attractive buy in my opinion. 

Thanks for reading

Latest buy: DPS

Finally, a little correction in the market! Why is this a good thing? I'm an investor in the accumulating phase of his life. I want my stock be as cheap as possible now, so I can buy the most dividend income and future profit with my dollars today.

When I walk into a supermarket and I see there is a big sale going on, I'm a happy guy. When stocks become cheaper, I'm a happy guy. I'd love it if stocks slide lower from here.

Today I decided to put some capital to work.

Latest buy: GE

In April I haven't bought any stocks, instead I accumulated some cash. A lot of dividend growth stocks are pricey. There are a hand full of stock that I like at today's prices. Those include Chevron, Exxon, General Electric and IBM.

Latest buy: MSFT

Work. Save. Buy quality stocks that throw off ever growing amounts of cash. When I'm buying an investment, I'm buying additional household income. Then wash, rinse, repeat. The cycle becomes self reinforcing. Today, I bought some more additional household income.

Latest buy: WFC

New DOW record! Looking at the market, I see some overvalued stocks, especially in the consumer staples. Pepsi Co. has a 20 P/E, Kellogg's has a 22+ P/E. Further more, MLP's and REITs are being bid up by yield-hungry investors.

And then, there are some stocks nobody wants to touch and everyone seems to be afraid of, the financials... *Insert dramatic sound*

Latest buy: WMT

The DOW is almost at its nominal all-time high. That doesn't mean all stocks are expensive, some are, some are fairly valued, and some are cheap. Even in an overvalued market, there are opportunities to pick op great businesses for reasonable prices. Back during the dot-com boom, it was really a large-cap stock bubble. Small stocks were perfectly fine. Most never were overvalued terribly, so they just kept plugging away as the tech bubble popped.

That said, I decided to pick up this dividend champion.

Latest buy: WFC

With the markets skyrocketing towards their all-time highs, it becomes harder and harder to find quality businesses for reasonable prices. That said, I stick to the plan: Saving a large portion of the money I make and buying solid companies every month, build a solid portfolio while I'm still young and reap in the rewards later.  Let compounding do the heavy lifting for me.