Thursday, February 28, 2019

Moving Money Around


I'm in the process of buying/selling a home, which will hopefully be completed by the end of March.  Some things I've done I'll list here.

Selling:  I'm moving closer to my job.  With the advent of Uber and Waymo, owning a car isn't as big of a deal.  Our family may downsize to one car if this current one dies ($4k convertible which I've owned for over 7 years and 100k miles - not a bad deal) and I'll just use the trendy transportation so I don't have to worry about maintenance, insurance, registration, etc.  I will miss the fun of a convertible though, so this may not happen.  One thing I've learned is don't own a large house.  You limit your market to only large families with limited lending abilities.  Whereas a smaller home will work for families, singles, couples, and the seniors.  Less upkeep, lower taxes, and better investment returns.  Our home has been paid off for quite a few years, so that helps.

Buying: In many cases, older is better.  A late 70's and 80's home will have a settled foundation, won't have issues with asbestos and lead, and usually won't be an "assembly line" home (i.e. quality construction).  We will be paying cash for the home using the income from the home we are selling, and will go in and tear up the place, replacing and installing flooring, cabinets, and the niceties our HOA will let us get away with (fireplace?).  We also opted for one of those "planned community" homes, that has activities and recreation and pools I won't have to take care of personally.  We plan on turning it into a long-term rental in 6+ years, and perhaps long-term vacation rental in 3-4 when we go on vacation.

How does this affect my investments?  Well, other than a home that will not cost me any loan interest, I am able to borrow against my 401k for "home purchase".  This allows me to borrow more for a longer period (less monthly payments) once again paying interest to myself only for a $50 origination fee.  I am able to allow the cash flow to the dividend stock account to go uninterrupted, and not pull from my account for anything.

However.

My taxable 401k dividend income has been reduced, since part of it was cashed out for the loan.  While I was able to compensate (and then some) with non-401k stock purchases, this may or may not be detrimental to my overall net worth.  I think it will be ok, as I am "selling" while the market is at a high, and I will look to repaying much of it when the market dips.  I am trying to just have cash on hand for closing costs and upgrades, but if I have money left over after all of that (end of March or April), I'll probably pay down my original 401k loan that I used to start my dividend investing adventure over a year ago.  This will reduce my total repayment amount each paycheck, and recoup much of the taxable dividends I am currently depriving myself of.  I also see this is a way to not have all my dividend eggs in one basket, since a huge amount of my dividend income (from a single source) is this 401k holding.  Loyal readers will notice I do not count the worth of the 401k stock to my cost/profit, since it is not really a liquid asset.

I also incorporated a double-blind LLC in New Mexico for under $200.  The reason for this is two-fold.  Primarily, it is to mask my identity from public records (I'm not keen on being searchable) by using it to purchase my home (easier when you pay cash vs. funding).  Secondly, when i do decide to start renting the property out, I can merely transfer the LLC to a tax friendlier state like Nevada or Delaware and already be in business.  It will be instrumental if I decide to really upgrade the rental via a ROBS (Roll-Over Business Startup) with my 401k.

That being said, let's look at February in the rear-view mirror:

February Dividends Received: $290.59
GIS 36.74
T 55.58
MA 5.27
APD 17.39
OKE 37.83
NNN 35.49
ABT 5.43
O 10.14
HRL 8.6
MAIN 21.99
ABBV 16.04
PG 30.1
FAST 9.88
Interest 0.11

February Purchases:
T         10
ADM    5
GIS     20
QCOM 4
WSO  15
HD       3
OKE     2

February Sales: (surprise!)
ETN     4

I sold off Eaton (industrial) and bought WSO.  Why?  Laziness, mostly.  ETN, while a good company, changed their HQ to Ireland from USA, and in doing so, causes my broker to report earnings LATE in the tax season.  I can't wait around for my refund, especially this year with the home purchase, to file, so I opted for a higher yielding US company.  I don't want to waste time re-doing my taxes over a few dollars in dividends.  

