Monday, August 31, 2015

August Activities



August has been a crazy month. I’ve been DGI investing for one year - and the market was like a roller coaster. I’ve been busy buying great qualities at the beginning of the month and with my insurance bills and property taxes at the end of the month, I was all out of capital - missing out the excellent opportunities. However, I am not worried since I plan to invest regularly and I believe we will have more sales ahead.


Here’s a summary of my blog posts, investments and dividends for August 2015.

Sunday, August 30, 2015

September Screen





It's almost the end of August - which means that it is time for my September Screen.

There was a problem with Yahoo Key Stats for 5 yr Average Yield this month, so I used Guru Focus’ 10 Median Yield instead.


  • Yield > 2.0%
  • Yield/10 Median Yield > 1.35
  • Chowder > 8
  • PE/5 Median PE < 1.0


The screen is looking for companies with higher than average yields and lower than average P/E, with reasonable dividend yields and growth (with Chowder).


Next, I filtered with M* Credit Rating with BBB+ or more as well as companies with no debt.

Tuesday, August 25, 2015

Weekly Purchase 1


 
The market is down. The market is up. I have no idea if the market will go south, or recover like last November.


What is clear is that I need to continue to invest in high quality dividend stocks - one or two positions weekly while trying to keep within my 0.5% fee threshold. After one year of DGI investing, it is also clear that I am lousy at timing the market.


So, I've started using sharebuilder plan from Capital One where you can invest regularly with lower fees. The drawback is that you need to make sure purchase decision the previous business day.

Monday, August 24, 2015

Keep Calm, Invest and Collect your Dividends


I created the picture below earlier in the year to remind me on what is important when the market is volatile (like today!)

Remember to keep calm and collect your dividends. Continue to invest regularly on high quality companies with excellent dividend growth. 


My view on dividends investing is to lock future income. Instead of locking $35 a year for every $1000 invested, you are locking in $40 or more when the market is depressed. 
Note: with dividend growth, that income will double every 8-10 years.

Of course, it's okay to disagree with me, and panic away. 

D4s

Saturday, August 22, 2015

Friday, August 21, 2015

Is this the Correction we're Waiting for?

Everything is red. Blood is everywhere. Most sectors are down. Is this the correction we are anticipating?


Thursday, August 20, 2015

The Magic of Dividend Growth


One reason why we love dividend stocks is because of the yield. Every quarter (monthly or half yearly in some cases) we get a dividend check back from these great companies. 

Another reason is the dividend growth. Every year, the checks get bigger and bigger. 

What does this mean?

Tuesday, August 18, 2015

Dividend Drill Return Model (DDRM) for Dividend Stock Investing

Soon after I started DGI investing, I have used the DDRM method to estimate my return in investments of my dividend growth stock purchases.

The Dividend Drill Return Model is fully described in Josh Peter's Ultimate Dividend Playbook.

You can read more here:


I like the DDRM method since it provides a forward view (assuming you use forward looking information ie ROE, EPS).

Thursday, August 13, 2015

Recent Buy VI



I analyzed 3M (MMM) back in June.




Back then, I thought it was a little expensive. When it finally dipped to the low 150’s. I made my initial purchase at $153.




I still thought it was a little expensive, but it was a good initial position to average down. It looks like 3M is dipping with the market and I found an opportunity to average down my cost basis.

Screening Approaches

This month, I relied heavily on my screen to filter out companies with lower than average PE and higher than average yields with wide moats and excellent credit ratings.



Then, I researched the companies for payout ratios, FCF, valuations etc using my criteria list. I read their quarterly reports etc. Now, I don't assign specific weights to the criteria but if the overall selects are positive, I will normally buy assuming I have cash available.

See my recent buys this month.

This process works for me but I've noticed other people using different screening methods.

Monday, August 10, 2015

Recent Buy V



After selling my BAX and BXLT positions, I have additional capital to invest - so I reviewed my August screen for opportunities.

If you follow my blog, UNP appeared on my August Screen.




The screen essentially looks for companies that have their PEs below their median PE and yield above their median yields. Moreover, in this month my focus is on companies with wide moat.


Union Pacific Corporation (UNP) manages the Union Pacific Railroad Company which is one of the largest railroads and transportation companies in North America. UNP covers 6 areas of business: agricultural, automotive, chemicals, energy, industrial products, and intermodal freight transport.

Recent Buy IV



If you follow my blog, TROW appeared on my August Screen.




The screen essentially looks for companies that have their PEs below their median PE and yield above their median yields. Moreover, in this month my focus is on companies with wide moat.


T. Rowe Price (TROW) is an asset management company with more than $770 billion assets under management (AUM) from both individuals and institutions. It also provides investment-management and retirement account products and services.

Saturday, August 8, 2015

Recent Buy III

Dividend Growth Stock Blog


If you follow my blog, EMR appeared on my August Screen.




The screen essentially looks for companies that have their PEs below their median PE and yield above their median yields. Moreover, in this month my focus is on companies with wide moat.


Emerson Electric Company ( EMR) makes air-conditioning units, refrigerators and motors for both commercial and consumer use. 

Friday, August 7, 2015

Recent Sell

Dividend Growth Stock Blog

Hopefully, I don't do this too often.

As some of you may know, I decided to sell my positions on both Baxter (BAX) and Baxalta (BXLT). When I first drafted up my dividend stock investment strategy last year, my key criteria for selling is if the dividend was cut.

I thought this would be a simple decision.

Prior to the split, Baxter was providing me around $120-130 of forward dividends a year. Not bad with more than 3% yield. Post split, Baxter and Baxalta's combined forward dividends estimate is around $47. That's just over 1%.


Thursday, August 6, 2015

Recent Buy II

Dividend Growth Stock Blog

Hello,



If you follow my blog, UTX appeared again on my August Screen.


http://div4son.blogspot.com/2015/08/august-screen.html


The screen essentially looks for companies that have their PEs below their median PE and yield above their median yields. Moreover, in this month my focus is on companies with wide moat.

United Technologies (UTX) makes products for helicopters and aircraft parts, elevators and escalators and heating and air conditioning systems. 


Wednesday, August 5, 2015

Portfolio Building - part 2, Diversification

Dividend Growth Stock Blog

A couple of weeks ago, I had a good discussion with investinginautism on the subject of diversification. You should check out his blog. 
Be careful with his questions - he is a teacher :)

My response was to diversify as much as you can. 

“Wide diversification is only required when investors do not understand what they are doing.” Warren Buffett

I guess to applies to me :)


Tuesday, August 4, 2015

Recent Buy

Dividend Growth Stock Blog

Hello,




New month. Fresh capital. New purchase.


If you follow my blog, CAT appeared again on my August Screen.




The screen essentially looks for companies that have their PEs below their median PE and yield above their median yields. Moreover, in this month my focus is on companies with wide moat.


CAT is a very cyclical company. There will be some good years and some lean years. The industry is tied to the economies of the world. Unfortunately, the world's economies are not growing.


This potentially means opportunities for DGI hunters.

Sunday, August 2, 2015

August Screen

Dividend Growth Stock Blog
Hello



Another month, another screen.

This is part of my routine - why DGI can be boring. But sometimes, you can find a gem. You also learn a lot by analyzing companies - which is always fun!

As usual, I screen using my google spreadsheet. (Or, you can use David Fish’s CCC list).

For August, I used the following criteria to screen for Dividend Growth Stocks:
  • Yield over Avg Yield > 1.10
  • Payout Ratio < 0.8
  • Chowder > 8
  • PE over Median PE < 1.0