February Review / March Preview, 2019

Excited Gremlin here to talk about the past and future months.  So far 2019 is shaping up handsomely.  Personally, its been equally rewarding with excellent opportunities popping up at work, fun at home, and with dividends.  The opportunities come from trying and taking chances - one of the best lines I have ever heard is "50% of the battle is showing up," which is beyond true.  Its amazing how many things happen just be giving something a shot.  On the home front Lil Gremlin has been a riot, and his rascally personality, is pay-per-view level entertainment.  If only everything was as funny to me as it seems to be to him.

Meanwhile in the real world some hilarious articles have come out, specifically this one on Vice.  The article offers a very interesting perspective on something I take for granted, but seems to miss the point.  Dovetailing with that article is one that is this gem from the Atlantic.  In a way it seems to vindicate the Vice one - where the cycle of spend, earn, live, repeat and unending progress seem to be the order of the day until you are retired because your fingers are unable to type.  As a person who generally dislikes religion, I found the Atlantic one very interesting and completely disagree with it in the sense that it applies to me.  Happiness is my goal, and I am not defined only by my work.  Also of interest to me was this find about social media is the new opium of the people.  These eschewing of saving, dedication to work, and temporary enjoyment (beyond what you need to keep the train on the rails) all clearly intertwine.  That being said I am writing a blog... so let's cut to the chase, show me the money.

February:

This month I made one purchase, acquiring shares of Canadian National Railway (CNI) in my taxable account.

Last month I brought in a total of $286.21 in dividends ($71.23 taxable, $66.1 Roth, and $148.88 IRA).  This is an increase from last year (233.83 total) by 22%.

In terms of dividend increases, I realized* five raises from the Bank of Montreal (BMO), one from my employer (Bºº), AT&T (T), Abbott Labs (ABT), and Deere Co. (DE).  The increases are from about 2% to about 21%.  I have now realized 7 raises thus far this year.

Next month I will realize eleven (11!) raises from the Archer Daniel's Midland (ADM), Amgen (AMGN), CNI, Dominion Energy (D), Dunkin Brands (DNKN), Union Pacific (UNP), Waste Management (WM), YUM! Brands (YUM), Prudential (PRU), 3M (MMM), and T. Rowe Price (TROW).  The increases are from about 4% to about 15%+.  I will also realize one cut of approximately 33% by Kraft-Heinz (KHC).

* I only count increases when realized, because until that money is delivered any statements or declarations are simply conjecture.

March:

The mortgage continues and I am putting a little extra cash towards the principal monthly - not a huge number, but every little bit counts. Our debts currently outstrip our assets (I choose not to count the house as an asset).  Outside of our house, we still have very low interest auto debt (1.9 and 1.5% for our cars).  I should be able to pay off my car soon thanks to my tax windfall related to home ownership and having a child - which is a nice silver lining.  Debt is being eliminated, and we are still building and assets.

My next purchase will be in March, which will make for 9 consecutive months of buys across all accounts.

Next month should produce around $426 in dividends, which is a 12% YOY increase, even with KHC's shenanigans.

My portfolio page is currently up to date.

Hope everyone has a great March.
- Dividend Gremlin
- Long all stock tickers

Avoiding Simple Explanations

History Gremlin here to discuss something that has been on my mind.  That specifically is the fall of General Electric (GE) from investing grace - I will relate a history lesson to their spiral.  I was long GE through its first of two recent cuts, and not including the cut that occurred during the financial crisis.  GE's most recent dividend cut saw their dividend reduced to $0.01 / per share on a quarterly basis [gross].  Before speaking about GE, for the unfamiliar please look at Seeking Alpha's about page or browse their wiki history - or both.  Ok, good either you knew it or not, now you do.  So the question is - how does behemoth of company slide so deeply?  It is a question that I cannot answer, but perhaps some light can be shed on the situation.

Leadership: This is something has clearly plagued GE.  Read any investment website article on GE and you will see people alternating between blame and praise for various GE leaders.  Often leaders shoulder far more credit than they deserve - regardless of the outcome.  GE employs 313,000 people.  Sure the buck will always stop at the top, but is that individual the only one making important organizational decisions?  Hell no.  Can leaders be bad or do stupid things?  Of course they can, my favorite being of course flying two corporate jets around in case one breaks down.  This coming from a company that manufactures jet engines...

