Welcome to The Dividend Pig – a blog dedicated to building wealth through dividend growth stocks! The Dividend Pig not only seeks to provide you with the fundamentals in dividend growth investing, but to also show you great dividend stocks that you can purchase for your investment dividend portfolio.
Wow, this month came and went pretty quickly. Below are the dividend stocks I purchased this month. You’ll see that i’ve been buying some higher yields this month. This is somewhat of an extension from last month, when I also added some more REITs. Clearly not been the best strategy with markets pulling back a bit the last few days.
So far this month I’ve added a little over $700 dollars in forward dividend income! A pretty awesome month!
Forget the stark mad, screaming pundits on financial TV shows squawking about the hottest gainers of the moment. Forget chasing the latest headline capturing investment trend — I’m looking at you Bitcoin. Think your going to make millions playing Rocket League? Forget even the fantasy of cashing in that winning Powerball ticket or inheriting millions from the rich uncle you didn’t know you had.
For everyday folks, the ones who go to work and receive a paycheck – saving, investing and retirement are inextricably connected. Setting aside money to grow over the long term is the means to achieve the end goal of having enough money to live comfortably after your working days are over.
And while 401(k)s and IRAs, whether employer-provided or personally managed, are critical investment vehicles for long-term investment growth, investors may seek other promising assets in which to place their money. Such is the space where stock index funds thrive.
To cut to the chase, if I weren’t a dividend investor who enjoys the hunt of picking stocks and building my own dividend portfolio, my money would be squarely placed in ETFs.
Simply defined, index funds are a type of passive mutual fund or ETF in which the money in the fund is diversely invested across a list, the index, of stocks that represent a whole market or market segment. Some index funds are constructed to mirror the performance of well-known indices like the Dow Jones Industrial Average or S&P 500 Index. Others may focus on stocks in industries such technology or pharmaceuticals.
Investors are provided two distinct benefits by the diversified nature of index funds: widespread market exposure to optimize the capture of bull runs (stock market returns historically outstrip other investment returns such as bonds) and significantly less vulnerability to single stock selloffs.
This approach is appealing to an increasing number of investors. By late 2016, it’s estimated that more than $1 out of every $5 invested in U.S. equity markets was via an index fund. But there are a lot of index funds out there. Where should the savvy investor, who doesn’t want use free time picking individual stocks, place their money?
The short answer is ETF’s – and you don’t need to buy many of them. Choosing index funds from Vanguard, a pioneer in the development and offering of these funds is a great place to get started. In fact, personal finance news organization Kiplinger recently recommended holding just two Vanguard 500 Index funds in your retirement portfolio.
One suggestion was Vanguard Total World Stock ETF (symbol: VT). The VT tracks the FTSE Global All Cap Index and invests in a staggering 7,900 stocks from around the world while carrying a modest 0.11 percent annual fee. The current investment composition of this fund is 52 percent in U.S. stocks, 47 percent in foreign stocks, and 1 percent in cash. The value of VT shares has climbed 55 percent over the past five years.
Another great pick to consider is Vanguard Total Stock Market ETF (symbol: VTI), which mimics the performance of the entire U.S. stock market by tracking the CRSP U.S. Total Market Index of 3,800 stocks. With an annual fee of 0.05 percent, VTI shares are up 88 percent over the last five years.
Or if you’re with Schwab, a fantastic discount broker, you have access to their commission free, low fee ETFs, like Schwab U.S. Broad Market ETF (symbol: SCHB). With an annual fee of only 0.03% it’s cheapest you’ll find. SCHB is up roughly 89 percent over the last five years.
But since I understand the importance of my investments generating cash through dividends, I would likely pick one of the three options below.
Schwab’s U.S. Dividend ETF (symbol: SCHD) isn’t a bad place to start. It caries a modest expense ratio of 0.07% and a decent yield of 2.7%. Or, Vanguard’s High Dividend ETF (symbol: VYM) with an also small expense ratio of 0.08% and slightly higher yield of 2.84%. Both should see some good dividend growth over the years.
However, if I felt the market was getting away from itself (hint, hint) I would likely choose a slightly higher yielding ETF with a greater percentage of defensive holdings. iShare Core High Dividend ETF (symbol: HDV) fits that job nicely. While HDV’s expense ratio is inline at 0.08% it’s yield is a whopping 3.28%.
