December, January, and the Corona Virus

The volatility many of us have been waiting for might actually be here.  As far as the market goes, the Iran dustup was not very effective.  The Corona virus might be responsible for the next correction, and drive the market even lower.  In the meantime I have been shoring up my stocks to be more diverse, and did indeed increase the utilities I had planned to buy.  The only stock under 2.5% weight in my portfolio is Hormel, and I'm not sure how it will perform in this market.  As a recessionary stock, it should increase, and with SPAM impossible to contaminate, it should fare well, however for the "fresher" brands, it may not.  It is already too expensive with a low yield that I may continue to pass it over for now.

Going into Monday morning February, the things I will be watching for will be the retreat of Corona (unlikely).  Which means waiting for the correction to continue, or for Corona cases to stabilize.  In the meantime we have the jobs report on Friday, and if the past 3 years are any indication, it should be a good one.  Couple that with the unusually warm January weather in large metropolis areas, no reason not to go out and look for a job.  Or better yet, move to one (many openings in the Midwest).

December went well, and January for the most part, just at the end did things heat up.  The "impeachment" was another non-event for the market.  The Corona Virus steals the show as the true disruption in growth.  If China can't supply the global economy, the global economy will panic.  This is the best time to buy.  Be ready to catch that bottom when it happens!  Lots of increases these past 2 months, here they are (along with some commentary by me):

Dividend Increases & Special Payouts
Mastercard (NYSE:MA) declares $0.40/share quarterly dividend, 21.2% increase from prior dividend of $0.33.
WEC Energy (NYSE:WEC) declares $0.6325/share quarterly dividend, 7.2% increase from prior dividend of $0.59.
Realty Income (NYSE:O) declares $0.2275/share monthly dividend, 0.2% increase from prior dividend of $0.227. (monthly payer that increases small several times a year, with usually one large increase once a year.  This isn't it!)
AT&T (NYSE:T) declares $0.52/share quarterly dividend, 2% increase from prior dividend of $0.51. (ATT just increases a little in order to keep their aristocrat status - which is fine because of their great yield)
Realty Income (NYSE:O) declares $0.2325/share monthly dividend, 2.2% increase from prior dividend of $0.2275. (Here's the bigger raise)
ONEOK (NYSE:OKE) declares $0.935/share quarterly dividend, 2.2% increase from prior dividend of $0.915. (This is another one that likes to increase several times a year)
Fastenal (NASDAQ:FAST) declares $0.25/share quarterly dividend, 13.6% increase from prior dividend of $0.22. (Nice!)
Kimberly-Clark (NYSE:KMB) declares $1.07/share quarterly dividend, 3.9% increase from prior dividend of $1.03.
Air Products and Chemicals (NYSE:APD) declares $1.34/share quarterly dividend, 15.5% increase from prior dividend of $1.16. (Nicer!)
Chevron (NYSE:CVX) declares $1.29/share quarterly dividend, 8.4% increase from prior dividend of $1.19.
Archer-Daniels-Midland (NYSE:ADM) declares $0.36/share quarterly dividend, 2.9% increase from prior dividend of $0.35.

December Purchases:
XEL         14
WEC 25
ORI          29
ADM        22
WTR 40
ABT            2

January Purchases:
ABT         14
ORI          14
APD         4
FAST 11 
CVX         6
HRL         13
ADM         9

Another Great Month For Net Worth

Today

...not so hot for purchases.

It was hard to find bargains.  While earnings were about even for all my companies (half profit/half loss), most stocks went up in value, regardless.  Our net worth is approaching retirement values, which is good news, but my annual income has hit a snag as I'm having harder times finding stocks on sale.  A relative and friend of mine is thinking of starting dividend investing, and if I were to start today, I would start in 5 diversified stocks:  Abbvie (ABBV), International Paper (IP), Southern (SO), Okeo (OKE), and AT&T (T).  You have medical, industrial, utility, energy, and telecom.  While they may be peaked on value, they have great yields.  So yeah, if you buy them, they may drop in the next crash, but you will still be making some money in the meantime to buy them at better prices.  AT&T was a dog in my portfolio for almost two years, but has recovered nicely, and still has a

great yield.  After those, I would invest in as many consumer staples & utilities as possible, as they will thrive in the next recession.

