Happy Thanksgiving

Have a break while at work today, so thought I'd share a few things.

I averaged down AT&T yesterday at market open, which was good as the stock went up from there.  Bought 21 shares, and added a nice +$40 to my annual div income.  Now at about $920, I have 3 more paychecks before the end of the year, so I *shouldn't* have any problems hitting the $1k mark for annual income.  Not bad for 6 months of work! :)  I may just average AT&T down again , since I'm not overweight on it yet, and the yield is incredible.  I figure the Time Warner merger will either boost the stock price, or if it fails, I'll be guaranteed my dividend for a long time, I really have a hard time seeing a downside to this.  I wish they would just sell off CNN already and be done with that fake news! :P

AT&T may be my first DRIP stock.  Another round of purchases at the current price and every quarter I'll have enough AT&T dividend income to buy a full share of AT&T stock.  My philosophy is to take dividend earnings and purchase shares of stocks on sale, not throw money at stocks that are overpriced such as Abbot & Mastercard.  If AT&T ever bounces back, I may have to reconsider, but since it is currently underwater in my portfolio at (now) -6%, it is definitely a candidate.  As a middle-aged investor, I need to be a bit more aggressive and meticulous about where each dollar goes.

I learned a real good lesson a few weeks ago.  I was a bit worried about the consumer staples, O, and AT&T falling and maybe never returning to the levels I bought them at, but as I gradually saw everything coming back (especially Hormel), I learned that I need to have more confidence in my stock picks.  I mean, over half are YD picks, have a record of stability, and the ones that are semi-speculative I still did my research on and have at least 6+ years of dividend increases.  I should have a bit more confidence in my choices.  After all, I am quite diversified, so a stock or two under water shouldn't concern me too much.  I was hesitant about buying AT&T initially, but I did my homework, looked at the (small) amount I was investing, and realized the potential reward was worth the risk.  No investor should worry about one particular stock's effect on their portfolio.  If they do, then they need to diversify more, and make sure they aren't overweight in any one stock or sector, that's all.  I guess I had just been burned too many times before, it is good to be cautious, but not paranoid if you don't have data to back it up.

Anyways, Happy Thanksgiving.  I have a lot to be thankful for.

P&G and my watchlist top picks

Bought 10 shares of Procter & Gamble.  I know many Div investors are waiting for a better yield, but getting 3.18% on a Consumer Staple is a bargain in my opinion (last I checked inflation was 1.9% so, all good).

I also filled out my holdings spreadsheet with my top picks to fill out my 32 dividend stocks.  While I may not purchase them yet, they are in line.  Some of them need to shape up before I will buy them anyway or they will get replaced.  I'll take each one at a time to explain the method to my madness.

Tyson Foods (TSN) - Low yield, but a profitable company.  I may have missed the boat on this year's holiday prime purchase time, so it might not be until Spring/Summer before I grab this one.  I know I'm not going to buy a frozen turkey from Amazon, so I expect this company to excel in these times.  This will probably be my last "Consumer Discretionary" purchase.

Wal-Mart (WMT) - With the closing of many K-Marts (and Sears), I believe Wally World will only get stronger.  I may have missed the purchase boat on this one as well, but I might grab it next buy-in pre-shopping season or next pullback.  Having a stake in WMT & Target should cover the bases against Amazon, and you can never have too many Consumer Staples, anyway.


Alaska Air Group (ALK) - I was surprised to find this listed as an Industrial on Fish's list, but then you don't see many airlines with 5+ years of dividend increases.  This airline and Delta both have hit that mark recently.  It is a speculative purchase, but it fills out my 2 industrials, and airlines are always good for profits (at least) if you know when/how to buy them.  I don't care much for using domestic airlines in general, but I know them, and I know how they behave, so I feel this is a safe bet for someone who has made money on airlines over the years.  Probably the only sub-sector I can day-trade successfully.

Telephone & Data Systems, Inc. (TDS) - Ugh, the TCom sector is practically garbage, worse than the retail sector since even retail has a few gems.  AT&T is basically the only shiny piece of glass in the rough of this sector, and that isn't saying much.  I am tempted to just have ONE TCom stock and find some other sector to fill out the "32 Div Stocks".  TDS isn't pretty enough to own, although they have increased divs for quite a long time.  Their Yield Payout too high, their P/E is too high, Beta is too high.  It will be a while for this stock, or even this sector.  I will probably buy this sector last.  Verizon I won't consider due to their debt.


