It turns out I did not have to wait long for the last dividend increase of 2013 to be announced:

Becton, Dickinson and Company (BDX) is increasing its quarterly dividend by 10.1%, from $0.495 to $0.545 per share, putting the company on track for its 42nd consecutive fiscal year of dividend growth (news release). Given that I own 25 shares of BDX, my quarterly dividend increases from $12.38 to $13.63 and my yield on cost becomes 3.06%. The extra $5.00 in annual dividend income raises my forward 12-month dividend total to $3,503.

In summary, 32 of the 33 stocks in my portfolio had dividend increases that took effect in 2013, with the lone holdout being INTC. The mean and median dividend increases were 11.7% and 10.1%, respectively, with a total of 18 double-digit percent increases. For comparison with last year, 24 of the 25 stocks in my portfolio (at the time) had dividend increases that took effect in 2012, with mean and median increases of 10.4% and 8.5%, with a total of 12 double-digit percent increases. Overall, I think this shows that my portfolio continues to maintain a strong rate of organic dividend growth.

## Tuesday, November 26, 2013

### Dividend Increase: HRL

Hormel Foods (HRL) is increasing its quarterly dividend by 17.6%, from $0.17 to $0.20 per share, putting the company on track for its 48th consecutive year of dividend growth (news release). Given that I own 100 shares of HRL, my quarterly dividend increases from $17.00 to $20.00 and my yield on cost becomes 2.84%. The extra $12.00 in annual dividend income raises my forward 12-month dividend total to $3,498. This is the second dividend increase among the stocks in my portfolio that takes effect in 2014. There have been dividend increases for 31 of the 33 stocks in my portfolio in 2013; an increase from BDX should be announced any day now and there will be no increase from INTC this year.

## Monday, November 25, 2013

### Stock Bought: O (Again)

For my second purchase today I bought shares of Realty Income (O), a large and diversified retail REIT. I provided some information about O in a post last week when I started my position. The continued decline in the stock price motivated me to average down by doubling my position.

I bought 55 shares of O at the price of $38.44 per share plus commission, giving me a 5.66% yield on cost and reducing my cost basis by over 1% to below $39 per share. At the current dividend rate, I can expect to receive

What can I say? I continue to think there are good buying opportunities in the REIT sector, so I figured I might as well take advantage of them. That said, HCP and O are now relatively large, equal-weight positions in my portfolio (3.4% and 3.3% weights, respectively), motivating me to look more closely at other REITs from this point forward. However, I'll likely cap my REIT exposure at a combined weight of no more than 10% of my portfolio. I'm investing rollover money more quickly than I anticipated, but I'm happy to do so if I can find stocks trading at attractive valuations.

I bought 55 shares of O at the price of $38.44 per share plus commission, giving me a 5.66% yield on cost and reducing my cost basis by over 1% to below $39 per share. At the current dividend rate, I can expect to receive

*monthly*dividends of $10.00 from this purchase, which will add a total of $120.00 to my annual dividend income. This purchase was made in my Roth IRA using rollover money. I now have a total of 110 shares of O and I will receive combined monthly dividends of $20.00. My forward 12-month dividend total increases to $3,486.What can I say? I continue to think there are good buying opportunities in the REIT sector, so I figured I might as well take advantage of them. That said, HCP and O are now relatively large, equal-weight positions in my portfolio (3.4% and 3.3% weights, respectively), motivating me to look more closely at other REITs from this point forward. However, I'll likely cap my REIT exposure at a combined weight of no more than 10% of my portfolio. I'm investing rollover money more quickly than I anticipated, but I'm happy to do so if I can find stocks trading at attractive valuations.

### Stock Bought: HCP

For my first purchase today I bought shares of HCP, Inc. (HCP), a large and diversified healthcare REIT. I provided some information about HCP in an article on Seeking Alpha when I started my position in August. The continued decline in the stock price (HCP now has a P/FFO below 13) motivated me to average down by increasing my position.

