Monday, May 16, 2016

DIVIDEND INCOME FOR MONTH OF MAY UP 140% OVER MAY 2015!

Just finished calculating projected income for the month of May, with the new dividends kicking in from GGT and GUT.  Compared that total to May 2015 and was extremely pleased to see dividend income has increased a whopping 140%!  It was also less than $2 shy of the record month of December 2015.  May 2015 was the lowest month for dividend income last year and was about one third of the dividend income earned in December.  If the same holds true this year, then December is going to be a blow out month!  If Decembers' income is three times the dividends earned in May, which seems quite likely, it means I'll earn as much in dividends in one month as I earned for half the year of 2015!  

This means the goal I set at the first of the year for increasing total annual dividend income by 50% will be met by the income earned in December alone.  At this point, it's more likely I'll see over a 100% increase for the year!  While I'm pleased to have exceeded my goal so dramatically, I want to keep the momentum going.  I've already set aside enough money to gain the maximum tax benefit from my regular IRA account, so I'm concentrating on building the new ROTH IRA for the remainder of the year to increase future tax free income.  To accomplish this, I plan on making all stock purchases with out of pocket cash through the ROTH account and starting July first I'll be diverting dividend income from my taxable account to cash and transferring that to the ROTH account as well.  With seven and a half months left in 2016, I should have a nice stream of tax free monthly income rolling in by the end of the year!  

  


Thursday, May 12, 2016

UNEXPECTED BONUS FROM WORK HELPS BOOST DIVIDEND INCOME BY OVER 10%!

Was pleasantly surprised to receive Employee of the Month bonus at our morning meeting at work on the 10th.  But I'm even more pleased that I was able to put that bonus to work by adding it to my ROTH IRA to purchase shares of PHK, GGT and GUT.  I mentioned in my previous article I'd be going after monthly income with this account, since income and capital gains are non taxable in ROTH accounts.  With two high yield stock funds and one high yield bond fund, I think I'll be off to a good start.  

Adding PHK and GUT, to my original purchase of GGT, will generate an additional 10%+ in monthly dividend income.  The three stocks combined will add close to 12% to monthly income!  They will also add a total of 28 extra dividend payments per year, bringing my total to 245 separate payments annually or an average of one dividend payment every 1.49 days! The three purchases combined, will also increase total number of shares owned by 12.5%!  Won't be looking to add any new stocks for the rest of 2016, unless I have to replace a stock for some reason, so the 245 dividends will most likely stay the same.  But I think that's pretty good, to be getting paid every one and a half days!

Still haven't decided whether to reinvest dividends in the ROTH account or let them pile up in cash.  If I created a cash balance from dividends, I wouldn't have to sell any shares, should I find it necessary to access some of the money from contributions.  However, since income and capital gains are tax free forever in this account, I'd like to see it grow as much as possible before I retire.  So most likely I'll opt to reinvest dividends in the ROTH and build up a cash balance in my taxable investment account instead.  Since I'm paying taxes on those dividends already, it makes more sense to use that money in case of an emergency and let the tax free income continue to increase.    

Tuesday, May 3, 2016

OPENED ROTH IRA WITH PURCHASE OF GGT SHARES

Accomplished another goal from my 2016 investment plan by opening a ROTH IRA account.  I placed my first order to go through on May 17th to purchase shares of The Gabelli Multimedia Trust Inc. (GGT:NYSE).  GGT pays a quarterly dividend with an annual yield of 12.09%.  My goal with the ROTH is to build a high yield portfolio and GGT seemed like a good place to start.  I'm going after big dividends with this account since earnings and capital gains from ROTH IRAs are non-taxable.  I'll be making the majority of my stock purchases for this account for the remainder of 2016 to build a stream of tax free income for my retirement.  I'll still be making contributions to my regular IRA until I max out the tax benefits, then everything else goes in to the ROTH account.

Another great feature about the ROTH IRA is that you can withdraw contributions at any time for any reason without a tax penalty.  These are after tax dollars, so you don't get an up front deduction, but I think the tax free income makes it well worthwhile.  

GGT's dividend will kick in in June of this year, boosting monthly dividend income by 4.5%!  That is a nice increase in monthly cash flow, but it's even better when you consider it's tax free income!  I'm pretty excited about this new account, even with the big drop in the stock market today.  As I've said before, when you invest to build dividend income instead of trading stocks for gains, you don't have to be as concerned about day to day fluctuations in the stock market.  I rode out the 2008 market crash and slept well each night knowing my dividends would just keep rolling in.  I even took advantage of the down market to buy more shares and it really paid off as the market recovered.  So I'm looking at any pull back in the stock market now as an opportunity to build the tax free income portion of my portfolio through buying stocks for the ROTH account.

Monday, May 2, 2016

MAY 2016 KICKS OFF WITH 5 BIG DIVIDEND PAYMENTS!

May 2nd, 2016

The month of May is off to a good start with 5 big dividend payments!  May is one of the slower months for dividends, with only 14 payments for the month, so there are 9 more payments coming in before the end of the month.  However, June is going to be big, with a total of 20 dividends followed by 19 in July!  Should see increase in monthly cash flow from some of my recent purchases starting this month.  Will capture the dividend for May, from tomorrow's purchase of additional shares of SPHD.  JMP dividends should also kick in this month, with both purchases adding a significant amount to monthly cash flow.

