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Thursday, April 28, 2016

DFG April 2016 Watchlist

My April top 10 watchlist has some new companies in it that I have not looked at before.  The DFG stockscreen was updated this month (actually I modified it some time ago but forgot to update the page.)  The biggest change is the additional filter of looking at only Dividend Champions and Contenders.  Anything less than that ups the risk factor.  Since I am trying to create a sustainable income stream companies over 10+ years of growth have survived the great recession (or at least 1 cycle in the stock market.)


I am already long on several companies in this list including ORI, ADM, NUS and IBM.  They have also appeared on my screen on and off for a year it seems. ORI stock price has been going up even though it is a slow dividend grower.  I guess the fear from late last year caused people to put their money in safety.  Another safe bet is ADM who has taken a beating but has been paying increasing dividends for over 40 years.


IBM I wrote a little about in my last post.  I see nothing wrong with them that would cause me any concern regarding a dividend freeze or cut.  They are shifting towards the big-data & cloud models just like Microsoft (also long on MS) and other tech companies.  They are selling off stagnant parts of the company and are on track to start growing overall revenue in a few years.  Sure it takes time to change a company that big but I have faith they can do it.

 


Nu Skin is one of the first DGI stocks I bought.  That was back when they were facing some legal issues.  It has not slowed and continues to grow at a fantastic rate.  Looking at The Chowder Rule also included in Dave Fish's Spreadsheet shows a remarkable 27.5.  This is the highest out of my top ten.  The only others above 12 where ADM and SPAN.

Speaking of SPAN I think I will have to do some additional research on this newcomer to my watchlist.  Based on what I see it looks very appealing especially since it is healthcare related.  I will take a closer look at them and let you all know what I find out.

Do you own SPAN?  Send me links to any reviews you have done of them.

Thanks and have a good day,

Dividend Family Guy

Wednesday, April 20, 2016

Burgers for Dinner Earns me Dividends

Mmm delicious!
I posted earlier on my Twitter (@DividendFamilyG) account a picture of some burgers I was grilling for the family.  It cost me $12 for 12 Angus burgers.  These were a whopping 1/3 pound each and did not shrink down when I cooked them.  To top them off I put not one but 2 slices of American cheese on them.  I do love McDonald's (food and stock) but there price for a quarter pounder with cheese is way more than the dollar I spent.  To top it off I played with my kids on our swing set while they were cooking.  Couldn't ask for a better evening.

Why am I talking about burgers?  Well it also got me thinking about the cost of eating out.  I know there are some guys at work that eat out lunch every day.  Mind you this is lunch and not dinner.  It may be a little cheaper than dinner but a high end burger place will easily cost you $12 bucks for the burger (with cheese), fries and a drink.

I eat out maybe once a week so my savings compared to the other guys is (12*5)-12=$48 dollars.  That $48 dollars saved every week will total 48*52=$2,496 dollars in potential savings a year for those that eat out.

If you were to put that money to work in a company like IBM  the dividends from this dividend contender (20 years of paying out increasing dividends) would reward you.  The reward would be $2496/144=~17 shares or  $265.2/year of income from dividends. 

IBM took a drop this week and is looking pretty appealing.  I like the new model they are driving towards and the fact they have reinvented themselves over the past 100 years as a company.  If you can last that long you are a survivor.  The 3.61% yield (and other statistics) is attractive as well and your 17 shares reinvested would compound and reward you further.

What do you think about IBM?



Have a good day everyone!

Dividend Family Guy

Saturday, April 16, 2016

March 2016 Budget and Savings

Sure March is still technically winter but it is one of my favorite months.  Not only is it a great month for dividends but it is also usually when I get my tax refund.  Maybe next year I will also get to include any raises or bonus from my new job I started this year.

Expenses
Looking at my expenses for the month it was a good month on that end as well.  My total needs were kept under budget with just a few minor hiccups.  The first hiccup was groceries.  $156 over budget there.  Again depending on where the first or last week of shopping lands it bumps that months budget by an extra week (to 5) or lessens it to 3 weeks.  I don't sweat this category as it evens out over the year.



The second bump was in the Guilt Free Spending Money or wants category.  I blew over my budget by a good $750!  Almost $400 of that went to pay off money I owed to my daughters fund raiser.  The cash given to me when I sold the candy bars was pocketed and used to eat out and other miscellaneous wants.  This was a bad idea and I should have saved it so it wouldn't have hit my budget in the end.  I think I did something similar last year and really need put the cash into the bank so it can be tracked.

