Tuesday, July 31, 2012

July Recap

July was a pretty slow month for me investment wise.  The stock market posted gains and was pretty even keeled, nothing crazy.  I wish I bought more in June.  Oh well, it's too late now!  To keep my allocations in order, my next purchase will be fixed income.  10% of my retirement assets are earmarked for fixed income, most of it is held in my TSP (federal employee 401k).  I'm currently investigating individual preferred stocks, individual exchange traded debts, and emerging market debt etfs.  I'm looking at new issues since they seem to be closer to par value.

DOW: 13,073.01 /// S&P 500: 1,385.30 /// 10-Yr Bond: 1.5040%

New Purchases:
1) 56 shares Senior Housing Properties (SNH) providing $85.12 annual income.  I bought SNH at $22.32/share + commissions.
2) 44 shares Owens & Minor (OMI) providing $38.72 annual income.  OMI was purchased at $27.96/share + commissions.

1) 33 shares LTC Properties (LTC) reducing my annual income by $57.42.  I reduced my stake in LTC at $37.37 per share.

Dividends Received:  $162.35
Coke (KO) - $19.89
H.J. Heinz (HNZ) - $12.36
Illinois Tool Works (ITW) - $10.44
Phillip Morris (PM) - $60.06
Exchange Income Corp (EIFZF) - $16.99
Realty Income Preferred F (O-PF) - $6.76
LTC Properties (LTC) - $24.38
Toronto-Dominion (TD) - $11.47

Dividend Increases:

New Deposits:
$1065 in July.  $300 added to ROTH IRA, $765 to taxable account.  I'm still working on a budget, waiting on a few items before I know what it will be.


Thursday, July 26, 2012

New Purchase - OMI

I purchased 44 shares of Owens & Minor at $27.96.  Including commissions this amounts to a yield of 3.13% and will pay me $38.72 per year.  OMI is one of my favorite stocks from the healthcare sector.  It runs a profitable business distributing medical supplies along with other hospital/medical related services.  OMI recently reported a softer outlook for the rest of 2012 which seems to have triggered a sell off.  Fine with me, I'm happy to add to my position although I paid a tiny bit more this time.  They also announced plans of a sizable acquisition which will be their first venture in the European healthcare market.

I've had a number of limit orders the past week which weren't filled including MCD, APD, and INTC.  Since I'm now 13 hours ahead of Eastern time, it's difficult to jump in quickly if something favorable happens.  I set limit orders before going to bed and check in the morning to see if anything triggered.  I'm still hoping the stock market drops a bit lower for better entry prices.

Thursday, July 19, 2012

Dividend Growth Companies in Korea

If you follow dividend growth stocks you will notice a trend.  US companies are expanding internationally to fuel growth.  Since I am now stationed in South Korea I see this strategy in action firsthand.  It's amazing to find to the same products as back home and cooler yet to see products customized to fit local tastes.  The past few days I've been taking pictures of American products and brands sold in Korea.  It's been a lot of fun.


Coke products seem to be very popular in this country.  I have no idea what the market share is, but it's not uncommon to see coke advertisements and coke products.  While in a small grocery store I noticed a strange juice made by Minute Maid.  Some type of Aloe juice, never seen this one before (one side is in English, the other Hangul).  I bought a bottle which was a good move, it's awesome.  It has a sweet, pleasant taste and has bits of fruit mixed in with the juice.  Diamond water is also a product I've never seen before, it has a coca cola label on it.  Diamond is a popular brand of bottle water in the military because it tastes good, comes in a big bottle, and is cheap.


Pepsi appears to be less popular than coke, but is still all over the place.  Pepsi, Mountain Dew, and Gatorade are sold in the vending machine shown above.  A can costs about 65 cents American.  Frito Lay can be found in grocery and convenience stores, there are a lot of flavors.  I have no idea what the flavors are since I can't read Hangul, so I picked one that looked like nacho cheese.  It has less flavor than what I'm used to.