Innovation: Sometimes companies get left behind, and it is not entirely a fault of their own.  Blockbuster fits this scenario the best, where a technology appears a company has no ability or infrastructure to benefit from it.  When a vacuum appears, someone will fill it - Netflix (NFLX) in this case.  This has not entirely happened to GE, since GE supports so many industries.  However, it is completely unlikely they are the cutting edge across all the industries they support.  Sure in a way diversification can be a positive when ideas are shared across divisions, but that is always easier said than done.

Culture: As the sports reference goes - you can't teach height.  Same thing goes for companies and culture / personalities.  I have personally worked for several smaller companies, which ranged from good to terrible depending on the organizational structure and the personalities involved.  Currently, I work for a large company and it is the best place I have ever worked.  My company actively works to transfer knowledge between groups and client missions - thus enabling us to be more proactive and deliver better projects.  GE, with its 313,000 people, likely will find it difficult incorporate that kind of workplace culture.  Indeed it is something larger companies will always struggle with, but large companies can make it work if they are dedicated to it on principle over a long period of time.  Also being focused on narrow(er) subset of industry it will be easier to meet that goal.

So how does this all relate to history?  Well it relates to one of my favorite historical entities, the Roman Empire.  For centuries people have debated why Rome, specifically the Western Empire, fell in 476.  People and historians have blamed everything from internal war / over-expansion, disease, Christianity, general moral decay, external pressures, etc.  The only thing clear is some of these did play a role, but none were the single root cause.  Indeed the only thing that is clear is Rome did fall.  However, it is more a death from a thousand cuts scenario (no pun intended), as opposed to singular unique or specific failings.  Much like GE the only thing that will be clear is they cut their dividend twice and are trying to salvage parts of their company that are clearly getting ravaged.  The CEO and leaders will get the blame, but there are 313,000 other stories out there.  Some will be positive, some negative.  All tell a story why GE has punted financially despite not being on their own goal line.

For a great history of Rome, I suggest listening to Mike Duncan's the History of Rome podcast (also linked in my blogs / books page).  However, if you want to skip to the end, episode 179 - The End, will suffice in giving probably one of the most honest looks as to why 476 was the end for Rome.  It has made me think about business in a different way too.  A reminder that no matter how holistic your approach there are and always will be X-factors that are unaccountable.

In Mike Duncan's words: "... or more precisely, why did the Western half of the Empire fall?  Well I have joked there are 256 different reasons why the Western Empire fell, and though I am obviously exaggerating, it is not that much of an exaggeration.  The decline and fall of something as monumentally complex as the Roman Empire is not going to be able to be explained away by one or two simple causes."

Thanks, and do you like Rome or GE (or not)?

- Gremlin
- Long no stocks in this post

Recent Sale / Buy, February 2019

I Could Do That Better Gremlin here to talk about a recent sale and buy.  The thing I could do better is most of the Super Bowl commercials, which were bad.  In fact, all commercials during that game should be funny, or you've screwed up.  No one talks about the heartwarming or cute ones, they talk about the funny ones!  Hell this year no one even wanted to talk about the game or halftime show, which were both snoozes to a neutral participant (me).  That being said there were a few funny ones, but seriously if you have millions of dollars - try to hire someone who is funny.

Right, anyway - at the end of January Tupperware (TUP) announced a major 60% cut in its dividend.  As soon as I read this the shares were gone.  Good bye; their stock crashed harder after opening too.  Now I have had stocks through cuts in the past - GE, PGH, and KMI.  Of those I have only held onto KMI.  I have a strong no cutters policy, and I will stick by it.  In addition, TUP has serious business problems.  Why buy their stuff, when I can get products just as good from my local Chinese food take out?  Riddle me that.  In addition, management promoted someone from HR to run the company.  As an scientist / engineer that is practically the most insulting thing you could do.

