Monthly Archives: June 2014

Weekend Reading – June 28, 2014

A learning mind is always open to new ideas, thoughts and endeavors in life and there is no frontier that is beyond human race. Here are some of the best articles that I enjoyed this week and they can sprout seeds of new thinking or reinforce existing ones.

Recent Stock Purchase for June 2014 By DivHut 
Keith bought securities in 5 companies this month of June: Aflac Inc. (AFL), The Chubb Corp (CB), General Electric Company (GE), Wells Fargo & Company (WFC) and Kraft Foods Group, Inc. (KRFT). I already own GE in one of the small portfolio which has a nice dividend yield of 3.3% and have been eyeing some of the other excellent companies, especially WFC and KRFT. Keith explains the rationale for all these buys.

Quarter Two: My Second Net Worth Overshare By Cashville Skyline
Cashville Skyville’s net worth jumped by almost by +$52K this quarter which is awesome. He also started his adventures in DI and bought KO, KMI and GE, which I also own in Portfolios. He already maxed out Roth IRA by contributing $5500 in Jan, which eventually will be one of my goal as well.

Frugal Fitness by Dividend Mantra
Jason talks about the fitness regimen using frugal means and beautifully explains various exercises for Day 1- Chest and Shoulders, Day 2 – Biceps and Triceps, Day 3 – Back and Legs, putting about 30 minutes per day three times per week. I’ve a similar exercise goal although I’m hitting and missing it 😉

What if Everyone Became Frugal By MMM
MrMoneyMustache talks about the debate on early retirement, frugality and simple living and concerns that it might trigger economic recessions but then allays them as frugal folks like us are not that many, so, we are in good camp by being frugal 🙂 and I might add helping mother nature by conserving previous resources

Construction of $192,000 Portfolio with Income Producing ETF by Asset-Grinder
Asset-Grinder constructed an interesting portfolio with ETFs (exchanged-traded funds) for his grandma with 46% fixed income and 54% equity income funds in a conservative way to reduce risks. Besides DI/DGI stocks that I own, I also have several ETFs in one of my Portfolios as a way to dampen higher volatility and attenuate big risks, as stocks can always dive big time any time.

Full Disclosure: Long on securities as mentioned above.

Thanks for reading.

My 3 Best Investments so far – Lessons Learnt

I started dividend investing sometime around end of year 2011. Now, I’m taking stock of all of my securities in various portfolios, including a fun portfolio that I do not track over this blog (due to its small amount) and how they performed in this duration from beginning to to-date so that the readers can see what have been my best investment bets so far, lessons learnt and hopefully a dose of inspiration for some 🙂

As the saying goes, hindsight is 20/20, so, you never know what securities are going to perform best in future, it’s only after years of investing, you’ll see the performance. Some securities will outperform others and some will lag behind, in-spite of all the analysis we do.

Without much ado, below are my 3 best investments so far:

#1 Hewlett-Packard Co. (HPQ):

Hewlett-Packard is a multinational IT technology company with varied interests in hardware, software and services and was founded by Bill Hewlett and Dave Packard in 1935 in a car garage. HP has many marquee products under their belt like printers: Deskjet & Laser, PC, Palm, and many others.

+89.67% Up: Average cost: $18.04 and currently trading at $34.22.

#2 ConocoPhillips (COP):

ConocoPhillips is world’s largest independent exploration and production company, based on proved reserves and production of liquids and natural gas. They have operations across 27 countries with over 18K workforce and a truly diversified company across globe.

+40.97% Up: Average cost: $60.55 and currently trading at $85.36.

#3 Johnson & Johnson (JNJ):

Johnson & Johnson is a consumer & healthcare company and lot has been written about it by many over decades in fact. This company has 30 consecutive years of increasing adjusted earnings and 52 consecutive years of dividend increases.

JNJ has an amazing set of products in various segments: baby care, skin & hair care, wound care & topicals, oral heath care, OTC medicines like tylenol, motrin, benadryl, etc., nutritionals, vision care, medical devices and diagnostic products, prescription pharmaceutical products, that are used daily by millions world over.