Two Years Ago

I have been filling out my portfolio buying a few lower yielders to diversify.  However, I really need to start concentrating on the utilities for a few reasons.  1, their profits should do nicely after the winter season, and 2, they also will thrive when a recession hits.  So, XEL, SO, WTR, and WEC, I'll be keeping my eye on you.

Dividend Increases & Special Payouts
Hormel Foods (NYSE:HRL) declares $0.2325/share quarterly dividend, 10.7% increase from prior dividend of $0.21!!!  Gotta love a 10.7% raise!

AbbVie (NYSE:ABBV) declares $1.18/share quarterly dividend, 10.3% increase from prior dividend of $1.07.  Another great raise! Better than my job!


November Purchases:

CVX	2
ORI	25
MCD	3

October Good and Bad

October was great for our net worth!  And, earnings were great for the most part for my stocks with a few positive surprises.  The only bad part was that I didn't invest much this month.  We had car problems, and had to pay a few bills.  However, I am looking forward to November and getting back on track.  It is unfortunate to not have cash on hand during earnings season, but then again, there weren't really any massive drops in value for any stocks.  I have been tracking report-outs for each of my stocks this time around, and they are about 2/3 done.  There were some nice dividend increases as well.

Hormel's Hit Product

I have slowly added all of the cost-consistent bills to my brokerage account, and will be funding the brokerage from my checking account for their amounts.  As I mentioned in another post, this is in an effort to slowly let dividends pay for my bills.

Today

I also would like to set a goal to have each of my stocks pay $100 a year at least if possible as deals present themselves.  15 out of 28 already do!  And some quite a bit (MAIN $323 a year).  The goal after that would be to have each stock pay at least $100 a quarter.  This way, even if the stock values change, the income should be diversified enough to handle any possible disruption from any individual stock.  While it is possible for more than ONE stock to be disrupted, in my 2.5 years experience, this has not happened!

I'm adding a new section to the blog progress, dividend increases.  Since this is unique to the current month, I will post it here along with purchases.  I will remove the dividends received, as the total for the year (e.g. div-o-meter to the right) is what really matters.  There is a high month and a low month, but if I budget correctly, this should not matter for generating income (only for purchasing).  As I said earlier, my purchases this month will be miniscule:

A Year Ago

Dividend Increases & Special Payouts
AbbVie (NYSE:ABBV) declares $1.18/share quarterly dividend, 10.3% increase from prior dividend of $1.07.

ONEOK (NYSE:OKE) declares $0.915/share quarterly dividend, 2.8% increase from prior dividend of $0.89.

International Paper (NYSE:IP) declares $0.5125/share quarterly dividend, 2.5% increase from prior dividend of $0.50.

Main Street Capital (NYSE:MAIN) declares supplemental semi-annual dividend of $0.24/share.

October Purchases:

JNJ	3
ADM	2
FAST	2
ABT	2
HRL	2
WTR	1

A Little Late... October Meltdown?

Today

September was a good month for net worth, and I've decided to start paying bills via my brokerage using dividend money (per se). 

We have a no interest loan with two popular hardware stores for the remodeling we did to improve our home's value.  They expire sometime next year, and we are paying them down.  One of the bills is less than the other, and less than the dividends I make on the low months (~$100).  Going forward, I will add that amount to my brokerage funding each paycheck, and as it pays off, I will not reduce my brokerage funding.  This gives me more cash flow, plus 2 extra paycheck's worth of funding per year.  I will most likely choose another bill to pay with the remaining amount on the LOW month to do the same.  The end goal is to basically have all of my paycheck go to my brokerage account, then pay all the bills through dividend income, and fund the brokerage with the rest. 

Two Years Ago

Why not just do it all now?  Well, I want to make sure I can make ends meet "virtually" before retiring, so that when I do, essentially nothing will change.  This means I will also need to start funding the stocks that pay in the low month when I can (starting with XEL since it is below my 3% minimum diversity weight).

As I write this, 10/2, today and yesterday the market has sold off.  So far the October Effect is in full swing, so I expect to find some investing opportunities next week when my funding hits the brokerage. 

Dividends were a tad higher this month due to Old Republic's $1/share bonus dividend.  I don't know if I will see this number again in 3 months, but I hope so!