I bought 40 shares of HCP at the price of $37.68 per share plus commission, giving me a 5.55% yield on cost and reducing my cost basis by over 2% to below $40 per share. At the current dividend rate, I can expect to receive quarterly dividends of $21.00 from this purchase, which will add a total of $84.00 to my annual dividend income. This purchase was made in my Roth IRA using rollover money. I now have a total of 115 shares of HCP and I will receive combined quarterly dividends of $60.38. My forward 12-month dividend total increases to $3,366.

I bought 40 shares of HCP at the price of $37.68 per share plus commission, giving me a 5.55% yield on cost and reducing my cost basis by over 2% to below $40 per share. At the current dividend rate, I can expect to receive quarterly dividends of $21.00 from this purchase, which will add a total of $84.00 to my annual dividend income. This purchase was made in my Roth IRA using rollover money. I now have a total of 115 shares of HCP and I will receive combined quarterly dividends of $60.38. My forward 12-month dividend total increases to $3,366.

## Thursday, November 21, 2013

### Stock Bought: TGT

Having already made two purchases for my Roth IRA in November, I did not plan on buying anything else this month. However, Mr. Market came knocking on my door this morning with an opportunity that I decided to jump on.

Today I bought shares of Target Corporation (TGT), operator of over 1,800 retail stores selling general merchandise in the United States and now Canada. Target is generally viewed as a more upscale version of its largest competitor, Wal-Mart Stores (WMT).

Target has achieved satisfactory operating results over the past several years, with 5-year growth rates of 3.0% for revenue and 6.3% for earnings. Recent growth has been slowed by Target's expansion into Canada, where it has encountered some difficulties, but I think the company will overcome these short-term growing pains within a year or two. Target's financial position is decent, with a debt/equity ratio of 91%, debt/cap ratio of 45%, 6.9x interest coverage, and a current ratio of 0.9. Value Line gives the company a financial strength rating of A and a safety rating of 2.

Target has an impressive dividend growth record. The company is a Dividend Champion, having increased its dividend for 46 consecutive years. The 5-year dividend growth rate is 20.5% and the most recent increase was 19.4% in August 2013. With a payout ratio of 41% and stable cash flows, I think the dividend can continue to grow in spite of short-term earnings weakness. The company has also excelled at share repurchases, reducing the number of outstanding shares by about 28% since 2004.

I think TGT is slightly undervalued to fairly valued at the current price. It has a P/E of 15.3 (vs. a 5-year historical average of 13.6), P/S of 0.6 (vs. 0.5), P/B of 2.5 (vs. 2.4), and dividend yield of 2.7% (vs. 1.8%). Note that these numbers have not been updated to reflect the results reported by the company earlier today. Using a Dividend Discount Model with a dividend growth rate of 10% (half of the 5-year historical rate) and a discount rate equal to the current yield plus the dividend growth rate, I calculate a fair value of $70.07. Morningstar gives a fair value of $64.00 and a 3-star rating. S&P Capital IQ gives a fair value of $73.20 and a 4-star rating. The average of those three estimates is $69.09, which implies an 8% margin of safety at my purchase price, hence my conclusion that the stock is slightly undervalued to fairly valued. Today the stock price dropped 3.5% because the company missed earnings and revenue estimates for the latest quarter, but as noted above, I regard this as short-term weakness. Value Line's analyst expects earnings to "ramp up at a solid pace" starting in fiscal 2014 and S&P Capital IQ sees above-average growth from fiscal 2015 onward.

I bought 30 shares of TGT at the price of $63.70 per share (no commission paid due to a free trade -- my last one), giving me a 2.70% yield on cost. At the current dividend rate, I can expect to receive quarterly dividends of $12.90 from this purchase, which will add a total of $51.60 to my annual dividend income. The stock went ex-dividend a few days ago, so I will not receive the next dividend payment. However, my lower cost basis due to today's price dip is equivalent to about 6.5 quarterly dividend payments, which more than compensates for the missed payment. This purchase was made in my Roth IRA using rollover money. Target becomes the 33rd stock in my portfolio and gives me more diversification in the retail sector, where it is approximately equal-weight with my WMT position. My forward 12-month dividend total increases to $3,282.

