Friday, September 21, 2012

End of Summer

Today is the last full day of summer, according to the solstice-to-equinox definition.  Hours spent in darkness will start to outnumber daylight hours very soon (at least here in NH).

Continuing the dividend announcement soap opera, yesterday MCD declared a dividend increase.   That makes two stocks which have announced increases and one which announced a decrease this week.

We also received our Q3 dividend payment for WM.  Based on our current holdings, we won't receive another dividend for more than a month.  More than half of our positions pay dividends on the popular March/June/Sept/Dec schedule, which means September was a good income month for us.  (Oddly enough, however, the higher-yielding REITs distribute their dividends during the other months, so we'll receive more income from fewer holdings in Oct & Nov than we will in December).  At this stage in my life, it doesn't matter when the dividends are paid, but for an investor who was counting on that income stream, I could see a case for shifting portfolio allocation between stocks so that it would be fairly evenly distributed throughout the year.

Thursday, September 20, 2012

Dividend Decrease

On the heels of the MSFT dividend increase comes a decrease from one of our other holdings, NLY.  Unlike many other companies, NLY seems content to allow its dividend to regularly float up and down based on actual profits, rather than seeking consistency with its dividend from one quarter to the next.  I have read a number of articles on NLY recently which predicted a drop in dividend from Q2 to Q3 based on narrowing spreads between short- and long-term interest rates, so this was not a huge shock.  As we are new investors in NLY, the Q3 dividend will be our first payment that we receive, so it won't feel like a "decrease" to us.  The current yield over 11 percent is still respectable.

As always, I'll keep a watchful eye on the high yielders in our portfolio to ensure that they still meet our investment criteria over the long run.  I am willing to take on some risk with a portion of our investments if it can help to bring up the overall yield.

Tuesday, September 18, 2012

Dividend Increase

For the first time since we bought our initial set of stocks back in July, one of our holdings announced a dividend increase.  MSFT will pay 3 cents more per share in December.  This brings our yield on cost to about 3.2% (up from about 2.8%).  Certainly not a huge difference, but nice to see the yield over 3%.  Hopefully some other dividend increases are in our future.

Speaking of MSFT, we received its September dividend last week, along with AMAT, PBI, and MCD.   WM is scheduled to pay on Friday.

I also opened a new position in EXC.  This is an electricity utility which is trading near its 52-week low.  Though the company doesn't have a track record of regular dividend increases, its current yield is just under 6%.  This certainly beats the paltry yield of the money market fund in my brokerage account.  I'm not looking for huge capital appreciation from this one, just a steady regular flow of dividends over time.  It should serve as a more stable, conservative anchor to help balance out some of the high-yielders in the portfolio.

Friday, September 14, 2012

Patience

My wife and I both work for organizations that pay employee salaries on a bi-weekly schedule, and as luck would have it, the pay schedules of our respective employers differ by exactly one week.  This means that every Friday we have fresh income flowing into our accounts.

Since we paid off the mortgage last year, we made the decision to use my wife's salary to cover our living expenses, and mine for long-term savings and investment.  Therefore, every other Friday the brokerage account has new cash ready to be put to use.

Since purchasing our first round of stocks back in mid-July, I've looked forward to these "investment Fridays" as opportunities to add to the dividend portfolio.  And so far I've found ample options for investing -- until today.

I don't know if it's because I'm getting pickier, or if subconsciously I'm wary that the recent run-up in stock prices can only be followed by a corresponding drop (even though I'm trying to stay disciplined to  avoid market timing), but despite spending ample time reading and researching over the past couple of weeks, I'm not sure exactly what to do with the latest influx of cash.  I'm torn between "doubling down" one one or more of our holdings which have lagged recently (like INTC), or opening a new position in a high-quality security at current market prices, in the name of additional diversification (since our portfolio is somewhat unbalanced at the moment).

I have really been enjoying reading blogs about personal finance in general and dividend growth investing in particular as of late.  There is so much to learn -- it's like embarking on a new adventure.

One thing I want to brush up on is an exit strategy that I'm comfortable with.  There are a number of "when to sell a dividend growth stock" articles out there, each with its own set of recommendations.  I want to settle on some personal guidelines for how to handle various scenarios, especially a large run-up or drop-off in the value of one of our holdings.  As of late there have been quite a few unrealized gains in our investments.  It's tempting to want to pull some of that cash out and diversify into another opportunity, but it seems like so many companies are hitting 52-week highs these days that I fear I'd be exchanging one high-flyer for another.

For now I'll be patient.  Meanwhile, I'll continue to learn as much as I can to try to be ready for opportunities for new investment when they present themselves.

Thursday, September 6, 2012

Recent Updates

The September dividends are starting to flow in.  CLF paid last Friday (technically still August), followed by INTC and COP earlier this week.  I've started tracking dividends received on the Portfolio page (in the Dividends tab of the spreadsheet).

We made two additional purchases since my last entry.  I opened a new position in MCD.  I also added to our stake in CLF after a recent decline.  Going forward I hope to balance our purchases between high-quality, lower-risk blue chip stocks (like MCD) and comparatively lower-quality, higher-yielding, higher-risk names like CLF and PBI (although depending on the source, these still rank as blue chips because of their inclusion in the S&P 500), as well as REITs.

Four more of our holdings are set to pay dividends in the month of September.  As it stands now, the March/June/Sept/Dec quarterly cycle is the payment schedule for the largest number of our positions.

I've been working long hours this week.  Although it seems like a distant dream at the moment, I look forward to the day when our investments can pick up some of the slack and make a meaningful contribution to our income.