Thursday, April 25, 2013

Dividend Increase: JNJ

Johnson & Johnson (JNJ) is increasing its quarterly dividend by 8.2%, from $0.61 to $0.66 per share, putting the company on track for its 51st consecutive year of dividend growth (news release). Given that I own 35 shares of JNJ, my quarterly dividend increases from $21.35 to $23.10 and my yield on cost becomes 4.16%. The extra $7.00 in annual dividend income raises my forward 12-month dividend total to $2,413. Thus far this year, there have been dividend increases for 17 of the 28 stocks in my portfolio.

Wednesday, April 24, 2013

Dividend Increase: CVX

Chevron (CVX) is increasing its quarterly dividend by 11.1%, from $0.90 to $1.00 per share, putting the company on track for its 26th consecutive year of dividend growth (news release). Given that I own 20 shares of CVX, my quarterly dividend increases from $18.00 to $20.00 and my yield on cost becomes 4.22%. The extra $8.00 in annual dividend income raises my forward 12-month dividend total to $2,407. Thus far this year, there have been dividend increases for 16 of the 28 stocks in my portfolio.

Wednesday, April 17, 2013

Dividend Increase: KMI

Kinder Morgan, Inc. (KMI) is increasing its quarterly dividend by 2.7%, from $0.37 to $0.38 per share (press release). This is the second increase from KMI this year, coming after a 2.8% increase in January. 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 $33.30 to $34.20, which will add an extra $3.60 to my annual dividend income. This dividend increase boosts my yield on cost to 4.34% in my taxable account and 4.11% in my Roth IRA. Thus far this year, there have been dividend increases for 15 of the 28 dividend growth stocks in my portfolio. My forward 12-month dividend total is now $2,399.

Monday, April 15, 2013

Dividend Increase: PG

Procter & Gamble (PG) is increasing its quarterly dividend by 7.0%, from $0.562 to $0.6015 per share, putting the company on track for its 57th consecutive year of dividend growth (press release). Given that I own 50 shares of PG, my quarterly dividend increases from $28.10 to $30.08, which will add an extra $7.92 to my annual dividend income. This dividend increase boosts my yield on cost to 3.78%. Thus far this year, there have been dividend increases for 15 of the 28 dividend growth stocks in my portfolio.

Thursday, April 11, 2013

Capital Allocation

In my quarterly review that was published recently on Seeking Alpha, I mentioned that I would be temporarily suspending new capital investment during the second quarter and allocating my savings for the next few months to my emergency cash reserve. I wanted to take a moment to elaborate on the reasons for that decision.

As discussed in a previous post, I have managed to get a new job that starts in the second half of 2013 and will involve moving to a different state. Even though my employer will cover selected moving expenses, I still expect to incur some one-time costs related to the move, so my expenses will be higher than normal. I will also have a temporary reduction in income because my current job contract is over at the end of June, but my new job contract does not begin until August (to coincide with the start of the academic year), so I will have no job income for July. Thus, with higher expenses and lower income this summer, it seemed prudent to be more conservative with my capital allocation policy.

My savings from April, May, and June will go toward increasing my emergency cash reserve, which I will use to cover any moving-related and July expenses. I will also be receiving payments from Seeking Alpha in April and July that will partly compensate for the lack of July income. My savings in June will be helped by the fact that I won't have to pay rent for that month (when I signed my lease I had to pay first and last months' rent) and I should get my security deposit back after I move out. The rent-related savings and security deposit will be more than enough to cover my July rent and utilities at my new place. Thus, I might make little use of my cash reserve in July, but I decided to be as conservative as possible, considering that I don't yet know how much all my expenses during that time will be.