From a quick estimate, it looks like May 2016 dividends will be up 90% over May 2015!  This makes 3 consecutive months of 90% increases.  If this trend continues, I'll have nearly doubled dividend income for the year!  I saw a lot of major increases last year over the year before and I said at the time, I didn't expect that to continue.  Now I'm seeing big gains again, but I still don't expect this to continue forever.  It's much easier to make great gains when you're starting from small amounts.  But as your portfolio grows it takes more cash investments to keep the big increases going.  At some point, I may not be able to keep increasing cash investments, due to limited earned income.  However, I haven't reached that point yet and it looks like I'll be adding more this year than I have since I started rebuilding my portfolio.  My current total investments are equal to about one third of my old portfolio, but I've built this portfolio in much less time.  So it seems quite possible I'll still be able to surpass the value of my original portfolio before I retire.  

Friday, April 29, 2016

TOTAL SHARES OF STOCK OWNED UP 120% IN PAST 12 MONTHS!

Collected the big six end of the month dividends today and closed out spreadsheet entries for the month of April.  At the end of each month, I like to check the same month's totals from the previous year to see how I'm doing.  Already posted about the 90% increase in monthly income for the month of April, compared to April of last year.  However, when I compared the spreadsheets with total number of shares owned, I was surprised and delighted to see number of shares up by a whopping 120% during the past 12 months!

The whole reason I launched my new stock purchase plan was to be more aggressive at accumulating stock.  Obviously, as a dividend investor, the more shares of stock you own the more dividend income you collect.  I developed this plan because I felt like I wasn't making much progress as far a building my current holdings.  Turns out that's not really the case, since I've more than doubled number of shares owned in the past year.  However, I'd like to keep the momentum going, so I'm sticking with the three year plan.  I've got an order in place to complete the 6th purchase from the list of 16 next Tuesday.  I'm taking advantage of extra income from overtime at work to accelerate my plan, so it looks like I may be able to complete all purchases within 2 years.  

After Tuesdays' stock purchase, the next major change in my investment portfolio is to open a Roth IRA.  Maxing out allowable contributions to my regular IRA is not the most tax efficient way for me to deploy investment income.  Since the tax deduction for contributions only impacts my tax return up to a certain point, it would be better for me to deploy the rest of my investment capital in a Roth IRA where I would owe no taxes on future income and capital gains.

Monday, April 25, 2016

BOOSTING MONTHLY DIVIDEND INCOME ADDITIONAL SIX PERCENT!

An unexpected cash windfall has made it possible for me to accelerate my stock purchase plan and buy additional shares of SPHD.  SPHD is a five star rated, low volatility ETF, paying monthly dividends, with a current yield of 3.27%.  I'm going after quality and stability here to balance out some of the risky high yield holdings in my portfolio.  I put a lot of thought in to how best to put this unexpected cash to work and I believe SPHD is my best bet right now.  With today's drop in the stock market, I might even be able to get a better price on the new shares.

I'll set the order to purchase the new shares next Tuesday which, I'm happy to report, will be in plenty of time to capture the dividend for May.  So this purchase will immediately increase monthly dividend income by 6%!  May is only a 14 dividend month, but with the increased payments from SPHD, PSEC and JMP all set to kick in, it's probably going to be a very good month.

On a related note, earned income from my job has increased significantly since the first of 2016.  Not due to any raise, but because of increased hours.  While I'm not crazy about working so much, I'm happy to put in the extra effort to reach my goals of building my portfolio and reducing personal debt.  A little extra work now can make life a whole lot easier in the years to come.   

Sunday, April 24, 2016

ACCOMPLISHED GOAL OF INCREASING ANNUAL DIVIDEND INCOME BY 50%!

Finally did the calculations and even without the extra dividend income starting in May, I've already reached my goal of increasing annual dividend income by 50% in 2016!  With reinvested dividends and ongoing stock purchase plan, it's impossible to say at this point how much I'll beat my original goal by, but it's pretty exciting!  It's quite possible that I might even see a 100% or more increase by the end of the year.

March 2016 saw a 90% increase in dividend income over March 2015 and it looks like April will follow suit, with another 90% increase over April 2015.  I'm still a long way from having the kind of passive income I'd need to retire, but with these type of gains, it's only a matter of time.  What surprises me most is that I'm continuing to see such fantastic increases in monthly cash flow.  It was one thing to make big percentage gains when I was just starting to rebuild my portfolio, but I expected to see a slow down.  When monthly cash flows are low, it's easy to achieve big percentage gains.  However, as cash flow increases, it takes more out of pocket cash to keep seeing the big gains in monthly dividends.  Or so I thought.  As it turns out, I haven't been investing that much more in cash.  I believe, what I forgot to take into account were the reinvested dividends.  I knew they would help boost income by buying more shares, but I never expected they would increase earnings by as much as they have.  Very nice surprise though.