Wednesday, May 30, 2012

May Recap

I won't have internet access for the next few days so I'm going to go ahead and post this now.  I'm driving up to Michigan for a few weeks of leave then I fly to South Korea.  I'm looking forward to it!

New Purchases:
1) 24 shares ConocoPhillips providing $63.36 annual income.  COP was purchased at $53.07/share + commission.
2) 16 shares Toronto-Dominion (TD) providing about $46.08 annual income.  TD was purchased at $80.315/share + commission.
3) 13 shares McDonald's (MCD) providing $36.40 annual income.  I paid $91.935/share + commission for MCD.
4) 60 shares Linn Energy (LINE) providing $174.00 annual income.  Line was bought at $37.18/share + commission.
5) 45 shares Owens & Minor (OMI) providing $39.60 annual income.  OMI was purchased at $27.72/share + commission.

1) 53 shares TC Pipelines (TCP) reducing my annual income by $163.24.  I sold at $41.49/share.

Dividends Received: $386.95
AT&T (T) - $80.52
General Mills (GIS) - $21.52
Raytheon (RTN) - $28.50
Abbott Laboratories (ABT) - $27.54
Exchange Income Corp (EIFZF) - $17.04
Procter & Gamble (PG) - $44.04
Realty Income Preferred Series F (O-PF) - $6.76
TC Pipelines (TCP) - $40.81
Boardwalk Pipelines (BWP) - $91.06
LTC Properties (LTC) - $29.16  (I'm including LTC even though it pays tomorrow)

Dividend Increases:
1) PEP: $.515 to $.5375 per quarter.  $7.20 annually
2) SBSI: 60.497 shares to 64.497 shares. $3.20 annually
3) INTC: $.21 to $.225 per quarter.  $7.92 annually
4) HNZ: $.48 to $.515 per quarter.  $3.36 annually

New Deposits:
$810 in May.  $300 to ROTH IRA, $510 to taxable account.  I spent $170 on a plane ticket, $45 on an oil change, and $548 on a new computer.  My finances will be unpredictable in June since I'll be on leave and moving to my new duty station.

-4 shares SBSI from the stock split.
-18 shares PSX from the spinoff.

Wow, May was extremely busy for both my investments and personal life.  The highlight of my month was high fiving Danica Patrick before the Coca Cola 600 last weekend.  I also made it on TV!  I went to the race in uniform as part of the Memorial Day theme.  It was awesome!  NASCAR fans love soldiers, it was a great experience.  I'm switching duty stations which couldn't have come at a better time.  North Carolina is way too hot in the summer for my taste.

I'm glad to see gas prices are low at the moment.  I have a 850 mile drive ahead of me plus I'm going to put a limit order in for CVX.  We'll see if it gets filled, but I won't get to check for a bit.

Thursday, May 24, 2012

Heinz Increases Dividend

This morning H.J. Heinz (HNZ) raised its dividend 7.29% from $.48 to $.515 per quarter.  HNZ is closing in on becoming a dividend contender, the streak now stands at 9 years.  The company also released its Q4 earnings which showcases its focus on emerging markets.  HNZ forecasts emerging markets to contribute 25% of sales in 2013.  While the company is famous for ketchup they produce many other food products including Classico spaghetti sauce and Bagel Bites.  HNZ uses an acquisition strategy to penetrate markets such as Brazil and China beyond ketchup.

Yet another strong dividend increase, 2012 is exceeding my expectations.

Friday, May 18, 2012

New Purchase - OMI

The stock market was red yet another day, this is getting interesting.  The hard part for me is figuring out which stock to buy, there are many attractive prices to choose from.  After scanning my watch list I decided today would be a good time to pick up OMI or APD.  My first instinct was to place an order for APD which is a stock I've wanted to own for a long time.  I later flip flopped and canceled the order before it was executed.  After thinking it over one more time, I placed an order for OMI which was filled at $27.72 + commissions.  The 45 shares I bought came with a yield of 3.15% and will pay me $39.60/year in dividends. 

OMI is the third healthcare stock in my portfolio.  It has a history of strong dividend and earnings growth.  Infact OMI has grown its dividend 10+% every year since 2001.  In total it has a dividend growth streak of 15 years which is quite impressive.  I don't intend to base my decisions solely on the past and I don't forecast this level of dividend growth to last another 10 years, but it does give me an idea of future outcomes.  Owens & Minor is expected to grow EPS by 8.7% for the next 3-5 years which should fuel dividend income down the road.  It has a healthy payout ratio of 44.8% and strong balance sheet.  Another selling point is its beta of .55.  APD has a high beta of 1.13, which might work to my advantage as a potential buyer if the market continues to decline.

How low will this market go?  I have no idea, I'm certainly not an expert.  I think the S&P is back to reasonable levels, but we will have to wait and see what unfolds.

Have a great weekend, it's Miller time!

