Tuesday, June 26, 2012
Dividend Increase: GIS
General Mills (GIS) is increasing its quarterly dividend by 8.2%, from $0.305 to $0.33 per share, putting the company on track for its 9th consecutive year of dividend growth. Given that I own 70 shares of GIS, my quarterly dividend increases from $21.35 to $23.10, which will add an extra $7.00 to my annual dividend income. This dividend increase also boosts my yield on cost to 3.36%. Thus far this year, there have been dividend increases for 16 of the 22 dividend growth stocks in my portfolio.
Monday, June 25, 2012
Book Review: The Neatest Little Guide To Stock Market Investing
The Neatest Little Guide To Stock Market Investing (2010) by Jason Kelly
This was the first book I read about investing in the stock market. The author provides a fairly well-rounded, beginner-level introduction to investing, which is what I needed at that point. In Chapter 1 he discusses the nature of stocks and the market, and provides a brief overview of key terminology. In Chapter 2 he covers the investing styles of well-known "Masters" such as Benjamin Graham, Philip Fisher, Warren Buffett, Peter Lynch, William O'Neil, and Bill Miller, indicating points of agreement among them. In Chapter 3 he discusses value and growth measures that have some validity based on historical analyses, then in Chapter 4 he provides an overview of a few strategies for building a portfolio, including discussion of leverage and technical analysis. Chapters 5 and 6 cover how to choose a discount broker, place an order, screen for stocks, and where to find useful information in print and online. In Chapter 7 he presents a detailed approach to building a core portfolio that includes several criteria (most of which are useful and sensible) and a worksheet for analyzing stocks based on those criteria. The buying and selling of stocks are addressed and some general advice is given for dealing with market fluctuations. Overall, the book is a concise and informative guide to stock market investing that helped get me started, even though the eventual strategy I settled on (dividend growth investing) differs in many respects from the approach presented in the book.
Note: I read this book in the spring of 2011.
This was the first book I read about investing in the stock market. The author provides a fairly well-rounded, beginner-level introduction to investing, which is what I needed at that point. In Chapter 1 he discusses the nature of stocks and the market, and provides a brief overview of key terminology. In Chapter 2 he covers the investing styles of well-known "Masters" such as Benjamin Graham, Philip Fisher, Warren Buffett, Peter Lynch, William O'Neil, and Bill Miller, indicating points of agreement among them. In Chapter 3 he discusses value and growth measures that have some validity based on historical analyses, then in Chapter 4 he provides an overview of a few strategies for building a portfolio, including discussion of leverage and technical analysis. Chapters 5 and 6 cover how to choose a discount broker, place an order, screen for stocks, and where to find useful information in print and online. In Chapter 7 he presents a detailed approach to building a core portfolio that includes several criteria (most of which are useful and sensible) and a worksheet for analyzing stocks based on those criteria. The buying and selling of stocks are addressed and some general advice is given for dealing with market fluctuations. Overall, the book is a concise and informative guide to stock market investing that helped get me started, even though the eventual strategy I settled on (dividend growth investing) differs in many respects from the approach presented in the book.
Note: I read this book in the spring of 2011.
Saturday, June 23, 2012
Book Review: The Money Game
The Money Game (1968) by 'Adam Smith'
George Goodman, writing under the pseudonym of Adam Smith, discusses the psychology of the stock market and the people involved in it. Back in the 1960s, not much consideration had been given to what is now called behavioral finance, so this book is often regarded as groundbreaking in that respect. Through a combination of anecdotes and general observations, the author provides many interesting and witty insights into investor psychology, driving home the point that many investors -- including professional money managers -- are anxious, biased, and irrational. To some extent, they are all playing a game, with the flow of money determining who is winning and losing the game. Even though the book was written over 40 years ago, it is remarkable how little some things change.
Note: I read this book in May 2012.
George Goodman, writing under the pseudonym of Adam Smith, discusses the psychology of the stock market and the people involved in it. Back in the 1960s, not much consideration had been given to what is now called behavioral finance, so this book is often regarded as groundbreaking in that respect. Through a combination of anecdotes and general observations, the author provides many interesting and witty insights into investor psychology, driving home the point that many investors -- including professional money managers -- are anxious, biased, and irrational. To some extent, they are all playing a game, with the flow of money determining who is winning and losing the game. Even though the book was written over 40 years ago, it is remarkable how little some things change.
Note: I read this book in May 2012.
