All About Interest

One man's journey to financial independence.

New Purchases – Week of 02/02/16

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Gundum Robot

I Bought:

$200 of UNP
$200 of DEO
$200 of CAT

I used $600 in new capital and added $20.16/year to my dividend income. This is an average yield of 3.36%.

Notes:

UNP is still high on my buy list. Coal and oil is weighing heavily on shares but I’m confident that will turn around.  I don’t mind slowly averaging into more shares while building a full position.

I’m really liking DEO here.  They have a giant portfolio of alcoholic beverages with great international exposure.  Even during a recession, there will be plenty of people still buying alcohol.  I plan to continue averaging into more shares while slowly building up my position.

This is my first purchase of CAT in a while.  It has popped a little from lows but still about 20% below my cost basis.  I don’t mind averaging down on shares at this level.  This cyclical company will be back, it’s just a matter of time.  I want to build up the position to equal that of DE.  I’m planning on having a 1/2 position in both CAT/DE for the long-term to give myself some extra diversification.

In Recent News:

I’m currently traveling in Japan and Thailand.  Posting will be slow here but I’m taking a lot of pictures I will start sharing.  I’m trying to get one last thing done for TABC.  It’s a little difficult being out of the country but I think I can finish it before I get back.  I’ve determined I’m way behind on taxes for 2015 and will really slow my purchases down until taxes are paid.  I’m only transferring $300/week into my Sharebuilder account and will be making purchases only ever other week for a while.  Between taxes and the new bar, I’ve got a lot of expenses.  I’ve received my new POS system and will be getting it set up and trained on it as soon as I’m back.  I also still haven’t finished a 10-hour food management course.

I’m due to finish up my goals post for the year and a monthly review for January.  Those posts will be a little late, likely a few weeks from now when I get back.

The picture is of a giant Gundum robot in Tokyo.  Yes, it’s freezing cold in Tokyo but Thailand will be much warmer.

New Purchases – Week of 01/24/16

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IMG_3378

I Bought:

$703 of UNP
$300 of V

I used $1003 in new capital and added $24.71/year to my dividend income. This is an average yield of  2.46%.

 

Notes:

UNP is still high on my buy list.  I may taper off purchases just a little as continued weakness in shares could provide even better buying opportunities.  I’d like to have a full position by the middle of the year.

I just love V.  If I had to pick only 10 stocks for a capital appreciation portfolio over the next 10-20 years, V would be in there.  No debt and tremendous cash flows.  They are growing their dividend with leaps and bounds.  The yield is low because the stock price keeps going up.  I don’t have a problem with that.  I don’t need to live off of dividend income anytime soon and at the rate they are compounding, I should end up with a pretty decent yield on cost in the long-term.

In Recent News:

I’ve finished the last items for my TABC application and am just waiting on a license to be issued.  I’m targeting an opening by mid March.  I’ve learned that my kitchen doesn’t meet all of the requirements for a commercial kitchen and I have to make more changes.  These costs may slow my dividend purchases for a while since I’m also saving for a large tax payment.  I’ve ordered a POS system and it’s on the way.  They even included a new IPAD to run the sytem on with printers and other needed hardware.  I still need to take a 10-hour food management course.  It’s a constant learning process.  I am still working on menus and ordering basic things needed to open.

The picture is of the sunset from the top floor of my new bar.

 

Dividend Increase – Omega Healthcare (OHI)

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OHI_logo_big

OHI announced 01/14 a quarterly dividend increase from $0.56 to $0.57 per share that’s payable Feb. 16, 2016 to holders of record as of Feb. 2, 2016.  This is their 14th consecutive quarterly dividend increase!  I love multiple increases in the same year!

OHI happens to be the only REIT I currently own.  I’m comfortable in the Healthcare REIT space and like the track record of this company.  I’m looking at adding another lot of 100 shares hopefully this year.

OHI currently yields 6.7%, after some price contraction the last several months.  OHI is a Dividend Contender, having increased their dividend for over 10 straight years.

Since I own 100 shares this will increase my yearly dividends by $4.00.

*note: I’m also looking forward to a raise from NSC in about a week and NVS by end of month.

New Purchases – 01/12/16

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A Norfolk Southern coal train wends its way...

I Bought:

$300 of UNP
$600 of DEO
28 shares of NSC ($2018)

I used $2918 in new capital and added $100/year to my dividend income. This is an average yield of  3.4%.

