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I entered the stock market when I was 24 through mutual funds. I started investing in stocks myself after learning and getting a feel of good & bad investments. My goal is to build an income generating portfolio through a dividend growth investment strategy over the long term. As finance... More
My company:
The Dividend Income Project
My blog:
The Dividend Income Project
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  • September Finance Highlights

    September so far has turned out to be quite the eventful month - we've had a few agent provocateurs for volatility courtesy Lawrence Summers backing out as a potential Bernake replacement, Fed taperisms, debt ceiling and obamacare bickering and a plethora of boom, doom and gloom predictions from every analyst out there. Suffice to say, life goes on as we're in this for the long haul and will collect cash payments being part owners in the companies we've invested in. Inspite of all the noise, our Dividend Growth Income fund is staying the course and has continued sending us cash and has also appreciated nicely in a month that I was expecting to be bloody. Our current net worth is 67% stocks and 33% cash.

    Key finance highlights for the month of September

    Continue Reading....

    Disclosure: I am long CVS, WAG, COST, AAPL, CVX, MCD, PSX, TGT, TWX, WAG, WEC, WMT, DLR.

    Additional disclosure: I am not a licensed investment advisor and I am not providing advise for you

    Sep 24 12:54 AM | Link | Comment!
  • Take Aways From "Rich Dad Poor Dad": Be Your Own Dad!

    So I was conversing with a friend who had just read Robert Kiyosaki's famous book - "Rich Dad Poor Dad" and I shared my two cent dividend on Robert's book with him.


    My brother had bought "Rich Dad Poor Dad" back in 2001 when I was in college and I had a chance to read it during that time. I must admit that this was the first book that got me looking at money, income and other elementary aspects of personal financial in a very different, unconventional way. I would recommend everyone to read this book to look at personal finance from an unconventional perspective and see the bigger picture in such an important aspect of one's life. There are various principles that will get you thinking in the right direction.

    Having said that, I do look at most things from a critical perspective. I believe that once someone familiarizes themselves with different aspects of personal finance and various schools of thought around it, it is best that they set their own goals and methodologies that work best for their personality and temperament over following someone else to the letter uncritically.

    Good points:

    1. Make money work for you instead of you working for money: This way of thinking caught my attention because we're all living in this rat race to "make money". And it's a never ending rat race once you have bills upon bills and various other expenses.
    2. Look at everything as an asset and liability: Robert defined assets as anything that brings you money or "cash flow" and liabilities as "anything that makes you loose money". Now this also opened my horizon to think at any big purchase in terms of an asset or a liability. So much so that even when I bought a car a few years ago when single, I bought a 2 year old used 2 door hatchback Hyundai Accent with 1 year warranty left on it all cash instead of the Dodge Charger or Camero I was eye balling since I was young, single and building up a cash reserve with low expenses. I figured that I would pay less cash on the initial purchase and subsequent maintenance if I started out low key. I haven't bought a house yet either because I'm living in a small apartment paying low rent instead of owning a house, paying off debt and having all sorts of one time initial set up expenses and monthly overhead expenses and annual property tax payments. Though his definition of assets is a good reminder on how to spend wisely, it should be noted from an accounting perspective that an "asset" is essentially anything with intrinsic value and it need not always produce cash flow. Eg A plot of land, a company stock, a wooden shelf made out of rosewood that might sell at a premium years later.

    Critiques:

    1. Too much focus on real estate: I felt there was a lot of emphasis on real estate which worked in the 90s and early 2000s but real estate, like any other asset class has its risks too. Many people followed his advise uncritically and even paid hundreds of dollars to attended Rich Dad Poor Dad seminars - they were flipping houses, taking loans and lost big during the housing collapse.
    2. Very critical of working a job: I got the impression that the book made it sound like working a job is not something that rich people do. However the reality is that many millionaires worked jobs. Former GE CEO Jack Welch and former HP CEO Carla Fione started working in their companies as low level employees and moved up the chain. I believe if you enjoy your work and have a steady income, it's something worth holding on to unless you feel you have a better working alternative and it shouldn't be looked down upon.
    3. A very material outlook towards being "rich": I also felt that there was a very material outlook towards wanting to be "rich" - make more money...and more money...and more money. I feel being happy, content and comfortable with your potential is an ideal goal that makes anyone "rich". One man's "poor" maybe another man's "rich".
    4. "Saving" is portrayed as a bad thing: I think a balance between saving and investing in assets that have potential for growth is a wise strategy. However, reading the book, you get the impression that people saving cash are losers. The main argument provided is that cash, doing nothing, will be lost to inflation. This is correct... however you should also realize that taking risky decisions with cash could also make you loose it. I believe a balanced approach would be to have enough cash for one year's worth of emergencies and an additional two to three months for immediate expenses incase you need a cushion due to some unforeseen event. It's only after the 2008 crisis that a lot of people realized that cash *can* be king.

    Conclusion:

    This is a great book to get your perspectives opened up to an unconventional way of looking at money and personal finance. However, readers should keep in mind that what worked for Robert Kiyosaki may not work for someone else and you have to read this book with the intention of learning and gaining a different perspective and then fine tune your short term and long term goals keeping your personality and temperament in mind while making financial decisions. Lots of people look for the easiest way to get rich and then end up getting burned (see this investigative report on people who paid for Rich Dad Poor Dad seminars).