I am tempted to say that I am done buying stocks for the month, but Mr. Market could surprise me again. In case you are wondering, I noticed the sell-off in PM today and the after-hours sell-off in ROST, both of which are stocks in my portfolio. I already have a fair-sized position in PM, though, and ROST would need to fall further to become attractively valued, so I do not plan on adding to those positions right away.

Today I bought shares of Target Corporation (TGT), operator of over 1,800 retail stores selling general merchandise in the United States and now Canada. Target is generally viewed as a more upscale version of its largest competitor, Wal-Mart Stores (WMT).

Target has achieved satisfactory operating results over the past several years, with 5-year growth rates of 3.0% for revenue and 6.3% for earnings. Recent growth has been slowed by Target's expansion into Canada, where it has encountered some difficulties, but I think the company will overcome these short-term growing pains within a year or two. Target's financial position is decent, with a debt/equity ratio of 91%, debt/cap ratio of 45%, 6.9x interest coverage, and a current ratio of 0.9. Value Line gives the company a financial strength rating of A and a safety rating of 2.

Target has an impressive dividend growth record. The company is a Dividend Champion, having increased its dividend for 46 consecutive years. The 5-year dividend growth rate is 20.5% and the most recent increase was 19.4% in August 2013. With a payout ratio of 41% and stable cash flows, I think the dividend can continue to grow in spite of short-term earnings weakness. The company has also excelled at share repurchases, reducing the number of outstanding shares by about 28% since 2004.

I think TGT is slightly undervalued to fairly valued at the current price. It has a P/E of 15.3 (vs. a 5-year historical average of 13.6), P/S of 0.6 (vs. 0.5), P/B of 2.5 (vs. 2.4), and dividend yield of 2.7% (vs. 1.8%). Note that these numbers have not been updated to reflect the results reported by the company earlier today. Using a Dividend Discount Model with a dividend growth rate of 10% (half of the 5-year historical rate) and a discount rate equal to the current yield plus the dividend growth rate, I calculate a fair value of $70.07. Morningstar gives a fair value of $64.00 and a 3-star rating. S&P Capital IQ gives a fair value of $73.20 and a 4-star rating. The average of those three estimates is $69.09, which implies an 8% margin of safety at my purchase price, hence my conclusion that the stock is slightly undervalued to fairly valued. Today the stock price dropped 3.5% because the company missed earnings and revenue estimates for the latest quarter, but as noted above, I regard this as short-term weakness. Value Line's analyst expects earnings to "ramp up at a solid pace" starting in fiscal 2014 and S&P Capital IQ sees above-average growth from fiscal 2015 onward.

I bought 30 shares of TGT at the price of $63.70 per share (no commission paid due to a free trade -- my last one), giving me a 2.70% yield on cost. At the current dividend rate, I can expect to receive quarterly dividends of $12.90 from this purchase, which will add a total of $51.60 to my annual dividend income. The stock went ex-dividend a few days ago, so I will not receive the next dividend payment. However, my lower cost basis due to today's price dip is equivalent to about 6.5 quarterly dividend payments, which more than compensates for the missed payment. This purchase was made in my Roth IRA using rollover money. Target becomes the 33rd stock in my portfolio and gives me more diversification in the retail sector, where it is approximately equal-weight with my WMT position. My forward 12-month dividend total increases to $3,282.

I am tempted to say that I am done buying stocks for the month, but Mr. Market could surprise me again. In case you are wondering, I noticed the sell-off in PM today and the after-hours sell-off in ROST, both of which are stocks in my portfolio. I already have a fair-sized position in PM, though, and ROST would need to fall further to become attractively valued, so I do not plan on adding to those positions right away.