So yesterday, I added shares of Canadian National Railway (CNI) in my taxable account.  I bought 15 shares, with a total cost of $1,261.05 ($83.605 / share, plus commission).  The current yield is 1.98%. For a detailed summary of their history, etc. please visit: CNI's Seeking Alpha Profile.

There are 7 Class I railroads in North America - Union Pacific (UNP), BNSF - wholly owned by Berkshire Hathaway (BRK.A/B), Canada Pacific (CP), CNI, Kansas City Southern (KSU), CSX Corp. (CSX), and Norfolk Southern (NSC).  Of those, I already own UNP, and I would like to also CSX, NSC, and KSU in the long run.  Rail is an extremely efficient method of travel, and I should know since my office overlooks a train station that I ride a commuter train to and from.  Yes, rail does have its constraints in terms of geographic reach and difficulties expanding.  However, the barriers to entry are beyond extreme and the obvious efficiencies of the system will shield the industry from other delivery methods.  Trucks are inefficient (yes even the electric ones by comparison) and air travel is costly.  Sea travel is efficient, but is constrained in a similar way rail is, plus shipping across oceans is time consuming.  So I will leave that spiel there, about rail in general, because I only added one of the 7 rail companies.

The reason I purchased CNI is twofold.  First, the stock has an excellent history of rewarding shareholders and growth in value.  Second, they have a major geographic advantage that none of the other rail companies have.  CNI has exclusive access to the closest deep water ports to Asia and Europe from North America.  These ports are Prince Rupert, British Columbia and Halifax Nova Scotia, respectively.  There is a huge advantage to that geography, especially considering the world economy will always involve trade and speedier solutions will always be at a premium.

This purchase will add $22~ to my forward 12 month dividend income.

I will update my portfolio page at the end of the month.

What do you think of CNI?

- Gremlin
- Long CNI, UNP, and KMI

January Review / February Preview, 2019

Frozen Gremlin here to discuss January and look into the future a little bit.  It is currently cold and snowing here, though nothing like the upper Midwest. I am glad that our wind chill is only in the single negative digits (ºF).  Don't get me wrong, I like the cold and hockey, but even I have my rational limits.  On the bright side, I can still work out / lift indoors, yay owning your own weights.

December is the busiest holiday month, and January has a ton of birthdays in my family.  February is a departure from that, a nice slowdown and change of pace.  The stock market is starting to recover, but who knows how long that will continue.  Or what direction it will go tomorrow or next week.  In the meantime it is full steam ahead on saving and investing our hard earned money.  So with that said, let's see how we did.

January:

This month I made one purchase, acquiring shares of Aqua America (WTR) in my IRA account.  I also sold out of Tupperware (TUP) at the end of the month, which will be discussed during my next buy in February.

Last month I brought in a total of $109.56 in dividends ($90.06 taxable, $9.5 Roth, and $10 IRA).  This is an increase from last year (74.41 total) by 47%.

In terms of dividend increases, I realized* two dividend increases from Realty Income (O), Disney (DIS), and Eastman Chemical (EMN).  The increases are from 0.2% to around 10%.  I have now realized 2 raises thus far this year.

Next month I will realize five raises from the Bank of Montreal (BMO), one from my employer (Bºº), AT&T (T), Abbott Labs (ABT), and Deere Co. (DE).  The increases are from about 2% to about 21%.

* I only count increases when realized, because until that money is delivered any statements or declarations are simply conjecture.

February:

The mortgage continues and I putting a little extra cash towards the principal monthly - not a huge number, but every little bit counts. Our debts currently outstrip our assets (I choose not to count the house as an asset).  Outside of our house, we still have very low interest auto debt (1.9 and 1.5% for our cars).  I should be able to pay off my car next month thanks to my tax windfall related to home ownership and having a child - which will freaking sweet.  Debt is being eliminated, and we are still building and assets.

My next purchase will be in February, which will make for 8 consecutive months of buys across all acounts.

Next month should produce around $281 in dividends, which is a 20% YOY increase.

My portfolio page is currently up to date.

Hope everyone has a great January.  Go Rams...
- Dividend Gremlin
- Long all stock tickers mentioned, minus TUP