Monthly Archives: May 2014

My Monthly Portfolio Update – May 2014

I allocated extra capital in my recent purchases: Prospect Capital Corp (PSEC), American Realty Capital Properties Inc. (ARCP), Pimco Corporate & Income Opportunity Fund (PTY), iShares Mortgage Real Estate Capped ETF (REM) and Omega Healthcare Investors, Inc. (OHI) where I went really aggressive on yield and took a calculated high risk, considering the long-term horizon of my portfolio. These buys may not be appropriate for all investors who cannot tolerate short term high volatility and are not in a position to hold them when prices go down significantly. It is always recommended to do your own research, consider whether these securities fit your risk profile, help in asset diversification and most importantly serve your long-term interests, which in my case is to be financially independent in 12 years and travel around world in exotic and beautiful places 🙂

Currently, I’ve got 3 Portfolios: DRIP, HID1, HID2 and new capital is distributed across these 3 portfolios in taxable accounts so that I’ve freedom to enjoy my passive dividend income whenever it is able to cover all my expenses. I also contribute towards 401K account in order to get employer’s match and help lower taxes as well.

I started contributing a small amount towards Roth IRA so that when I’m fully retired, I can withdraw any amount without having to pay any more taxes and worry about tax implications. I’ll start tracking 2 additional Roth IRA portfolios when I start making purchases in those accounts. These 2 accounts would serve as an insurance towards government’s propensity to tax hard-working citizens and beat the crap out of them 😉 . Thanks to the ballooning budget deficit, I see all wide red ink over there and a small amount in these accounts is highly desirable, and what I call a responsible act to save our skin.

Thanks for reading. Appreciate all your support.

How did your portfolio perform in May ? Any interesting aspect of your portfolio.

A Million Dollar Question – Which Mobile Computing Device to Buy?

I know it may be little funny and perhaps un-interesting to some, however, I’ve been conflicted big time about the mobile computing device to purchase, really I’m, not due to scarcity of choice between various form factor of devices but due to the multitude and cacophony of devices like laptops, ultra-book, tablets, phablets, smart-phones, etc. Each one is shouting out-loud for my attention and mind space. In various corners of my brain, I’m in love with each of them for one reason or other; however, I can use only one device at one point of time 🙂  not surprisingly so.

Even since Surface RT and Pro tablets were announced by Microsoft, I was so excited like a young kid on the block jumping up and down with joy, thinking it will be a panacea and kill two birds with one stone: laptop folded into a tablet, and therefore, getting tablet as well as a laptop. I remember that I ran like a rabbit to a Demo store to lay my hard hands on mushy and cushy soft Surface RT and Pro. But, boy! I was truly disappointed, my hopes were dashed and just wondering what the Microsoft geeks were up to. Anyways, I gathered myself and on the first day when Apple released iPad Air, crossed the Rubicon and bought it for fun and tried to heal myself with this new toy.

Last week, Microsoft released another avatar of Surface as Surface Pro 3 in New York to a select audience, and my senses were tickled again but this time with some tampering. What I’ve read so far, this device looks promising to me, athough, I’ve yet to lay my hands on it. Panos Panay, Microsoft VP, beautifully tagged it: “I am sure, Satya. I am sure that is the tablet that can replace the laptop”. That is a big statement and only future will tell whether Surface turns out to be as revolutionary as it was being envisioned and touted from the very beginning. Some competition guys for Apple, as long as it benefits the consumers 😉

My dilemma has been confounded by the recent purchase of yet another device: Samsung Galaxy Note Pro 3 12.2 by one of my friend last week also. He showed to me little piece of delight with ultra-high definition (UHD) display, blue-tooth keyboard and mouse in tow, however, I’ve a nagging feeling that it may not provide the horse power that a full-blown laptop can.

As if above dilemma was not enough for me, I’ve been secretly desiring to consider Macbook Air with OS X Mavericks for some time, which is really an ultra-book with top-notch styling, sturdiness and beauty that is typically associated with Apple products. Now that Microsoft Office has been available on MacBook, it may probably serve all my purposes.

However, I’ve been using Windows devices for ever at work and moving completely to a different device scares me whether I would be forced to make a hasty retreat like the fiasco I’d when I bought the latest Windows Vista when it came out first, where I had waited for 4 months to arrive with top-notch advertised/marketed multi-media lollipops, but, had to abandon in haste.

Thus, my dilemma for a “perfect” personal mobile computing device still continues apace…

Full Disclosure: Owns Apple iPad Air, laptops and desktops (feels like they belong to dinosaur era 😉

Have you been in same dilemma as me? What device do you think are the best buy or considering to buy or already bought? Would love to hear your thoughts.

