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

Monday, January 12, 2015

December 2014 Budget

December was a good month for dividends however it wasn't so much a good month for saving.  This time of the year is the most expensive for me.  A big family with even a bigger extended family makes for a BIG month in the Guilt Free Spending Money category.  I did save up for a portion of the gifts but went about $200 dollars over budget.  My wife says I should spend equally among all of our kids.  My reply is the older kids "toys" are more expensive.  If they get equal number of gifts the older kids would therefore cost more.  If I spent several hundred dollars on the little ones toys they would get heaping mounds of plastic toys they would not play with.  Still working on the right balance even after 14 years of raising them.  In retrospect I probably could have spent less on the older kids and they would have been just as happy.  For example my daughter has yet to touch several of her presents and her favorite cost under $20 (see picture above).  Any advice all you frugal spenders?

Expense Breakdown
I am presenting the breakdown two different ways this month.  One is with the usual pie graph and the other is a mind map.  Let me know what one you like better.  This is a short post as my time is limited (kids have 2 hour school delay from snow so squeezing it in now).  This month was my bi-yearly car insurance payment.  That always takes a good chunk out of my savings.  Utilities/Cell Phones continue to eat up over 10% of my income.  Kinda crazy considering my mortgage only consumes 20%.  Maybe I should move back out to the country where my water was free.  The other biggy is food.  That is about the same as utilities.  We did host Christmas which added about $150 on to my normal food bill.  I wonder if I should go back to shopping at Aldi's.  I tried it once last year and got out with a week of groceries (including organic) for $100.  The family had some complaints about the taste of some of the products.  So I didn't go back.

The usual pie graph: 


Below is the mind map:

Savings
It was a merry Christmas until I totaled up the bill.  Ha just kidding.  It was a good holiday.  I spend 2 weeks playing with the kids and hanging around the house.  I will try better next year to focus even more on spending time with the family vs. buying them gifts they will get little joy from.


Savings rate for the Month = 0% :-(


Wednesday, January 7, 2015

December 2014 Dividends

It was a good month.  December was my best month of the year in my taxable account.  This was mainly because of a cash payout for the transition of my  El Paso Pipeline Partners LP stock over to Kinder Morgan, Inc. 

My IRA took a hit from Q3 because of a dividend elimination by Seadrill (SDRL).  A loss of $100+ in dividend income does sting a little.  That was one of the stocks I bought just looking at the yield before I had any idea how to research a company.  I am still pretty upset about that and haven't decided what to do with the stock (since I have no sell guidelines defined).  At this point it has dropped so much it is nowhere near what I paid so I am holding for now until oil recovers.  If I were to sell I would not generate enough capital to be able to purchase good dividend paying stocks with minimal expense.

In my IRA I got my first dividend from my most recent purchase of Crown Crafts Inc. (CRWS.)  It was a whopping $1.44.  I think that could get me a Wendy's value chicken sandwich. 

Yes it is lunch time and I am thinking about food.  I am trying to get some writing done during lunch.  I was working on my budget totals last night and was just too tired to do much more.  By the time I get my kids to sleep I am about ready to go to bed as well.

The grand total for the month was $461.05.  That does feel good and was a good way to end the year.  All of it was automatically reinvested except for the cash payout.  That will just sit there and collect interest until I have enough capital to make another purchase. 

I hope your month was equally rewarding and can't wait to see everyone's totals for the year.  Go dividends!




Full Disclosure: Long on KMI,SDRL :-( & CRWS.

Friday, January 2, 2015

Pre-goals for 2015

Happy new year to everyone and I hope your holiday season was relaxing and enjoyable.  I have spent the past two weeks on vacation playing with my kids mostly.  I started to take decorations down and went back to work today.  The next couple of months are always fun as it is tax time (REFUND!) and bonus/review time at work.  This is a major source of my investing income so for me at least I like winter.

I wanted to share with you some of the things I need to accomplish in order to have goals for the year.  I am already late on goals since the new year has started.  If I actually set goals this year that will be an accomplishment.  So hear is a quick list of what I need to do to get there.

  1. Write this post
  2. Create a goals page
  3. Set three SMART goals geared around dividend income, health (mental and physical) and finances.

The health goal also includes anything pertaining to my family.  I would love to set a blog goal but family time always takes precedence over blog time.  My blogs will continue to be irregular but I do appreciate those who stop by to read up on what I have to share.  

I think it is a major accomplishment just to have a blog and keep at it.  Writing is not easy and sharing your world with others isn't any easier.  Kinda makes you accountable to the world.  No small undertaking so congrats to everyone out there that started one and to those who continue to, blog on.  Happy new year.

Regards,

DFG

nRelate Going Away

So I used nRelate to help share additional posts at the end of each post for my readers.  I liked it because it worked and it was FREE.  Their service ended December 31, 2014.  Now on their site they give some alternatives to use but they look to be for WordPress.

Should I move to WordPress?
Any content sharing tools you know of that are free? 

The searching I did all led to ones you have to pay for.


Thanks in advance for any replies.