If things work out as anticipated, then in August/September I will trim the excess from my cash reserve and reallocate it toward investing. In addition, in July I should be able to roll over the two retirement plans I have with my current employer into a traditional IRA, which would make a large chunk of money immediately available for investing. I have decided not to do a subsequent conversion into a Roth IRA because I crunched the numbers and it seemed too disadvantageous to incur the considerable tax burden that would arise from the conversion (which I estimated to be at least $6K). Edit: I reran some numbers using different online calculators and it looks like converting to a Roth IRA and paying the taxes might be more advantageous in the long run. I will need to think more about this issue. Collectively, the excess from my cash reserve, the rollover IRA, and the higher income from my new job should give me quite a bit of new capital to invest in the second half of the year, which will make up for the temporary suspension of new capital investment during the second quarter.

Monday, April 8, 2013

A Real Dividend Growth Machine: Q1 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: Q1 2013 Review and it provides a review of my dividend growth investing progress in the first quarter of 2013.

Thursday, April 4, 2013

Monthly Review: March 2013

Here is a review of what happened in March:

Dividends: I received a total of $222.71 in dividends from the following stocks:
  • BDX: $12.38
  • CMI: $7.50
  • CVX: $18.00
  • INTC: $42.75
  • JNJ: $21.35
  • MCD: $38.50
  • MSFT: $12.65
  • NSC: $47.50
  • UTX: $13.38
  • VFC: $8.70
This represents a 100.9% increase compared with the same month a year ago, making it the second month in a row with a year-over-year doubling of my dividends. It is also the second time I have exceeded $200 in monthly dividends. Going forward, I will reach that mark every March, June, September, and December due to a large number of companies paying in those months. My year-to-date dividend total is now $475.94.

Dividend Increases: I was pleased to see dividend increases announced for two stocks (click on each stock to see my post about the increase):
  • GD: 9.8% increase, $4.00 more in annual dividend income
  • GIS: 15.2%, $14.00
The increase from GIS was much larger than I expected, which is great. Thus far this year, there have been dividend increases for 14 of the 28 dividend growth stocks in my portfolio. The mean increase has been 9.6%.

Savings: This month I saved $1,511 (52.0%) of my net job income, which is satisfactory. I did not have any unexpected expenses during the month, although I've noticed that my food expenditures have increased over the past few months. Thus far this year, my mean monthly savings has been $1,448 (49.8%).

Transactions: I bought two stocks during the month (click on each transaction to see my post about it): Both purchases were for my Roth IRA, using up the rest of the cash from my 2012 contribution. I was particularly pleased to start a position in ROST, which is a stock I have wanted to own for a long time and has great potential as a long-term, total return investment. These purchases will increase my annual dividend income by $91.00. My forward 12-month dividend total is now $2,387.

Portfolio: My portfolio (taxable account and Roth IRA together) currently consists of 28 stocks and has a market value of $82,205.23 (including cash), which is a 5.1% increase over last month's value. I did not add any new capital to my accounts in March because my February savings were used to pay back money I borrowed from my external cash reserve to make my 2012 Roth IRA contribution in one shot. Thus, this month's increase in portfolio value is completely due to capital gains and dividends, which is quite impressive.

Seeking Alpha: This month I published two new articles on the investing website Seeking Alpha: Both articles had good receptions, each garnering over 11,000 page views (well above the site average). I earned $243.46 from page views in March, which is my highest monthly total since I started writing for SA. My Q1 2013 total ended up being $433.95, which will be paid in mid-April. It is very nice to average about $144 per month in extra income from occasional investment writing (I wrote just three new articles during the quarter).

Looking Ahead: In April I expect just a minor year-over-year increase in dividends. I am anticipating announcements of dividend increases from CVX, JNJ, and PG. My savings rate will decline in April because I will incur some travel expenses related to my upcoming move (I will be visiting to look for a new place to live). However, the expenses will be offset by my SA income and my federal tax refund of over $500, which I received at the start of April. (I was pleasantly surprised to get a refund at all.) I will not be contributing any new capital to my investment accounts because my March savings constitute the last repayment of the money I borrowed from my external cash reserve to make my 2012 Roth IRA contribution. Thus, I will not be purchasing any stocks in April. In a forthcoming post I will discuss my capital allocation plans for the next few months.