Welcome to my passive income blog

I am about a week late, but I did save all the data on the last day of the month.  Biggest news is General Mills unfroze their dividend and raised it!!  I never thought I'd see the day! 😁

I'm not very inspired this month, and there isn't really anything in particular to say, with the election inching closer and no perceptible impact on the market.  I've been pretty busy getting back into the swing of things post-pandemic, and preoccupied with some life events.  So I'll just reiterate what I'm doing and why I'm doing it, something I haven't done for awhile.

My dividend investing began back in 2017.  I thought to myself, "I'm a halfway intelligent person, how come I can't make any real money in the stock market?"  I made some good calls, and some bad ones, but every time I invested, I had to wait a long time and hope for a profit.  I wanted a sure thing, something I could depend on, and live on without much time investment and stress.  

Prior to this, each paycheck I had excess cash, and I found that my wife and I were starting to buy things that we really did not need.  Henry David Thoreau's mantra of "Simplify, simplify" kept resonating in my brain.  I realized that in about 8 years I would be eligible for retirement.  While I had no debt (house had been paid off a few years before), I did not think I would be able to retire early, even though my employer offered this option.  As the first of my name to obtain a secondary education, and being blessed with being raised to be frugal but not stingy, I wanted to be able to "make it happen".  Why can't I retire early, as some are able to do, and then pursue some personal goals?

My job had proven itself to be as stable as can be compared to many.  So I just needed to increase my cash flow and invest it in my future.  I could have gone all in with 401k, and I did for a few years, but I did not like the choices that were given to me, and the fact that even if I retired early, I wouldn't be able to touch the money until I am 65.  After all, it was *my* money.  On top of that, my employer didn't even match it.  So how could I live off of it?  I stopped giving to my 401k at this time.

So I did the one thing every bank and insurance company has done for decades, bought high quality dividend stocks.  I took my initial stock account value (about 4k), borrowed 16k from my 401k (which *doesn't* allow me to reap dividends), and dropped 20k into about 10 stocks recommended for dividends.  And I was off to the races!  Best part about it was I didn't have to worry about these stocks breaking me.  General Mills, for example, has paid out their dividend for over 100 years.  They haven't always increased it, but they never decreased it.  That is something you can bank on.

Following this, I decided to take Thoreau up on his simplification of life, and started eliminating excess.  This was not difficult for me, as I am a minimalist by nature, but my wife is a hoarder, and even today she is still working on eliminating her accumulation of material items.  I basically took the view of, if I don't plan to use it in the next 6 months, get rid of it.  Our donations to the Salvation Army have been epic, and I'm still surprised I haven't been audited yet.  We continued this thinking by going down to one car (I use rideshare to commute to work, when I don't telecommute), getting a modest condo instead of a huge house (less upkeep, and kids are graduating soon), and eliminating time wasters.  When you have too many things, and not enough time to do them, then you don't need those things.  Right now we are preparing for retirement.  Fixing up the condo to our liking so we don't need to spend a lot of money later, obtaining large appliances, but delaying as much as possible until the retirement date, so they last longer, and taking every cent we save and putting it into dividend stocks.

Three and a half years later, I am making over $600 a month in passive income, which I reinvest, along with spare cash from my paycheck.  My employer also recently started matching my 401k, so I am giving the minimum for matching.  Once I retire, I can move my 401k to an IRA and live off the dividends on stocks *I* get to choose.  That is my bigger asset.  I calculate that with the IRA dividends, and my capital investment dividends, I could make over $2k a month if I retired *today*.  

Sadly, I can't retire today, but I can in 4 years.  While $2k a month before taxes is a modest amount, I would like to double it in 4 years, if possible.  Once retired, I can draw on the dividend cash to pay my bills, and the dividends should increase annually ahead of inflation to more and more every year.  Any windfalls I receive, I would use to add to that, and I would monitor the companies that may take a wrong turn, cash them out, then reinvest in another dividend company.  Then, when we pass on to the next life, my kids should be able to split the accumulation down the middle and live off the dividends as well, and hopefully, if they are wise, will pass it down to their kids, and so on.  Trying to leave a financial legacy, so that way if they are artists or missionaries, they won't need to worry about income.