Exxon Mobil (XOM) - What's to say that hasn't been said?  It's Exxon, basically Chevron's twin when compared to everything else in the Energy sector.  Oil may be in a decline, but with the Tesla Tax Break going away, I think Oil will do fine until I expire.  There's also that smug feeling of buying gas at the pump and knowing that what I pay will come back to my pocket.  Go Big Oil!

Owens & Minor (OMI) - Healthcare stocks have done very good for me, J&J and Abbott let me feel a little freer to be somewhat speculative in this sector.  However, I would like to see OMI's Yield Payout lower a little bit more before I buy.  The stock is inexpensive, so if my son, Little Dividend, snaps it up, I may look at something else.

 

National Retail Properties (NNN) - REITs after a certain point become reliable compared to each other in that sector.  I know YD doesn't like the way they operate fundamentally, but they are there and real estate never goes away.  NNN has raised its dividend for quite a few years, and until I can mentally get past the REIT yield payout number (O's is higher) I'll move in here.  There are about two other REITs I am keeping my eye on, so this one may change.



Qualcomm (QCOM) - Mastercard is considered a "Tech" company these days, so that works for me, as Tech is another lame sector for dividend investors.  QCOM and IBM were the only two worth considering for me, and since Mastercard took one spot, I can give the other to QCOM.  That is until they get bought out by Broadcom - I still need to keep an eye on this one in the coming months, and who knows, IBM might get its chance at bat.

Last but not least...

J.M. Smuckers (SJM) - The Consumer Staples have been beat up pretty bad since Amazon/Whole Foods.  If staples have been beat up, then Smuckers has been put into a coma.  The drop is so significant, it suddenly looks attractive.  Their Yield Payout is great, they still have a spot in the grocery aisle, and in my refrigerator.  However, if Clorox or Colgate decide to have an attractive yield, I may head in that direction!  I wanted KMB in this spot, but their fundamentals aren't looking so hot.



Well, there's my tentative watchlist.  I'm pretty committed to TSN, WMT, ALK, & XOM, but the others not so much.  After filling out the list, I can concentrate more on buying on dips in my stocks, getting to the "DRIP Level" (see my post on DRIPping), and getting my monthly payouts closer to each other.  Then I could buy more Abbot on a pullback, or CMP the next time their mine caves in.

Happy Investing!

What's next for November?

October has certainly been the roller coaster during earnings season.  My total profits from stock valuation dropped about 1%, but still in the black.  The good news is my dividends haven't dropped a bit :)

I bought AT&T a few days too early.  Two days after I bought in to increase my position, they announced their cord cutting news, and coupled with their earnings my flat position is now in the red.  I still have confidence in T, and their more attractive looking yield, but I'm going to step back a bit because the weight of my staples has dropped below discretionary (again).  This is also because last Monday I bought into my smallest holding, the financials.



I bought 15 shares of Main Street Capital Corp. (MAIN).  It has been on my watchlist for some time, and is quite attractive.  Why I hadn't bought in sooner is because of it being at its 52 week high.  This hasn't changed for quite a while.  Great *monthly* yield, P/E, dividend record, etc etc.  They also have a semi-annual dividend which I will get in December, and my spreadsheet and broker don't know how to handle or record it.  My broker had it on the list for December, but then took it off and had not included the June one.  I added a little calculation in my spreadsheet with the current semi-annual valuation which I will need to keep tabs on if it changes in the future.  I know Jim Cramer was asked about MAIN in his lightning round, and he stated that he doesn't like financiers in a specific market.  The main reason people don't like MAIN (ba-dum ching) is because it is a BDC (Business Development Company) and it has a low yield compared to 5 other BDCs.  However, it has good coverage of its dividend, and BDCs either do great - or don't.  They tend to make risky lending decisions hoping they pan out.  MAIN seems to be conservative in this manner, or at the very least, has some reliable companies owing them for a long time.  I will probably add more into ORI before revisiting MAIN due to risk, but after the hurricanes possibly affecting ORI, MAIN is a good place to be right now.

It is no secret that the worst valuations in my portfolio are my consumer staples.  Thanks in part to Amazon playing halloween scare tactics on the food staples, HRL and GIS are deep in the dumps.  I am not even sure if averaging them down is worth it right now, because they possibly haven't hit the bottom.  While I have confidence in HRL, GIS is on relatively shaky ground, and is a prime candidate for being bought out.  The other black hole in my portfolio, other than AT&T, is Philip Morris.  I am confident they are going to pull through one way or another but I am so overweight on tobacco right now in staples and my portfolio in general thanks to averaging down Altria.  Averaging down Altria, incidentally, really paid off.  It is tempting to do the same with PM, but I would rather diversify right now.  Which is why I am looking at Proctor & Gamble with a suddenly 3%+ yield, Colgate-Palmolive, and Clorox.  The former because of the yield opportunity, the latter two because they don't primarily sell food.  Because of my $1k goal for 2017 and staple shortages, I am looking real good at PG over the other two.  My next purchase will be a week from now in November, and earnings will be in for many of my other holdings which could change all this.  Before the end of the year I would like to buy more AT&T, Old Republic, Realty Income, and maybe a utility or two.  Once January hits I'm going to be buying some more under 3% yield staples which will hopefully be bargains.