Thursday, May 17, 2012

Lots of tasty fish in the sea

Time to get out my fishing pole, we're in the middle of a correction.  Every day I check the stock market, it seems to go down.  In fact stocks were in the red 11 of the past 12 days.  WOW!  I've already had an extremely busy month buying stocks and managing my portfolio, but I don't think I can say no to some of these prices.  APD is now $79.34 (3.23%), EMR is at $46.19 (3.46%), MCD $89.62 (3.12%), OMI $27.95 (3.15%).  GPC is another company I like, it saw a decline of 4.55% today.  BP is yielding over 5% and now has a P/E less than 5.  I like this menu!

The real question is whether to buy now or wait for even better deals.  These stocks are at levels not seen since November, back when the gettin was good.  If we see another down day tomorrow I'm going to reel in a catch.  My plan to slowly invest my stockpile of cash is going out the window if this market keeps declining.  We'll see what happens.  Either way I won't be buying Facebook.

Tuesday, May 15, 2012

Swapped LINE for TCP

This afternoon I made a lineup change.  I benched TC Pipelines and brought in the 6th man, Linn Energy.  I rarely sell stocks, but I felt it was time to do something about TCP's poor performance.  TCP has been disappointing ever since I bought it May of last year.  I like what LINE has to offer and feel more comfortable owning a slice of their business.  TCP was sold @ $41.50 and I bought 60 shares of LINE with the proceeds.  TCP is a pipeline company while LINE acquires and develops oil & natural gas properties.  The business models are different, but they are both MLPs.  Reasons why I did this swap:

#1 Linn Energy is more diversified.  Their main business is natural gas, but they also deal in oil.  TCP is natural gas pipelines only.  While Linn is not a pipeline company they managed to hedge 100% of expected natural gas production until 2015.  This is a smart move because natural gas is very cheap right now.

#2 Linn does not have a general partner (TC Pipelines does).  They will not have to pay incentive distribution rights, always a plus when evaluating MLPs.  It is typical for a MLP to issue new shares to expand business.  Sometimes I feel like they do this to pad the profits of the general partner, more than act in the best interest of the unit holders.  No need to worry with LINE.

#3 LINE has a higher yield.

#4 I anticipate Linn increasing distributions at a faster rate.  They recently hiked the distribution by 5%, which is nothing to sneeze at for a yield above 7%.

The only thing that bugs me is that I sold TCP near the 52 week low.  Maybe I would be better off waiting, but unfortunately I don't have a crystal ball to tell me the right answers.  My total return with TCP was -5.67% including distributions received.

Saturday, May 12, 2012

Portfolio Reaches $3600 Annual Income

I'm excited to announce my investments will now provide an average monthly income that exceeds $300.  May has been a busy month with new purchases, dividend increases, spinoffs, and stock splits.  All together I currently expect to receive $3,680.57 of dividend income the coming year.  Average monthly income: $306.71

To me this is a significant milestone because dividend income is real cash that can be used to pay bills, travel, eat out, or just squander on hookers and blow (haha).  In all seriousness I will continue to use this income to buy more shares of dividend stock till I'm ready to retire.  The best part is that these dividends are sustainable and will rise over time; hopefully faster than inflation. 

Looking forward I will strive to improve my portfolio and take advantage of attractive entry prices to the best of my ability.  I'm obviously not a financial expert (I'm a professional soldier), but I have learned a lot about investing the past few years.  The real test will be the next market crash.  Staying the course during tough times is not easy.  I will need to either have an iron stomach or just not pay attention to account balances.  Back in '08/'09 I remember cringing as I watched my mutual funds sink in an endless sea of red.  As long as income stays steady I'm confident I'll make good decisions.

Thursday, May 10, 2012

Intel Increases Dividend

A few days ago Intel (INTC) increased its dividend 7.14% from $.21 to $.225 per quarter.  This is the 9th straight year of increases.  I was anticipating a larger boost in 2012, but 7.14 % is still welcome.  There is a chance INTC will do another dividend increase before the year is up, but I'm not going to count on it or make any predictions.

My initial INTC purchase came with a 3.75% yield the day I bought it.  After 2 increases it has already ballooned to a 4.67% yield on cost.  This is what dividend growth investing and compounding is all about.  The payout ratio is still healthy at 38.1%, there is plenty of room to take the company to dividend contender status and beyond.  I'm not one to get excited about tech stocks, but if Intel can get a foothold in the mobile market the stock price is going to soar.

Wednesday, May 9, 2012

New Purchase - MCD

My latest purchase is 13 shares of McDonald's (MCD).  The shares were bought at $91.935 which results in a yield of 3.03% after brokerage fees.  In my opinion MCD is one of the top dividend growth stocks, I'm happy to increase my position.  I plan to hold McDonald's for a very long time and will continue building the position along the way.

The purchase today was not planned, but I'm trying to invest some of the cash sitting in my account doing nothing.  I probably won't make any more purchases in May, but no guarantees.  It's nice to know I can take advantage of opportunities if I see something I like.