### Stock Bought: O

Yesterday I bought shares of Realty Income (O), an equity REIT with a geographically diverse collection of over 3,800 properties. The company owns free-standing properties that are leased primarily to retail businesses, typically under triple-net leases (tenants pay taxes, maintenance, and insurance). Its properties are 98% occupied and major tenants (by rental revenue) include FedEx, Walgreens, Family Dollar, LA Fitness, AMC Theatres, and Diageo.

Realty Income bills itself as "The Monthly Dividend Company" due to its track record of having paid 520 consecutive monthly dividends. The company is a Dividend Contender, having increased its dividend for 19 consecutive years. In fact, there have been 73 dividend increases since the stock was listed on the NYSE in 1994. With the exception of a 19% dividend increase earlier this year (reflecting the acquisition of American Realty Capital Trust), the dividend growth rate tends to be low, with 5- and 10-year rates of 1.5% and 4.2%, respectively. However, the high dividend yield (over 5.5%) helps to compensate for the weak dividend growth. The company's payout ratio (based on funds from operations, FFO) is about 92%.

The company has a stable balance sheet that should support continued dividend payments and modest growth. Debt/capital is 44% and interest coverage is 2.2x. Notably, 100% of Realty Income's debt is fixed-rate, so its interest payments will not be affected by rising interest rates. However, the company is still sensitive to rising interest rates because it often issues new debt to help fund acquisitions; this is a common practice among REITs and represents the main reason why the entire sector has fallen over the past several months. Debt issuance is affected by credit ratings (companies with higher investment grade ratings can issue debt at lower interest rates) and S&P recently upgraded the company's credit rating to BBB+. In addition, Value Line increased their financial strength rating to A (with a safety rating of 2).

I think O is fairly valued at the current price. It has a P/FFO of 16.5 (using the low point of the company's FFO guidance for full-year 2013), which matches Value Line's estimate of the average annual P/FFO for the next few years. Other useful valuation metrics include a P/S of 10.1 (vs. a 5-year historical average of 9.4), P/B of 1.8 (vs. 2.5), and dividend yield of 5.55% (vs. 5.6%). Using a Dividend Discount Model with a dividend growth rate of just 1.5% (matching the 5-year historical rate) and a discount rate equal to the current yield plus the dividend growth rate, I calculate a fair value of $39.91. Morningstar gives a fair value of $44.00 and a 3-star rating. The average of those two estimates is $41.95, which implies a 6% margin of safety at my purchase price. Overall, I think it is reasonable to conclude that O represents decent value in the current market, but not a bargain.

I bought 55 shares of O at the price of $39.32 per share (no commission paid due to a free trade), giving me a 5.55% yield on cost. The fact that the stock price promptly fell another 1% after I made my purchase shows why I am not a day trader. At the current dividend rate, I can expect to receive

This month I have made two purchases in my Roth IRA and one purchase in my taxable account, consistent with the plan I laid out in a previous post. If O's stock price falls a few more percentage points, then I would consider increasing my position. However, I am also on the lookout for other REITs that might be good candidates for my Roth IRA.

In case any readers are wondering why I did not write a Seeking Alpha article about O (given that I wrote articles when I started my positions in HCP, WMT, and XOM), there are two reasons. First, I simply do not have much spare time at the moment, especially with the fall semester coming to an end. Second, O is one of the most-covered REITs on SA, and I am not sure how much useful information I would be able to add. Hopefully this blog post partially compensates for the absence of an article.

Realty Income bills itself as "The Monthly Dividend Company" due to its track record of having paid 520 consecutive monthly dividends. The company is a Dividend Contender, having increased its dividend for 19 consecutive years. In fact, there have been 73 dividend increases since the stock was listed on the NYSE in 1994. With the exception of a 19% dividend increase earlier this year (reflecting the acquisition of American Realty Capital Trust), the dividend growth rate tends to be low, with 5- and 10-year rates of 1.5% and 4.2%, respectively. However, the high dividend yield (over 5.5%) helps to compensate for the weak dividend growth. The company's payout ratio (based on funds from operations, FFO) is about 92%.

