Sunday, November 17, 2013

$10,000 Worth of Dividends (so far)

$10,000 Dividends
Friday's payments from Abbvie, Abbott Labs, Kinder Morgan, Procter & Gamble, and Realty Income pushed my lifetime dividend total over $10,000.  I have been income investing a bit over 3 years now, boy it sure goes by fast.  Prior to investing solely for income I was part of the total return camp for well over a decade.  I had owned mutual funds since high school (some individual stocks too), though I started taking saving & investing seriously when I joined the military in 2008.  The great recession was a big test for total return investors, and I discovered I couldn't handle total return investing psychologically.  If the financial meltdown never happened I'd probably still be indexing and still think individual stocks are for suckers.

In a way I'm glad the great recession happened when it did.  It lead me down the path towards income investing which allows me to sleep well at night and meshes better with my long term goals... I never felt comfortable with the 4% rule!  Anyways my investment assets are approaching $175,000 these days, the thought of losing 40% of that number would send chills down the old total return investor in me.  I found a better path, although it is clearly not for everyone. 

DOW 16,000?
Holy Moses!  If I had debt (I don't), I'd consider paying down debt as an option along with investing as a use for excess capital from my day job.  It's a tough market out there for value investors.  Even though I don't care about capital gains I still want to preserve my invested capital.  That's where value investing comes in.  If I stick to purchasing a diversified set of undervalued or fairly valued high quality equities, capital preservation will take care of itself.  Capital preservation is the reason I focus on value and also on high quality companies.

I prefer low purchase prices and the market is simply not cooperating.  Yet I still have capital to invest, November has been very frustrating so far.  I placed limit orders on both CVX and LEG this month.  Turns out my chosen purchase price for both companies was about $.25 off.  Missed out both times and I didn't have the opportunity to make adjustments during trading hours.  At this point I still need to put money to work or else I will not be able to increase my passive income stream.  I'm going to purchase something, right now I'm still interested in CVX & LEG.  DE will also be thrown into the mix.  Don't think I've bought a stock from the industrial sector all year o.O

Turn Over = Too High
It's a shame I've had to sell so many positions this year.  I've been forced into selling HNZ, BWP, INTC, and recently SNH due to dividend freezes (HNZ was bought out, nothing I could do there).  4 sells in one year is way too much.  In the future I plan to focus more on quality companies that are as close to a sure bet as possible when it comes to dividend increases.  Perhaps next year I'll have to do a bit more portfolio retooling as I do question some of my picks from years passed when I was interested in high yield over high quality.  Maybe a few decades from now I will have mastered the art of dividend growth investing.  Favoring high yield is a beginners mistake, I'm learning as I go.

20 comments:

  1. Congrats on getting over $10k in around 3 years! The key is to recognize and learn from your mistakes. That way you can mavoid those investments in the future.

    ReplyDelete
    Replies
    1. Thank you buddy. I just realized I also sold UNS so that's 5 sales this year... not good...

      Delete
  2. Heck of an accomplishment to hit $10,000 in dividends after only three years of investing with a DG focus. Of course the next $10,000 won't take near as long!

    I like LEG as well, and was able to snag some in my investment club a few weeks ago. Any price in the $29-30 range looks like a solid entry point in my opinion.

    ReplyDelete
    Replies
    1. LEG is my top choice at the moment. I wish you well with that investment and hope to join you soon as I think the dividend growth will pick up eventually.

      Delete
  3. Wow, that is impressing reach 10k annual income! I think your are so close to the goal now.

    So a big Congrats here!

    I agree with you on the valuation. It is tough but there are still good opportunities to be found out there.

    ReplyDelete
    Replies
    1. Hey Martin! One day I hope to achieve $10,000 in a year, however I'm kind of far off at them moment. Progress is slow, yet very steady and predictable. Best wishes

      Delete
  4. Congratulations CI! Thats fantastic.

    ReplyDelete
  5. Congrats on the milestone. The next 10k will come much sooner!

    ReplyDelete
    Replies
    1. Yes I agree that it will come much sooner next time. One thing working against us is that starting yields are a bit lower these days. Thanks for checking in!

      Delete
  6. Congrats on hitting $10k so soon in your investment career! That's awesome.

    ReplyDelete
    Replies
    1. Thanks man always a pleasure when you stop by!

      Delete
  7. I'm jealous! But I'm also proud of your accomplishment. I, too, am a reformed equities investor having abandoned the total return for the dividend income approach. I just need to get these rentals paid off. One of the three mortgages will bite the dust next month forever thus providing me a $425.00 p/mo ($5,100.00 p/yr.) reward.

    Good job!

    ReplyDelete
    Replies
    1. Thanks. You're in a great place, don't forget that. Every time you put additional money towards mortgage principle you get a guaranteed return. If I had a mortgage I think I might favor that option over equities for the time being. Cheers!

      Delete
  8. CI,

    Congrats on a great milestone like that! You hit $10k pretty quick. Keep up the great work. :)

    Best wishes.

    ReplyDelete
    Replies
    1. I appreciate your on going support over the past few years. I think that if we knew each other in real life we would be great friends. Take care!

      Delete
  9. CI,

    Great job on $10K in dividends in just a few short years. I'm happy that you were able to find this strategy. I wish I hadstarted dividend focused investing in high school, but like you for quite a few years tried to pick up gains. Then I found dividends and DRIP plans. I still make a lot of mistakes, but it helps to learn from them and get better. It's all part of investing.

    Hope to continue following along with your successful quest for income.

    ReplyDelete
    Replies
    1. Thanks SWAN!

      I did start investing in high school, but it wasn't focused towards a goal at all. What I did gain was valuable experience during the tech bubble and and the sideways market that followed. I had a small portfolio and didn't make much $$ during that period, but many lessons were learned. For starters I discovered investing in random internet/tech start ups is fraught with risk! I also squandered much of my portfolio during my mid 20's when other activities were a higher priority. I suppose it's better to learn life lessons when the stakes are small.

      Best of luck with dividends and DRIPS, you're doing well for yourself!

      Delete
  10. Fantastic achievement CI.......milestones are such a motivational boon. I think sometimes the journey to financial independence through dividend growth investing can become a grind, the absolute certainty makes it quite boring. I do not look forward to the days when it is soooo close I can taste it. However, milestones like this $10,000 total are always good motivational reset. Keep up the effort, you're making great progress....slow and steady wins the race.

    KM

    ReplyDelete
    Replies
    1. Thank you. You're right that dividend growth investing is a grind. I could stuff my portfolio with high yielding mortgage REITs, E&P MLPs, and BDCs to try to speed it up, but the certainty you speak of would be lost. I don't mind sneaking some of those companies in, but try not to get carried away.

      I don't know why, but the past few months I have been motivated to increase my savings rate. I hope that will translate into higher income next year. Cheers!

      Delete