Phillip Morris
I see a HUGE opportunity for Phillip Morris over here.  A lot of Koreans smoke, about 24% according to some website.  Sounds about right.  The thing is not all stores carry Marlboros.  They have not fully penetrated this market.  It's almost impossible to find Camel or Newport, it's clear PM is making headway.  Korean cigarettes have charcoal in the filters I'm told (not Marlboros), maybe they need to look at that.  Or maybe PM already owns local brands that do?  I noticed Marlboro "Ice Ball" are popular with soldiers stationed here.  The ice ball is similar to the Camel Crush in that it has a small ball inside the filter that you can break to release menthol.  It's only sold in Asia as far as I know.  A pack of smokes costs around $2-$2.50.

Procter & Gamble
It's not a surprise to find P&G products at grocery stores.  Familiar brands such as Fusion, Head & Shoulders, and Downy.  I have yet to find Crest (or Colgate) toothpaste/toothbrushes.  P&G has some work to do in South Korea.  It's clear there is room left to grow.

Johnson & Johnson

I haven't seen much from J&J except the baby products shown in the picture.  I imagine Tylenol and Acuvue are also sold in Korea.  I've only been here a month, I'll discover more as I go.

McDonald's are rare.  I've only seen one so far which was located in Itaewon.  Itaewon is an Americanized part of Seoul where many soldiers and other Americans go to shop and drink.  It seems to me that fast food wouldn't be popular with the typical Korean.  I've been here a month and have yet to see an obese Korean.  It's astonishing!  Every other American is a fat-ass, it's so refreshing to see healthy people.

General Mills
I saw a Haagen Daaz ice cream truck on a bus ride home, but didn't have my phone handy at the time.  It's about all I've seen from GIS so far.  The grocery store I was shopping at carried Post cereals, no Cheerios or any other General Mills brand.  A store carrying Post leads me to believe GIS brands are sold somewhere.  I don't imagine Koreans eat cereals very often, different culture.

Military bases sell regular American products we are used to.  I do not have to shop off base, but that won't stop me from seeing what my retirement plan is up to.

Tuesday, July 17, 2012

Added Sector Breakdown to Portfolio Page

Wow I now have color in my blog!

I know my blog is pretty boring to look at.  I'm working on it, but unfortunately I'm not very creative or gifted at designing websites.  If anyone has an idea to make this better, let me know.

Looking at the sector breakdown in my portfolio, you can see it's very defensive.  I'm way overweight consumer staples and also heavy on utilities and energy.  I vastly underweight tech stocks and also go light on consumer discretionary and financials.  It never occured to me I was actually overweight in the industrial sector, I will have to keep that in mind for the future.  The materials sector is noticably absent in my portfolio, I plan to to remedy that situation sometime this year. 

I never expect or even want to match the stock market in weightings.  I just use it as a reference point.  The distribution of quality dividend growth stocks favors some sectors more than others.  It would be hard to find a bunch of tech stocks that meet my investing criteria, while it's a piece of cake in consumer goods.

Thanks Austinbroker.  I stole the pie chart idea from you.

Sunday, July 15, 2012

How Many Stocks Should I Own?

It's monsoon season in Korea right now.  Due to the rain I didn't feel like doing much this weekend.  I did make it to the gym at least.  Anyways I was thinking about how many stocks should be in a portfolio.  Some people feel a concentrated portfolio of the 5-10 best companies is where it's at while others own up to 50.  There is not a right answer, but in my mind there are two factors that need to taken into account.

First of all the size of the portfolio is definitely is a factor.  If you have 2 million dollar portfolio do you really think owning only 10 stocks is the best course of action?  In my experience when you start approaching the 6 figure mark you'll be more comfortable with more stocks.  You're spreading the risk around.  No matter how much I might like the companies I own I know some of them are going to be losers.  Be it dividend freezes, catastrophes (oil spills, hurricanes), loss of competitive advantages, or any number of other landmines it's going to happen.  I believe a concentrated portfolio makes since for smaller and midsized portfolios (up to $500,00?) depending on risk tolerance.