The company has a stable balance sheet that should support continued dividend payments and modest growth. Debt/capital is 44% and interest coverage is 2.2x. Notably, 100% of Realty Income's debt is fixed-rate, so its interest payments will not be affected by rising interest rates. However, the company is still sensitive to rising interest rates because it often issues new debt to help fund acquisitions; this is a common practice among REITs and represents the main reason why the entire sector has fallen over the past several months. Debt issuance is affected by credit ratings (companies with higher investment grade ratings can issue debt at lower interest rates) and S&P recently upgraded the company's credit rating to BBB+. In addition, Value Line increased their financial strength rating to A (with a safety rating of 2).

I think O is fairly valued at the current price. It has a P/FFO of 16.5 (using the low point of the company's FFO guidance for full-year 2013), which matches Value Line's estimate of the average annual P/FFO for the next few years. Other useful valuation metrics include a P/S of 10.1 (vs. a 5-year historical average of 9.4), P/B of 1.8 (vs. 2.5), and dividend yield of 5.55% (vs. 5.6%). Using a Dividend Discount Model with a dividend growth rate of just 1.5% (matching the 5-year historical rate) and a discount rate equal to the current yield plus the dividend growth rate, I calculate a fair value of $39.91. Morningstar gives a fair value of $44.00 and a 3-star rating. The average of those two estimates is $41.95, which implies a 6% margin of safety at my purchase price. Overall, I think it is reasonable to conclude that O represents decent value in the current market, but not a bargain.

I bought 55 shares of O at the price of $39.32 per share (no commission paid due to a free trade), giving me a 5.55% yield on cost. The fact that the stock price promptly fell another 1% after I made my purchase shows why I am not a day trader. At the current dividend rate, I can expect to receive

*monthly*dividends of $10.00 from this purchase, which will add a total of $120.00 to my annual dividend income. The stock goes ex-dividend next week, so the first dividends from this purchase will be paid in December. This purchase was made in my Roth IRA using rollover money. Realty Income becomes the 32nd stock in my portfolio and the 2nd REIT (the other being HCP), giving me a bit of diversification in the real estate sector. My forward 12-month dividend total increases to $3,231.This month I have made two purchases in my Roth IRA and one purchase in my taxable account, consistent with the plan I laid out in a previous post. If O's stock price falls a few more percentage points, then I would consider increasing my position. However, I am also on the lookout for other REITs that might be good candidates for my Roth IRA.

In case any readers are wondering why I did not write a Seeking Alpha article about O (given that I wrote articles when I started my positions in HCP, WMT, and XOM), there are two reasons. First, I simply do not have much spare time at the moment, especially with the fall semester coming to an end. Second, O is one of the most-covered REITs on SA, and I am not sure how much useful information I would be able to add. Hopefully this blog post partially compensates for the absence of an article.

## Wednesday, November 13, 2013

### Stock Bought: CVX

For my second purchase today I bought shares of Chevron (CVX), one of the largest integrated oil and gas companies in the world. My only previous purchase of CVX occurred nearly two years ago (November 23, 2011) and I have been wanting to increase my position for some time.

I think CVX is moderately undervalued at the current price. It has a P/E of 9.8 (vs. a 5-year historical average of 9.3), P/S of 1.1 (vs. 0.8), P/B of 1.6 (vs. 1.7), and dividend yield of 3.35% (vs. 3.2%). Using a Dividend Discount Model with a dividend growth rate of 8.5% (slightly lower than recent dividend increases) and a discount rate equal to the current yield plus the dividend growth rate, I calculate a fair value of $129.70. Morningstar gives a fair value of $130.00 and a 4-star rating. The average of those two estimates is $129.85, which implies an 8% margin of safety at my purchase price.