 

Notes:

Choo Choo!  It’s like Monopoly and I just bought two railroads.

UNP continues to be on my short list at these prices until it’s a full position.  A couple more months at these prices and I’ll be loaded up for a while.

DEO is still a fairly new position.  They have a lot of big alcohol brands in their portfolio and sport a pretty nice yield of almost 4%.   S&P Capital IQ estimates their 3-year CAGR at 8% and Morningstar  gives the company 4 Stars.  I’ll keep buying and think they are a good company to diversify my portfolio further.  Even when we have a recession, people are drinking alcohol.

It’s been a long time since I added to NSC.  I topped off the position with a purchase of 28 shares to make my share count an even 100.  The price is slightly over my basis but I think there’s good value here.  Morningstar gives them 4 Stars currently.  I’m done purchasing NSC for a while now since it’s slightly overweight.

In Recent News:

I corrected a few items on my TABC application and the lady seems happy.  I picked up appropriate signage.  I have to place an ad in the newspaper alerting everyone that I’m applying for the license and that should be the last step.  I’m targeting an opening still in early March but expect to have the license by mid February.  I picked out a POS system that works on the IPAD.  I’m looking at credit card processing companies and I still need to take a 10-hour food management course.  I never knew how much work this would be. I still need to finish menus and get the bar in compliance with ADA laws.

 

 

New Purchases – 01/05/16

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DEO

I Bought:

$500 of UNP
$300 of DEO
$100 of RDS.B
20 shares of JNJ ($2018)

I used $2918 in new capital and added $93/year to my dividend income. This is an average yield of  3.2%.

 

Notes:

At these prices, UNP will be on my list until it’s a full position.  I like the value here and I love companies with a large moat.  UNP is a good compliment to my railroad holdings in CSX and NSC.

RDS.B is one of the best values of the majors in my opinion.  The cash flow they produce is enormous and I believe their dividend is still fairly safe even at an 8% yield.  It’s a company in a cyclical industry and now is the time to load up in my opinion.  I’m willing to build up to a $20k position in this company over the next couple of years if prices stay depressed.

DEO is a brand new position.  They have a lot of big alcohol brands in their portfolio and sport a pretty nice yield of almost 4%.   S&P Capital IQ estimates their 3-year CAGR at 8% and Morningstar  gives the company 4 Stars.  I’m a buyer here.  Considering I’m opening a bar, I think this one is fitting for my portfolio.

I also added 20 additional shares of JNJ to bring up the weight.  JNJ is one of those “forever” companies if there is such a thing.  I plan for them to be a core holding for the rest of my life.

 

In Recent News:

The TABC inspection seemed to go well.  The officer didn’t have much of a personality but I have my fingers crossed.  Apparently I’ll have to go for an in-person interview soon.  I’m getting quotes on pouring some concrete for a parking lot currently, testing out some POS and credit card payment systems, working on menus and getting the bar in compliance with all the state laws.  The target opening date is still in March.

 

A New Year And A New Beginning

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happy-new-year-2016

As many of you have noticed, I’ve been out of action for a while.  There have been a lot of personal and financial changes.  2015 was a big transition year.  I’m not technically “starting over” completely.  I did lose a lot of my net worth though.

How did this happen you might ask?  One word: DIVORCE.  It’s a nasty word and I won’t go into any more details about it but that’s the main reason for the hiatus for the better part of last year.

What’s more important is what I’m focusing on right now; that’s growing my passive income stream.

This passive income stream is currently a little over $1000/month and has three components:

1.) Individual Dividend Paying Stocks

My portfolio has taken a bit of a hit but I plan to be as diligent as every and to consistently invest into dividend growth stocks as I’ve always done.  I’ll also be posting my new trades again as usual on a weekly basis at least.  I’m currently contributing $900/week to my Sharebuilder account to build it back up to where it was.  My portfolio basically got set back about two years.  After the 75% dividend cut from KMI, I’m currently at a 12-month forward dividend income of $8468 or $705/month.  That’s not too bad to be starting over with.

2.) Real Estate

I’ve sold off a property and lost one in the divorce so I just have one rental currently that’s earning $274/month in profits.  However, I recently purchased a historical building that has a bar on the first floor and a living area upstairs.  It was built in the 1800’s and is already fully renovated.  This is the building I’ll be opening up a bar out of.  So a lot of my extra cash has gone here. I’m hoping to have it fully running sometime in March and I’ll be posting updates.  This will be a new source of income that I’m looking forward to.