Financial independence and freedom is the end result.  To be able to pursue other projects and endeavors without worrying about paying the electric bill or being able to get your next meal.  Set up my own schedule, say no to something I don't believe in, support or do the things I do believe in without pressure, care for people, and provide opportunities for others than myself.  As a great man once said:  "Without money, one often has to do things one does not want just to survive, and this is not how I want to live."  Money is a tool lent to us, being a good steward of it and not wasting it is the legacy I want to leave.

Dividend Increases & Special Payouts

Realty Income (NYSE:O) declares $0.234/share monthly dividend, 0.2% increase from prior dividend of $0.2335. (another one of their minor increases, but any increase is good for real estate at this time).

General Mills (NYSE:GIS) declares $0.51/share quarterly dividend, 4.1% increase from prior dividend of $0.49. (Soon after I first bought them, they froze their dividend, but now they raised it!!  Patience has paid off!)

(October preview, McDonald's raised their dividend!!!!)

September Purchases:

T - 10

WPC - 9

WTRG - 15

SO - 4

ORI - 30

See you next month!

Milestone: $600 a Month Passive Income

 A major milestone has been reached for my quest to retirement.  I am now making $600 a month in passive income!  That's $600 in my pocket, to pay bills, buy more dividends, or travel.  Well, not too much travel right now.  Other milestones are close as well, net worth, home value, etc. Things I don't normally share on here.  Also got rid of some home remodeling debt as well.  The pandemic continues to be an economic boon for our household finances.

Not much more to say - America is slowly opening back up, people are starting to come out from their homes, their eyes dilating from the bright light.  There's still a few riots (allegedly funded) in a few blue cities, but it doesn't change anything, so hopefully they will stop the nonsense, and let main street recover like Wall St. did (close to all-time highs again).

Major movers this month:

Abbot Labs - $5, 15 minute covid test, funded by the feds

Air Products 

Procter & Gamble (as expected)

McDonalds??? up 11%

Johnson & Johnson

Qualcomm

Mastercard

Target +17%!

Dividend Increases & Special Payouts

Essential Utilities (NYSE:WTRG) declares $0.2507/share quarterly dividend, 7% increase from prior dividend of $0.2343.

No cuts.  Yet.

August Purchases:

XEL - 4
IP - 6
WPC - 10
O - 5
WTRG - 7
SO - 5
GIS - 2
CVX - 4
ABBV - 2

Good. Bad. Ugly. Q2 Earnings Season

Q2 earnings, the moment we were all dreading, is here.  Thankfully, it is better than expected, but worse than hoped.  Let's dive into my portfolio, shall we?

The Good

This is a hard time to predict earnings, and many corrections have been made for pretty much all companies.  The recession stocks actually had to correct up!  It appears everyone is learning how to cook their own meals.  Probably good for some people to eat healthier, bad for some people because of the waistline (snacking habits - something I'm struggling with - fasting helps!).  Here're the good stocks that have reported good earnings already (most have gone up $10+ per share the past month):
FAST - their medical side (I didn't even know they had one) has been doing very well
JNJ - Rose and dropped, but ended up higher than starting the month
ABT - Just keeps going, and going, and going...up
PG - Another winner that increased dramatically
WSO - Rose over 16% on earnings... WOW
KMB 
XEL
MA
SO
ADM
WPC -  So glad I bought this stock after trading in NNN
APD
QCOM - Another exploder!  Up 17% on earnings news and a deal with Huawei.  New high!

The Bad
So that was a good list above, but we were expecting everyone to report bad this quarter.  It was inevitable with the shutdown earlier and the slow restart of the economy.  So here are the expected bad boys of my portfolio:
MCD - One cannot thrive on Drive-Thru alone.  200 stores closed in Japan.  They did maintain their dividend, and this is the best of their sector, they will pull through.
ORI - They beat their earnings, but the share price is flat and still far below what I paid for it.  I'm leveraging a little here and there, but I need some sign from the insurance sector that they are ok.
T - AT&T has the cash flow, but Time/Warner is suffering from the lack of entertainment industry.  The dividend is safe, but the share price is still terrible.  Another one I'm nibbling at.
ABBV -  I have been buying on the way down, the yield is too good to pass up, but I am a little surprised at this one.  I expected a medical stock to do better in this environment.