While it’s possible in the digital age to reach a millionaire status by becoming a skilled gamer, don’t bank on it for your retirement plan. Strongly consider the long-term wealth growth and low fees associated with quality ETFs, reinvest those dividends and buy more shares over time. Once retired, you will be glad you did.
Below are the best dividend earning stocks I could find this month. It’s been slim-pickings with markets continuing to move up to finish out the year. I’m really scrapping the bottom barrel looking for decent values in companies that I need to round-out my portfolio. Although, the companies in the bottom of this barrel are still fantastic.
I’m extremely excited to say i’ve been able to add a little over $500 in yearly forward dividend income. Clearly not an insignificant sum!
You’ll notice that I put some additional money into REITs this month. They have been valued better going into 2018 with FED raising interest rates.
I also made a big investment into CVS. This large buy happened because of a limit order that hit after CVS announced they were buying Aetna. They also announced that the CVS dividend yield wouldn’t be increasing in January to help pay down debt from the purchase. While this is disappointing, I still feel comfortable that CVS will get back on the dividend growth track shortly.
Oh, after the large CVS purchase I had over 100 shares in the account. I was able to sell a $73.50 covered call that expired on December 15. The call expired out of the money and I was able to pocket the $40 premium! A great outcome, especially since the option was only open for a little over a week. I hope to do more of that in 2018.
So below are the best dividend earning stocks I could find this month… we’ll best valued anyway.
As a dividend blog, I like to keep a monthly tally of my dividend income and net worth. This serves two purposes. First, it keeps me actively focused on my goals and second, it allows me to document my path to financial freedom. If nothing else, hopefully my story will encourage and prove the process for others looking to follow a similar path.
October Dividend Income
It’s hard following up gigantic months, like September, with monthly dividend income sums that are a quarter of the previous month’s haul. However, it’s important to keep in mind that the totals are not what matters right now, it’s the year over year income percentage increase that’s really important. October has been a decent month with regards to total income but a fantastic month in terms of percent increase from last year.
Let’s get to it.
This month I received $281.63 in dividend income. On average, I received $21.86 pay checks from 13 of the world’s best companies. I’ve said it before, but being a dividend income investor is the best job I’ve ever had.
Net worth is slowly starting to crawl it’s way back.
Let’s do the numbers…
It’s not a big increase, but it’s certainly better than another decline. With the load of medical bills we’ve had to pay (and the big ones that come due this month) it’s a miracle we were able to stay positive at all. Next month though, that’s a different story.
My wife’s surgery will end up costing us right about $4,500.00. This is a drop in the bucket when it comes to her health and I would gladly pay whatever was necessary.
Oh, speaking of the surgery, everything went very well!!!! She is recovering nicely and it seems like the surgery will result in a big increase in her quality of life!
Real Estate (Steer clear of Ditech!)
Well, we did it. We put rental property #1 on the market. This is a very exciting time for us. We have had a few showing so far, but no offers yet. I guess we priced it right as no one has complained about the cost and people are coming to look at it… just not ponying up.
Rental #2 is still moving along well. The renter continues to pay on time and we continue to deposit checks on time. It’s a great relationship, however, I do not have a good relationship with the mortgage company that bought my loan.
Ditech (the holder of our loan) has some pretty shady business practices and has tried to extend my loan several times. We pay extra on this mortgage every month. We obviously want it paid off as quickly as possible. You do that by paying extra towards principal. Well, we had to jump through several hoops (which is ridiculous) and spend easily an hour on the phone previously (about a year ago) to ensure that additional money paid to them goes towards principal. Sounds logical and should be easy right? It’s not with those thieves at Ditech.
Instead of defaulting to extra money going towards principal, they hold it and put extra money into escrow and then credit the money towards future monthly mortgage payments. This is not how you pay down principal, but it is how they ensure the length of your loan and keep you paying all of that additional interest you are trying to avoid. Really, who would pay an extra $500 every month in order to get ahead on monthly payments? No one. After that initial hour on the phone, we were assured that the account would be correctly coded for future “extra to principal” payments.
Perhaps there was a coding update a couple of months ago, or maybe they were just up to their tricky thievery. Luckily we are aware of this problem and noticed it within 2 months this time around. The money will get correctly applied and once again the future extra payments should go to principal, but not without hassle and another long phone call.
