Stock Bought: KMI

Today I bought shares of Kinder Morgan, Inc. (KMI), the third-largest energy company in North America and operator of an extensive network of pipelines for transporting natural gas, crude oil, and petroleum products. I made previous purchases of KMI in October 2012 and March 2013.

I consider KMI to be fairly valued at the current price, making it a decent purchase in the context of a broader stock market that is near an all-time high. Using a Dividend Discount Model with a dividend growth rate of 10% (which is the company's long-term target) and a discount rate equal to the current yield plus the dividend growth rate, I calculate a fair value of $43.07. Morningstar gives a fair value of $41.00 and a 3-star rating. The average of those two estimates is $42.03, which implies a 7% margin of safety at my purchase price. In general, I think KMI is a decent purchase whenever it yields over 4%.

I bought 40 shares of KMI at the price of $39.15 per share plus commission, giving me a 4.07% yield on cost. At the current dividend rate, I can expect to receive quarterly dividends of $16.00 from this purchase, which will add a total of $64.00 to my annual dividend income. The stock goes ex-dividend next week, so these shares will pay their first dividends to me in mid-August. This purchase was made in my taxable account by combining $700 in new capital with $900 in dividends that had accumulated over the last few months. Given that I already owned 40 shares in my taxable account and 50 shares in my Roth IRA, I now have 130 shares of KMI and I will receive combined quarterly dividends of $52.00. My forward 12-month dividend total increases to $2,503.

After a few months of inactivity it was nice to finally make a purchase. I would have preferred to buy a deeply undervalued stock, but good deals are hard to come by in the market these days. KMI seemed to be one of the better opportunities available, so I deemed it worthwhile to increase my position. It is now the second-largest holding in my portfolio, with a weight of 5.8%. My next stock purchase will depend on when I receive my moving expense reimbursement and associated supplement; the paperwork has been submitted but I was told it would probably take 2-3 weeks to process. Thus, I will likely have new capital for investment by mid-August.

Dividend Increase: NSC

Norfolk Southern (NSC) is increasing its quarterly dividend by 4.0%, from $0.50 to $0.52 per share, putting the company on track for its 12th consecutive year of dividend growth (news release). Given that I own 95 shares of NSC, my quarterly dividend increases from $47.50 to $49.40 and my yield on cost becomes 3.09%. The extra $7.60 in annual dividend income raises my forward 12-month dividend total to $2,439. Thus far this year, there have been dividend increases for 20 of the 28 stocks in my portfolio.

Dividend Increase: KMI

Kinder Morgan, Inc. (KMI) is increasing its quarterly dividend by 5.3%, from $0.38 to $0.40 per share (news release). This is the third increase from KMI this year, resulting in an overall increase of 11.1% in 2013. Given that I own a total of 90 shares of KMI (40 in my taxable account and 50 in my Roth IRA), my quarterly dividend increases from $34.20 to $36.00 and my yield on cost becomes 4.43%. The extra $7.20 in annual dividend income raises my forward 12-month dividend total to $2,432. Thus far this year, there have been dividend increases for 19 of the 28 stocks in my portfolio.

A Real Dividend Growth Machine: Q2 2013 Review

A new article of mine has been published on the investing website Seeking Alpha. The article is entitled A Real Dividend Growth Machine: Q2 2013 Review and it provides a review of my dividend growth investing progress in the second quarter of 2013.

Dividend Increase: CMI

Cummins (CMI) is increasing its quarterly dividend by 25.0%, from $0.50 to $0.625 per share, putting the company on track for its 8th consecutive year of dividend growth (news release). Given that I own 15 shares of CMI, my quarterly dividend increases from $7.50 to $9.38 and my yield on cost becomes 2.83%. The extra $7.52 in annual dividend income raises my forward 12-month dividend total to $2,425. Thus far this year, there have been dividend increases for 19 of the 28 stocks in my portfolio, although this has been the largest percent increase.

Monthly Review: June 2013

The end of June and the start of July coincided with my big move, hence the delay in posting this review. I spent June 28-30 packing and loading my belongings, as well as cleaning my apartment so I can get my deposit back. I then made the 7+ hour drive to my new city and started moving into my new apartment on July 1. Since then I have been pretty busy with unpacking, running errands, getting things set up, and buying a few pieces of furniture and other household stuff (the frugal side of me cringes at how much money I have spent during the past few days). At this point I do not have too much left to do, aside from more unpacking and organizing, which I should be able to finish this weekend. Overall, the move has proceeded more or less according to plan, with only a few minor hiccups.

Not surprisingly, I paid very little attention to the stock market during the past week. Here is a review of what happened in June:

Dividends: I received a total of $244.51 in dividends from the following stocks:

• BDX: $12.38
• CMI: $7.50
• CVX: $20.00
• INTC: $42.75
• JNJ: $23.10
• MCD: $38.50
• MSFT: $26.45
• NSC: $47.50
• ROST: $4.25
• UTX: $13.38
• VFC: $8.70

This represents an 85.8% increase compared with the same month a year ago, which is excellent. In fact, it is my highest monthly dividend total ever. My year-to-date dividend total is now $1,070.05 (this month put me over the $1,000 mark) and my forward 12-month dividend total is $2,417.00.

Dividend Increases: I was pleased to see a dividend increase announced for one of my stocks (click on the stock to see my post about the increase):

• MDT: 7.7% increase, $4.40 more in annual dividend income

Thus far this year, there have been dividend increases for 18 of the 28 stocks in my portfolio. The mean increase has been 9.5%.

Savings: This month I saved $1,035 (35.6%) of my net job income, which is relatively low but not unexpected. Major expenses included renewals of my six-month car insurance and annual renter's insurance premiums, as well as a few moving-related items. Thus far this year, my mean monthly savings has been $1,334 (45.9%).

Transactions: None

Portfolio: My portfolio (taxable account and Roth IRA together) currently consists of 28 stocks and has a market value of $83,990.11 (including cash), which is a 0.8% decrease over last month's value. The dip was not surprising in light of the turbulence in the stock market during the month.

Seeking Alpha: This month I did not publish any new articles on the investing website Seeking Alpha. However, I received $10.54 from page views of my previous articles, increasing my Q2 total to $284.36 (to be paid in mid-July) and my year-to-date total to $718.31.

Looking Ahead: My dividend total will be lower in July because I have fewer stocks that pay in that month. I expect dividend increases to be announced by CMI and possibly INTC near the end of the month. I will have no savings in July because I will have no job income; my new job officially starts at the end of the month. Thus, my July expenses will be paid from a portion of my savings over the past few months, which is how I planned it. However, as noted above, I will receive my Q2 payment from Seeking Alpha in mid-July, and at some point (more likely in August) I will get reimbursed for a large chunk of my moving expenses. Until all that happens and my income/expenses have returned to "normal" I will continue to sit on the sidelines with respect to investing. I anticipate that I will finally be in a position to resume new capital investment sometime in August, which is just as well because for the next several weeks I will likely be absorbed in activities related to my new job.

Bonus: Earlier this week I got a library card at the public library in my new city. I was delighted to discover they provide free online access to both Morningstar Premium and Value Line.