The Ugly
OKE - They maintained their dividend, but this one is not pretty.  While I expect them to cut the dividend, I'm looking for a boost to get out.  But where would I go?  They are the best company out there for natural gas (you may think that's debatable) with a dividend.  If I get out of OKE, I would need to go into another sector completely.  Although my portfolio on a whole is up, I've lost about half my investment in OKE.  The only good news is that this has to be the worst quarter and we can only go up from here, right?  Right?
CVX - Wow this one was way worse than I expected.  Chevron is the king of oil in this market, and they still were hemorrhaging on earnings EPS of -$1.59 misses by $0.70  - Wow!  They also took on some debt to take advantage of this crisis by an acquisition of a smaller company, so they are confident.  I'm just glad I don't own Exxon.

If these two Ugly guys cut their dividend, I may stay with them, going against my rule of running when a dividend is cut.  I have nowhere to go in this sector, they are the best you can get.  However, if they *eliminate* their dividend, I will send them packing and just go to another sector (or maybe load into the other one).  Apparently energy will be too volatile for me in that case.  I need dependable income, and this crisis has separated the men from the boys.

Still a third of my portfolio needs to report, mostly utilities and consumer discretionary stocks.

There weren't a lot of buying opportunities this month, because the good got expensive, and the ugly scared me away, but I did some buying mostly on the market drop yesterday.  Good news is my low month dividends increased by about 60% after all the buying a few months ago.

Dividend Increases & Special Payouts
None, but no cuts either.

July Purchases:
IP - 12
CVX - 7
O - 4
ABBV - 2
SO - 2
ORI - 10
WPC - 2


Looking ahead, the rest of my stocks need to report out in August, following worst GDP on record.  We can only go up from here, right?  I expect that so close to the election, Trump will do his best to shock the economy and to stock market back into action.  Stay tuned.

Stunted Growth

My net worth grew quite slow this past month, although the highest it has ever been.  I expect this slow pattern to continue until the Q2 earnings are announced (which will be in a few weeks).  I am writing and compiling this data as of July 1st - and the jobs number just came out, and it was very good.  I would like to say we are back to normal economically, but the election is on the horizon, and I fear that the establishment is making inroads in making sure the outsider is not re-elected (yeah, I'm talking to you, Soros).  While the blue outcome could be a bit devastating to the growth of my net worth, as long as regulations aren't reintroduced, it will give me some time to get more deals.

I hit a milestone of $7k a year taxable income, $583 a month.  Not too bad, but I really need to step it up if I want to retire in 5 years.  Whatever I get to, I can figure about x4 that when I retire after moving my 401k over to an IRA I can control for dividends.  That would put me at 28k a year right now, which is not bad.  However, as I am growing my brokerage faster than my 401k (minimal matching contributions and Fidelity's silly restrictions and ETFs), that factor may dwindle.

As far as the riots, I did note them in my "dividend history" as I always do each month on something of significance that may or may not impact the market.  I also noted the 2nd wave.  I think the riots are mostly noise as far as the market is concerned, those people still need to buy goods and services, or at least their handlers do.  The 2nd wave is the troublesome note.  On a good note, Realty Income collected more rent money in June than they did in May, so O is ok!

Dividend Increases & Special Payouts
Realty Income (NYSE:O) declares $0.2335/share monthly dividend, 0.2% increase from prior dividend of $0.2330.

Target (NYSE:TGT) declares $0.68/share quarterly dividend, 3% increase from prior dividend of $0.66.

W. P. Carey (NYSE:WPC) declares $1.042/share quarterly dividend, 0.2% increase from prior dividend of $1.040.

June Purchases:

ABT	3
T	3
IP	6
WPC	18
O	7
ORI	10
SO	6
WSO	4
ADM	4
GIS	3

Tax Harvest Time! NNN out, WPC in

Last month I was sweating a few sectors.  One of them was the REIT sector.  O (Realty Income), had received the majority of their lease payments from tenants.  NNN (National Retail) only received about half their lease payments.  I started looking into my watchlist for a similar dividend paying REIT, and I think I found a better one.  WPC (W. P. Carey) had a good yield, 92% of their tenants paid up, limited retail exposure, 9 years of dividend increases, and many other favorable attributes.  Now I had to do the math - if I completely sell my NNN shares (before they cut their dividend), and use that cash to buy WPC, what will it net me?

- Peace of mind: one less drop of sweat from the real estate sector
- About $10 more a year annually in dividend income: So no loss to my income
- $800 and change loss I can write off on my taxes: harvest time!

So I made the biggest move in my portfolio in years.  NNN, despite how long they have generated dividend income, despite how long I have held them, although they haven't cut their dividend, has left the building.  My "never fall in love with a stock" philosophy was successfully tested, and now my portfolio is more recession proof than ever before.