I bought 20 shares of CVX at the price of $119.54 per share plus commission, giving me a 3.34% yield on cost. At the current dividend rate, I can expect to receive quarterly dividends of $20.00 from this purchase, which will add a total of $80.00 to my annual dividend income. The stock happens to go ex-dividend tomorrow, so the first dividends from this purchase will be paid in less than a month. This purchase was made in my taxable account using accumulated dividends and $2,275 of new capital. I now have a total of 40 shares of CVX and I will receive combined quarterly dividends of $40.00. My forward 12-month dividend total increases to $3,111. Chevron is now the fourth-largest position in my portfolio (3.7% weight).

As mentioned in a recent post, I plan to use the rollover money in my Roth IRA to make two purchases per month. After buying shares of KMI earlier today, that leaves one more purchase for November. The next purchase for my taxable account will not be until December.

I think CVX is moderately undervalued at the current price. It has a P/E of 9.8 (vs. a 5-year historical average of 9.3), P/S of 1.1 (vs. 0.8), P/B of 1.6 (vs. 1.7), and dividend yield of 3.35% (vs. 3.2%). Using a Dividend Discount Model with a dividend growth rate of 8.5% (slightly lower than recent dividend increases) and a discount rate equal to the current yield plus the dividend growth rate, I calculate a fair value of $129.70. Morningstar gives a fair value of $130.00 and a 4-star rating. The average of those two estimates is $129.85, which implies an 8% margin of safety at my purchase price.

I bought 20 shares of CVX at the price of $119.54 per share plus commission, giving me a 3.34% yield on cost. At the current dividend rate, I can expect to receive quarterly dividends of $20.00 from this purchase, which will add a total of $80.00 to my annual dividend income. The stock happens to go ex-dividend tomorrow, so the first dividends from this purchase will be paid in less than a month. This purchase was made in my taxable account using accumulated dividends and $2,275 of new capital. I now have a total of 40 shares of CVX and I will receive combined quarterly dividends of $40.00. My forward 12-month dividend total increases to $3,111. Chevron is now the fourth-largest position in my portfolio (3.7% weight).

As mentioned in a recent post, I plan to use the rollover money in my Roth IRA to make two purchases per month. After buying shares of KMI earlier today, that leaves one more purchase for November. The next purchase for my taxable account will not be until December.

### Stock Bought: KMI

For my first purchase 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. My most recent previous purchase of KMI was in September 2013.

I continue to think that KMI is undervalued. 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 $37.84. Morningstar gives a fair value of $41.00 and a 4-star rating. The average of those two estimates is $39.42, which implies a 13% margin of safety at my purchase price.

I bought 60 shares of KMI at the price of $34.40 per share (no commission paid; I had a free trade), giving me a 4.77% yield on cost. At the current dividend rate, I can expect to receive quarterly dividends of $24.60 from this purchase, which will add a total of $98.40 to my annual dividend income. This purchase was made in my Roth IRA using rollover money and it reduced my cost basis by a little over 2%. I now have a total of 225 shares of KMI (80 in my taxable account and 145 in my Roth IRA) and I will receive combined quarterly dividends of $92.25. My forward 12-month dividend total increases to $3,031. Kinder Morgan remains the second-largest position in my portfolio (6.0% weight).

I continue to think that KMI is undervalued. 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 $37.84. Morningstar gives a fair value of $41.00 and a 4-star rating. The average of those two estimates is $39.42, which implies a 13% margin of safety at my purchase price.

I bought 60 shares of KMI at the price of $34.40 per share (no commission paid; I had a free trade), giving me a 4.77% yield on cost. At the current dividend rate, I can expect to receive quarterly dividends of $24.60 from this purchase, which will add a total of $98.40 to my annual dividend income. This purchase was made in my Roth IRA using rollover money and it reduced my cost basis by a little over 2%. I now have a total of 225 shares of KMI (80 in my taxable account and 145 in my Roth IRA) and I will receive combined quarterly dividends of $92.25. My forward 12-month dividend total increases to $3,031. Kinder Morgan remains the second-largest position in my portfolio (6.0% weight).

