April Recap

I was very pleased with the performance of my portfolio this month.  I added shares to 2 of my positions and enjoyed 3 solid dividend increases.  I received a bonus installment from my enlistment; once again I have way too much cash.  I plan to average in over time, but if I see opportunities I will jump on it. 

I'm on orders to Korea and will report mid June.  I'll be taking 2 weeks of leave in about a month, it's going to be awesome!  2 weeks without an alarm clock sounds nice, very nice indeed.

New Purchases:
1) 19 shares Norfolk Southern (NSC) providing $35.72 annual income.  NSC was purchased at $64.96/share + commission.
2) 20 shares Johnson & Johnson (JNJ) providing $45.60 annual income (the dividend has since increased).  JNJ was purchased at $63.16/share + commission.

Sales:
None

Dividends Received: $155.17
Coke (KO) - $19.89
H.J. Heinz (HNZ) - $11.52
Illinois Tool Works (ITW) - $10.44
Phillip Morris (PM) - $60.06
Exchange Income Corp (EIFZF) - $17.34
Realty Income Preferred Series F (O-PF) - $6.76
LTC Properties (LTC) - $29.16

Dividend Increases:
1) PG:  $.525 to $.562 per quarter.  $11.54 annually
2) CVX: $.81 to $.90 per quarter.  $10.44 annually
3) JNJ: $.57 to $.61 per quarter. $9.60 annually
4) BWP: $.53 to $.5325 per quarter. $1.71 annually

New Capital:
$6,010 in April.  $1700 added to ROTH IRA, $4,310 added to taxable account.  I received an installment of bonus money this month.  Last year no taxes were withheld, this year it was.  I hope my tax bill will be lower in 2013 because of this.  I spent $78 on contacts, $138 on a hard drive, $57 on 2 pairs of shorts, and also replenished my emergency fund.  The rest of the year I won't be able to contribute as much.

Options/Bonus:
None

In May I will most likely make 2 purchases.

Johnson & Johnson Increases Dividend for 50th Consecutive Year!

I am very pleased with recent news Johnson & Johnson (JNJ) has raised its dividend for the 50th straight year.  50 consecutive years is a really really long time, the streak started decades before I was born.  JNJ is the second company in my portfolio along with KO to reach the 50 year mark this year.  The latest increase to $.61/quarter clocks in at 7.01% which is higher than I was expecting.  April has been a fantastic month for dividend growth investing.

Including the latest dividend increase JNJ has a payout ratio of 66.8%, which is kind of high.  It is worth noting that in the Q4 2011 JNJ had extraordinary items reducing net earnings including litigation settlement and product liability expenses.  Excluding one time non-recurring items, JNJ now has a payout ratio of about 48.8%.  This means the dividend is more sustainable than it looks at first glance.

Chevron Increases Dividend for 25th Consecutive Year!

Chevron Corporation (CVX) is the newest dividend champion.  Today it announced it has raised its dividend 11.1% to $.90 per quarter.  This marks an impressive 25 year streak of dividend increases.  Dividend growth of 11.1% by itself is awesome, but it gets even better because CVX has tended to make multiple increases in recent years.  These increases have already boosted my yield on cost to over 4%.  With a payout ratio of only 26.8%, there is plenty of room for future dividend boosts. 

Upcoming ConocoPhillips Spinoff

As most ConocoPhillips (COP) investors know, in about a week it will spinoff its midstream and downstream businesses into a new company.  The new company will be called Phillips 66 and will trade under the ticker PSX.  COP will receive cash from the spinoff and will then focus on exploration and production.  No longer will it be an integrated oil corporation.  Investors will receive 1 share of PSX for every 2 shares of the current COP.  In my case I will end up with 36 shares COP and 18 shares PSX. 

ConocoPhillips has stated it will use most of the cash raised from the spinoff to pay down debt.  I read it plans to keep the same quarterly dividend of $.66.  This caught my attention.  After the spinoff the share price of COP will be reduced to around $55 (based on COP-WI) meaning it will yield around 4.8%!  They still plan to reward shareholders with dividend increases and share buybacks.  The new streamlined company will focus on exploration and production- finding and extracting oil & natural gas. 

Phillips 66 intends to pay a quarterly dividend of $.20.  Based on a recent price of $36 (PSX-WI) this comes out to a yield of about 2.2%.  Again we can expect dividend growth and share buybacks as was stated in a recent investor update.  PSX will be a downstream and midstream energy company.  This means they own pipelines, refineries, and gas stations.  Right now the largest segment is refining and marketing.  In the future PSX plans to expand its pipeline and chemicals segments.  The chemical business produces hydrocarbons such as Olefin which is used to make house wraps, cigarette filters, clothing, rope, and carpet to name just a few applications.  Don't think of PSX as just a bunch of gas stations and refineries.  There is more to the story. 

I plan to hold both companies.  I'm excited that both COP and PSX want to reward shareholders with increasing dividends.  Since PSX is brand new it has no dividend history. We know it's yield will be low.  Will it have high dividend growth to compensate?  We really don't know.   I'm willing to give it some time and see what happens.