Watsco is renown for passing profits onto shareholders, so they have a very high dividend payout percentage.  However, they have raised their dividend twice in the past year, so I though I would take the chance.  They are an HVAC parts company.  While i don't expect any major sales going forward, I am aware of what happened to KHZ last week, and this could happen to any company, not just Buffet's.  

Keep them dividends coming!

Thursday, January 31, 2019

Back in the Saddle

Just got back from 8 weeks out of  the country a few days ago.  I missed out on the December downturn, but I do have a lot of powder saved up for earnings season.  I've already made a few good purchases, with a good chunk of cash still on hand.

A colleague of mine saw the light on dividend investing, and dropped $200k in at the end of December after the downturn - he is already generating about $1k a month.  His portfolio of 10 is a bit riskier, but he is a bit older than me so it is for good reason.

I'm looking forward to a better, if not ho-hum, year of good dividend increases and buybacks to increase share value.  A deal with China wouldn't be too bad either to help with the ever increasing strong dollar overseas.  In the meantime, I am looking to gobble up some more of my utilities which are unaffected by tariffs and often forgotten, but crucial during the polar vortex era.

This update will include December and January.

December Dividends Received: $530.09
MAIN
$30.25
QCOM
$37.82
MCD
$15.08
O
$9.92
ORI
$16.77
MAIN
$21.45
IP
$26.50
ADM
$6.03
HD
$15.45
JNJ
$19.80
TGT
$10.88
CVX
$14.56
SO
$32.40
WEC
$7.18
WTR
$3.50
401k Taxable $262.43

December Purchases:

FAST 3
TGT 10

January Dividends Received: $75.74
XEL
$16.34
O
$9.95
MAIN
$21.45
KMB
$28.00
January Purchases:

ABBV 10
ETN 4
ORI 5

Saturday, December 1, 2018

Sabbatical

I'm going on a vacation out of the country, but I'll update if/when I can in a month or two.

November picked up a bit at the end after the selloff in October.  The big issues on the horizon are the economic summit in Argentina (i.e. Trump & Xi), and the jobs report on Friday.

I'll keep this short, since I'm in a bit of a hurry to start my vacation.

Dividends Received $244.08
FAST  $8.00
ETN  $6.60
$9.92
PG  $30.12
NNN  $35.50
MAIN  $10.34
HRL  $7.69
ABT  $4.76
OKE  $34.20
APD  $16.50
MA  $4.00
GIS  $26.95
$49.50

November Purchases:
OKE  2
TGT  20
TGT  3
ADM  3
IP  10
HD  3
IP  5
MAIN  56
QCOM  16
There were some good post-earnings deals for quality companies, especially QCOM & TGT.  MAIN became my largest holding thanks to my wife wanting to invest and putting up some money in our account.  She originally was looking for immediate income so I offered MAIN, but decided to let me reinvest (for now) her dividends from MAIN.

Have a Merry Christmas and Happy New Year

Friday, November 2, 2018

Downturn During a Scary Month

My net worth dropped this month to a level not seen since July, and so did everyone else's.  Anyways, I'm a few days late for this post due to a busy month, so let's get into it.

Dividends Received: $60.60
October is my "low" income month.  I'm not sure if I should do anything about it - two of the stocks are monthly payers, so I don't see how I would ever really get ahead.  I guess I could make it my goal to make sure my bills are just barely paid for in this month, which means everything over that on the other two months would be excess.  In that case, I have a ways to go!

October Purchases:

I started a position in ABBV, and now I am at 28 stocks.  I have all the sectors pretty much covered with what I want, so I think I will hold here for awhile.  My wife has been thinking about joining my son and I in the dividend investment realm, and will probably be purchasing just for monthly income starting this month.  I will probably track her investments separately, even though we will use the same account (so she can take advantage of the free trades).  IP has been dropping like a rock, despite having a great quarter, and WTR announced it will be buying Peoples Gas, which made it drop 10% as the shareholders digest that information.  Everything else I've been buying on dips.

