Thursday, April 30, 2015

March 2015 Dividends

Well as the month of April comes to a close I finally got around to totaling up my dividends from March.  There were some increases most notably HMN with an 8% increase (see my review here).  Also upon review I came across some dividend cuts so now I have to decide on selling or not.  I should sell but if they are worthless and still paying a dividend I tend to hold on to them.  For example AGNC had a big sell off yesterday as the declared that dividend cut and now I missed the boat.

There was no additional capital put in March however my year over year dividends increased by 551%.   Checking out my dividends page the total dividends for March came to $63.48.  I am OK with that for now however I need to make further changes after using Dividend Life's cross-over calculator.  According to it I need to be saving 20% a year just to reach financial independence by the age of 65.  I still think the emergency fund should come first but now at least I know what I need to save and invest to reach my goal.  It was eye opening.  Check it out to see if you're on track. 

Company
Held In
Dividend Paid (Qtr.)
Amount Received
Shares of Life
Note
COP
Taxable
0.73
8.86
0.1359

AGNC
Taxable
0.22
6.11
0.286
Div Cut Declared for May
IBM
Taxable
1.1
4.43
0.0276

HRZN
Taxable
0.115
6.88
0.4811

VNR
Taxable
0.1175
0.26
0.0184
Div Cut in Feb, should have sold
NUS
Taxable
0.35
8.1
0.144
1% increase, slowed way down
CTL
Taxable
0.54
9.16
0.2628

FTR
Taxable
0.105
11.01
1.5041
5% increase, payout ratio  200%
HMN
Taxable
0.25
8.67
0.2528
8% increase


Happy dividend collecting,

DFG

Friday, April 17, 2015

Windstream Spin Off, dividend cut?

Windstream (WIN) is spinning off a REIT that will encompass most of its fiber/copper and real estate assets.  The goal of this appears to be a fancy way of ridding itself of debt.  The new company is called Communications Sales and Leasing, Inc. (CSAL).  As a stockholder will this be in my favor?  Let's take a look.

For every 5 shares of WIN I will receive 1 share of CSAL.  For example if I owned 1000 shares of WIN, after the spinoff completes I will own 1000 shares of WIN plus 200 shares of CSAL. 

The dividends will change from an annual $1/share for WIN all the way down to $.10.  The CSAL dividend is expected to be $2.40 per share annually.

WIN does mention it will sell its stake in CSAL to reduce debt.

I was confused by the next snippet in the letter to shareholders.  If you can explain it to me I would appreciate it.  The quote is "After giving effect to the interest in CS&L retained by Windstream, each shareholder at the time of the spinoff will receive the equivalent of a $.48 per share Windstream dividend per annum."  I am reading that as when WIN dumps it's shares of CSAL the WIN dividend will then go from $.10 up to $.48 per share annually.  Is that right?

So if a shareholder current owns 1000 shares they were receiving $1000 annually in dividend income (1000 * $1=$1000.00)

Initially after the spinoff the annual dividend income (total of both) will be
1000 * $.10=$100.00 WIN
200 * $2.4=$480.00 CSAL
For a grand total of $580.  This is close to half the current dividend.  A pretty major cut.

Even after WIN sells it stake and the dividend goes up a little it is still a cut.
1000 * $.48=$480.0 WIN
200 * $2.4=$480.00 CSAL
Total = $960

I understand why they are doing this.  With the current payout ratio trending to always be above 100% it would have been likely that the dividend would be cut (by a lot).  With this strategy they are able to keep the dividend close to the original but at the same time reduce debt.  Will this make the balance sheet better and get that payout ratio back to something sustainable?  Only time will tell.  Regardless the dividend isn't increasing so this is not a dividend growth stock.

Cut and run or hold?  What do you think?

Full Disclosure: I own WIN.

Thursday, April 16, 2015

March 2015 Budget

Argggg!  My first red month of the year.  No More Waffles wrote a post on to rent or own and you should read it (and the comments).  It really hit home last month (and this one too) as my home continues to fall apart.  The 20 year old furnace started acting up.  Winter was still in full swing in March so I couldn't just turn it off.   If I were single I could keep the house warm with space heaters and the ol' gas fireplace.  But the family demands comfort from me!  Such high expectations from 1st world citizens.