As far as the other risky sector stocks, there hasn't been much change except slow recovery.  Well, slow is pretty relative, seeing as how we may avoid a depression and just see a recession.  Of course, it is too early to tell anything, but I'm feeling pretty good about the purchases I made during the height of the pandemic.  There still a few great yields out there, and I hope to keep taking advantage of them. "Never let a crisis go to waste", as Churchill said.

Dividend Increases & Special Payouts

Nothing this month.  No cuts, though.

May Purchases:

HRL 5

NNN 9

NNN -112

WPC 58

SO 3

QCOM 5

ORI 26

O 4

ADM 4

MAIN 4

Recession Stocks Weren't Cool... But Now, They Are

Back in my MMO days, there was a web series with Felicia Day called "The Guild".  They had a few song hits, "Do You Want To Date My Avatar" notably, the costume Felicia wore in that video is on display at the Smithsonian, which I recently visited.  Lesser known is their song "I'm the one that's cool" which tells the tale of how the Guild, once a group of nerds, are now the center of our culture.

I look at the recession stocks as the "nerds" of the stock market.  No one thinks they are cool or worth the investment, until something like 911, the housing crisis, or a pandemic hits.  Now they are "burning bright thanks to your rejection fuel" like the song says.  I make sure most of my dividends come from these stocks, because you need your income most during times like this.  The Nerd Stocks are:

Consumer Staples like

• Archer Daniels (ADM) agriculture
• General Mills (GIS) Grocery
• Hormel Foods (HRL) Supermarket
• Kimberley Clark (KMB) TOILET PAPER GOLD
• Proctor & Gamble (PG) Everything else in the store lol!

Utilities like

• Southern Co. (SO) Electric Company working on nuclear power in the south (hot summers)
• Wisconsin Energy (WEC) Electric/Gas company in the north (cold winters)
• Essential Utilities (WTRG) Water Works + Natural Gas
• Excel (XEL) Electric/Gas

Health Care (really shining in a pandemic)

• Abbvie (ABBV) Humira & Allergen
• Abbot Labs (ABT) Covid-19 Testers (cha-ching!)
• Johnson & Johnson (JNJ) everything else!

Now for the stocks in severe trouble.  I am keeping a close eye on them to see who will make it through, and sell off/tax harvest those who cut their dividend.  Thankfully none of them are more than 3-5% of my portfolio, so I can afford to.

Chevron (CVX), while the king of the oil companies, is the closest of my stocks to cut their dividend.  I just glanced at their earnings this morning, and Q1 wasn't as bad as expected.  Q2 may be the real test, however.  CEO assured shareholders the dividend is fine, but everything is always fine... until it isn't.

Okeo (OKE) is the next one.  While they were hit hard by the pin action of the oil stocks, they did report a decent quarter.  They are mostly pipelines and natural gas, so why they haven't bounced back too well is beyond me.  Meanwhile, their dividend payout ratio is high (not as high as Chevrons) and they always had a great yield, now it is scary good - too high!

Realty Income (O) and National Retail (NNN) - these guys are in for a rough ride.  As if brick and mortar wasn't already having issues.  While some of their tenants (Walgreens, 7-11, Dollar General/Tree, Walmart, CVS, Home Depot) are doing well, many may never do well again (AMC, LA Fitness, Chuck E. Cheese).  The problem is, if half your tenants are doing well, you don't get any excess, but if half are not doing well, you don't even get your lease payment.  

Main Street (MAIN) - They dropped their semi-annual bonus dividend, but then they already planned to, and absorb it into the monthly dividend.  They just dropped it sooner, and hopefully will absorb it later.  They appear to be doing fine on paper, but investing in companies is a tricky business during a pandemic where many businesses are failing.  I know they will be investing even smarter from now on.

Otherwise, the pandemic has been good for my wallet.  My employer labelled me "essential" and gave me the documentation to prove it.  They have been providing me with 2 square meals a day, an essential worker bonus, a Q1 bonus, and a secure job.  My family hasn't been going anywhere or spending anything, so we have been working on home project spending only.  The government provided me with a check I don't really need, so I am using it to invest and pay ahead on bills in case another tragedy hits.  Our family has been blessed during this time, and I told my children to try to avoid a job in the entertainment/travel industries, because they are the first to suffer during a crisis.