I put my house up for sale last month, and it is currently in escrow (crossing fingers) to close early December.  I did this because the housing market is currently pretty good - along with the job market for potential buyers.  With mortgage rates on the rise, I didn't want to be trapped in a big house that I didn't really need anymore.  I have a feeling that the election in early November might have a negative impact on the economy sooner or later, so I wanted to be ready for any housing market bubbles popping.  I'll be "homeless" for a few months, but we have that taken care of already.  While it is tempting to drop all the house money into dividends for $1000+ a month instant income, I do realize that would be putting all my eggs in one basket, and while home equity buildup is slower (although it seems just as volatile sometimes), it is diversifying.

Friday, September 28, 2018

30 Days in September


Dividends Received: $189.33
WEC ENERGY GROUP INC 7.18
AQUA AMERICA INC  3.28
ARCHER DANIELS MIDLD  5.02
SOUTHERN COMPANY  26.39
TARGET CORP 8.95
CHEVRON CORP  14.55
JOHNSON AND JOHNSON 19.79
HOME DEPOT INC  12.35
OLD REPUB INTL CORP  16.76
MAIN STR CAP CORP  10.33
REALTY INCM CRP 9.92
INTL PAPER CO  9.02
MCDONALDS CORP 15.07
QUALCOMM INC  27.89
401k Taxable 10.01

Highlights this month included:
-The big Southern Vogtle fight.  This is now over, and the nuclear plant is going to continue being built with double (triple) the cost.  The payoff will be huge once it is finished, but this will be an anchor around this utility's neck for awhile.  I bought in once they decided.
-International Paper keeps sinking - I think I'll be buying this more as it dips until I'm full (just under 5% of my portfolio).
-Wanted to by ABBV but it hasn't had a pullback the week I was looking - so nickel and dimed some other nice prospects already in my portfolio.
-Been very busy with life this month, but still kept an eye on stocks.

September Purchases:
Southern Company (SO) 10
ONEOK (OKE) 14
International Paper (IP) 4
Fastenal Company (FAST) 5
     I'm trying to determine how real estate is a comparable investment to dividend stocks.  I'd rather pour money into a REIT than get minimal gains after owning a house for almost two decades.  I understand location is key, and the 2007 bubble set many back, but seriously, I've gotten better gains on my dividend stocks in 18 months than almost 20 years with my house, not to mention all the repairs/improvements.  I'd almost rather let someone else deal with the problems and costs of a house and liquidate my house into dividend stocks, except that wouldn't be too diverse now would it?  And the work of owning rental properties vs. buy dividend stocks... sheesh real estate is too much of a headache.  I *may* buy a future vacation rental, then rent it out while travelling the world... or maybe just get a Winnebago.

     September is historically the worst month for stocks, so this one wasn't so bad.  But does this mean the selloff will happen in October for tax harvesting?  Or in November after the midterm elections?  Who can say.... Let's hope for the best!

Friday, August 31, 2018

Big Changes

A lot has happened in my personal life the past month - much of it is a blur, but without going into details I am moving large amounts of money around.  One example is the fact that my employer's 401k is kind of a two-edged sword.  The ETFs they let me invest in do garner interest, but the interest just DRIPs back into the ETF.  It was a little annoying for the brokerage account to not let me at least direct the dividends.  However, on the upside, I could purchase my company's stock in my 401k and receive the dividends as taxable income into my bank account, which I can then feed back into my taxable brokerage account.  I had quite a bit of cash on hand in my 401k in case of a flash crash, but decided to just drop it (about 15%) into the company stock.  A little much, but I don't put anymore money into my 401k, so it will more or less stay at that point without help from me.  This did add over $1k into my taxable and I should be getting those dividends ($250) on a quarterly basis very soon.  So my dividend meter increased by quite a lot at this point.  I haven't yet decided if I want to graph it as part of my taxable brokerage account holdings.  While it is deceptive to have that much income unattributed to my stock picks, it's share of my taxable portfolio isn't something I need to know when I buy stocks that aren't from my employer (hope that makes sense).

After dropping Compass (CMP) as one of my materials stocks for freezing their dividend, I decided to add International Paper (IP) as my second pick for that sector (after APD).  I also purchased my second energy stock Oneok (OKE).  Both were at good times to buy.  After I start a position with another health related stock, I will be at 28.