+36.44% Up: Average cost: $77.16 and currently trading at $105.27

Lessons Learnt: All the above 3 companies are top notch in the segment they operate , have growing earnings and hence growing dividends that are distributed to shareholders over the years, in-spite of the great recession or wars in between.  They were bought at the price when they were fairly valued and therefore had margin of safety. Wish I had bought them more 🙂

Full Disclosure: Long on all securities mentioned here.

What have been your best investments so far in your DI life ? Please do mention in comment below as it may help our community readers to see any other hidden diamond(s).

Thanks for reading.

My Watch List for June 2014

I’m always looking out for good quality securities, and if they are under valued that’s great and if they yield high dividend income, even better!

I’ve been pondering about following 3 securities since some time. As soon as more capital becomes available, I’ll be gnashing my teeth in some of these great companies 😉

1) Vanguard Natural Resources (VNR)

 Vanguard Natural Resources, LLC is involved in acquisition, production and development of mature, long-lived oil and natural properties in the United States. VNR has been consistently distributing growing dividends since 2007.

VNR is trading at P/E ratio of 23.40 with a healthy monthly dividend yield of 8.10% and market cap of $2.49B. It’s 52 week high was $31.50 and currently trading at $31.15, close to its highest level and therefore, fully or little over-valued. However, considering long-term growth prospective of VNR in oil & gas arena, I consider it a good prospect.

2) Kinder Morgan Inc. (KMI)

Kinder Morgan is the largest midstream and the fourth largest energy company in North America, own an interest or operate approximately 80,000 miles of pipelines, and 180 terminals. In most of businesses, they operate like a giant toll road and receive a fee.

The Kinder Morgan family of companies comprise of 4 entities: Kinder Morgan, Inc. (KMI), Kinder Morgan Energy Partners, L.P. (KMP) (largest publicly traded pipeline Master Limited Partnerships in America), Kinder Morgan Management, LLC (KMR) and El Paso Pipeline Partners (EPB). Combined enterprise value of Kinder Morgan companies is approx. $105B.

KMI is trading at P/E ratio of 30.70 with a healthy dividend yield of 4.80% and Market Cap of $36.17B. It ran up to $40.45 at its 52 week high and currently trading at $35.19, almost 12.5% lower and fairly priced. KMI was one of the recent buy by Dividend Mantra as well and I’ve eyeing this security since then 🙂

3) Digital Realty, Trust Inc. (DLR)

Digital Realty Trust, Inc., is a real-estate investment trust (REIT) that is primarily involved in development, ownership and management of technology- related real estate. DLR has 131 properties distributed in 33 markets across North America, Europe, Asia and Australia. 

DLR is trading at P/E ratio of 28.30 with an excellent dividend yield of 5.90% and Market Cap of $7.67B. It’s 52 week high was $65.43 and currently trading at $56.66, almost 13.5% lower and fairly valued. Due to its diversified foot print across various geographies, it’s a long-term prospect for me. Being a REIT, it must distribute 90% of its taxable income to shareholders and we’ll be happy campers in DLR 🙂

Full Disclosure: I plan to purchase above securities in near future.

Are you also considering to purchase these securities in near future? 

Thanks for reading.

Dividend Income Update – May 2014

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

I received Dividend Income: $41.49 to be precise which was lower than last month. But, if I look back, I’m very satisfied as I did not had any dividend income last May. So, as compared to last year May, I can say that my passive dividend income growth was infinity 🙂 Nothing can be better than infinity, my friends. It shows the power of Dividend Income engine. I’m that much closer to being Financially Independent (FI) and live a life that I want to live, be independent and not have to rely on someone else’s mercy.

