Monday, November 20, 2017

2017's Dividend Increases

Dividend Gremlin here to discuss this 2017's dividend increases that have been received.  At this point in the year no new increases are expected to hit my account, though some may still be announced before the end of the year for 2018.  At this point these increases are not the driver of investment income growth, and they can be easily forgotten about.  However, though their present impact is minimal, longer term their impact will be both easier to quantify and undeniable.  The real power of compounding is not comprehended until much later in the game, which means that those who do not foresee this in the present will miss out on it in the future.

So far this year I have received a record fifty (50) dividend increases from a total of forty (40) companies.  The increases range from 0.2% at the low end given quarterly by Realty Income (O) to 16% and over given by Discover (DFS).  Of note, four of my companies had multiple increases including Bank of Nova Scotia (BNS), CIBC (CM), O, and Omega Healthcare (OHI).  These increases reflect growth coming from a wide variety of industries, products, and businesses.  All told they have added approximately $175 to all my accounts in terms of forward projected income.  It would take an additional ~$5800 invested at a 3% yield to nominally achieve that.

In addition, I experienced spin off one company, YUM China (YUMC), establishing its first ever dividend; chronicled earlier here.  That was exciting news, but there was one sore spot with a singular dividend cut coming from problem child General Electric (GE).  GE started the year off with a dividend increase, only to cut the yield by 50%.  Even with that dividend cut, my projected income is still significantly higher than last year (my above $175 total reflects this change). 

My stock holding diversity shows, in a positive light, that when one company gets out of line and cuts its dividend the impact is minimal.  There are so many others working out there to boost my income regardless of GE's failure to even maintain its dividend.  This is the second most important part of investing, that the rest of your portfolio keeps moving even if some parts fall behind.

I have discussed these issues with friends, who usually just scoff at these increases as being mere chump change.  That is their prerogative, but it will not alter my methods or progress.  Sure it is chump change now, but get back to me in a few years, see how you feel then.  It is my sincere hope that those of you crazy enough to read anything I post see this logic, and put on your running shoes because this game is a marathon not a sprint.

- Gremlin
Long O, DFS, BNS, CM, OHI, YUMC, and GE (😒)

Wednesday, November 1, 2017

October Review / November Preview, 2017

Candied Out Gremlin here to talk about last month and this month.  Halloween came and went recently, Lil Gremlin got lucky to get dressed up and get smothered with all the attention.  Little dude stole the show of course.  Otherwise, this month has been crazy.  Got a new set of feet under the house, and a new series of challenges that comes with it.  My sleep cycle has certainly been altered, but its nothing I can't handle.  Everyone always warns new parents of the troubles, but so far its been exactly what I expected.  A great time, but far from perfect.  I am excited to make new memories and watch Lil Gremlin grow - which is for next month.

October:

This month I made one new purchase of Sonoco (SON) in my taxable account.

Last month I brought in a total of $68.22 in dividends ($68.22 taxable, $0 Roth, and $0 IRA).  This is an decrease from last year ($81.58 total) by 16%.  This change primarily reflects the changing payout month of Kraft-Heinz (KHC), a topic that is finally finished.

In terms of dividend increases, I realized* three this month from CIBC (CM), Scotiabank (BNS), and Realty Income (O).  The raises range from 0.3% to 4%.  Thus far for 2017, I have realized 41 dividend increases!

Next month I will realize three raises from American Express (AXP), Omega Healthcare (OHI), and Verizon (VZ).  The increases range from 1.6% to 9%.

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

November:

The mortgage continues, so at least part of our 'rent' counts towards our house. Our debts currently outstrip our assets.  Outside of our house, we still have very low interest auto debt.  Both my car and house are receiving slightly out-sized payments monthly.  We will be effective at eliminating debt, while still building and assets.  Even with a new Gremlin in the lair. This is a long game, and I am nothing if not patient.

My next buy will likely be in December.