Thanks for reading.

Average Expenses of Top bloggers

Recently, I got an email from a gentleman from Singapore and he wrote to me inquiring about my expenses in US. Wow! I was really humbled that your’s truly blog is now read even in remote tiny island of exotic Asia. Here it is (not corrected for grammar to keep an original flavor):

Hi PIM,

How are you doing? I am looking for some friends in Dallas to help and guide me in this most difficult transitional decision i have to take.

I am currently living in Singapore, but getting an opportunity to move to Dallas, TX for my work. However, I have no idea on how is it, and What are living expenses in Dallas. I have’nt lived in US before. Have lived in Tokyo for a few years before coming to Singapore.

Would you be kind enough to help me on a few things, related to life and cost of living in Dallas, since you are there on the ground.

To give you some background we are family of 4, Husband, Wife, Son (2.6 years) and my Mother. Following are the major high level estimates I would need your help on if you can please spare some time out of your daily routine.

3 BR rentals in Plano or McKinney area (place which is safe, friendly neighbourhood and have some parks etc for kids, and some shopping areas nearby for daily utils, good if there are any elementary schools nearby) –

What is approximate monthly groceries bill –
Approximate monthly dine and eat out expenses (considering we eat out 2 dinners a week, mostly restaurants ) –
Utility Bills (Gas, Electricity, Sweage, disposal) –
Cable TV (Intl Channels) –
Internet, Mobiles (2 nos) , Landline –
General Car cost a month (do not have experience no this, have not owned a car in Singapore or Tokyo before, but heard its kinda must in US) –
Any other things i need to think about? –

I would be extremely extremely thankful for your help on this, its would be a HUGE help to me….

Eagerly waiting for your reply, and potentially meet you when we are in Dallas…
 
Regards,
Name Hidden
(To protect privacy)”

It was very interesting to hear from other parts of globe and hey, I was wondering: Huh… people in Singapore wants to know how much I spent every month 🙂 Well, I thought if some folks want to know my expenses, there may be other folks in many other parts of the world curious to know what my expenses are or for matter what are the expenses of other average Americans. I know you can google it but people want to hear from real persons like myself or other bloggers.

This is a very tricky topic as there is no such thing as average expense of Americans OR even frugal bloggers like myself since it varies so much, even for the same person; it’s all over the map due to many variables like some unexpected expenses or sometimes medical bills as well. Due to these very reasons, I do not track them as they are unpredictable while I enjoy tracking my 3 High-Dividend Investment Portfolios: DRIP, HID1, and HID2.

I know some bloggers track their expenses religiously which only shows how passionate they are in the frugal life they want to live and we want to live and aspire to be financially independent (FI). Here are statistics from some of the blogs: I follow many other blogs 🙂 but, I’ve restricted to few blogs to start with. I’ll be adding more as I further my case study.

Starting From Zero: $613.13 (average last 3 months)

Dividend Mantra: $2239.25 (average last 4 months)

If you want to be included in this study, please email me with some details like: min and max expenses, average expenses over a period of 12 months, details (major categories) about expenses, city, state, country so that people can benefit from geography and do apples to apples comparison, what kind of life style you consider living: frugal, conservative, lavish like Britney Spears or Madonna where millions could be spent in a single party 😉 and whether you are comfortable to publish your name in this blog. I believe that it will be fun to elaborate this case study and the results for all to see.

Thanks for reading.

My Recent Buy – May 2014

I’m always looking for securities that are fairly valued, have a decent dividend yield(3% to 6%) and have a fairly long history of paying dividends consistently for 10 years or more. However, there could be some cases for exceptionally good company or a strategic buy for a very long term.

I’ve bought following securities in this month of May:

1) Prospect Capital Corp (PSEC)

PSEC is a leading provider of private debt and equity capital and is a genre of business development company (BDC) and due to its monthly payment, it can be a great fit for dividend income earners.

I wrote about this company in my watch list for April and I’ve added another 50 positions to my already existing 50 positions. PSEC has P/E ratio of 9.30, an excellent yield of 12.30%, market cap of $3.36 Billion and fairly valued. A note of caution is in order due to SEC’s initial ruling regarding financial statement, as explained in Scott’s article.

2)  American Realty Capital Properties Inc. (ARCP) 

ARCP is world’s largest net lease real estate investment trust (REIT) that acquires, owns and operates single-tenant and multi-tenant commercial real estate properties. 

ARCP is down almost 30% from its 52 week high of $18.05 and currently has a dividend yield of 7.60% and provided me an attractive entry point. I bought ARCP at $13.12 and initiated 75 positions in this company.  It will add $75.00 of passive income on an annual basis that I do not have to earn and work for 🙂 It was also a recent buy by Dividend Mantra. If you want to dig deeper, check corporate profile and prospectus, here it is.