Dividends Received: $775 (the high paying month)

QCOM			$40.30
MAIN			$22.55
HD			$24.48
MCD			$22.04
O			$11.33
ORI			$121.20
MAIN			$22.00
IP			$44.50
JNJ			$20.90
TGT			$33.66
CVX			$20.23
SO			$34.72
ADM			$17.15
WEC			$7.67
WTR			$7.26
401k Taxable			$346.87

September Purchases:

CVX	8
ADM	2
FAST	12
ABT	4
WEC	2
WTR	2

Old Republic Offers Special Dividend Again!

Last time ORI offered a special dividend, I called it "Breaking News!".  This insurance company, which I personally used as my home warranty during my recent move, has been doing great since the Trump era of reduced regulations.  Because of the reduced regulations removed by this administration (by ORI's admission), they offered their original special dividend of $1 per share, which I then loaded up on.  You can consider it as $1 off the share price, but in this case it actually doubles the dividend offered this year.  I hope this trend continues where they reward shareholders.  ORI is a nice slow-growth company with a decent dividend and a great balance sheet.  So hurry up and buy in before September 6th!  I'll probably grab some ORI before the 6th, but I'm hoping for some tradewar "bad" news to cause all the stocks to drop first.  I never thought I'd be such a bear when it comes to stocks, but dividend investing will do that to you.

Now

I have reached a full position on IP, and am closing in on a full position on ABBV.  I believe those two have found their "bottom" and should more or less go up from here.  My goal is to achieve 3-4% of my portfolio for each of my stocks, to ensure greater diversification.  However, if they yield higher than 5%, I crank them up to 4-5% in order to take advantage of the situation to play "catch-up" (since I started a little late on this gig).  

2 Years Ago

In the meantime, I've been setting up my own personal "margin" account.  My wife and I set up a savings account with my broker's partner bank (quick and easy transfers) that we are feeding extra cash into without detracting from our dividend investments.  I've already used it twice to catch good stocks on "bad" news days, and paid it back when the paycheck is deposited.  I think that with all the unsubstantiated talk in the media about a recession on the way, it might be a good idea.  The problem with recessions is that you can actually talk yourself into one, but you can't talk your way out of one.  The only thing that worries me is the amount of subprime mortgages being allowed to exist in 2018 and even more projected for 2019.  This smells of 2007 all over again.  While I don't think you can prevent a recession (that's like trying to prevent winter), you can delay it, ease into it, and ease out of it.  So I guess I'm officially "saving for a rainy day".  Happy investing!

Dividends Received: $347.24 (the mid-paying month)

FAST	$16.50
ABT	$6.08
O	$11.33
PG	$31.33
NNN	$37.60
MAIN	$22.55
HRL	$8.61
ABBV	$44.94
OKE	$50.73
APD	$17.40
MA	$5.28
T	$58.14
GIS	$36.75

August Purchases:

ABBV	12
IP	20
FAST	3
ORI	4
ADM	10
WSO	3

Back on track

A Year Ago

I'd like to take a moment and reiterate to the readers of this site what I am doing here and why I am doing it.  Back at the turn of the century, I did some trading (not investing, there's a difference) and made a bit of money, lost a bit of money.  My employer had a stock participation program (SPP) which I partook in to some profit as well.  As time when on, I bought some stocks and promptly forgot about them.  During the interim, I worked hard to eliminate all debt, and develop a lifestyle that made me a good steward of the funds I was given (disposable cars, abstain from subscription models, determine ROI, etc.) and suddenly had plenty of cash flow.  I had been feeding my 401k like most drones, and started to wonder why I couldn't make money in the stock market (I'm a reasonably smart guy).

Today!

The Trump economy was starting to get underway, and I was poised to be left in the dust.  I logged into my old brokerage account, and found $400 sitting in it, and I wondered why.  I owned a paper company that paid dividends.  It piqued my interest.  I started reading primers on investing (and trading) and long story short, learned about dividend investing.  Slow growth with cash just for hanging onto the stock, what could go wrong?  I liquidated all my stocks, borrowed against my 401k, and began my foray into dividend stocks exclusively.  That had to have a solid balance sheet, plenty of cash flow to pay the dividend, have to have paid out faithfully, and a clear direction.  After all, I wanted to own a company and invest in it, which is a far cry from the "casino" trading that is done.  It would be as though I am financing a business, but letting someone else do all the work.