For the time being I will consider adding to the new COP until I know more about PSX.  COP is going to have a juicy dividend.  It will be hard to resist.

Go here for more information

New Purchase - JNJ

I bought 20 shares of Johnson & Johnson (JNJ) at $63.16 plus commission today.  This purchase will add $45.60 to my annual income based off the current dividend.  It's been a long time since I've bought JNJ stock, I figured now would be a good time to make an addition with recent bad news.  JNJ has had problems with product recalls the past year and has been fined for questionable drug advertising in a court case.  I typically make purchases when prices decline in companies I want to own. 

JNJ is a remarkably stable stock that has a long history of dividend increases.  I expect the company will announce their 50th consecutive increase later this month.  Historically JNJ is renowned for high dividend growth, I think this year we'll see a small increase of only 4-5% or so.  The past year has been challenging for JNJ, but I still like the company long term.  I use many Johnson & Johnson brands such as Acuvue, Tylenol, Aveeno, and Band-Aid.

Procter & Gamble Increases Dividend

Today Procter & Gamble (PG) announced it has increased the quarterly dividend 7.05% to $.562 per share.  Amazingly this increase represents 56 consecutive years of dividend growth.  This is one of the longest streaks you'll find anywhere.  The baseline I look for in dividend growth stocks is a 3% yield with increases averaging 7%.  PG's increase meets this objective and handily beats inflation.  Based on the new dividend, PG's payout ratio is 66.5% which is a little higher than I'd like.  I use many Procter and Gamble products including Gillete razors, shaving cream, deodorant, and body wash; Gain dish soap and laundry detergent, Mr. Clean cleaning sprays and floor cleaner; Pert Plus shampoo, Crest toothpaste, Oral-B toothbrushes, Charmin toilet paper; Duracell batteries; and Pringles snacks (which will be sold to the Kellog company).  I own this company because I use many of the products it makes, plus I like it as a dividend growth stock.

New Purchase - NSC

This afternoon I added to my position of Norfolk Southern (NSC).  I bought 19 additional shares at $64.96 plus commissions which will provide $35.72 annual income.  Norfolk Southern has hit a rough patch the past few months with concerns over coal transportation revenues.  I look at this as an opportunity to buy a company I like at cheaper prices.  It should go ex in less than a month so I figured now would be a good time to get in.

It has been exciting to see the market decline the past week or two.  It's refreshing to check my watch list and find many companies trading at reasonable prices.  At this point in time I'm also looking at OMI, BNS, and APD.  I'd love to add to CVX if it continues to decline.  I would also note that UNS is attractive right now for those looking at utilities.

Added Goals Tab to Blog

I just added my goals for the year to the blog.  I don't know why it took me until April to do this, but here they are.  A lot of these I've already been working on.  So far in 2012 I've added 4 new positions in my quest to build up to 30.  I've haven't bought any foreign holdings this year, but I have identified Canadian banks I'd like to own. 

Financial goals for 2012:
o $3800 annualized passive income from investments: This is based off an analysis I did in 2010.  If I reach $3800 I will meet projections and be on track with the plan (2013 is $4650).  Currently almost $3400, this should be easy.
o Increase dividend growth portfolio to 30 positions:  I want to be diversified and prevent one position from hurting me too much in case something bad happens.  Currently hold 24 positions.
o Hold 3 foreign dividend growth stocks:  Diversify beyond U.S. holdings.  I will need to buy 2 more.


Non Financial goals for 2012:
o Visit one new country or state:  I re-enlisted to go to Korea after I wasn't able to get Germany.  Should move later this year.
o Quit tobacco: This will be the toughest goal since I've been smoking/dipping for over 10 years.  I quit Tuesday 27MAR2012, but this isn't the first time I've tried.  I will allow myself to smoke while drinking only.
o Perform 70 pushups in 2 minutes while maintaining good form:  I graded a PT test last month; one of the soldiers in my line did 111 pushups.  It made me realize how weak sauce I am.  The most I've ever done is 65 and can currently do about 55-60.
o Perform 10 consecutive pullups; no cheating (all the way up, all the way down):  I can do 6 right now.
o Run 2 miles under 15 minutes:  I'm at around 15:30 right now.

Quarterly Progress Update

In the first quarter 2012 I sat back and collected $812.14 of dividends from my portfolio.  This represented a surprising $80.47 increase from the previous quarter .  I sold a large position on the very last trading day in 2011 and have yet to redeploy the funds.  That particular position paid me about $60 every 3 months which was noticeably absent in Q1.  Also KO did not pay out, but PEP paid twice to more than make up for it.

Overall I'm happy to have received the dividends.  It's fun to look back at last year and compare.  My portfolio has certainly come a long ways from Q1 2011.  I'm hoping to see a correction or a market sell off in Q2. I'd like to be fully invested and therefore maximize my passive income.  Even if I stopped investing right now and spent all dividends, an extra $800/quarter would enhance my life in a significant way.  That's almost $300/month! 

Since I started dividend growth investing I've received over $2600 in total dividends.  That means 2 purchases were bought using house money.  Very cool!  It's only going to snowball from here.

I'm excited to buy more dividend growth stocks and see how much the portfolio will rake in next quarter.