The second item in this category was a whopping (don't laugh) $200 towards chocolate.  My wife is a stay at home mom and chocolate is her allowance.  We went to tour a chocolate factory with the kids over spring break and stocked up on their chocolates.  Also after Easter another chocolate maker in the area cuts their prices in half so we stocked up to last us through the summer.  The third largest expense was $100 to dining out and going to a home and garden expo.

Savings
I am happy to say even with my over the budget blowout on wants I was still able to save 59% of my income for the month.  This income was mostly from my tax refund.  If I take a look at just my basic living expenses vs. last year I am happy that the trend is now going down for March.



With the extra savings I was able to fund all of my savings goals this month and even put some extra into them since I missed funding them in January.  There was even a few bucks left over for investing so I will be on the lookout for an April purchase.


Summary
Some months do get away from me regarding the GFSM category (wants).  I still find it extremely hard to put a hard stop on the spending once I hit my budget limit.  I even bumped that line item in the budget by $50 and still find myself exceeding it regularly. I highly suggest to anyone who has the same problem to cut up your credit cards and go to a cash only system.  I have not yet mainly because I am still able to save even though I blow the budget.  I am not saving enough yet so I need to buckle down some more.

How was your month?  I hope the tax fairy was kind to you and deposited some cash instead of stealing some.

Happy investing,
Dividend Family Guy




Wednesday, April 13, 2016

2016 Budget version 1

Before I put out my March update I thought I should share with you all my 2016 Budget and any goals I have for the year.

First let's take a look at my adjustments I made to the budget.  These were either because of my monthly average increasing for the line item or adding or removing new items.




Item
Difference Vs. 2015
Notes
Mortgage
2

Water
17
#1 Utility combined with Sewer
Phone
-15

Sewer
20
# Utility combined with Water
Gas
-18
This should go down further next year with my new HVAC
Garbage
-5
City formed new agreement with waste company
Electric
-1
When I bulb burns out I replace it with LED
Cable
-115
Only using it for internet now
Loan
-350
Loan was forgiven.  However it did affect my 2015 taxes
Auto Fuel
24
Should go back down now that I work close to home
Auto Service
-9
No major repairs last year
Personal Care
20
Larger family, more soap
Miscellaneous
-6
Better categorization I guess??
Household
190
Now saving for home repairs
Healthcare
11
This will go down next year now that I have better insurance
Food
-200
Attempting to drop this down
Clothing
-30
Doesn't include kids
Kids
213
#1 expense behind house, who would have guessed
Home Insurance
11

Guilt Free Spending Money (Wants)
50

Emergency Fund
1000

Vacation Fund
400

Christmas Fund
65


Overall my budget is lower this year than last (-191).  With the savings from that and increase in salary I was able to formally create savings goals to track against.  So far I have been able to hit most of the savings goals each month (except January.)  January was a miss because of the higher credit card bill from holiday spending in December (and this why I need a Christmas Fund.)

The Kids line item continues to increase every year.  This was expected with the new addition to the family.  It will be several years before this drops back down (potty training).  All in all kids are a good investment for the future of the human race.  The more kids I have and raise to the best of my ability the better off the world will be.  A friend of mine was telling me we need a test like a driver's test to get a license to have kids.  Interesting concept but I don't see any presidential candidates pursuing that one.

The downside is it leaves about $50 for investing.  Once I have my emergency fund at the 3 month expenses level I can then turn that into the Investing Fund.  This still will not align with what I should be investing each month so I will have to look at further ways to shrink the budget.

With that said I am looking to combine my Auto and Home insurance (especially since my son will start driving this year).  Also my healthcare line item will adjust as my new health insurance has a deductible that is several thousands of dollars lower than my previous insurance.  When my one year of savings with DirectTV runs out I will also switch down to a lower packages to save there.  After the 2 year contract is up we may even get rid of that bill.  With the internet we can watch what we want when we want.

Last but not least is my final attempt to reduce the water/sewer bill will be installing  water efficient toilets.  After the new washing machine failed to reduce it the only other item left is the toilets.  The ones I have now are 24 years old and probably use 5 gallons a flush.  By comparison new toilets use only 1.2.

I welcome additional ideas on frugality from those with many kids.