I like being able to buy 1 or 2 shares depending on if the stock is low for the day, and if I have any cash leftover from dividends received.

Dividends Received: 192.39
 Date Type Descriptio Amount ($)
 08/22/18  Dividend    FASTENAL CO CASH DIV ON 15 SHS REC 07/25/18 P...6.00
 08/17/18  Dividend    ***EATON CORPORATION PLC CASH DIV ON 10 SHS R...6.60
 08/15/18  Dividend    REALTY INCOME CORP CASH DIV ON 45 SHS REC 08/...9.90
 08/15/18  Dividend    PROCTER & GAMBLE CO CASH DIV ON 42 SHS REC 07...30.12
 08/15/18  Dividend    NATIONAL RETAIL PROPERTIES INCCASH DIV ON 71 ...35.50
 08/15/18  Dividend    MAIN STREET CAPITAL CORPORATION CASH DIV ON 5...10.07
 08/15/18  Dividend    HORMEL FOODS CORP CASH DIV ON 41 SHS REC 07/1...7.69
 08/15/18  Dividend    ABBOTT LABORATORIES CASH DIV ON 17 SHS REC 07...4.76
 08/13/18  Dividend    AIR PRODUCTS & CHEMICALS INC CASH DIV ON 13 S...14.30
 08/09/18  Dividend    MASTERCARD INCORPORATED CASH DIV ON 16 SHS RE...4.00
 08/01/18  Dividend    GENERAL MILLS INC CASH DIV ON 55 SHS REC 07/1...26.95
 08/01/18  Dividend    AT&T INC CASH DIV ON 73 SHS REC 07/10/18 PAY ...36.50

August Purchases:
Aqua America - 1
International Paper - 15
Kimberly Clark - 1
Oneok - 26
Southern - 4
Air Products - 2

Southern's nuclear plants are in doubt, and I suppose we will know more after the end of September.  It's share price should continue to dwindle because of this uncertainty, but after the news, I may look to load up.  They are a utility, and always have decent cash flow, so I think abandoning the nuclear project, though expensive, wouldn't necessarily be a bad thing for the company.  We will see if I am right.

Thursday, August 2, 2018

Moving Day

Time for the July update, but first...  I'm moving to my new broker!  Nine days of frozen securities as they drop off the stock POD and move me to 30 free trades a month (and some cash)!  July was a great month for me capital gains-wise, and some pretty good increases (FAST had their second div increase this year!) as the Q2 results are all better than expected.

Meanwhile, my last opportunity to purchase before moving was a bust.  Mainly because I had nothing on sale.  The only two stocks of mine that are under water are General Mills (GIS) and AT&T (T), and I am overweight on those.  So I decided to hold my cash until after the move.  I was looking to round out my two energy buys with Occidental Petroleum (OXY) but that, also, is too expensive.  Hard times for DGIers everywhere :)

I've been reading Adam Smith's ponderous tome "The Wealth of Nations" on my audible app, and it has many interesting tidbits.  I only mention this, because once I finish it, I'll start researching my business startup so I can "ROBS" my 401k, which I mentioned last month.

Dividends Received: $59.31 (the low month)
 Date Type Description (show categories) Amount ($)
 07/20/18  Dividend    XCEL ENERGY INC COMMON STOCK CASH DIV ON 43 SHS REC 06/15/18...16.34
 07/16/18  Dividend    MAIN STREET CAPITAL CORPORATION CASH DIV ON 53 SHS REC 06/29...10.07
 07/13/18  Dividend    REALTY INCOME CORP CASH DIV ON 45 SHS REC 07/02/18 PAY 07/13...9.90
 07/03/18  Dividend    KIMBERLY CLARK CORP CASH DIV ON 23 SHS REC 06/08/18 PAY 07/0...23.00
 

July Purchases:
 Date Type Description (show categories)
 07/17/18  Bought    26 of T 
 07/03/18  Bought    40 of ORI 
 07/02/18  Bought    22 of T

GIS and CMP are currently a "Hold" for me, as they have frozen their dividends.  I did tax harvest GIS this month.