Monday, July 7, 2014
Weekly Purchase - DE
I'm building a position in Deere & Company right now. I think the company has a very bright future as the world population grows and modern farming techniques are adopted in other parts of the world. It seems to me I could profit on a trend like that and also collect rising dividends in the process.
I'm looking to buy great companies with rich histories of taking care of shareholders. Even then I cannot pay any price when acquiring parts of these businesses. The cheaper I acquire shares the more shares I can buy with the same amount of capital and therefore collect more dividends. I have a predetermined list of 50 companies I plan to own. The only thing left is acquire the shares at favorable prices to the best of my ability. I think DE shares should be worth $117 so yeah I believe I'm getting a nice discount with today's purchase. I could be wrong about its fair value. However I do prefer to at least have some idea about what shares might worth as opposed buying stocks based on stocks charts or even completely in the dark. I find my system to be quite useful yet it isn't perfect.
With 24 shares, DE now has a dividend weight of 0.94%. I could easily build up to a 50-55 share position as part of a balanced portfolio built for sleep well at night income generation. Besides DE I'm looking to start new positions and to beef up holdings with dividend weights less than 1%. At this point I'm keeping an eye on GPC (.56%), BP (.38%), GE (.78%), and XOM (.77%). UL (.56%), KRFT (.93%), and ITW (.80%) are pretty much uninvestable for new money as much as I'd like to add.
Today's purchase was commission free as I still have free trades available. I plan to purchase income paying securities, most likely dividend stocks, on a weekly schedule for the rest of July. Then I'll resume larger purchases. I have extra free trades for August and beyond, but not enough to burn through them via weekly buys.
Midyear Financial Goals Update
1. Increase forward annual dividend income to $6,880 ($573 per month)
Starting the year at $5,680 I need $1,200 of progress. Not including today's purchase my annual dividend income went up by $623 so far this year. 52% of $1,200 is slightly ahead of schedule half way through .
Looking ahead: Monthly capital infusions have been better than expected allowing me to purchase more stock than previously thought. Higher market prices have been working against me since I can't buy as many shares with the same amount of money. Not only that, but I'm working on weightings which means I can't really buy high yielding stocks such as REITs or tobacco companies at the moment. The typical stock I'm buying right now pays less than 3% making this goal somewhat problematic. I also expect fewer dividend increases for the back half of the year. Accomplishing this goal will be challenging, but I think it is possible if I want it bad enough.
Status: on track, but I need to increase my savings rate.
2. $20 monthly Lending Club interest
Last month I received $14.82 worth of Lending Club interest. During December 2013 I received $8.75. I'm very pleased with the progress. I plan to change nothing.
Status: on track and looking good.
3. Average monthly brokerage deposits of $1,300
I averaged $1,717 so far this year. I'm really doing well here. A few things have changed since I crafted this goal late last year. First off my employment income went up by a nice amount on the back of some decent raises. Second of all I have taken steps to reduce fixed monthly expenses. I switched car insurance, I ditched cable and bought a digital antenna, and started using cash back credit cards for everyday purchases. Small things like that do add up! Also my rent went up by less than $1 per month and I fully funded my savings account for a future vehicle. Yep. When it comes time to purchase a new vehicle (used obviously) I will be paying cash. The money has already been saved, and it feels awesome!
Looking ahead: I think I could easily save upwards of $2,000 per month later this year. Right now I'm working through some large expenditures and will likely only deposit $1,700 per month for the time being. I need new tires for my vehicle, I just bought a new smart phone, I still need to buy my season ski pass, I'm buying snowboard boots, and will continue getting preventative maintenance done on my truck here and there. Once I get through that, savings will pick up.
Status: on track and looking good.