## Monday, November 11, 2013

### Rollover and Conversion to Roth IRA Completed; New Milestone Reached

A few weeks ago I posted an update about rolling over the money from two retirement plans held with my former employer into an IRA, then converting that into my existing Roth IRA. I am pleased to report that the entire process has now been completed. As a result, I added a little over $25,000 to my Roth IRA, more than tripling its size. Note that I already set aside sufficient external money for the estimated taxes on the conversion, which I will be paying soon.

In the meantime, I now find myself in the unusual position of having over 20% of my overall portfolio in cash. Even though I am eager to put the rollover money to work, I do not see much in the way of attractively valued dividend growth stocks at the moment. The value investor inside of me cringes at the thought of buying overvalued stocks simply because I have money to invest. For that reason, I will not be investing the money all at once. However, I will not attempt to time the market, either.

I have decided that a reasonable course of action is to invest the money at regular intervals in whichever stocks happen to be fairly valued or undervalued at the time. With over $25,000 at my disposal, my tentative approach will be to make two purchases per month over the next five or six months, with each purchase being in the range of $2,000 to $2,500. The only constraint is that a stock has to be either fairly valued or undervalued by my judgment in order to be purchased. If the market happens to take a sudden downturn and more than two opportunities become available in a month, then I would accelerate the purchasing schedule.

Note that these purchases will all occur in my Roth IRA. Let's not forget that I will also be contributing new capital to my taxable account on a monthly basis (I have not made my November contribution yet). The amount will vary a bit from month to month, but it will likely average over $2,000. Thus, I will have sufficient cash to make a third (and possibly a fourth) purchase every month.

That's the plan as it currently stands. Incidentally, thanks to the rollover money, my portfolio reached a new milestone today, closing above $125,000 for the very first time ($125,862.52). Continuing with $25,000 increments, the next milestone will be $150,000.

Milestone history for portfolio value:

In the meantime, I now find myself in the unusual position of having over 20% of my overall portfolio in cash. Even though I am eager to put the rollover money to work, I do not see much in the way of attractively valued dividend growth stocks at the moment. The value investor inside of me cringes at the thought of buying overvalued stocks simply because I have money to invest. For that reason, I will not be investing the money all at once. However, I will not attempt to time the market, either.

I have decided that a reasonable course of action is to invest the money at regular intervals in whichever stocks happen to be fairly valued or undervalued at the time. With over $25,000 at my disposal, my tentative approach will be to make two purchases per month over the next five or six months, with each purchase being in the range of $2,000 to $2,500. The only constraint is that a stock has to be either fairly valued or undervalued by my judgment in order to be purchased. If the market happens to take a sudden downturn and more than two opportunities become available in a month, then I would accelerate the purchasing schedule.

Note that these purchases will all occur in my Roth IRA. Let's not forget that I will also be contributing new capital to my taxable account on a monthly basis (I have not made my November contribution yet). The amount will vary a bit from month to month, but it will likely average over $2,000. Thus, I will have sufficient cash to make a third (and possibly a fourth) purchase every month.

That's the plan as it currently stands. Incidentally, thanks to the rollover money, my portfolio reached a new milestone today, closing above $125,000 for the very first time ($125,862.52). Continuing with $25,000 increments, the next milestone will be $150,000.

Milestone history for portfolio value:

- $125,000: November 2013
- $100,000: October 2013
- $90,000: August 2013
- $80,000: March 2013
- $70,000: January 2013
- $60,000: September 2012
- $50,000: March 2012

## Sunday, November 3, 2013

### Monthly Review: October 2013

Here is a review of what happened in October:

Starting with this month's review, there is a new addition to my Portfolio page. Below the portfolio table is information about the retirement plans with my new employer, which I discussed in a previous post. The combined value of the 403(b) and 401(a) plans is $3,014.45, all of which is invested in a low-cost index fund that tracks the S&P 500. At some point in the future I will likely modify my fund allocations, but for the time being I have decided to keep things as simple as possible.