3.) P2P Lending (I recently started a Lending Club account)

I love the concept; I have a small account but am adding $250/week currently and I’m seeing over 16% returns so far.  I’m sure this number will come down as there are some defaults on the account.  I’m mainly focusing on higher interest loans for now.  Any tips would be helpful.  I also want to check out Prosper but not sure if they are in Texas yet.  The reason I hadn’t invested already in Lending Club is because they weren’t in Texas yet and I didn’t like buying notes on the second-hand market.

So What’s next you may ask?

What I’ve been working on is getting back on track financially.  It’s been a tough year for me but I’m finally anxious to start writing on my blog and letting you guys know what is going on again on a regular basis.  My portfolio weights are all out of whack but I’m working on that now.  I’m also anticipating a large tax bill and will keep purchases a little light the first half of the year but hope to increase them the second half.  I still have a lot of time to buy and diversify.

Lowering expenses, earning more income and building more passive income streams are what I’m working towards.  I will be eating out less and cooking at home more.  I’ve also stopped going to Starbucks every single day.  Every few dollars count!

I’m excited for a brand new start and will be sharing my journey with you guys.  I appreciate anyone that’s been following along.  I’ve not lost commitment; only a little money.  This can be replaced with a little bit of time, savings and consistent investing.

I’m fully dedicated to an early financial independence and hope to see you all there some day!

I hope everyone has a Happy New Year!

 

New Purchases – 12/29/15

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Royal_Dutch_Shell_RDS_Logo

I Bought:

$600 of UNP
$200 of RDS.B
$269 of TD

I used $1069 in new capital and added $41/year to my dividend income. This is an average yield of  3.84%.

 

Note:

At these prices, UNP will be on my list until it’s a full position.  I like the value here and I love companies with a large moat.  UNP is a good compliment to my railroad holdings in CSX and NSC.

RDS.B is one of the best values of the majors in my opinion.  The cash flow they produce is enormous and I believe their dividend is still fairly safe even at an 8% yield.  It’s a company in a cyclical industry and now is the time to load up in my opinion.  I’m willing to build up to a $20k position in this company over the next couple of years if prices stay depressed.

TD – TD offers a good value right now with the exchange rate practically being equal.  Canada also offers some of the safest banks in the world.  TD sports a dividend of nearly 4% and Morningstar rates it at 4 Stars.  I’m a buyer here.

Watchlist:

I’ll likely focus the majority of my new investments outside of the energy sector.  The remainder  will go into the beaten up energy, materials or industrial sectors.  I love lowering my cost basis on companies I already own.  I’m looking at adding more to existing positions in CAT, DE, RDS.B, BP, BBL, CVX, TD, UNP, MDT, V to name a few.  I’ve also been eyeing WMT as a new investment to compliment TGT.  So many companies and so little funds.

Update:

I’m getting a visit by a TABC officer tomorrow to inspect the bar.  That’s the Texas Alcohol and Beverage Commission for anyone not familiar.  I have to jump through hoops to get licensed to sell liquor here.  Anyways, wish me luck.  I hope to have the bar/restaurant up and running in March.  I’m working on menus currently in addition to pricing glassware and other typical things you need for a restaurant.  This is where most of my money continues to be tied up.

No new changes on the real estate front but I do plan to buy another rental sometime next year.

 

I hope everyone has a happy New Year!

New Purchases – 12/22/15

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Union_Pacific_18

I Bought:

$450 of UNP
$200 of V
$150 of DIS

I used $800 in new capital and added $16.01/year to my dividend income. This is an average yield of  2.00%.

$50 per Week Challenge:

 

It’s been a while since I posted.  I did make some smaller trades but I wasn’t able to complete the challenge due to some unexpected expenses.

Note:

UNP is still a fairly new position for me.  I like the value here and Morningstar agrees with a 5-Star rating currently!  UNP will be a good compliment to my railroad holdings in CSX and NSC.  I plan to continue building UNP up to a full position.

V is a cash cow with no debt.  It’s mostly about appreciation with this one but they do pay a dividend that has some major acceleration with the large raises.