AT&T

Bought 15 shares of AT&T on Tuesday.

My deposit was delayed due to Columbus day.  It gave me the chance to observe the effect of  the Monday purchase vs. Tuesday purchase.  Since Monday was down as it should be, Tuesday morning was right before the market took off.  I am considering moving my deposit to Tuesdays for a morning purchase, although it is hard enough to wait through the weekend for the deposit to drop.  I know when I get to the $500+ point per month on dividends, thus having more cash on hand,  I will be able to make better choices on purchases (i.e. buying in when CMP's salt mines experienced an earthquake).

AT&T has been largely flat in my portfolio.  However with my previous purchase of the low yield Hormel, I wanted to offset that yield with a higher yielding one.  Since it is harder and harder to find high yielding stocks due to the market going up, I looked inward to my own portfolio.  I had considered MAIN or ORI before bank earnings are released, but since I don't know much about the financial sector's effects after earnings, I decided to err on the side of caution.  I will be observing this unique sector and it's earnings ramifications this month.

I am having more difficulty finding stocks that fit my criteria for purchase, but there are a few gems out there, although not in every sector.  I am happy to see Altria (MO) recover after I averaged them down, and now they are positive in my portfolio.  I hope Philip Morris (PM) is able to do the same.

I will update charts at close today.  On the plus side, my profits have reached $1k, which is a 4% gain.  This gives me a lot of room to make some mistakes and takes some remorse pressure off me.  I am aggressively pursuing the goal of $1k in annual dividends by the end of this year, ergo I probably won't be looking into low yield stocks for some time.

The Best September in Stock Market History?

Due to September being historically the worst month for stocks, I decided to pull in my feelers and tend to my own stocks.  Of course, the market being ever unpredictable, it was the best month *ever* for September stocks.  I guess it could have been predicted thanks to Trump and his corporate tax talk, but I decided to tend my own house anyway. 

I bought more MO earlier this month, and Monday, I averaged down Hormel.  The Hormel purchase didn't do much for my dividends, but the stock was fluctuating at the -10% loss level, which is a "Buy me, I'm on sale 10% off!" sign for me.  Hormel has GREAT fundamentals.  It is a very conservative company in many ways, including their dividends, and I have long been wondering why it didn't bounce up while I was waiting to buy it at such a great price.  Reasons I bought it:

1. On sale at 9-10% off from my last HRL purchase.
2. Hovering at its 52 week low (like many consumer staples in this market) .
3. 51 years of increasing dividends.  Why they are 0.68 a share I have no clue.
4. Beta of 0.6
5. P/E of 19.63
6. Increased yield since I last bought it (weak, Midlife!)
7. Almost no debt.
8. Payout ratio of 40%.  This is a big one for me.
9. $640 million cash on hand (plus new acquisitions)
10. Lots of free cash flow 

Since I bought it, it has gone up so it is under the 5% mark after averaging down.  MO has also recovered nicely.

Stocks that worry me:  My other two staples that are also underwater, General Mills (GIS) and Phillip Morris (PM) have some good reasons to be purchased, but one thing is holding me back.  Call me cautious, but payout ratios of 120% and 93% respectively, and GIS's debt (PM has some too) give me pause.  While I expect PM to recover at some point, I already have too much invested in tobacco.  Of my 3 bottom stocks, Old Republic Insurance (ORI) has better fundamentals than these staples.  If anything, I may increase my holdings in ORI for my next purchase in 9 days.  Otherwise, I will be looking outside at staples and possibly oil or tech for my next investment.  I don't know if oil is a good investment now that it bounced back quite a bit - my Chevron stock is already at the +10% above water mark!

Anyways my updated technical data should be up soon after writing this.  Here's to looking toward October and my goal of $1k in annual divs per year!

More MO and my current DRIP strategy

Monday I increased my position in Altria (MO) from NINE to 19.  For a couple of reasons:

1)  I didn't like buying 9 at the time, but I'm glad I did.  I prefer to double digit my purchases since I am paying for trades.
2)  They raised their dividend recently, so it is a good investment due to a higher yield, at least for the short-term.
3)  They are one of the few underwater stocks in my portfolio, so an even better yield.
4)  My staples need to increase in value.  Badly.