Next month should produce around $236 in dividends, which is a 1% YOY increase.

My portfolio page is currently up to date.

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

Friday, October 27, 2017

Recent Buy, October 2017

Costume Ready Gremlin here to talk about a recent buy.  Life has slowed down, of late - something that usually happens after the birth of a little one.  So far everyone continues to be happy and healthy, and we are getting ready for a small Halloween party.  Hooray for simple family costumes - time savers and generally cheaper - and simple parties with friends.  They provide for real happiness and keep costs down.  Using some of that saved income, we have made a new dividend stock purchase.  Every purchase is another building block towards that goal.  So here is a new brick:
Yesterday, I added a new position by purchasing shares of Sonoco Products (SON) in my taxable account.  I bought 23 shares, with a total cost of $1190.48 ($51.46 / share, plus commission).  The current yield is 2.98%.  The P/E ratio for SON sits today at approximately 19.75, trailing.  This is about the same as the historical 5 year average for the stock with the average yield being 3.08% and the average P/E being just under 19.29.  SON boasts a trailing payout ratio of approximately 57%.  SON has 35 years of dividend growth and is a member of the Dividend Champions.  This purchase will add $35.88 to my 12-month forward income.

As I said this is a new Purchase, and SON is not a well known company, so you are probably wondering what do they do here?  So SON, what do you do?  Well here is a description in their words:

"Over its 100-year-plus history, Sonoco Products has steadily assembled a diverse portfolio of industrial and consumer packaging product offerings such as flexible and rigid plastics, reels and spools, pallets, and composite cans. In the next few years, we believe Sonoco will continue to invest in its advantaged product lines (composite cans and tubes and cores), primarily through overseas acquisitions. Sonoco has raised its dividend annually for more than 30 years, a streak we expect to continue."

SON is my first basic materials company housed in my taxable account.  Packaging will always be thing, that is simple.  There product line covers so many different types of products, so even during a downturn they should have no problem bringing in enough money to cover their needs and my dividend.  Also they have made important recent strides in the packaging industry, something that should reward shareholders for decades.  Also that last line is awesome - a streak we expect to continue.  It is a streak that I cannot wait to join.

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

What do you think of SON? 

- Gremlin
- Long SON

Monday, October 16, 2017

Lessons in Pragmatism

Somehow Still Calm Gremlin here with a few general updates and thoughts on the future.  So, the update is that there is now a Lil Gremlin living in my house.  The Lil Gremlin even has an online profile stating that he likes milk, long walks - so long as you are holding him, car rides, things similar to car rides, and sleeping (just kidding, but if one did exist it would probably say that).  I was there when Lil Gremlin was born and it was a powerful experience.  It is something I would not have missed for the world, and it is the type of event that is beyond life altering.

This new addition has gotten me thinking, what will I teach Lil Gremlin as he grows.  To start there is the obvious stuff - how to tie your shoes, how to ride a bike, the best flavors of ice cream, how to rock at Tetris, etc.  What I mean is, what will I teach him about personal finance?

My wife and I have a good idea of what kind of education Lil Gremlin will get in school.  However, personal finance only receives limited coverage in school.  Most of what I have learned is from my own trial and error, with some extras from friends and family.  What I learned came later in life than it should have; that information would have been amazingly valuable had I learned it sooner. 

First, I plan to teach him how to save and why to save.  It is one thing to have extravagant plans for investing, but it is impossible to accomplish those goals without having the capital to do so.  I surmise this will require small lessons such as how you can save money such as by biking places.  In the syllabus will be how to save on the every day things, getting the best value on the big ticket items, and most importantly not caring about what the Jones' have.  After all, it does not take a lot of money to get the most enjoyment out of life.

Second, I plan to teach him the power of compounding and investing.  This will be done by establishing an account for him and for him to see the power of it via my accounts.  I will continue the focus on dividend growth stocks and work on establishing for him a bank of stocks and or funds that work for him and us.