Morale of the story, if you have Ditech (or any shady mortgage company), pay close attention to your monthly statements and where your extra payments are being applied.
Wrap-up – Why I keep a dividend blog
So, with regard to the dividend blog, I now have 3 full years of data – dividend income and net worth on the site. The dividend income growth has been incredible and I can say for certain, that I would not be nearly as close to where I am to reaching my goals without keeping this dividend blog. It’s provided me an outlet to share and the motivation to track my progress.
If starting a dividend investing blog has ever crossed your mind, I highly recommend you take the leap! The community of other dividend bloggers are extremely friendly and supportive (thanks guys)! It is without a doubt the best decision I have made concerning to my financial future.
Once again, I’m late to publish the dividends stocks I’ve been buying this October. It’s been a trying month to say the least. Anyway, in an effort to get this published today, I’ll keep this very short.
It’s again been a difficult month for me to find deals in the dividend stock world. Yet, I’ve still managed to add almost $300 in forward dividend income this October!
I feel comfortable with all the stocks that I’ve been purchasing will continue to pay and grow their dividend for years to come. However, I have been somewhat neglectful to some of the old guard and feel compelled to add to my positions in these fantastic, yet wildly overvalued companies. JNJ, MMM are two that I continue to kick myself for not buying more when they were reasonably valued in the past. JNJ dividend yield and MMM dividend yield ranges are trading near their five year lows. I just can’t bring myself to pull the trigger while these companies are so historically expensive… but I would love to add more!
So, here is the list of dividend stocks I have been buying this month. You can click on the underlined stock tickers in the table below to see their historic dividend yield ranges.
I’ve finally done it! I’ve reached a dividend cash record that I’ve been working towards for years! This month’s new dividend income report is here and I’m excited to share!
September Dividend Cash Record Month
I’m sure you can already tell… I’m thrilled to report the dividend income progress I’ve made this month. It’s taken a lot of work, time and money to make this happen. While this month’s report is more of a beginning then an end to reaching further goals, it is something I’m very proud to have finally achieved.
Let’s get to it.
This month I received $1,027.85 in dividend income. On average, I was paid $21.86 from 47 fantastic companies. I absolutely love having 47 passive income jobs with some of the best run companies in the world!
We once again have a huge monthly dividend income increase. This month’s dividend income is a 127.13% increase over September 2016. This type of increase will allow me to reach my goals of early retirement in just a few more years.
Dividend Income - September 2017
BHP Billiton plc (ADR)
Costco Wholesale Corporation
Digital Realty Trust, Inc.
Discover Financial Services
Duke Energy Corp
Emerson Electric Co.
Exxon Mobil Corporation
Ford Motor Company
Home Depot Inc
Honeywell International Inc.
International Business Machines Corp.
J M Smucker Co
Johnson & Johnson
Lockheed Martin Corporation
Main Street Capital Corporation
Marriott International Inc
PowerShares Preferred Portfolio(ETF)
Realty Income Corp
Stag Industrial Inc
T. Rowe Price Group Inc
Travelers Companies Inc
Unilever plc (ADR)
Union Pacific Corporation
United Technologies Corporation
UnitedHealth Group Inc
W W Grainger Inc
Wal-Mart Stores Inc
Wells Fargo & Co
∑ = 1,027.85
It’s a huge increase and a gigantic sum of dividend cash to receive for doing nothing… zero work! Being a dividend income investor is the best job in the world. I can’t wait to be able to do this full time in a little less than 5 years!
September’s dividend cash covers electricity, gas, internet, groceries and dining out. Pretty much all of my larger expenses outside of the mortgage.
Cash got smashed this month after investing in upgrades to get rental property #1 ready for sale. However, overall net worth pretty much stayed flat.
Let’s do the numbers…
Another huge cash decrease this month. This time the money was used to invest in rental property 1 to get it fixed up to sell. It’s funny, I would never spend this kind of money on my primary home, but I’m happy to shell it out for the CHANCE to sell my rental property for more.
Here is where it all went. Brand new kitchen appliances – $7,500. We bought them on sale from HD and “saved” a little over $1,000. We also purchased new fancy granite countertops for the whole unit for about $2,500. We also changed all the lighting in the unit to LEDs and painted all the walls. The place looks great. We are now planning on listing the unit for 250k.