I have been putting a couple hundred dollars into it each year for the past 4 years.  Sure it provides my family with heat in the winter and cool dry air in the summer.  However it is one of my nemesis'.  I feel like the dad in the Christmas Story going down to the basement to do battle.  In this house and my last I could usually guess the problem and order the part online.  This time I had no clue and couldn't wait for a part to ship.  So I had to call my local repair man (the same one who put the furnace in all those years ago.

When he arrived he was pleasant as always (yes a big pay day from this guy).  Went down and after 30 minutes announced the main control board was faulty.  I can fix it for only $700.  I wept, I yelled (not really), and died some inside as my savings quickly disappeared for the month.  If I had a warranty or rented the bill would have been negligible or nil.)  Warranties run about $1000 a year or less depending on the age of certain things in your home (like a furnace). 

I have been gambling with the house devil a lot lately with no emergency fund.  Next month I will rant some more on this subject and hopefully you will either sympathize with me or have a good laugh.  For now let's see how the rest of the month went.

Income
I just wanted to mention my whopping 2 percent raise.  I guess that is what the average person gets within my department.  Seems kinda low doesn't it?  Compared to my last raise at my previous company (1%) it is double so maybe I should be happy.  This raise just doesn't compute as my company is doing well and the broader stock market easily beat 2% last year.  This is probably very similar to most of the working class out there.  I call it stagflation of my wallet.  Goes to show you can make more as a stockholder than you could as an employee.

Additional income was from those lovely dividends.  March treated me well with $63 of income.  While this couldn't cover any of my bills it will grow over the years.

Needs
Category
Comments
Under K or Over J
Auto
No repairs and fuel was under budget
K
Home/Personal Expenses
This was way over budget ($786) from a couple of things.
1) Still over budget buying diapers and clothes for the kids.
2) The evil furnace.
3) I even went over on buying things like toilet paper and toothpaste.  
J
Utilities
$200 over budget (quarterly sewer bill and high heating costs didn't help).  Should improve next month as warmer weather starts to move in.
J
Loans
2 Mortgage loans and 1 kid in braces.  Other than that debt free.
=
Food
Aldi's continues to save me money.  Saved $142.  This continues to be one of my biggest variable expenses.  Since I have control over this I am continuing to find ways to reduce this cost.
K

Wants
What happened DFG?  Went $50 over budget this month.  I don't recall eating out that much.  Ah I remember now.  We donated to my kids charity buy buying a truck load of candy bars at a dollar each.  I sold most at work but we kept about a hundred at home to feed the now pregnant wife with her favorite food over the next several months.  A price well paid and will give me months of hormone relief.  If your reading this my dear wife remember that I love you!

Category
Percent
Comments
Dining Out
8%
Only went out to eat with the family once this month.  Our best ever!
Charity
72%
Candy bars and a lot of them
Misc.
20%
Tax software and some movie rentals

Savings & Summary
It was a close month but the unexpected (and very expensive) furnace repair cost me my entire months savings.  My expenses exceeded my income by about $100.  Luckily I have built enough buffer in the emergency fund that I was able to cover the repair.

Savings rate for the Month = 0%  (well actually it was negative but 0 is the lowest I will go)

Congrats to all those who met or exceeded their savings goal for the month.  For those who didn't just keep on trying and don't give up.  Persistence is your luck.

Happy saving,

DFG

Wednesday, April 1, 2015

My Wealth Has Increased Dramatically

What is wealth to you? 
For most of the frugal and seekers of financial independence it means having more time to spend enjoying life.  Whether that is traveling or spending time with your family you have that choice.  Both my parents worked until they died (father) or retired (mom).  The time they spent with us kids was precious and my mom always says her happiest days in her life were raising us kids.

The problem I have is I also enjoy time with my family but between working for the man and the responsibilities of being a parent I find little time to spend having fun with kids.  With that in mind I guard my time wisely at work so that I don't have to bring it home while still doing a good job.  I also constantly look for ways to save more money at home to invest while not compromising our current standards of living.

Everyone values things differently.  For me wealth is time and who I spend that time with.  How do I increase that wealth?  Save as much as I can and invest it in dividend growth stocks purchased at attractive values.