In a recent post I mentioned that I had initiated the rollover of money from my former employer's retirement plans to an IRA. The money from TIAA-CREF has already been deposited and I expect the money from Vanguard to be deposited within the next few days. Once that happens, I will arrange the conversion of the Rollover IRA into my existing Roth IRA, which I assume will not take long to do. Thus, the rollover-and-conversion process is still on track to be completed by mid-November, which will result in a sizable chunk of money becoming available for investment in my Roth IRA. I might put some of that money to work by the end of the month, but it will depend on whether I can find attractively valued stocks. It's slim pickings on my watch list at the moment.

**Dividends**: I received a total of $137.87 in dividends from 7 stocks, as indicated on my Dividends page. This represents a 10.7% increase compared with the same month a year ago. My year-to-date dividend total is now $1,903.08, which is 15.4% higher than my year-end dividend total for 2012.**Dividend Increases**: I was pleased to see dividend increases announced for the following stocks (click on each stock to see my post about the increase):- UTX: 10.1% increase, $5.40 more in annual dividend income
- ABT: 57.1%, $14.40
- KMI: 2.5%, $6.60
- VFC: 20.7%, $7.20

**Stock Splits**: It was rare to see stock splits announced for two stocks during the month (click on each stock to see my post about the split):- VFC: 4-for-1 stock split, resulting in 40 shares instead of 10
- CNI: 2-for-1 stock split, resulting in 40 shares instead of 20

**Contributions**: I contributed $2,800 in new capital for investment, which was divided between my taxable account and Roth IRA. My year-to-date contribution total is $15,215, which is an average of $1,522 per month. I have now maxed out my Roth IRA for 2013 (which has a contribution limit of $5,500), so my November and December contributions will go into my taxable account.**Transactions**: I made two purchases during the month (click on the transactions to see my posts about them): I was pleased to double my position in XOM and start a position in WMT. These purchases will increase my annual dividend income by $84.80. My forward 12-month dividend total is $2,932.**Portfolio**: My portfolio (taxable account and Roth IRA together) consists of 31 stocks and has a market value of $99,914.18 (including cash), which is a 7.3% increase over last month's value. The unusually large increase reflects strong capital gains and an above-average influx of new capital. As noted in a milestone post, my portfolio's value closed above $100,000 for the first time in late October.Starting with this month's review, there is a new addition to my Portfolio page. Below the portfolio table is information about the retirement plans with my new employer, which I discussed in a previous post. The combined value of the 403(b) and 401(a) plans is $3,014.45, all of which is invested in a low-cost index fund that tracks the S&P 500. At some point in the future I will likely modify my fund allocations, but for the time being I have decided to keep things as simple as possible.

**Seeking Alpha**: This month I published two new articles on the investing website Seeking Alpha:- Wal-Mart Stores: A Retail Heavyweight For My Dividend Growth Machine
- A Real Dividend Growth Machine: Q3 2013 Review

**Looking Ahead**: November will yield a nice batch of dividends and result in a substantial year-over-year increase. I expect the last dividend increase effective in 2013 to be announced by BDX, leaving INTC as the lone stock in my portfolio that did not increase its dividend this year. As mentioned previously, I plan to continue holding INTC into early 2014. I also expect dividend increases for 2014 to be announced in November by HRL and T. I should be able to contribute around $2,500 in new capital to my taxable account in November, which will allow for either one large purchase or two smaller ones.In a recent post I mentioned that I had initiated the rollover of money from my former employer's retirement plans to an IRA. The money from TIAA-CREF has already been deposited and I expect the money from Vanguard to be deposited within the next few days. Once that happens, I will arrange the conversion of the Rollover IRA into my existing Roth IRA, which I assume will not take long to do. Thus, the rollover-and-conversion process is still on track to be completed by mid-November, which will result in a sizable chunk of money becoming available for investment in my Roth IRA. I might put some of that money to work by the end of the month, but it will depend on whether I can find attractively valued stocks. It's slim pickings on my watch list at the moment.

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