Have a good day all,
Dividend Family Guy

Sunday, April 10, 2016

March 2016 Dividends

Company
Held In
Dividend Paid (Qtr)
Amount Received
Shares of life purchased
March
IBM
Taxable
1.3
5.27


HRZN
Taxable
0.345
6.99


VNR
Taxable
0.09
0.1


NUS
Taxable
0.355
8.27


CTL
Taxable
0.54
9.3


FTR
Taxable
0.105
11.17


HMN
Taxable
0.265
9.26


JNJ
IRA
0.75
18.75
0.1757

CVX
IRA
1.07
10.09
0.1087

EMR
IRA
0.475
15.2
0.3036

MSFT
IRA
0.36
9.06
0.1715

TGT
IRA
0.56
10.02
0.1234

ED
IRA
0.67
54.15
0.737

MCD
IRA
0.89
10.08
0.082

ORI
IRA
0.1875
20.34
1.1382

MCY
IRA
0.62
67.36
1.2063

UHT
IRA
0.645
70.79
1.261

INTC
Taxable
0.26
0.97


HP
Taxable
0.6875
0.98


CMI
Taxable
0.975
0.59


MUR
Taxable
0.35
0.87


ADM
Taxable
0.3
4.04


XOM
Taxable
0.73
1.65


IBM
Taxable
1.3
0.88


CVX
Taxable
1.07
2.18


MCD
Taxable
0.89
1


ORI
Taxable
0.1875
0.8


NUS
Taxable
0.355
0.59


BHP
Taxable
0.39
0.67


BBL
Taxable
0.39
0.68



This was a good month with several payouts in both my taxable and IRA accounts.  My exposure to more companies was expanded when I started using Motif Investing.  I now can get more diversification for a decent price.  I have many great ideas each month so I am always looking for the most cost effective way to purchase multiple companies.

The only downside to Motif is Quicken is unable to connect and download my transactions automatically.  While I get diversification I also get the joy of having to add everything manually.  I am getting pretty good at entering transactions manually.

I do have some stock in BHP/BBL but it is so small I will not sell them.  Energy will rebound someday so I will take what I can get from them.


Looking year over year I am up 3.6%.  I will attribute it to mostly dividend reinvestments as there has been dividend cuts which resulted in me selling several stocks.  Some of the money was reinvested but most of it sits as cash waiting for another market drop or good idea.

I hope you saw an increase in your dividends compared to last year!

Happy investing,
Dividend Family Guy

Tuesday, March 22, 2016

How much do I need to retire?

Recently I was reading a post by Dividend Life regarding his expenses.  There was one sentence in particular that caught my eye and finally got me thinking about how much I really need to save if I am ever to become FIRE. 

I have been blogging about my FIRE approach through dividend growth investing and frugal living for a couple of years.  I even claim I want to retire by age 55.  What I never really did was figure out what I need to do to get there.

Let's start with what Dividend Life said.

"Note that based on my $3,900 budget, one Work Freedom Day requires about $128 of dividend income which in turn requires about $4,000 of capital."

So based on that if there are 365 days in a year that would amount to total capital (including reinvested dividends) of a mere $1,460,000.  Wow that is a lot of money I need to save!  Currently I can't even support the family on $4000 a month.  My base 2016 budget is $4975 a month.  Sure I could squeeze TV, Internet and phone out of it and not take a shower.  That might get it down to $4k.  The other big item to get it down to $4k would be to not have a house payment.

The house is not going to be paid off for another 24 years or when I am 66 years old.  That fact really depressed me and is probably why I never really thought about it.  I have 2 options.  One would be to refinance to a 15  year loan.  Then I have a shot of early retirement.  The other option is to sell my house for a profit and by a fixer upper with the cash proceeds.  Then live out my life in a not so nice home with less stuff (and probably be happier).

So what do I need to get to FIRE by age 55?  First would be to have no mortgage.  Second I would need to be generating roughly $4000 per month in dividends.  I have a spreadsheet I think I got from Dividend Life as well but couldn't find the post to link it.  This spreadsheet allows me to punch in yield and dividend increase.  It then calculates out your income per month as you reinvest those dividends over the years.

What I did was take the average yield (2.76%) and dividend increase (6.3%) from the list of Dividend Champions by Dave Fish and used that in the spreadsheet.  I picked the champions because they are the most stable dividend payers and are likely to be around until I retire.

The results were shocking and got me a bit worried.

It will take me investing $7100/month to get to $4020 of dividend income monthly by the age of 55.
It will take me investing $2300/month to get to $4082 of dividend income monthly by the age of 66.

If I tweak it and only buy companies with 3% yield it will drop it slightly to $2000/month until I am 66.

Keep in mind these numbers don't account for inflation.  I have never been laid off in my 18 years of the rat race but the numbers show you are more likely to get let go the higher your salary and the older you get.

Any advice from the community on what I should do?

For now I will look into my house options and see if I can get up to $2000 a month invested through my 401k, IRA and personal investment accounts.)

Thanks for reading,

DFG