Third, I plan to teach him the power earning more.  As powerful as saving can be, earning a higher income is the 2nd punch that really can propel people to financial independence.  Lots of things contribute to improving earnings - having a side hustle, professional certifications, advanced education, fields studied, and hard work of course.

Finally, I plan to teach him to lookout for bad advice.  This is one that I wish was covered more often by those in the dividend growth community.  Some of the bad advice is easy to spot and can come from anyone - friends, family, late night advertisements, etc.  That advice usually starts with the phrase 'its okay you can afford / deserve it.'  Usually this is followed by statements that make it seem normal or expected to be in debt.

However, there is much more subtle bad advice out there parading around as if it was good advice (no not the Indexing vs Dividend Growth argument, I think they are 2 sides of the same coin that is made up of FU / FI money).  What I am talking about here are some popular platforms that have large followings.  Some such as the Financial Education Channel - on YouTube* have large subscriber followings, so you would think the advice given is sound.  It often is anything but sound; examples include the presenter concentrating his portfolio in 1 to 5 stocks or overly frequent re-balancing.  Other bad advice can come from those who often give good advice.  Here is an example from Dave Ramsay covering credit cards.  Ramsay is all about paying off debt (good), but refuses to see how small amounts of interest earned from things such as credit cards can help (he would laugh at many DGIers' side hustles).  His advice is clearly aimed at people in the community who need more rudimentary advice.  This all runs counter to my beliefs, which is every dollar counts - Mr. Money Mustache said it better in this article (one of my favorite articles of all time in any form).  Ramsay states that people spend more with plastic than cash, which is not necessarily true.  Having worked at a bar I know people who pay in cash usually tip significantly more.  There is merit to the idea that card users spend more money, but once again that is a mind set that a strong willed person can easily overcome.  The fact is the world is progressing away from cash at a steady rate.  Might as well learn how to deal with it now and take advantage. 

Naturally, Lil Gremlin will need to learn a lot of things for himself.  Sure I can try to teach him everything, but that does not mean everything will stick or matter to him.  I like soccer and hockey, he might prefer ping pong.  However, I can still attempt to pass on important financial advice that I wish I had when I was younger.

* There are some good dividend growth / investment videos out there, but it seems like the majority or at least the ones that pop up in searches first are not among them.

- Daddy Gremlin
- PS I do intend to teach him that pizza and ice cream are the best dinner - dessert combo on the planet!

Sunday, October 8, 2017

First Dividend Initiation

Self-Hazing Gremlin here to talk about initiation.  From the looks of it one may think I am talking about a college initiation with heavy drinking or something similar.  Rather I am talking about a dividend initiation.  I have experienced over 30 dividend increases this year already, and have had over 70 since 2014 without a doubt.  Some of those are as small as 0.2% (I appreciate the consistence Realty Income - O!), with others getting as high as 16+%.  However, I have never had a dividend initiated by a spun off company.  That all changed last week.

YUM China (YUMC), was spun off from YUM Holdings (YUM) in December of 2016.  The split at first meant a lower payout combined, with YUM decreasing its dividend accordingly and YUMC not paying one.  Some might take this as a good reason to sell one or both stocks, I did not.  My mindset was to put YUMC on a clock, and see if they cannot rectify this situation.  They did, my clock was about 1.5 years long.  This past week they declared their first ever divided, unexpectedly to many.

YUMC's announcement was very exciting.  Sure it is not a ton of cash - $0.10 per share (assumed to be quarterly), but it is a start.  The yield should come out to be approximately 1.0%.  The payout ratio will likely be very low (once past year numbers are fully tallied, we will have a better idea), hence there will be a lot of room to grow the payment.  This is what matters when it comes to compound growth - time, patience, and growth!

Have you had a dividend initiated before, or are you sharing in this YUMC experience?

- Gremlin
- Long O, YUM, and YUMC

On tap when writing: Victory Brewing (PA), Sour Monkey - 9.5% ABV.  Biting sour flavor, not too heavy body.  Been a big fan of sour beer of late.