Thursday, June 21, 2012
Dividend Increase: MDT
Medtronic (MDT) is increasing its quarterly dividend by 7.2%, from $0.2425 to $0.26 per share, putting the company on track for its 35th consecutive year of dividend growth. Given that I own 55 shares of MDT, my quarterly dividend increases from $13.34 to $14.30, which will add an extra $3.84 to my annual dividend income. This dividend increase also boosts my yield on cost to 3.21%. Thus far this year, there have been dividend increases for 15 of the 22 dividend growth stocks in my portfolio.
Wednesday, June 13, 2012
Dividend Increase: UTX
United Technologies (UTX) is increasing its quarterly dividend by 11.5%, from $0.48 to $0.535 per share, putting the company on track for its 19th consecutive year of dividend growth. Given that I own 25 shares of UTX, my quarterly dividend increases from $12.00 to $13.37, which will add an extra $5.48 to my annual dividend income. This dividend increase also boosts my yield on cost to 3.00%. Thus far this year, there have been dividend increases for 14 of the 22 dividend growth stocks in my portfolio.
Wednesday, June 6, 2012
Monthly Review: May 2012
I returned this week from a road trip to visit some friends (I had a great time), so I am now able to post a review of what happened in May:
Dividends: I received a total of $114.30 in dividends from the following stocks:
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):
Savings: This month I saved $1,226 (42.0%) of my net income, which is my lowest monthly total thus far this year. I mentioned in my monthly review for April that I anticipated my savings rate would take a hit in May due to some large annual expenses and travel costs. This results in year-to-date savings of $7,390, which puts me 61.6% of the way toward my goal of $12,000 in savings for 2012.
Transactions: I bought two stocks this month (click on the transactions to see my posts about them): These purchases will increase my annual dividend income by about $115 (the exact amount of the VOD dividends will depend on the exchange rate). I did not sell any stocks for the fifth consecutive month. My portfolio has 22 stocks with a market value of $51,861.12 (including cash), which is a 0.5% decrease compared with last month's value of $52,106.60. Even though I added new capital in May, my portfolio was dragged down amid the broad decline in the stock market.
Seeking Alpha: I published only one new article on the investing website Seeking Alpha (click on the title to go to the article): Surprisingly, this turned out to be my most popular article thus far, in terms of both page views and comments. In May I earned a total of $122.19 from this article and additional page views of my previous articles. Payments are made on a quarterly basis and my Q2 total (to be paid in July) is currently $337.35.
Looking Ahead: I expect to receive more in dividends in June than I did in May, which will be nice. My savings rate will take a bigger hit in June than in May as I deal with some remaining annual and semi-annual expenses. Even though I will have limited new capital for investment, I still think I will be able to make one purchase per month.
Dividends: I received a total of $114.30 in dividends from the following stocks:
- ABT: $22.95
- GD: $10.20
- GIS: $21.35
- HRL: $7.50
- PG: $28.10
- T: $24.20
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):
- VOD: 7.0% increase (amount in USD to be determined)
Savings: This month I saved $1,226 (42.0%) of my net income, which is my lowest monthly total thus far this year. I mentioned in my monthly review for April that I anticipated my savings rate would take a hit in May due to some large annual expenses and travel costs. This results in year-to-date savings of $7,390, which puts me 61.6% of the way toward my goal of $12,000 in savings for 2012.
Transactions: I bought two stocks this month (click on the transactions to see my posts about them): These purchases will increase my annual dividend income by about $115 (the exact amount of the VOD dividends will depend on the exchange rate). I did not sell any stocks for the fifth consecutive month. My portfolio has 22 stocks with a market value of $51,861.12 (including cash), which is a 0.5% decrease compared with last month's value of $52,106.60. Even though I added new capital in May, my portfolio was dragged down amid the broad decline in the stock market.
Seeking Alpha: I published only one new article on the investing website Seeking Alpha (click on the title to go to the article): Surprisingly, this turned out to be my most popular article thus far, in terms of both page views and comments. In May I earned a total of $122.19 from this article and additional page views of my previous articles. Payments are made on a quarterly basis and my Q2 total (to be paid in July) is currently $337.35.
Looking Ahead: I expect to receive more in dividends in June than I did in May, which will be nice. My savings rate will take a bigger hit in June than in May as I deal with some remaining annual and semi-annual expenses. Even though I will have limited new capital for investment, I still think I will be able to make one purchase per month.