DIS – I’m a little late to the game on this one.  I’ve been adding some here and there and wouldn’t mind a full position at some point.  I’ll keep dollar-cost-averaging into more shares.

Watchlist:

I really want to load up with RDS.B and BBL at these prices.  I think they offer some major value but both companies are already full weights in my portfolio.  I’ll continue to diversify a little out of energy and commodities though since prices may be depressed for a while and it’s not looking much better.

Update:

I owe a major update and I plan to get back on track beginning in the new year.  After a divorce, I have one rental property and a new primary residence.  I’ve also purchased a property and have applied to open up a restaurant/bar.  That should happen in approximately two months.  That’s where some of my money has been tied up lately.

I still plan for dividend growth investing to be a major part of my income along with real estate.  I wanted to try my hands at something new and I’m excited to do so.

I think my New Year’s resolution will be  to get my finances back and on track and start consistently investing.  I plan to invest at least $800/week in my Sharebuilder account until it’s built back up to about $200k.  It’s currently less than half that.

I still read a lot of blogs on feedly when I have a chance but I haven’t been able to post many comments.  I hope that can change now that I’m setting down in a new place now.

I’m back baby!  I hope everyone has a Merry Christmas!

 

Dividend Increase – McDonald’s (MCD), I’m Lovin’ It

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MCD

Mcdonald’s (MCD) announced 11/10 a quarterly dividend from 0.85 to 0.89.   The dividend is payable Dec. 15, 2015 to shareholders of record as of Dec. 1, 2015.

This is an increase of 5%.  It beats inflation and MCD keeps their streak going.

MCD is a Dividend Champion and this is the 40th annual consecutive dividend increase for the company .

Since I own 18.17 shares, this will increase my yearly dividends by $2.91.

How Safe Are Your Dividends?

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Does anyone else take a look at their dividend weights versus the actual weights of stocks in their portfolio?  There could be some additional hidden risks to your income stream because of high yielding stocks.

If you read My Business Plan , I’m targeting 40 stocks in my final portfolio having an average weight of 2.5%.  Right now in my building phase I don’t get too alarmed unless a position is greater than at least 5%.  This doesn’t mean I sell some of that position but instead I try and bring up the weight of other positions with new purchases.  Over time I hope to smooth out these portfolio weights.

Take a look at the tickers BBL, BP and KMI.  Below is a snapshot from my portfolio.  Notice that my portfolio weight for these three stocks are 2.95%, 5.14% and 6.28% respectively.   At first glance, BBL doesn’t seem alarming at all, it’s barely over the 2.5% average I’m targeting.  The other two are a little rich here at over double my target weight but I’m not overly concerned as I was working to add to energy positions while they were depressed.

 

portfolio_weights

 

Now take a look at the snapshot of my dividend page.  Notice that my dividend weights for BBL, BP and KMI are 6.72%, 9.39% and 12.78%.  Now this is a lot more alarming.  I have 3 stocks that make up 14.37% of my portfolio but they contribute 28.9% of total income!!  Now this is something a lot more concerning.

dividends

 

At first glance it didn’t look too bad but when I look at the income I’m relying on, it’s a whole different story.  The chances are probably small but they are much higher now than just a couple of years ago for one of these companies slashing dividends.  If I had to guess, I’d say BBL would be first followed by KMI and then BP.  There’s a reason KMI is yielding nearly 8%, they have a lot of debt and are being drug down with other energy stocks right now.  They have already given a little lower guidance in dividend raises.  BP is in the same energy mess and even BBL has some energy exposure along with other depressed commodity prices.  Nobody knows for sure how long this cycle for lower gas prices and commodities will last.

Honestly, this does make me a little nervous.  If this were my final built portfolio, meaning I wasn’t contributing any more, I’d be extremely worried right now.  Luckily, my portfolio has a long ways to go and I plan to smooth it out with new purchases.  This does lessen the worry somewhat but it’s still a concern and I’ll be keeping a closer eye on this.

What would happen if KMI and BBL cut their dividends in half?  Well, I’d lose immediately 9.75% of my income stream!  That’s nothing to laugh at.  It’s certainly not something I would want to stomach if I was already living off dividends.   Heck, I’d feel that hit right now.

This is why it’s important to diversify.  I have a long ways to go in building my portfolio but I like to keep track of my portfolio diversification.  Dividend weight is just another form of diversification that I believe is important to keep an eye on.