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.
Tuesday, July 17, 2012
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.
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.
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.
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.
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.
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.
Friday, June 29, 2012
June Recap
This month went by fast, I was extremely busy. The stock market was a rollercoaster ride with bad news from Europe then recent encouraging news. The DOW is currently at 12,880. As a whole stocks look to be slightly overpriced, but still reasonable. It seems investors have been chasing yield. Telecoms, utilities, and REITs are pretty pricey right now. LTC Properties, my only REIT, has been the best performer (in terms of total return) in my portfolio. I couldn't have predicted that one. It became my largest holding on accident.
New Purchases:
1) 15 shares McDonald's (MCD) providing $42.00 annual income. MCD was purchased at $86.40/share + commissions.
2) 27 shares Emerson Electric (EMR) providing $43.20 annual income. EMR was purchased at $45.55/share + commissions.
3) .627 shares Southside Bancshares (SBSI) providing $.52 annual income. This was a dividend reinvestment.
Sales:
None
Dividends Received: $371.57
ConocoPhillips (COP) - $39.60
Intel (INTC) - $27.72
Southside Bancshares (SBSI) - $12.90
Chevron (CVX) - $26.10
Emerson Electric (EMR) - $11.20
Norfolk Southern (NSC) - $17.86
Johnson & Johnson (JNJ) - $36.60
Avista (AVA) - $30.16
Exchange Income Corp (EIFZF) - $16.83
McDonald's (MCD) - $18.20
Realty Income preferred series F (O-PF) - $6.76
UNS Energy (UNS) - $45.58
LTC Properties (LTC) - $29.16
Owens & Minor (OMI) - $9.90
Pepsi (PEP) - $43.00
Dividend Increases:
1) GIS: $.305 to $.33 per quarter. $7.04 annually
New Deposits:
$720 in June. $300 added to ROTH IRA, $420 added to taxable account. My expenses were very high this month, but my income was also higher to offset it. I now live in South Korea. My car expenses will be reduced. I will spend more on phones and fun money.
Options/Bonus:
None
New Purchases:
1) 15 shares McDonald's (MCD) providing $42.00 annual income. MCD was purchased at $86.40/share + commissions.
2) 27 shares Emerson Electric (EMR) providing $43.20 annual income. EMR was purchased at $45.55/share + commissions.
3) .627 shares Southside Bancshares (SBSI) providing $.52 annual income. This was a dividend reinvestment.
Sales:
None
Dividends Received: $371.57
ConocoPhillips (COP) - $39.60
Intel (INTC) - $27.72
Southside Bancshares (SBSI) - $12.90
Chevron (CVX) - $26.10
Emerson Electric (EMR) - $11.20
Norfolk Southern (NSC) - $17.86
Johnson & Johnson (JNJ) - $36.60
Avista (AVA) - $30.16
Exchange Income Corp (EIFZF) - $16.83
McDonald's (MCD) - $18.20
Realty Income preferred series F (O-PF) - $6.76
UNS Energy (UNS) - $45.58
LTC Properties (LTC) - $29.16
Owens & Minor (OMI) - $9.90
Pepsi (PEP) - $43.00
Dividend Increases:
1) GIS: $.305 to $.33 per quarter. $7.04 annually
New Deposits:
$720 in June. $300 added to ROTH IRA, $420 added to taxable account. My expenses were very high this month, but my income was also higher to offset it. I now live in South Korea. My car expenses will be reduced. I will spend more on phones and fun money.
Options/Bonus:
None
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