Passive Dividend Income – May 2014 

1. Dividend Re-Investment Plan Portfolio (DRIP) 
Abbvie Inc. (ABBV): $1.97
The Clorox Company (CLX): $2.59
The Proctor & Gamble Company(PG): $14.10

2. High Dividend Income Growth Portfolio 1 (HID1)
American Real Estate Cap (ARCP): $6.25
Realty Income Corp (O): $4.56
Prospect Capital (PSEC): $5.52
Pimco Corp & Income Opportunity (PTY): $6.50

Total Passive Dividend Income: $41.49

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

Full Disclosure: Long in all above mentioned securities.

Thanks for reading.

House Appraisal Way off: Filing Protest!

I’ve been staying in my current home in DFW area, TX since more than 5+ years and my house price has fluctuated between $230K to $250K in those years. Typically, prices in TX do not change drastically unlike in certain other parts of US like Florida, Las Vegas or Cal. So, I’m generally not too concerned about my house appraisal due to these reasons. But, in May, I got the new appraisal and it was a shocker: $273K, that is $28K more than its current appraised value! I could not believe my eyes.

I said, wait a sec! what the heck. I decided its time to fight back this absurd appraisal since prices in our community have not moved much. I wonder whether some of the high flying so called smart financial hacks who created the housing bubble in the first place, have been re-hired by counties to juice up their wallet, with the budget tightening happening along with Fed tapering the easy money spigot.

I’m filing protest here and my hearing is due on June 30th. I’m currently discussing what I all I can do to make a strong case against the sudden jump in home appraisal. I can certainly understand that counties want to make a hay on the general price appreciation in most of the areas. But, 11.42% raise in placid areas is ridiculously high, considering no house improvements have been made in last 5 years, being a frugal guy myself.

Appreciate any suggestions from the readers to improve my case. I’ll keep you posted on the new developments on this front and my fight back.

Update June 25, 2014: 10:24PM
Due to personal reasons, I filed for extension on protest hearing until next Monday: July 7th. Also, due to coming holidays and travelling over July 4th weekend, I knew that I would not be ready with all the papers.

Update June 26, 2014: 8:25 AM
I got an email from the Appraisal District mentioning that: “The hearing date for your protest has been re-scheduled and is available online”. small victory 😉

Over the June 30th week, I furiously started preparing for my case and collected following documents:

  1. Comparative Market Analysis (CMA): This is the most important aspect of proof whereby you choose properties sold in your area recently OR properties that are very similar to yours. I used Zillow, RealtyTrac and Cad district’s website to get values Or if you’ve some RE friend, you can ask for CMA as well.
  2. Repair Estimates: I mostly did research online and googled to get the estimates for following major items a) Foundation Repairs b) Tiles Repaving c) Painting d) Oven e) MailBox 
  3. Photos: I took pictures of all the items that needed to be repaired as above.
  4. Market Value: Finally, based on CMA and Repairs cost, I arrived at the fair market price of my house: $245K.
  5. Copies: I made 2 copies of all documents and put in a binder so as not to miss any documents.

Update July 7, 2014: Scheduled Time: 9:30AM
I arrived at the Appraisal District about 8:35 AM and was asked to wait in lounge & register as panels were still hearing cases from 8:30 AM lot. Around 9:05 AM, we were called to stand in queue and asked to provide all the documents.All the documents were scanned and fed into the computer. I was ushered into a room where there were 5 total personnel from district. Already a hearing was on-going and in few minutes, my turn came.

I was asked to provide my own house estimate, document proof and explanation about my estimate. I mentioned all things as listed above. One lady who has computer and access to all the houses in district blurted out how they arrived at their appraised value. I provided a rebuttal and they countered back. They deliberated among them selves about various points and one mentioned a figure of $264 K and other two said $265 K and finally, they all seconded $265 K.

I was not happy with their final figure as my fair market estimate was close to $245 K however, at that point, I did not had option to say much to them after above deliberations had already taken place. I inquired with them about my further options like appeal, etc.

On the same day: July 7th, 2014 at 6:11 PM, I got an email mentioning: “The final appraised value of your property is available online”.

Full Disclosure: I own real-estate property that is my own home.

Did your house prices went up significantly and do you consider your new appraisal as appropriate?