Tuesday, February 24, 2015

What to write about when you have no money to invest?

Without any money to invest from January all I could do is screen and learn about some new stocks that came up this month.  It is my hope still to save enough where I can actually invest on a regular basis again.  Part of me wants to start using loyal3 or computershare.com.  Buy for free and sell for free on Loyal3 or for a fee on Computershare.  That way I can continue to invest in some of the strong dividend payers these companies allow you to buy.  The other part wants simplicity and is willing to pay the fee to keep all my money in one place with one tax document.   The third part just reminded me my goal is to first rebuild an emergency fund.  That part is such a downer and is no fun.  The fourth part is my wife who wants me to put any free money into home improvements.  I avoid that conversation at all costs.   The house will hold up and last longer than me.  My time is what I want not a nicer house.

I could go on all day about that stuff but you are probably more interested in what popped up in my screen this week.  It would have been a steal if I had picked it up at the beginning of the month.  Other people saw the bargain and thus the price is creeping back up again and the yield is dropping.

CARBO Ceramics (CRR) came in at #5 in my screen.  The other 4 above were all very interesting but ranged in 5-7 years of dividend increases.  Many had been paying increasing dividends before the financial crisis but cut them for a year before resuming increases.  The last dividend increase for CRR was back in July 2014 so we will see if they can keep the streak alive in 2015 and make it 15 years.  Why might this be at risk?

CARBO Ceramics you would think does pottery or something like that.  Not even close.  They fall under the Oil & Gas Equipment & Services sector.  They make ceramic proppant.  Proppant in terms I understand are a whole bunch of little beads that frackers inject into the cracks to keep them open.  This allows them to keep on widening and lengthening a crack to get to gas and oil reserves.  They also provide other services to the fracking industry which widens their moat (all in one stop and shop).

The risk is in the negative earnings estimates they are forcasting for the current quarter (-0.07).  That is a big difference from the last actual EPS of $.70 for the period ending 1/29/2015.  The other thing to worry about is the free cash flow.  Morningstar has the TTM at -7.  All the other TTM numbers look good regarding value, dividend growth, sales, etc.

Wells are being shut down.  For how long we don't know but oil is finite.  There will be a point when the oil will need to be extracted.  The other thing to point out is that CRR has survived and continued to raise the dividend in other years with cash flow dipping to -20 at times.  However if all wells shut down there isn't much business for Carbo.  On the other flip side the Chairman of the company continues to buy up shares.

I gander (haven't used that word in a long time) if I had some cash I would initiate a small position in CRR.  Since I don't I will keep my eye on it and hope A) the dividend doesn't get cut and B) the price remains near its 52 low so I can make a buy. 


Ever looked at this company?  To risky?

Thursday, February 12, 2015

January 2015 Budget

Month Overview
Not a bad start but could have been better as we went over budget this month by about $60 bucks.  For this year's budget I dropped the 'Needs' budget buy about $300 dollars.  January is my last car payment so for the rest of the year there will be no more car payments.  This was a big victory as I took out a 3 year loan with high car payments.  That part of the budget dropped but I upped the budget for things like auto repairs and utilities.  Is the budget reduction enough to achieve my savings goal for the year?  The budget adjustment gets me 6% lower but my goal is 10% less on 'Needs'.  I guess I need to find something else to cut out.



Needs
Category
Comments
More, Less or Same as last year same month
Mortgage
Steady consumer of my life
Same
Home Insurance
Almost like life insurance
Same
Utilities
$240 under budget (no water bill this month
$120 more than last January
Car
Yippee!
$260 less than last year (car repairs)
Car Insurance
If I save $80 a month I will be OK
Same
Loans
10 years and I am on year 3
Same
Food
Under budget by $190!
Same
Braces
Another year of braces for 1 kid
Same
Misc.
$320 over as my wife does winter clothes clearance for all kids for next winter
$300 more than last year

Wants
Category
Percent
Comments
Dining Out
50%
Includes my wife's love of expensive chocolate.  This is a good area to reduce.
Gifts
24%
A couple of birthday parties and next you know you're out $100
Charity
3%
Yeah not too proud of that
Misc.
23%
Domain renewal time and other miscellaneous stuff I buy could cut if I wanted to

Savings & Summary
In the end I did manage to come out ahead by a few bucks.  Enough to save for my car insurance and that is about it.  In the end no money left over to invest this month however I am happy I didn't spend money I don't have.  I will continue in February to target food.  Groceries combined with eating out is my family's #1 expense.  I have taken some measures already as of this writing and will share the results with you next month.

Savings rate for the Month = 1%

Thanks for listening to my story,

Dividend Family Guy

Tuesday, February 10, 2015

January 2015 Dividends

I haven't had any extra cash to invest since October of last year but that doesn't stop the dividend machine.  It is a small amount now and as long as dividends aren't cut and continue to grow it will be a sizeable chunk in like a hundred years.  By then I may be long gone but my kids and maybe their kids will reap the rewards. 