    Until next time, happy investing!

    Sep 01 1:17 AM | Link | Comment!
  • DGI Journey: New Positions, Additions, Dividend Reinvestments And Planned Profit Taking For Building Cash

    Is it time to buy yet?

    I don't know...but we've had a small pullback since last week and since the high 1700s.... yes, "small" because a normal correction would be atleast 10% but what we've had so far is what? 5%? So that's more like a "pause".

    Anyway, short post for now because I didn't update my blog for quite sometime. I've been keeping cash handy to buy on attractive dips. Even though I wanted to wait till september's taper tantrum, I felt that with the chorus of negative news, taper talk may die down and the feds may tone down their taper talk.

    So a few stocks on my watchlist started to look very attractive and I added to some positions and also started some new positions.

    New positions added: (CVS), (COST)

    CVS Caremark Corporation (CVS): I started a small position (30% of my intended final position) in CVS and will gradually fill in during sizable dips. This is a fairly new dividend growth story operating in the retail pharmacy segment. Dividends have been increased consistantly for the last 10 years. Like Walgreens, I like CVS as a growth story. It offers a 1.69% dividend yield. Though a low dividend for any dividend growth investor, I bought it early because low payout ratios and growing Earnings Per Share (EPS) make me think that this is a potential dividend growth story.

    Costco Wholesale Corporation (COST): Costco operates membership based warehouses offering members lower prices by selling select merchandise products in bulk. Costco has been a leading player in this market and has seen stellar growth over the last year. I did break my rule of going for moderate Price to Earnings ratio (PE) and payout ratio. Costco has a trailing PE of 24 and a payout ratio of 176%. However, I felt compelled because owing to increasing memberships and rapid growth plans, Costco has a guaranteed source of cash flow to sustain dividends and historically, Costco's PE has been hovering around the same mark. I bought a small speculative position in Costco (around 40% of my intended 5 year target) after Costco came down around 8% from its recent highs. Costco has a low dividend yield of 1.1% but it has been constantly increasing dividends for the last few years and I see Costco has a potential dividend growth company.

    Growth + Dividend Growth = Well balanced DGI

    So looking at my overall dividend growth portfolio, I have three blue chips that pay very low dividends in terms of yield on cost (YoC): Disney (DIS) paying 1.50%, CVS Caremark Corporation (CVS) with a YoC of 1.69% and Costco Whole Sale (COST) with a YoC of 1.1%. My expectation is that these companies will not only sustain their dividends but also grow them.

    Additions to existing positions

    You need to be able to add to existing positions when you get opportunities and see attractive dips. I did just that with three of my existing holdings. Walmart (WMT), Target (TGT) and Chevron (CVX) took nice dips so I added small amounts equally to these three positions.

    Walmart (WMT) came to the low 72s from the high 79s,

    Target (TGT) came to the high 62s from the high 73s

    Chevron (CVX) came to the low 117s from the high 127s.

    These are good dips to add on for anyone going long in this dividend champs.

    Dividends Reinvested

    I built sizable cash positions from dividends in August so I deployed them to buy shares of Textainer Group Holdings (TGH).

    Plans for September:

    • Profit Taking And Rebalancing: I'm looking to book some profits on my Apple (AAPL) holdings - maybe to half before September 10th or right after September 10 depending on how sentiment goes. Apple on September 10th will be a classic case of buy the rumor and sell the news. Thanks to the Icahn lift and rumors building up towards the September 10th launch, I'm planning to sell and raise cash to buy on significant dips. I may change my plan and just continue holding if sentiment continues to stay and Apple's current move upwards turns into momentum that can be sustained. With the whole Apple saga and my general negative temperament towards technology, I'm actually looking to exit Apple completely within the next two years and will look to using capital gains from Apple and dividends as a mechanism to build cash positions and redeploy.
    • Dividend Reinvesting: I will be building a sizable cash position through dividends in the month of september a couple of pay dates fall in. I'm thinking of adding to my existing Digital Reality position (DLR)

    So my current portfolio includes:

    1. Apple (AAPL) - 2.5%
    2. Conoco Phillips (COP) - 4.8%
    3. WalMart (WMT) - 2.5%
    4. Abbvie (ABBV) - 4.5%
    5. Phillips 66 (PSX) - 2.25%
    6. McDonalds (MCD) - 3.8%
    7. Disney (DIS) - 1.75%
    8. Dynex Capital (DX) - 12%
    9. Target (TGT) - 2.6%
    10. Digital Reality (DLR) - 5.6%
    11. Chevron (CVX) - 3.3%
    12. Time Warner (TWX) - 2%
    13. Medtronic (MDT) - 2.25%
    14. Scana Group (SCG) - 4.5%
    15. Walgreen (WAG) - 2.5%
    16. Coca Cola (KO) - 2.8%
    17. Wisconsin Energy (WEC) - 3.6%
    18. Textainer Group Holdings (TGH) - 5.4%
    19. CVS Caremark Corporation (CVS) - 1.65%
    20. Costco (COST): 1.1%

    Until next time, happy investing!

    Disclosure: I am long AAPL, COP, WMT, TGT, CVX, PSX, TGH, MDT, TWX, ABBV, MCD, DIS, KO, WAG, DLR, DX, SCG, WEC.

    Aug 30 1:03 AM | Link | 3 Comments
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    Dec 18, 2013
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