As I mentioned above, we are selling rental property #1. Our hopes are to get roughly 250k for the property and we would like to net roughly 230k. There are a lot of variables that will go into that. First, our agent is a friend and I hope to only be charged 1.5% on the selling agent side. That hasn’t been “worked out” yet, but I’m pretty sure it is possible. Also, 3% from the buyer’s agent takes a large chunk of cash as well. Ugh. On top of that, we have been deprecating the rental property and that will come back and eat some additional cash. I just don’t know how much yet. However, these are all pie in the sky numbers at the moment. Perhaps nobody will like the unit or, maybe everybody will like it and there will be a bidding war (cross your fingers for me). We’ll know more once all of the rehab is done next week.
The money from this sale will most likely go into paying off my mortgage. While I understand this isn’t maximizing my earning potential for this windfall of cash, I am getting a guaranteed return of 3.5% (my mortgage interest rate). I’m okay with that! And, I’ll be more mortgage free. I suspect the level of freedom not having a gigantic mortgage payment do every month will be extremely liberating.
This month’s dividend income increase truly shows that what I’m trying to do is working. I mean, I made over one thousand dollars this month for doing nothing! On top of that, rental property #1 is almost ready to list and hopefully that will go as well as planned and I’ll be mortgage free!
Now, as to where I think we are going in the markets. The Fed will begin to reduce their balance sheet this month. Apparently, by 10 billion and will ratchet that up to 50 billion in the following months. This should put some pressure on the markets and interest rates should begin to rise. That will certainly be welcome to us dividend investors that would love some better values. However, those better values will come from a reduction in stock prices and we are going to see a lot more red days ahead. For all you folks that trade forex and focus on the USD, this should also be welcome news. Typically higher interest rates appreciates the base currency. There should be some good opportunities approaching.
I still have plenty of cash and will be anxiously awaiting a correction. It would be great to see a 5-10% correction this October, but only time will tell.
Did you break a monthly dividend income record? Do you think we’ll see a correction this month?
With markets reaching new highs, I’ve been thinking a lot recently about hedging my dividend portfolio. In my case, I’ve put a little over $100,000 to work over the last 6 months and have only seen a roughly 2 – 3% gain in that invested money. I am, however, more concerned with creating dividend income than increasing my total portfolio value. Still, nobody likes to see huge red negative numbers next to their holdings. I’ve put down some of the options I’ve been thinking through on how I can hedge my dividend portfolio in case of a large market correction.
Pay a professional
The first and easiest option to hedge my dividend portfolio is to pay someone else to do it for me. I could invest a in a numerative amount of hedge funds. Many hedge funds have a minimum 500k buy in… MINIMUM. So, that dog don’t hunt. There are other options as well. I could hedge like banks and other financial institutions do. JCRA’s guide to hedging risk using financial derivatives has an interesting walk through on those options. But again, I’m not a financial institution and am nowhere close to having that kind of cash to invest. So, in my case, enlisting professionals to do it for me just isn’t an option at the moment.
Hedge with ETFs
Timing my hedging based on market conditions is a viable option. There are loads of ETFs I could short and even leveraged inverse (short) ETFs like SH, SDS or SPXU that I could use to protect the total value of the portfolio in the case of a significant market correction. But, we again run into a snag. First, how does one effectively time a gigantic sell off? I don’t have an accurate way to predict a correction to side step the declines. Permanently holding a hedge would be a huge waste of money, especially with the bear continuing to run.
Hedging with Dividends and Cash
Since the stated purpose of my dividend portfolio is to produce consistent cash, I’m kind of already hedged. None of the companies that make up my portfolio are going to stop paying if there is a 10, 15, 20 or 25% correction. For the most part, I own companies that have a long history of consistent dividend payouts, even during tough times.
I also maintain a decent cash position just itching for a large market correction. Frankly, those still in the accumulation phase should welcome a market correction and have a large shopping list of companies they would love to buy for 20% off. I know I do.
Now, it can easily be argued that there is a cost to keeping cash ready to invest. It’s true. Although I am losing potential returns (and dividends) from not investing the cash, it’s not costing me cash. Also, that side-line cash will eventually be some of the most productive money as it will be buying some great companies at fantastic discounts!
Do you hedge your dividend portfolio or keep cash ready for those big sale days?
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