Sometimes I wonder if dividend growth investing is the right model at my age with limited savings to invest.  This year will be another minimal investing year as I rebuild my emergency fund and set aside more money in the budget for expenses such as healthcare costs and home repairs.  This money should be kept separate from the emergency fund as it can be planned for from previous year averages.

January dividends totaled $149.68 .  This was a year-over-year increase of 88%.  This was mainly attributed to the purchase of 3 companies.  I have yet to look over dividend increases to see what amount of new dividends were from reinvesting vs. buying YOY.  If anyone has that calculation easily handy pass it along or blog on it.  I could probably figure it out but my lunch is almost over and that is all the time I have to blog with. 

Below is my slightly changed dividend graph.  I have this and last year by month so I can easily gauge if I am heading in the right direction.  Also updated on my Dividendpage.  One day I may actually break it down by each company and share that with you.  For now it is just the sum of all dividends for the month.



Thanks for reading,

Dividend Family Guy

Thursday, January 29, 2015

DFG Stock Screen v.2

Dividends grow like leaves on a tree.
Why Change
The last and only Dividend Family Guy stock screen was posted when I had started writing this blog.  A lot of it still holds true but like everything else it should be reviewed (annually for me) and adjusted.  Always learning and growing is a good way to become financially independent.  I have learned quite a bit in a year and some of that will be applied to version 2 of my stock screen.

First Change
My struggle continues on whether or not to include all companies listed in Dave Fish's U.S Dividend Champion's spreadsheet (All CCC worksheet).  Most of the companies with the most potential for growth tend to be Challengers (5-9 years of dividend growth).  These are also the most likely to cut dividends as it has not baked into the culture long enough.  I am not saying this doesn't happen to the kings (Diebold for example) but it is much rarer.

Building a solid core first, then once it is established take some more risk seems to be an approach much recommended by the broader dividend growth community.  A core in my taxable account is non-existent.  It is better in my IRA where most of my money went to Champions (25+ years) who had a 4% yield at the time I opened the account.  These purchases were before I was wiser.  Those high yielders do grow the dividend but the rate is mostly below inflation. 

There is a middle ground and that is the first change to my screen.  Challengers are out.  Now I will take a balanced approach to just those companies that have raised dividends for 10 or more years.  When I say balanced I am referring to a ranking system that takes value, growth, quality and yield factors into consideration and ranks companies on each.

Will this eliminate 10 baggers and other high growth companies?

Second Change
My next change to the DFG screen will be a cap on yield.  It will be at 6% max on entry unless it is a REIT or MLP.  I have yet to determine what the best range is for those.  Any input from you is always welcome.  This change will help reduce risk of purchasing a company who may cut the dividend in the near future.

The Screen Simplified
Pass
Criteria
1
Dividend Champions and Contenders
2
Rank each company on value, growth, quality and yield
3
Rank each company with overall ranking
4
From overall ranking filter on dividend yield over 3%

Once that list is formed I usually research the top 10 who are less than 6% yield excluding REITs and MLPs.  Then another top 10 for just REITs and MLPs.

At this point I am leaving it at 3%.  If there are not enough opportunities at that level I will mostly likely drop the yield down to 2.5% but require a double digit dividend growth rate for the past 5 years with no downtrend.  What do you think?  Is that better than starting at 3%?

To make it easy for me to find the DFG Screen I created a new page on my blog.  That is it for now and there will be changes.  Always are.  The key is to hold even as your entry criteria changes over the years. 

Happy reading,
DFG


Image By Domdeem and courtesy of www.FreeDigitalPhotos.net

Monday, January 26, 2015

2015 Goals (finally)

The goals for this year are simple and focused.  I hope by doing this I will achieve them.  Unfortunately I do not think I will be able to bump up my investment rate.  However my plan for the year will set me up for the future by freeing up income.  Additional planning will also ensure that income stays free for investing.  Some surprises are good but financial ones that reduce your free cash flow are not.  Here they are in no particular order as they are all important to me.

