Thursday, January 2, 2014
New Purchase - HCP
Today I added a new dividend champion to my portfolio. I now control shares of 15 companies who have increased dividends a minimum of 25 straight years. This particular purchase will bolster my annual income by $102.90 on a 5.78% yield taking fees & commissions into account. However I expect HCP will unveil a higher dividend rate later this month. I'm looking for a 5% increase.
I chose to go with HCP because I feel it offers a reasonable value in today's market, it has a long history of steady dividend raises, and provides a sizable income stream which I can use for reinvestment during the accumulation phase or spending money when I stop working. I am not looking for above average capital gains, nope, I'm looking for a reliable income source. Frankly I'm just not sure stocks will be able to continue rising the way they did last year. I'm also concerned REITs might struggle since interest rates seem to be in an upward trend. With that in mind I'm not planning to add additional REIT shares for the time being.
HCP is the 5th REIT in my portfolio and will also be the last. I'm about 10% REITs at the moment and have hit my limit in terms of portfolio weightings and also the number I'm willing to hold. My plan is to build up to 50 positions total, 5 from the REIT industry. From this point forward I'll have to buy additional shares of the ones I already own when allocations allow. The reason I'm heavy into REITs has to do with my occupation more than anything else. A career in the Army entails constant moving which makes rental properties impractical for Soldiers. I've been stationed four places in the past five years, and it gets even worse if you want to include basic training (3 months) & advanced individual training (9 months). If I knew I'd be staying put for long periods of time I think I'd favor physical rental properties. But the good news is that REITs are liquid, I don't have to deal with tenants, and they don't tie me down to a specific location. Those are all qualities I'll enjoy when I finally hang up my boots.
I plan to do a second purchase this month.
Core Position: No
Speculative Position: No
Expectations: Steady income; 3% annual dividend growth
Automatic Sell: Frozen dividend; dividend cut
Consider Selling: Business fundamentally changes, management becomes untrustworthy, fundamentals deteriorate, wildly over valued stock price, or position fails to meet expectations.