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.