The goal:  Work free income with raises that exceed cost of living.  I put $1000 into a stock, and I get (starting) $50 a year for the rest of my life, with that $50 increasing every year by 4-30%.  So that, when I retire, I receive income that won't count against social security income, and just have to maintain the stock by making sure the dividend isn't cut.  If it is cut, I pull out and invest into another.

This way I obtain independence and freedom, and can pursue other things, such as setting up my children with income from dividends when I pass on, I won't have to depend on social security, have control over my assets (which a 401k won't allow me to do), and pursue a ministry and philanthropy.

So far, I am 2 years in, have almost $100k in assets (by reinvesting dividends and NOT investing in my 401k) and am making almost $5k a year.  The goal is 30-50k, of course, but the snowball is getting bigger and moving faster!  In the beginning I could only pay my water bill, now I can pay all my utilities plus more (if I wanted to!).  Instead, I put more and more every month into the dividend stocks, which makes me more and more money.  When I read that dividend investing, while not sexy, is 99% successful, I didn't believe it, but now I do.  Know that if I lost my job today, I would be making $400 a month doing nothing, adds some security which just grows and grows.

My investing strategy is gauged different than a younger person's, as I am middle-aged and need to be a bit more risky, but I still am quite conservative compared to my co-worker who is about 10+ years older and chases yield a bit more.  I may discuss the finer points in a future post, but you can figure it out studying my past blogs.

Raising two kids gets a little complicated, and this year expenses for school were a tad steep.  Coupled with current debt for remodeling, our FCF (free cash flow) is getting a workout.  If it wasn't for the free cash flow, and ability to move things around, we couldn't make ends meet.  However, the FCF is there, and savings and retirement were impacted little if at all.

Purchases were down for July, since there wasn't a lot of downward action in the market for most of the month.  In fact, there was a lot of growth for my stocks.  It wasn't until August 1st (today) that I backed up the truck to buy several stocks that went on sale after the double whammy of a rate cut, followed by additional presidential tariffs.

Dividends Received: $113.28 (the low paying month)

WSO			$33.60
XEL			$17.42
O			$10.87
MAIN			$22.55
KMB			$28.84

July Purchases:

FAST 3

IP      3

WSO 3

OKE   3

ORI    3

ADM 2

ABBV  9

O       2

WTR 2

Best June for the Dow since 1938!

It was a good month, in many ways.

Despite starting to pay down debt, I was able to move things around in my 401k to increase my taxable dividends by a moderate amount (and take advantage of some dips).  Normally, I would use this increase to buy more stocks, I will be using it to help pay down debt (for now).  My debt is interest free, and half of it is 401k loan (which isn't interest free, but the interest goes to me so - same thing!).  However, living completel
y debt free is such a great feeling, so I aspire to get back there as soon as possible.

My net worth got a nice boost not just from the market this month, but the remodel added 60% of the cost (per Dave Ramsey) to the value of the home.  I thought this was quite high, but since it included flooring and cabinets, it seems legit across several websites. 

Finally, ABBV dropped 14% on the news it was buying Allergen!  I was only able to snag 4 shares before it bounced back by half of that.  Early next week I hope to buy more.  General Mills also dropped 7% and has bounced back a little, but I was out of cash, not to mention I already have enough GIS for now.  ABBV is in my sights right now, until I own 4+%.

One thing I've noticed is that although I have money going to many different places, the cash flow allows for a little chaos.  I get to feel how AT&T feels with their debt, chaos, but substantial cash flow.  I think this is important:  Have no debt, have a plan for your money, and have a lot of free cash flow to funnel where it is needed.  Not doing this leads to unnecessary debt, unnecessary purchases, and unnecessary opulent lifestyle changes.

Dividends Received: $572 (the high paying month)

QCOM			$40.30
MAIN			$27.50
HD			$24.48
MCD			$18.56
O			$10.85
ORI			$18.80
MAIN			$22.00
IP			$39.00
JNJ			$20.90
TGT			$32.64
CVX			$16.66
SO			$34.72
ADM			$8.75
WEC			$7.67
WTR			$6.35
401k Taxable			$255.78

June Purchases:

ABBV	4
IP	4
FAST	2
WSO	2
ABBV	2
FAST	4
OKE	2
CVX	1
MCD	3
FAST	2