Family is Wealth
This will become even more important when my next child arrives later this summer.  That is right, the DFG is growing again!  This addition to my wealth has caused me to drive even harder at reaching my FI goal.  The joy I experience when I come home and my kids rush to greet me is something I want to have more of.    The joy and happiness they bring into my life is way better than sitting in a political storm at work day after day and not accomplishing much. 

Sure changing diapers for 15 years isn't the most fun thing or cleaning up puke from yourself and the floor.  Buy hey you do crazy things for love.  I certainly would not do that at work.  Would you?

Thanks for stopping by,
DFG


PS this is not an April Fool's joke for you jokesters out there :-).  I really will have 2 boys and 3 girls come August.

Tuesday, March 24, 2015

February 2015 Budget

February is my best month so far this year and my best month ever since I started watching my expenses in 2013.  Between no more car payments and some other adjustments I was able to cut my spending and work towards my goal of rebuilding my emergency fund.  Let's take a closer look and see where I saved and where the DFG family went over.  Yes it is almost the end of March but better late than never.

Income
I have decided to follow some of my fellow bloggers and not look at any windfalls (bonus, tax refund, etc.) that might fall within the month.  I will look at my fixed budget (based on 2 paychecks in a month) and track whether or not I stay within that budget.  By keeping it simple I will have a consistent budget which will help me with my spending.

What about big purchases or travel?  That will come out of the emergency fund.  So if I do not have enough cash for it, it doesn't happen.

I liked the features of Quicken 2015 from Dividend Life's review so I decided to upgrade.  One of the features is virtual accounts.  You set it up and money is transferred from your checking to this savings account only in Quicken.  Say you have $1000 dollars in your checking account.  You transfer $200 to this virtual savings account in Quicken.  It will only subtract it from the Quicken account and not the physical bank's checking account.  Quicken will say you only have $800 in your checking account.  If you login to your banks website it would say you have $1000 still.

I may fire up a couple of those to help save for vacations and big purchases.  This will keep the funds in the emergency fund for what they were intended for.

Going forward I will be removing income from my posts.  The focus will be on my expenses vs. budget and how much I was able to save for the emergency fund.  Once I get my 2 months of expenses saved I will shift the savings over to my investment account.

Expenses
Another nice feature of Quicken 2015 is the Planning & Budget area.  In older versions of Quicken I never could get it to work properly.  That is why I started tracking my categories in Excel.  With 2015 it was intuitive enough where I was able to setup all of my categories just like my spreadsheet.  Then at the end of February I compared the two and the numbers matched!  Looks like I can retire the spreadsheet.

Another nice feature of the budget is you can set it up to rollover unspent money.  This is almost like having savings accounts for each category.  This is really helpful for the categories that fluctuates every month like your electric or gas bills.  Say over the course of the year you average $100 dollars on your gas bill.  For example, if I spent $50 in January because of a war winter the extra $50 would carry over to February ($150 to spend).  If February was extra cold and the bill was $150, I would have enough cash to cover it.

One of my discoveries is you need to start off the year with some kind of buffer of cash in each category.  If you don't have that buffer and go negative in January there will not be enough in your checking account to pay the bill.  So I started my budget with a one-time buffer.  This should not be an issue after this year as the budget will save that cash over the course of the year. 

Below is an example of my Childcare budget.



In last month's budget I wrote about all of clothes we bought our kids on clearance for the next year.  In the image above you can see in grey $132.  That is the average I spent on my kids per month in 2014 and is my budget for 2015.  In Quicken I can easily see I am still negative (red) in this category for February.  Without some initial buffer I would be in the hole and not able to pay my January bills.  So to balance it out my new goal would be to spend less than $132 to get that balance back to a positive number.  I did just that by spending only $82 in February.  If I keep that trend up I will rebuild my buffer to ensure there is adequate cash in my account to cover the bill.

So how did I pay that bill then you ask?   Well my buffer came partly from coming under budget in other categories.  For example my automobile budget includes saving each month for car repairs.  So I had some extra cash in my account because the cars didn't need repairs in January.  This is not ideal as that money was supposed to be set aside for when a repair is needed.  That is why it is important to have that buffer/emergency fund.

There were only 2 other categories that went over for the month.  The first was guilt free spending money.  Previously I had no budget for fun but with my car paid off I set one for February.  Unfortunately I set it after I spent more in this category than what I budgeted.  This should improve next month as I have a visual that I can look at any time to help me stay on track.