Saturday, May 26, 2012
Book Review: Common Stocks and Uncommon Profits
Common Stocks and Uncommon Profits (1960) by Philip A. Fisher
In this concise and compelling book, the author outlines an approach that has come to be known as growth investing. He seeks companies that have very strong growth potential and may produce gains of several hundred percent in a very short time. However, unlike "get-rich-quick" schemes, his approach is based on a comprehensive analysis of a company and a thorough understanding of everything about its business, prospects, and so forth. He presents 15 sensible points to look for in a company, such as a product or service with great growth potential; management effectiveness and integrity; strong research and development; large and improving profit margins; outstanding labor, personnel, and executive relations; good cost and accounting controls; and a long-range outlook. He argues that much of the useful information concerning these points can be obtained via the "scuttlebutt" method, which involves tapping into various branches of the business grapevine to get a multifaceted, in-depth view of a company.
After discussing when to buy and to sell growth stocks, the author addresses the "hullabaloo about dividends." He basically considers the payment of dividends to be a poor use of a company's money, which I agree with in the limited context of a company with strong growth potential that is capable of re-investing all of its money into its business in ways that are highly effective in producing strong growth that will promote accelerated capital appreciation for shareholders. However, this depends on a lot of assumptions (critically, whether that strong growth can be realized), which is why it only makes sense not to pay a dividend if a company meets the 15 points he outlined for a growth company.
The author also presents 10 "don'ts" for investors that generally constitute good advice. For example, he says that investors should not: (a) buy into a promotional company that has no track record; (b) buy a stock because they like the "tone" of the annual report; (c) quibble over eighths and quarters (i.e., fail to buy or to sell a stock because the market price is a few pennies away from their target price); (d) overstress diversification (he recommends concentrated portfolios); and (e) follow the crowd. He concludes with some general advice on how to go about finding a growth stock, which at the time depended strongly on his "scuttlebutt" method. It might be easier nowadays with the wider access to information and customized stock screeners, but his emphasis on conducting a comprehensive analysis of a company -- to a greater extent than what 99% of investors likely do -- remains as valid today as it was over 50 years ago. Overall, I think his approach can be extremely successful, but it requires a tremendous amount of work (it would basically make investing a full-time job) and a keen eye for analyzing a company and its growth prospects.
Note: I read this book in May 2012.
In this concise and compelling book, the author outlines an approach that has come to be known as growth investing. He seeks companies that have very strong growth potential and may produce gains of several hundred percent in a very short time. However, unlike "get-rich-quick" schemes, his approach is based on a comprehensive analysis of a company and a thorough understanding of everything about its business, prospects, and so forth. He presents 15 sensible points to look for in a company, such as a product or service with great growth potential; management effectiveness and integrity; strong research and development; large and improving profit margins; outstanding labor, personnel, and executive relations; good cost and accounting controls; and a long-range outlook. He argues that much of the useful information concerning these points can be obtained via the "scuttlebutt" method, which involves tapping into various branches of the business grapevine to get a multifaceted, in-depth view of a company.
After discussing when to buy and to sell growth stocks, the author addresses the "hullabaloo about dividends." He basically considers the payment of dividends to be a poor use of a company's money, which I agree with in the limited context of a company with strong growth potential that is capable of re-investing all of its money into its business in ways that are highly effective in producing strong growth that will promote accelerated capital appreciation for shareholders. However, this depends on a lot of assumptions (critically, whether that strong growth can be realized), which is why it only makes sense not to pay a dividend if a company meets the 15 points he outlined for a growth company.
The author also presents 10 "don'ts" for investors that generally constitute good advice. For example, he says that investors should not: (a) buy into a promotional company that has no track record; (b) buy a stock because they like the "tone" of the annual report; (c) quibble over eighths and quarters (i.e., fail to buy or to sell a stock because the market price is a few pennies away from their target price); (d) overstress diversification (he recommends concentrated portfolios); and (e) follow the crowd. He concludes with some general advice on how to go about finding a growth stock, which at the time depended strongly on his "scuttlebutt" method. It might be easier nowadays with the wider access to information and customized stock screeners, but his emphasis on conducting a comprehensive analysis of a company -- to a greater extent than what 99% of investors likely do -- remains as valid today as it was over 50 years ago. Overall, I think his approach can be extremely successful, but it requires a tremendous amount of work (it would basically make investing a full-time job) and a keen eye for analyzing a company and its growth prospects.
Note: I read this book in May 2012.
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