Saturday, September 30, 2017

September Review / October Preview, 2017

Cold(er) Weather Gremlin here to talk about the last month and take a peek through the looking glass into next.  The end of September has finally brought some chillier weather to my area.  Being that I bike to the train for work, I enjoy not getting on board and being a sweaty mess.  In addition, the wife will appreciate it, as being pregnant in hot weather is considered less than desirable.  Either way, the big deal is the baby around the corner.  We have done some classes, gotten the room ready, and all that other fun stuff.  The real challenges and fun are still ahead.

September:

This month I made no new purchases, but I should next month.

Last month I brought in a total of $319.66 in dividends ($106.24 taxable, $80.64 Roth, and $132.78 IRA).  This is an increase from last year ($115.43 total) by 177%.  This total is extra high as Discover (DFS) changed its payout month, and it will be the last time that the IRA really blows that percentage out of proportion.

In terms of dividend increases, I realized* seven this month from DFS, Hershey's (HSY), Kellogg's (K), Kraft-Heinz (KHC), Target (TGT), J.M. Smucker's (SJM), and Westlake Chemical (WLK).  The raises range from 3.3% to 16.8%.  Thus far for 2017, I have realized 38 dividend increases!

Next month I will realize three raises from CIBC (CM), Scotiabank (BNS), and Realty Income (O).  The increases range from 0.3% to 6%.

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

October:

The mortgage has started, so at least part of our 'rent' counts towards our house. Our debts currently outstrip our assets.  Outside of our house, we still have very low interest auto debt.  Both my car and house are receiving slightly out-sized payments monthly.  We will be effective at eliminating debt, while still building and assets. This is a long game, and I am nothing if not patient.

I have cash on hand to make another buy, but I might not depending on other needs.

Next month should produce around $68 in dividends, which is a 15% YOY decrease.

My portfolio page is currently up to date.

Hope everyone has a great September, sorry for those who are back to school, but don't want to be...
- Dividend Gremlin
- Long all stock tickers mentioned

Monday, September 18, 2017

Big Changes

Real Talk Gremlin here to talk about some major changes.  In life most changes come slowly.  We get older, wiser, taller, slower, stronger, etc. over a long window of time.  However, there are specific times where things can change rapidly.  Going off to school, buying your first house or car (just like the house we bought...), and having a child come to mind.  Well that last one will be happening soon, which makes for several major changes in the past year: a new job, new house, and new person in our house. So that there is a huge change.

Naturally everyone points to the cost of raising a new child, which in some ways is undeniable.  Clothing, food, and medical needs are all requirements and will be present in someway for a baby.  However, many of the believed requirements are not requirements - especially as kids age.  For instance, if your child wants to learn an instrument, they don't need top of the line equipment to start.  Now to be honest, our child will have opportunities to do fun / stimulating stuff, but it will not be rammed down their throat.  Part of being a kid is about trying and learning new things, if there is too much emphasis on specific things that bigger picture of the world is missed - and from their perspective its likely not fun.  So the goal is to give them a chance to explore their world while not forcing on them nor breaking the bank.

"You don't have to buy your kid a Stradivarius if they want to learn to play the violin." - me

From a family perspective, I also see a relative cost savings up front on some items.  Food - we won't be trying as many new places outside of our kitchen.  Travel - probably not happening very much, outside of our family events.  I doubt there will be any splurges of any sort, outside of stocks and the occasionally required ice cream.

Regardless of these big changes, I still intend to pursue financial independence.  Debt is being knocked out faster, and investments are still being made.  I will continue working at two jobs to achieve this faster, and obtaining professional certifications to further my main money making abilities.  Not all is lost, in fact really nothing is lost - including my time.  Children demand time, regardless of the age, however that is no way time lost.  Its just a different journey, one that is much less predictable.

Here's to new beginnings.
- Gremlin