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.

Thursday, April 21, 2016

TOTAL SHARES OWNED UP 10% WITH RECENT STOCK PURCHASES!

With the completion of recent stock purchases, total shares owned increased by 10% from the end of March.  Total increase in shares owned is up 15% since the beginning of 2016, both very encouraging numbers.  More shares owned means more money per month in dividend income, which also means more shares purchased with reinvested dividends.  It's a snowball effect and the snowball is on a roll!

With the 3 year stock purchase plan I recently initiated and reinvested dividends, I expect the momentum to continue.  Haven't done complete calculations, but it looks like I've already reached my target goal of increasing dividend income by 50% in 2016!  Which doesn't mean I'll be coasting through the rest of the year.  It would be great if, instead of just increasing income by 50%, it would increase by 75% or even 100%.  Whatever it ends up being, it's looking like it's going to be a very good year.

Wednesday, April 20, 2016

JMP SHARES UP 6.37% ONE DAY AFTER PURCHASE!

I learned, after placing an order to purchase more shares of JMP, they were holding an earnings conference call after markets closed, on the very day I executed the buy order.  I was worried that might not work out in my favor, but it turned out pretty good.  While their reported earnings were down compared to last year and they cut the dividend by 25%, they also announced additional share repurchases and the dividend yield I'll be earning is still a generous 7%.  On top of that, the stock price jumped 6.37% in today's trading!  So I guess I'm not the only one who figured out insiders owning around 44% of the company, along with low P/E and low P/B, sufficient earnings to sustain dividend payouts and a generous dividend yield, adds up to a definite buy.

While it might seem like a negative to have lower earnings compared to last year, their earnings were down less than industry average.  With insiders holding such a large percentage of shares, I'm thinking their interests are very well aligned with the interests of shareholders.  So, while today's stock price performance may just be a fluke, I have a very good feeling about this investment.