Friday, February 22, 2013

Portfolio Reaches $4800 Annual Income

From this point forward my passive income with average $400 per month!  To me, this is a big milestone on my journey to financial Independence.  I really couldn't be happier! 

I've had a big month.  I do believe February is the best single month I've ever had, and it's not even over yet.  Dividends are flowing into my account, dividend increases are numerous and meaningful, added some new positions, and even had a nice gain with HNZ.  It really feels like everything is coming together as planned. 

When you consider I am an enlisted Soldier (NCO not a commissioned officer) in the US military who makes a crappy salary it's pretty encouraging.  My base salary is about $2500 a month before taxes. I'm lower middle class by all measures.  You do not need to be a 1%er to make dividend and income investing work.  All you need is determination and time!

Not trying to toot my own horn here, but you can achieve a lot over time with a shitty salary.


I decided to discontinue writing posts about every single dividend increase because it gets tedious.  Instead I'll discuss recent increases here.

Avista 5.2%:
AVA is about as steady of an utility as they come.  5.2% is fantastic, very pleased.

Lorillard 6.5%:
Another solid increase from LO.  This boost is great, but a little lower than the past which didn't surprise me.  A 6.5% increase on a stock yielding 5% is just as good as a 16% increase on a stock yielding 2%!  You have to love LO!

Owens & Minor 9.1%:
Yet another solid increase from OMI.  This breaks their decade long streak of 10%+ raises, but 9% is close enough.  Solid!

Pepsi 5.6%:
Nothing too exciting here, but I will take it none the less.  At least it is an improvement over the 2012 boost.  The new and improved payments won't hit out accounts until June.

Coca-Cola 9.8%:
This is exactly why I own shares of this fine company!  I'm glad I bought more in December.

I expect to see an increase from UNS before February is over and hope it's better than last year.  LINE just reported a major acquisition and has recommended a 6% increase to the board.  This is very reassuring because short sellers have been inciting fear in Linn investors with bogus cash flow concerns.  If LINE does boost the distribution it will be later in the year.  LINE is also considering starting to pay monthly instead of quarterly.  I love me some monthly payments, I hope it gets approved!


  1. Dude, I say toot the hell out of that horn! That is an impressive accomplishment and one you should be proud of. There are a lot of ways you can manage your money, some good and others not so good. That 400 a month in income represents the collective good choices you have made over the years and doing it with a modest income is even more impressive. Rock on brother!!

    1. Haha thanks Stoic! My only real outlet to talk finances and investing is my blog. Nobody I work with understands or is interested. I stay anonymous because I do not want people to know I'm worth. Most of my peers lives pay check to pay check, this blog is my little secret!

  2. CI,

    Great stuff. Fantastic. You're doing really great and there is nothing wrong with bragging about it. You're doing something very rare, and that's something to be proud of.

    Hitting $4,800 in passive income is amazing. The compound snowball is really starting to roll downhill now. Look out below!

    Great raises there. WMT also had a huge one.

    What do you think of LNCO? I've looked at it before, and seeing how you're long LINE I figured you'd have an opinion. Is there something that specifically differentiates LINE from competitors or something that you're particularly excited about? I viewed the LNCO investor presentation a while back and it was really confusing to me. The hedged energy and all that...just seemed to go over my head at points.

    Best wishes!

    1. Oh man I could talk for a long time on LINE and LNCO.

      If you are interested, I highly recommend listening to conference calls. Anytime they start talking about something you don't understand pause the webcast and google it.

      Linn is not a super stable company like a JNJ or a PG. It is currently about 3.1% of my portfolio which sounds about right to me. This one is not without risks.

      This thing is setup to pay unit holders and shareholders massive distributions. That's what it does. It's kind of like owning KMP except there is no KMI (and it's not a pipeline company). There is no general partner to suck up IDRs. It grows through M&A since it pays out basically all of its DCF. So I have to expect secondaries and new debt issues. It's going to happen. I think in 2006 Linn was worth about 600mill after the Berry deal is approaching 10bill.

      They look for acquisitions that are accreditive to DCF. Once the deals are complete and they have increased cash flows they pay it out to unit holders. At some point it may be hard to find new deals or new deals aren't going to be accreditive anymore. The party might end. I mean how big can it really get?

      They use hedging to set a floor on cash flows. 100% of production is hedged 4-5 years out if I remember correctly. The point of it is to be certain they will have enough cash to pay distributions. Last year nat. gas was selling around $2-$2.50 at one point. Because LINE hedged they were effectively still able to sell the natural gas from their wells at something like $5. Hedging costs money, but it makes cash flow a lot more stable. The feast or famine nature of natural gas and oil prices are kept in check.