Net worth took a big hit in February, but has recovered nicely.  I think it is because Vegas is closed, so the gamblers are all playing the market, investing in biotechs and airlines.

IP was taken off tax harvest status on the 16th, so I loaded up a bit.

So glad many of my dividends actually increased during this time!  Honestly, I'm just glad some like Chevron and O maintained their dividend.

Dividend Increases & Special Payouts

Watsco (NYSE:WSO) declares $1.775/share quarterly dividend, 10.9% increase from prior dividend of $1.600.

Johnson & Johnson (NYSE:JNJ) declares $1.01/share quarterly dividend, 6.3% increase from prior dividend of $0.95.

Procter & Gamble (NYSE:PG) declares $0.7907/share quarterly dividend, 6% increase from prior dividend of $0.7459.

Southern Co (NYSE:SO) declares $0.64/share quarterly dividend, 3.2% increase from prior dividend of $0.62.

April Purchases:

ADM	17
IP	17
NNN	10
ORI	4
O	6
SO	4
Stay safe!

The Covid

Just when the market was getting a little boring, this happens.

This is why I refuse to ever pull from my 401k.  When I retire, which will be hopefully soon, I will just move it into an IRA, receive taxable dividends from it, and NEVER pull from it.  If you have to depend on it, the market will fall when you need it, then what will you do?
I have depleted all of my dry powder, and now am waiting for each paycheck as it comes in to buy as much as I can here, or on the way down.  I don't expect my job to be in peril, as it is big tech, and big tech is the clear winner here with everyone at home using it.


I am trying to be careful to pick quality stocks with increased dividends, but since I am middle-aged and prone to a little risk to catch up, I have bought a few riskier stocks (MAIN, OKE).  I did tax harvest IP, but I maybe

KMB Makes Toilet Paper!

should not have since they have a great balance sheet.  I should have harvested OKE, and I may yet still.  If anyone cuts their dividend, I *will* sell them, so that is why I am not harvesting yet, I may be forced to.  I only see OKE cutting at this point, but many stocks are at or slightly above their payout ratio.  I am watching the market more often to see if I can catch the moment the announcement is made.

Many stocks have cancelled buybacks, which I have mixed feelings on.  Buybacks decreased the payout ratio, and during these low prices it seems foolish not to take advantage.  At the same time, it is very bad PR for the company, since everyone wants companies to use that extra money to keep people employed.  If! they use it for that. 

Several CEOs have come around saying the dividends are safe.  Of course they are, until they aren't, right?  Q1 earnings will be the true test.  Still, I was surprised to see O raise theirs, even a little.  QCOM raise should be fine, with the 5G rollout and the home PC use, tech will be fine or better for Q1.

In the past week, the market seems to have found some footing, to slightly the point at the beginning of Trump's presidency, so a nice mulligan for anyone who wants to start jumping in.  However, many stocks are at risk.  The recessionary stocks, as expected, are doing fine, and are floating my portfolio well enough against the rest of them.  I expect them to have a good quarter, if not a great one, and all the others to be affected almost exactly inversely.  It is basic econ, the money flows one way, then the other.  I also expect Home Depot to do well, as people finally get around to doing their home projects if they still have a job.  I'm glad I don't have any stocks in the RED ZONE, such as restaurants, travel, and any consumer discretionary that isn't selling recessionary brands.

I am VERY proud to own ABT and JNJ, as they are leading the charge in this pandemic war.

It is hard not to say anything that hasn't already been said by the stock gurus.  Stay safe out there, and always make sure the main source of your passive income is recessionary stocks!  I need to buy more ADM on Monday!

Dividend Increases & Special Payouts
Qualcomm (NASDAQ:QCOM) announces dividend increase to $0.65/share quarterly dividend, 4.8% increase from prior dividend of $0.62.
Realty Income (NYSE:O) declares $0.233/share monthly dividend, a 0.2% increase from prior dividend of $0.2325.

March Purchases:

MAIN	47
FAST	11
QCOM	6
NNN	20
ADM	30
WTRG	12
SO	22
WEC	16
GIS	22
KMB	17
WSO	9
OKE	60
CVX	17
IP	-30
PG	4
TGT	5
JNJ	5
ABT	5
ABBV	10
ORI	35

Whew!  Most purchases I have made in a month, and I certainly exceeded 30 trades (all of the ones above were split into 2 or more transactions throughout the month).

Keep on buying on the slide down, or the ramp up.  Research your companies.  Receive your dividends.