Friday, May 27, 2016


After a recent trip to the dealership for some minor maintenance and some recall work on my 2002 Honda Civic, I decided it was time I started doing some of the maintenance work myself.  I went in for a $39 oil change and free recall on the air bags.  Ended up with a bill over $200 due to some minor repairs they said had to be done because they were "a fire risk."  Well I didn't want my car catching fire, so I had the work done, but I was skeptical just the same.  They also told me I needed to bring the car back for new brakes all around, with an estimate of $490.  That was just too much.  Looked it up on Youtube and decided I could do the brakes myself.  

I also knew I needed to replace the spark plugs, so I looked that up as well.  For 20 minutes of work and less than $9 in parts, I saved myself $44 to $56 in labor costs, which is the average estimate for changing the spark plugs in my car.  I was amazed at how much better my car runs with the new plugs and how easy it was to do the work.  Also checked the air filter, which didn't need replacing since it still looked brand new.  I figure when I get to the brake job, I'll save a great deal more in labor costs.  Plan on doing that in a couple of weeks.  Have an experienced mechanic watching over me, just to make sure I don't screw those up, but I'm doing all the work myself.  I'm actually pretty excited about the whole thing, since I'll be able to get much more done on my car than I could afford if I were paying someone else to do the work.

Wednesday, May 25, 2016


When it comes to making money from investments, most people seem to think of capital gains.  Who hasn't heard the stories of the Walmart and Microsoft millionaires?  Early investors who pick the right stocks can become fabulously wealthy from capital gains.  However, identifying the next Walmart or the next Microsoft is extremely difficult.  So getting rich from capital gains is a very iffy proposition in my opinion.

Dividends, on the other hand, are somewhat predictable.  You have the Dividend Aristocrats, stocks that have consistently paid and increased dividends for several years.  Usually big blue chip stocks, big name corporations with good balance sheets and predictable earnings.  Rather than trying to identify a $10 stock that's going to shoot up in price and split shares several times along the way, how much easier it is to simply buy shares of companies with a good track record of increasing dividend payouts.  This doesn't mean you miss out on capital gains.  On the contrary.  In my portfolio I'm currently holding stocks with anywhere from a small 4% increase to over 200% gains!  I could sell and take the profit, but I purchased these stocks for the dividend payouts, so I have no intention of selling as long as the dividends continue.

While I invest with the primary goal of building monthly cash flow from dividends, I do take advantage of capital gains when it seems to my advantage.  When my stake in UVE increased in price to around 250%, I took money off the table by selling just enough shares to take back all my original out of pocket investment.  I've kept the remaining shares and continue to collect and reinvest the dividends.  Dividend stocks do tend to increase in price, so I'll be looking for more opportunities to employ this same strategy with other holdings in my portfolio.  In the mean time, I'm very happy to collect and ever increasing stream of dividend income along the way.  

Tuesday, May 24, 2016


I'm very excited about the stream of tax free income from my new ROTH IRA account!  I think it's off to a good start with substantial investments in GUT, GGT and PHK.  I wanted to concentrate on building a stream of income with the first three purchases and will be adding shares of SPHD next.  I'm planning on building a large position in SPHD in the ROTH account for low volatility, income and possible capital gains.  

As for my taxable account and my regular IRA, I'll be taking dividends from mutual funds and bond funds in cash from here on out.  In the IRA I'll use the cash to build positions in individual stocks and the cash from my taxable account will be transferred to the ROTH account and put to work building tax free income.  I'll still be making some cash investments from time to time in the IRA and taxable account, but I plan on increasing positions in both accounts by continuing to reinvest dividends from individual stocks.  I have automatic transfers set up to cover my tax deductible contributions to the IRA, so I'll get the maximum benefit when I file my taxes for 2016.  

I've got at least 6 more years to work before I can sign up for Social Security and hope to be able to work at least 8 more years, if health allows.  I'm visualizing the perfect retirement for me as living in a new tiny house with a wrap around porch in one of the small towns here in central Missouri.  Want to stay close to family and be near the good hospitals and doctors in case I need their services.  I think the ROTH account will go a long way toward helping me achieve my dream retirement.

Monday, May 16, 2016


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


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


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 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.