3) Pimco Corporate & Income Opportunity Fund (PTY) 

PTY invests at least 80% of its total assets in a combination of corporate debt obligations of varying maturities, other corporate income-producing securities, and income-producing securities of non-corporate issuers like US Government securities, municipalities securities and mortgage-backed securities and other asset-backed securities issued on a public or private basis. 

PTY has a healthly dividend yield of 8.40% and at $18.62, it is almost 16% lower than its 52 week high of $22.10 and provides a good entry point. I added 50 positions at $18.34 to my existing 50 positions and this will incrementally add $78.00 of passive income on an annual basis. Note that PTY may drop in value if rates were to rise faster and suddenly.

4) iShares Mortgage Real Estate Capped ETF (REM)

REM is a mortgage real estate investment trust (mREIT) and seeks to track the investment results of an index composed of US REITs that hold residential and commercial mortgages. It can be used to diversify your portfolio and express a view on a specific US real estate sector.

REM is currently trading at $12.37 and almost down 20% from its 52 week high of $15.53 and has moved up quite a bit from its 52 week low of $11.25. It has a mouth-watering dividend yield of 16.40% and currently pays $2.03 on an annual basis. I added 50 positions of REM to my existing 50 positions.

Note that this is a risky bet and understand that this security could be very volatile and drop in price significantly if housing market were to go sour in future due to rising rates or other external factors. With high reward comes high risk as well 😉

5) Omega Heathcare Investors, Inc. (OHI)

OHI is a healthcare real estate investment trust (hREIT) and provides financing and capital to the long-term healthcare industry with a particular focus on a skilled nursing facilities located in the United States. Company owned or held mortgages on 547 skilled nursing facilities, assisted living facilities and other specialty hospitals located in 37 states and operated by 49 third-party healthcare operating companies. 

OHI is currently trading at $36.15 and not far from its all time high of $38.41. It has a relatively high P/E ratio of 23, dividend yield of 5.50% and Market cap of $4.46 Billion. Considering that baby boomers generation in US is rapidly graying, OHI will be a nice play catering to the needs of big spender and one of the richest generation of our times. I initiated 30 positions at $35.00, handing me a nice dividend income of $60.00 on an annual basis. I’m a happy camper as well as fellow share holders are.

I’ve to say that I definitely took big risks this month, perhaps summer effect 🙂 and let’s see how these bets turn out over time.

Were any of the securities that you bought this month, were big risks, causing stomach churning?

Full Disclosure: Long on all above mentioned securities.

Thanks for reading.

Dividend Income Update – Apr 2014

Its time for me to post dividend income earned from all of my 3 portfolios: DRIP, HID1 and HID2.

Wow, I had triple digit total Dividend Income: $149.10 to be precise and that too 2nd consecutive month of triple digit dividend income. As compared to last year’s, it was almost 390.52% more. That’s awesome and giddy, my friends. It only shows the power of Dividend Income engine. I am that much closer to being Financially Independent (FI) and living a life that I want to live, be independent and not have to rely on someone else’s bread crumbs.

I want to own securities of Blue chip Aristocrats (companies with 25+ yrs of growing dividends) and once the earned passive dividend income covers all my expenses, I will own my time as well like a free bird 🙂 Think about it: you can travel around world exploring beautiful exotic culture or even explore blue lagoons and white beaches, play golf 😉 or simply relax and have a power to make a difference in someone’s life and do charities.

Passive Dividend Income – April 2014 

1. Dividend Re-Investment Plan Portfolio (DRIP) 
Glaxo SmithKline Plc. (GSK): $8.29
Kimberly-Clark Corp. (KMB): $12.89
The Coca-Cola Company (KO): $10.95
Altria Group, Inc. (MO): $21.79
Phillip Morris Intl, Inc (MO): $15.92
Wal-Mart Stores, Inc. (WMT): $9.25

2. High Dividend Income Growth Portfolio 1 (HID1)
American Capital Agency (AGNC): $16.25
iShares Emerging Markets (DVYE): $2.45
Altria Group, Inc. (MO): $15.84
Annaly Capital Mgmt (NLY): $15.00
Realty Income Corp (O): $1.82
Pimco Corp & Opportunity (PTY): $6.50

3High Dividend Income Growth Portfolio 2 (HID2)
Altria Group, Inc. (MO): $12.15

Total Passive Dividend Income: $149.10

How did your Dividend Income come along this April as compared to last year’s April.

Full Disclosure: Long in all above mentioned securities.

Thanks for reading.