Second of all when you have a concentrated portfolio you are essentially saying "I'm a great stock picker."  There is no room for error.  You have to be right all the time, or close to it.  With owning 30-50 positions you're saying "I trust the dividend growth strategy more than the individual companies themselves, I'm not a great stock picker."  I fall into the latter category.  There is only one stock I truly believe will be a big winner over the next 10 years, that's Phillip Morris (PM).  As great as KO, JNJ, CVX, MCD, etc. are I just do not think they are on the same level. 

I trust the dividend growth strategy itself more than my ability to identify and purchase great companies at attractive valuations.  I might have a list of the 10 greatest stocks right now but it will be constantly changing.  I know I'll come up with new best ideas in the future.

I plan to own 30-35 stocks but it won't be equally weighted.  I want PM to be the largest position.  In the end we have to take what the market gives us.  Even the mighty Phillip Morris is trading at $90/share right now, it's not cheap.

Friday, July 13, 2012

Added Historical Data to Portfolio Page

I added a tab to the google spreadsheet showing what my portfolio looked like on December 31st 2011.  You can tell by the size difference that I've added a number of new companies this year.  It is evident my yield on cost went down a bit with my focus on lower yielding/higher dividend growth stocks.  It's not that much lower, dividend increases helped to keep it high.  You can also see I started the year with a mountain of cash which I've been slowly investing.

I will update the sheet every year which will be fun.  I don't see any reason why I would stop blogging, but who knows maybe I'll be too busy in the future.  I've made $0 blogging since I don't have ads or anything.  I don't get very many visitors and I don't really care.  I blog because it's fun to look back at what I was doing and what I was thinking.  It's a way for me to learn and become a better investor.  I like interacting with fellow income & dividend growth bloggers. 

Wednesday, July 11, 2012

Quarterly Progress Update

My portfolio paid me $913.69 in the second quarter which averages out to just over $300/month.  This was a $101.55 increase from Q1 mostly due to new purchases but dividend increases helped out as well.  Since I started dividend investing two years ago, I have received a total of almost $3,600.  It's now to the point where I receive a dividend almost every week.

I plan to retire in 16 years with investment income and a military pension.  I have a longgg way to go but the good news is I'm ahead of schedule.  The goal of $3800 annualized dividend income for 2012 has already been achieved.

I need to focus on running or I will not meet my goal of 2 miles under 15 minutes (which isn't even very fast!).  There is no organized physical training at my new duty station, I've been slacking off big time.  We have a new track and a nice gym right down the street.  I have no excuse.  I need to suck it up and stop being lazy.

Friday, July 6, 2012

New Purchase - SNH

I used the money from the LTC sale to buy 56 shares Senior Housing Properties (SNH).  Both LTC and SNH are health care REITs.  They own nursing homes, senior apartments, and assisted living properties.  I'm fan of health care REITs because I believe the demand for these types of properties will increase as the baby boomer generation ages. 

This move will increase my dividend income since SNH yields 6.7% while LTC dropped to 4.6% at the price I sold it.  If I wanted to wait I think I could find a better price with SNH, but this was meant to be a swap.  I don't want to increase my cash position at this time.  It should go ex sometime this month, I wanted to make sure I get the Q3 dividend.  I've been monitoring SNH for a while and think it offers more value than LTC right now.  SNH has a better yield, lower p/e, and is not at its 52 week high.  It does have higher debt, and a lower dividend growth rate however.  Low debt (for a REIT) was one of the reasons I bought LTC in the first place.  I also like NHI from the industry, but it's trading at its 52 week high as well.

Tuesday, July 3, 2012

Sold LTC Properties

I do not want a REIT to be my largest holding.

I sold 33 shares LTC Properties (LTC) at $37.37/share + commissions.  I decided to to prune back the position since it has increased in value immensely and has overtaken PM as the top holding in my portfolio.  I never meant for LTC to be a top holding, it more or less happened by accident.  The original purchase was made in March 2011 at around $28 and I averaged down last August when it was trading around $23 (I couldn't resist).  I then dripped the shares for 6 months until it recovered to the original purchase price.  Using the average cost basis I booked a 53% total return profit.

I plan to use the proceeds to buy shares in a different REIT.  I like SNH specifically at this point in time.  I need to spend time researching the sector, I'm looking to find a decent yield.