The second was utilities.  The cold winter where I live had an impact in January.  Both electric and gas were over budget.  These are rolling accounts so in the summer I hope to be under to build that buffer back up before next winter.  The other utility that contributed to the miss was my quarterly water payment.  Same applies to this and I will have 3 months to build that buffer up before the next bill comes.

Savings
So this was my lowest expenses for a month in 3 years.  Came in at $809 under budget.  All of that goes to build up my emergency fund.  Boy do I miss buying good dividend paying companies but as the sole income stream for my family I need that buffer.

One other extremely positive savings category was food.  My budget was $900 a month which does not include eating out.  The price of food was ridiculous last year so that is what I averaged.  This year something needed to change to rebuild my buffer and hopefully have some money to invest.

For February I came in $200 under budget. How you might ask?  Well I don't buy as much organic food as I used to but the big saver was from switching stores.  I am now a faithful Aldi's shopper.  I plan my menus around what the store has and pay in cash.  I actually feel good coming out of the store having some change in hand. 

Overall
I feel really good about this month and it gives me hope for the rest of the year.  There are some big changes coming to my family this year (still have to blog about that) so saving as much as possible is the key to a happy family and happy DFG (that's me).

Take care all,

DFG

Thursday, March 19, 2015

DFG Current Income Streams

I know some fellow bloggers have side income/hustle listed in there income/expense reports.  Just wanted to let everyone know I have yet to receive any income from this blog (not that that was my intent).  What are my secondary sources of income?

Well the first would be obvious.  Income from investing in dividend paying stocks.  That money I currently just put right back in automatically to purchase more stocks.  That is income I will not see for some time.  I am fine with that as I know it is buying me time I will get back some day as long as I keep investing.

The second is any interest I get from banks for loaning them my cash in savings or checking accounts.  So I get paid to use their services like mobile banking and online bill pay.  No fees and these services do make my life easier.  The only time we buy stamps is around Christmas for cards.

The third stream is from shopping.  I am not a mystery shopper but I do use Ebates.  They offer deals and cash back by installing an app in your browser.  Sometimes I have gotten up to 6% back from shopping on certain sites.  Every month they cut me a check and deposit it in my PayPal account.

On top of that things I buy with my credit card give me cash back as well.  That gives me another 1%.  This and the Ebates almost pay for the taxes.  Yippee!  All of this income and I just don't know what to do with it all (kidding).  It totals just a few bucks a month and I am spending more money on things for the family than getting from these streams.

Have a good day!

DFG

Monday, March 16, 2015

February 2015 Dividends

I am trying something new this month by listing out my dividends received by company.  The key thing to note is the Life column.  This represents how reinvesting your dividends has a snowball effect.  I also think it is a good representation of how much of your life you're getting back.

It may start off small but over time you will receive more dividends which will buy more stock which will lead you to the ultimate goal of financial independence.  When you reach that goal 100% of your life and time is again yours (unless you have kids.)  If you have kids like me at least you will get your time back when they are out of the house (kidding/I enjoy my time with them.)


Company
Held In
Dividend Paid (Qtr.)
Amount Received
Shares of Life
Note
AGNC
Taxable
0.66
6.05
0.279

EROC
Taxable
0.07
0.38
0.1532
Div. Cut Feb 2014
EVEP
Taxable
0.5
0.36
0.0217
Div. Cut
HRZN
Taxable
0.345
6.77
0.4515

VNR
Taxable
0.3525
0.46
0.026

KMI
Taxable
0.45
12.73
0.3033
First Div. from KMI
T
IRA
0.47
48.86
1.4842

WGL
IRA
0.4625
45.41
0.8037

NWN
IRA
0.465
47.95
1.0019


This was a good exercise because looking in Quicken I was able to easily see where a dividend cut had occurred and I did not take action.  So I noted them for now.  The two mentioned above are close to worthless now but if they help tax time come next year I may consider reaping them from the DFG portfolio.

Checking out my dividends page I can see the big leap a few investments made (mostly KMI).  I little under $2 to over $26 dollars in dividends in one year.  Nothing new added in February to the portfolio yet I still collected income.  See that is why I like dividend stocks.  You don't have to sell to see a profit!

Happy dividend collecting,

DFG