  1. 5% weight loss by end of the year
    • I want to live.  Plain and simple.  I want to see my kids graduate from college, get married and have kids.  I want to live to retirement so I can enjoy the fruits of my labor (dividends).  Less fat means better sleep for me and less risk of cancer.  Having kids means my sleep is disrupted by them.  It is not so bad now that the youngest is 3.  However I still wake up tired in the morning and my wife says I snore big time.  I talked to my doctor and she suggested losing weight and getting a sleep test.  That test will come out of my pocket so losing weight is what I am focusing on for now as that is free.
    • My work health plan wants me to set a goal of 5% weight loss and they will give me 1000 points if I achieve this goal.  Those points can be redeemed for Amazon gift cards and count toward reaching their platinum level.  If I hit the platinum level my company will deposit 90% of my deductible into a health savings account (HSA).  So I am making money by losing weight.  I love money and this is easy cash.
  2. Reduce fixed costs by 10% and GFSM by 5% so I can rebuild my emergency fund to 3 months fixed cost expenses. 
    • The emergency fund dwindled to $50 this year.  I am not quite sure how as my year-end review shows me being ahead by about $800.  I think part of it has to do with everything that can does go on the credit card.  Then I pay off the credit card and reap the rewards program.  Since this is like getting a 1 month loan for free I had a high credit card bill from December 2013 that I paid off in 2014.
    • My fixed costs are already dropping from my car being paid off.  The rest I will have to squeeze from miscellaneous needs like changing toilet paper brands.  Additional savings will also come from lots of praying that nothing in the house breaks down nor my wife's minivan which is a 2006 model.
    • GFSM reduction by 5% should be easy.  Restrain from eating out as much.  That plus smaller gifts for the kids birthdays and Christmas.
  3. Plan in advance for all major expenses (no new debt)
    • Working on a budget and learning how to budget this past year has taught me a few things.  Plus tips and seeing how other investors save has been helpful as well.  If I save for house repairs I will have a fund that when the furnace breaks down I can draw from it.  This kinds of stuff happens when you own a house and car.  It is called maintenance and businesses plan for it so why don't more families.
    • Estimate health care costs for the year and make sure you can cover them from your HSA and savings accounts.  Basically this will be like my car/house maintenance funds.  Estimate and save so the money is there if something were to happen.
    • One account or many.  I have yet to decide if these maintenance/reoccurring costs accounts should be in the same savings account as my emergency fund.  Need to decide on how to keep the money set aside from being spent for the wrong thing.  If I don't figure this out my emergency fund will never rebuild.

Well writing this up wasn't as bad as I thought it would be.  Just had to sit down and think about it.  Writing out your plans and goals helps to clarify the jumble of thoughts that a brain is.  Now if I have any money left over after this rebuild year I will definitely invest it.  I will still be looking at stocks and doing a few reviews this year just to keep my skills sharp.  Wish me luck and I look forward to hearing about your goals and how you plan on achieving them.

Kind regards,

Dividend Family Guy

Tuesday, January 20, 2015

2014 Year End Budget Review

The year 2014 ended several weeks again and I finally have time to sit down and total up my numbers.  I am happy to announce that I did not incur any new debt for the year!  In fact my income was a whopping $700 more than my expenses.  I feel pretty good about that considering my career change that set me back 10% of my income.  I hope to see my savings & investing grow more this year with my car paid off.  However life tends to always change on you so who knows what 2015 holds for me.

Initially I had written about my budget and what my targets were.  When I started tracking I realized I was nowhere close to hitting those targets and when through several adjustments in how I track.  The budget goals were simply not realistic since they were not based on the past.  This year's budget should be better and more predictable.  Having information will allow me to set achievable finance goals.

Category
Initial Target
Comments
Needs
60%
Doing my best didn't even come close.  Missed by 11%.  More below on this area.
Investing
10%
Tax refund and reinvesting dividends helped here and was only off by 1.7%
Wants
20%
Formerly known as guilt free spending money.  This was combined with charity and surprisingly I spent all that I planned to.  We did have a nice family vacation and Christmas this year so money well spent.
Savings
10%
Well it was less than 1%.  Google spreadsheet charting didn't even dignify it with a percentage.  Any extra money I invested and my savings account is very sad right now.  Emergency fund, what's that? 



My needs will drop without a car payment.  I might also drop some car insurance coverage as I fully cover both our cars.  That might help get closer to 60% but I doubt it.  My house is the single biggest consumer of my income (and doesn't pay me dividends).  It does provide a home for the family but in retrospect both my wife and I agree we over paid for it.  Within a year of buying it homes in our neighborhood were going for considerably less.  Goes to show you trying to time the real estate market or the stock market never works for the majority of us.  Many lessons learned in 2014 and I look forward to what I will learn this year.  I hope you all feel the same way and will continue to grow with me.

Thanks for reading,

The Dividend Family Guy

Thursday, January 15, 2015

2014 Dividends

Sunny day at work.
It has been a good day so far.  Donated blood, the sun is shining and summing up my dividends for 2014.  It was a big jump from last year (mainly because I actual bought something).  Now that I got the ball rolling it will be tougher to top a   814% year of year growth for all accounts.  This was largely in part to my IRA which I can't touch until much later in life. 

If I just do the YOYG for my taxable account I get a more realistic growth of 224%.   I was never enjoyed math even though I had to go up to Calculus III in college.  So I appreciate the gift of the internet which let me know how to calculate growth.  I haven't set a goal yet but as long as I contribute at least the same amount as last year I will be very happy.

My largest payers this year were Windstream in my taxable account and SeaDrill in my IRA.  Well that will be changing this year since SDRL eliminated the dividend.   Well as I have read in your posts and comments many times slow and steady wins the race.  That $4 annual dividend from them was nice but now I pay the piper.

I hope you all met your dividend goals for 2014!

Happy investing,
Dividend Family Guy


Year
Taxable
IRA
Total
2014
 $     861.36
 $  1,568.92
 $  2,430.28