In other news I received extra shares from the SBSI split today and noticed they gave me 4 shares when I was expecting 3.  Seeing as the split was 5% and I used to own 60.497 shares, it appears they rounded up.  I did the math; 5% comes out to 3.025.  Maybe the distribution will be amended, but right now my account says 64.497.  Thank you Southside Bancshares, this was a generous gift!

Tuesday, May 8, 2012

New Purchase - TD

I swooped in and picked up 16 shares of Toronto Dominion (TD) this afternoon.  The shares were bought at $80.315 + commission in my ROTH IRA to avoid withholding taxes. This amounts to a yield of 3.56% and about $46.08 annual income depending on exchange rates.

I've spent time thinking about my portfolio and what I can do to keep it balanced.  It's painfully obvious I am lacking financials and foreign stocks.  TD makes sense because it fills both needs.  I want foreign stocks to diversify away from the the US dollar more than attempting to capture foreign business.  I figure international powerhouses such as MCD, JNJ, and KO cover the globe rather well.

Frankly, financials is a sector I do not like.  I do not trust large U.S. banks, some of which needed to be bailed out in recent years.  How ridiculous is that?  It wasn't just a bank here and there, it was widespread.  Something is wrong with the whole system.  Luckily our friends to the north do banking right.  I don't feel like describing it all right now, but Canadian banks didn't need bailouts. The major Canadian banks did not cut or eliminate dividends during the crisis.  Yes the dividends were frozen temporarily, but that is a BIG difference from cutting.

If anyone out there uses TD Ameritrade for a broker, please start day trading to pad my dividend income...

Just playing!

Sunday, May 6, 2012

May Shopping List

The stock market cooled off last week presenting a number of companies that look attractive.  As a whole I do not think stocks are at bargain levels right now, but I am paying close attention to a select group.  If we see additional market declines I will most likely pick up one of these names later this month.

-Emerson Electric (EMR):  Emerson had a substantial earnings miss last week, but it still grew EPS from the previous year.  Every company will miss earnings from time to time, the fact that it is growing EPS is a good sign for dividend growth.  My target buy price: <$48
P/E: 15.62 / Yield: 3.28 / Payout Ratio: 47.6% / Est. LT EPS Growth: 11.3% / Yrs of Div Growth: 55 (champion) / Industrials sector

-Air Products and Chemicals (APD):  APD had a slight earnings miss a few weeks ago which seems to have triggered a price decline.  I would note that Air Products is expected to earn less in 2012 than it did in 2011.  My target buy price: <$83
P/E: 16.05 / Yield: 2.99 / Payout Ratio: 43.83% / Est. LT EPS Growth: 7.7% / Yrs of Div Growth: 30 (champion) / Materials sector

-Owens and Minor (OMI):  OMI also had a slight earnings miss a few weeks ago.  Even with the earnings whiff, Owens and Minor is still growing earnings per share, which is always good.  In my opinion, OMI is trading at an attractive price right now.  My target buy price: <$29(already there)
P/E: 15.57 / Yield: 3.09 / Payout Ratio: 44.81% / Est. LT EPS Growth: 8.7% / Yrs of Div Growth: 15 (contender) / Healthcare sector

-Toronto Dominion (TD):  TD is a Canadian bank that has been on a tear the past year.  It has been growing EPS and trouncing estimates along the way.  This is an example of why I do not put full faith in analysts.  I'm looking to increase exposure to foreign stocks and financials.  TD fits the bill as I am willing to overlook the dividend freeze in 2010.  My target buy price:$80
P/E: 12.98 / Yield: 3.56 / Payout Ratio: 42.5% / Est. LT EPS Growth: 9.9% / Yrs of Div Growth: 2 (froze in 2010) / Financial sector

Friday, May 4, 2012

New Purchase - COP

I couldn't resist ConocoPhillip's (COP) new yield, today I bought 24 additional shares.  The shares were picked up at $53.07 which is a yield of 4.94% after transaction costs and will pay me $63.36 per year.  This is a slightly better price than my initial (prorated for the spinoff) purchase.  I always like to average down when I can.  Oil stocks were hammered this week due to lower gasoline prices and sluggish job growth.  I would welcome further market declines since I plan to make at least one more purchase in May.

Since the spinoff I have noticed investors sold PSX and seem to have a more favorable opinion of the new COP.  PSX took a harsh beating in market price this week, I will hold it regardless.  As I stated in a post about the spinoff, I plan to keep both companies.  Right now I'll only consider adding shares of COP until I know more about Phillips 66.

Have a great weekend!

Wednesday, May 2, 2012

Pepsi Increases Dividend

Pepsi announced it has raised its dividend for the 40th straight year.  The quarterly dividend has been increased to $.5375 from $.515, which is 4.37% boost.  I'm disappointed that it's so low this year, but at least it's higher than inflation.  For a stock yielding around 3% I expect more, but I also realize high dividend growth will not be possible every single year.  I still think Pepsi is a world class company that will deliver solid dividends in the future.  The portfolio of brands they own is amazing, I consume a lot more Pepsi products than Coke products.

I know this dividend increase was announced a few months ago in an investor update, but I wanted to wait until the official release in case something changed.