      The biggest advantage of Linn compared similar companies such as QRE that I see right now is the fact they have been doing this longer and LNCO. Since LNCO is a C-corp (it owns LINE units) it gives Linn a whole new universe of potential acquisition targets. I don't think Linn could have closed the Berry deal without LNCO and the Berry deal is supposed to increase my distributions by about 6.2%. They are pioneers and I bet the industry will follow their lead and set up their own C-Corp holding companies. Very innovative. At first I thought they created LNCO so shareholders could put LINE in an IRA. No, it is access to capital markets to close deals and grow distributions.

      LINE and LNCO are risky, but I see potential. I don't kid myself here, I'm not an expert and do not fully grasp everything they do. Same with most of my other companies.

      There is a lot to take in if you decide to look closely at this company.


  3. Great job CI, really happy for you. It's a great accomplishment. 20 more years of investing like this and I believe you will be a very wealthy man.

  4. Congrats! Averaging $400 a month from here on out is amazing. I'm still well behind you but doing my best to close the gap. I just crossed the $2k mark in forward dividends with the dividend increases from this past week and my recent VOD purchase. I've been looking a LNCO for a while and appreciate the explanation.

    1. Thanks PIP! I like what your doing with your holdings plus you have a good track record of picking big winners. Keep it up!

  5. Wow that's an amazing mark. I'm only at a bit over $100 a month at the moment, I can't wait to hit that $400 mark. Congrats !

  6. It's a pity you don't have a donate button! I'd certainly donate to this fantastic blog! I suppose for now i'll
    settle for book-marking and adding your RSS feed to my Google account.
    I look forward to new updates and will share this website with my Facebook group.
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    1. Ok thanks. I will not be adding a donation button however. My blog is just a place for me to record my progress and talk about investments when I feel like it. I really don't care if I make money or if anybody even reads it.

  7. Congrats on the $400/month mark! That is a great milestone. I am a little behind you but hope to hit the $400 mark within the next few months.

    I look forward to your future updates and milestones.

    1. Thanks, the next milestone is $500/month. It's going to be a while!

  8. Awesome job proving that is doesn't take being a "one-percenter" to hit your stride when it comes to investing and financial success! While you don't do this for anyone but yourself, it is a delight to follow and read about your investments! Keep up the good work!

    1. Thanks for the encourgement. I'm currently on vacation and haven't really been keeping up with blogs and investments lately. I'll stop by your blog when I have a minute. Yesterday I got sunburned at the beach and don't feel like being out in the sun at the moment. It's a tough life...

  9. CI, you have my admiration. Knowing how badly our Government treats our soldiers who protect our freedom and who should be paid well in the first place since they pay the highest price for us to be in warm houses, sitting behind the screen and bit**ching about everything and seeing your achievements, well I have no words to express my attitude (and gratitude). Congrats!!! Let me know if you need anything.

    1. Thanks Martin! My pay isn't the greatest, but the military does have a lot of benefits. I do not pay rent, utilities, health/vision/dental insurance, and receive money for food. There is more to our compensation than just the salary I guess.

      Anyways I'm happy to serve and have had the chance to go all over the country and all over the world. Seeing third world countries really puts things into perspective and makes it easier to be frugal. Much of the world lives on next to nothing, the USA is a wonderful place. We are a bit excessive though.

    2. I know. I lived in another country for a great chunk of my life and I know exactly how great this country is. That's why I am sad seeing leftist trying to implement those failed socialistic ideas. They do not work. Period.

  10. Very nicely done!

    If I hadn't decided to put ALL of my monies into paying off $177,650 in three rental house mortgages in 42 months, I'd be doing exactly what you're doing. Actually, I plan to do what your doing...I just have to wait 39 months to start. In the meantime, accomplishing that goal will bring in the equivalent of $1,476.46 of monthly income (or $17,717.52/yr).

    It's amazing how many paths there are to financial independence. But It's always encouraging to see fellow bloggers reaching their goals one milestone at a time. Keep up the great work. I look forward to reading more posts like the one above.

    1. Due to my profession I will not be getting into rental properties, but I know there is a lot of money to be made there. I will check out your blog when I have a second!


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  14. I can relate to you in a lot of ways. You definitely do way more research than me when it comes to stock picking! I like you're diversification. I'll check back here for more stock ideas. Most of my passive income derives from Canadian unit trusts, and they pay out on a monthly basis. Maybe you can check those out, but I know you're an American so there might be some tax implications.