On that last point, my staples are below my consumer discretionary - mainly because the latter are doing well and the former are not.  I only have 4 companies in consumer staples, and more than half are tobacco.  I need to diversify!  I also made a rule that if a stock hits below 10%, it is on sale, and I'll buy more of it, so that means Hormel is probably up next.  There are a lot of consumer staples at their 52 week low right now - Smuckers is another on my list - and are good buys in my opinion.  I really don't know why Hormel has been sitting so low for so long, but I think they have made some good investment purchases lately and are set to break out.  General Mills has been relatively flat, but also has potential.  After boosting my position in Hormel, I'll be shopping to up my staple diversification before returning to my other sectors. 

I notice that Altria and Philip Morris are two of the largest holdings in YD's portfolio.  I think that is partly because they are great stocks, and since he DRIPs, their great yields lead to more ownership.

Speaking of DRIPping... I am not a believer in DRIPping everything.  I don't believe you are getting the most for your money by reinvesting your dividend into a stock that may be overpriced or currently having a low yield.  I would rather take the dividends, be a more active investor, and put it into whatever stock du jour is the best offering (technicals, yields, even approaching ex-dividend dates).  This may be because I'm kind of on a time limit.  It is great for the lazy or busy investor, or for people who don't think there are better options on the market  (is that possible all the time?).  However, I will probably DRIP stocks that increase their yield since I bought them (the green ones on my list) ONLY if one dividend payout is enough to buy at least one share of stock.  That has not occurred yet.  This would be beneficial since the money is instantly working for me instead of sitting and waiting for my next purchase.  While it would be impossible to get an ex-dividend date right after receiving the dividend, I would be making the stock buy itself when it is on sale, which is kind of a novel concept when you think about it!

Of course, the hope is that ALL my stocks are red because I strengthened my positions enough so they are all showing a positive market value, but then I'll just reset my control limits, if that ever happens.  The only thing that bothers me about this strategy is that only the volatile or even failing (*COUGH* TECH *COUGH*) stocks will get my attention, and stocks like ABT and MA which have outpriced themselves at about 20% gains, will never increase in holdings.  But I guess them's the breaks.  I need to set myself up short-term - so bring on the oil and tobacco stocks! :)

August purchases & App I use

13 shares of Chevron (CVX) (Energy)
15 shares of Fastenal (FAST) (Industrial)

CVX and XOM are at all time lows.  They may even dip lower due to Hurricane Harvey, but their returns are fantastic.  My account jumped about $50 a year with the chevron purchase.  Fastenal is my first foray into Industrial.  It is a bit cyclical, but with the repairs in Texas, infrastructure development on the horizon, and of course the tax breaks which will help all our stocks, I feel this is a good buy.  Grainger is listed as Industrial, but they seem too much like retail to me.  FAST has some wholesale aspects as well as retail, but since they are manufacturing as well, it was more attractive.  I hope to get at least one more in each sector, XOM seems the most solid and likely one in the energy sector, although VLO is attractive as well.  For industrial, I'll just wait and see.

I want to share an App that I use that is very good for tracking real-time stocks on my tablet and phone.  It is called My Stocks Portfolio, and is worth paying the guy for it (to turn off ads).  Check it out and let me know if there's anything better out there.  It allows for watchlists, but I use my broker for that because it has more research data.  However, since my broker doesn't provide me with real-time data (15 minute delay), this works just fine.

September is historically a bad month for stocks, and with the Korean/Harvey news, this month may not surprise us.  It is possible that Trump has waited until this month to push tax reform based on the reason of history, so people will be more accepting of it, but only time will tell.  I am trying to make some financial decisions as well.  I am in a position to pay off my 401k loans to have about 16% more come to me in my paycheck, or I could just take this disposable capital and invest it in dividend stocks which makes it more readily available if I needed to pull it out.  I am of the mind that bringing home more money will help me make wiser, smaller decisions over time with investments, but it irks me that once I put that money into my 401k (which will happen eventually anyway as I pay off the loans) I can't touch it anymore.  Frozen assets :)  I will wait and see if the tax cuts happen and when they take effect.  Trump could use Harvey to make tax cuts retroactive to this year, but of course he will be criticized for politicizing the tragedy, so for PR reasons he may not.  It would take someone else to suggest it and take the heat for it to be pushed ahead.  But I digress.  I will be updating my graphs by the closing bell today.