Friday, September 30, 2016


The last of September's dividend payments came in today and I'm happy to report, income for September 2016 is up over 130% compared to September 2015!  While part of this increase can be attributed to rising dividends, the majority is from reinvested dividends and additional cash investments.  Still, it's a pretty astonishing increase in cash flow.

For the month of October, I'll see new dividends kicking in from CRF, EAD and CHI, so it promises to be another great month.  I expect to see a similar, if not even larger, increase in year over year monthly cash flow for October.  At this point, I'm really getting excited about December.  December has the most dividend payments of any month of the year and includes special dividends, so it should be a great month for income.

Yesterday's 200 point drop in the DOW just served to confirm my decision to withhold reinvesting dividends for the time being.  The problems with Deutche Bank in Germany, uncertainty over the Federal Reserve rate increase, OPEC agreeing to limit oil production and the election are all bound to affect markets one way or another.  I'm thinking it's going to be a downward spiral for a while.  So I'll keep parking cash on the sidelines and hold out for better prices on stocks.  

Tuesday, September 27, 2016


I have stopped reinvesting dividends on all individual stocks, stock funds and bond funds for the time being, for three very good reasons.  For one, we are nearing the November elections and a new president will take over at the first of the year.  Regardless of who wins the election, historically we will be faced with at least a two year period of a sagging stock market.  Reason number two, the Federal Reserve seems intent on raising interest rates which will adversely affect bond funds and rate sensitive stocks, at least for the short term.  The third reason has to do with the aging bull market.  Stocks are historically overpriced right now and some sort of correction is due any time.  So reinvesting dividends at today's stock prices seem contraindicated to me.

My plan is to collect the cash dividends until I see how everything plays out after the first of 2017.  Should we see a correction in the market, I'll have a cash reserve built up to take advantage of lower priced stocks.  Should the Feds raise interest rates, shares of the bond funds I hold will drop in price, also allowing for me to purchase more shares at a better price.  If none of these things should happen, then I'm left with a chunk of cash I can put to work however I see fit.  I'll still be building monthly cash flow through additional cash purchases between now and the first of the year.      


When I was younger, my brothers and I used to meet for dinner at our mother's house on Friday nights.  We'd have a great home cooked meal and a nice visit and afterwards we'd have our Friday night poker game.  We never played for big money, it was more about visiting and having a good time.  But every time we played, if I won a hand, I would take half of the winnings and put it in my pocket and continue playing with the rest of the money.  When the money on the table ran out, I'd drop out of the game.  Taking money off the play table ensured that I never had a poker night that was a total loss.

It's the same when it comes to investing.  There is never anything wrong with taking some of your cash off the table.  In my case, I don't sell any stock, I just divert dividend payments to cash.  Of course I keep the cash in an FDIC insured interest bearing account, so it continues to work and earn more money, but it's no longer subject to the gyrations of a sometimes volatile stock market.  I don't do this because I need the money, I leave the cash in my investment account.  However, when the stock market is dropping, having a sizable chunk of cash in your account is a great stabilizer.  And when things start to look up again, you can always put that cash to good use buying in while stock prices are still low.


O.K., I know money can't buy you happiness and just getting paid won't magically transform your life, but I've noticed that most of the people I work with are in a much better mood on payday.  So, with that being the case, imagine getting paid every day.  It won't make you totally happy but it will go a long way toward improving your mood and making happiness a lot easier to come by.  Any time I start feeling a little down about the struggles of life in general, it helps tremendously to remember that I'm now getting paid 339 times per year (including stock dividends, paychecks from work and interest payments).  All I have to do is figure out how to get paid the other 26 days and I'll be getting paid every single day!

I've really already figured out that I only need to buy shares of 2 monthly paying dividend stocks and one dividend stock that pays quarterly and I'll get paid 367 times per year.  While that, in itself, improves a persons disposition, what's even more exciting is it just keeps getting easier and easier.  Money attracts money and success breeds success.  It's the whole snowball effect taking hold, with monthly cash flow increasing month after month and no end in sight!  It took a lot of hard work and perseverance to get where I'm at today and I still have a long way to go, but it makes the whole process much easier and makes my life much happier just knowing that tomorrow is payday.

Wednesday, September 21, 2016


As a shareholder of Wells Fargo, I've been following the news about allegations of fraud committed by some of their executives to boost their compensation.  While I'm a firm believer in performance based pay packages, if it's found that fraud is committed as an effort to boost compensation, then I believe every effort should be made to retrieve the money paid to the individuals involved.  In the most recent article I read, the CEO of Wells Fargo was talking about possible "claw back" actions being invoked by the board of directors, but it didn't say they were actually going through with it.  In my opinion, failure to do so shows an egregious lack of responsibility on the part of the board of directors and should result in a call for their replacement.  The board of directors are supposed to represent the best interests of the company and it's shareholders (i.e. owners of the company, which I think they tend to forget).  If they fail to do so, then they need to be fired!

As far as I'm concerned, this whole situation brings up the need for a close look by all shareholders of every U.S. corporation at executive pay packages.  One of the people involved in the fraudulent practices at Wells Fargo is reportedly walking away with over $124 million in compensation.  The real question shareholders should be asking at this point is, why was this woman getting paid so much in the first place.  Here again, it goes back to the board of directors who repeatedly approve these outrageous pay packages.  Yes, I believe that good people should be paid well for their work, but come on!  What did this woman possibly do that would merit such high pay.  Apparently nothing, as it turns out.

So really, what it all boils down to is, we as shareholders (owners) of the companies doing business in the U.S. need to start demanding better representation of our interests from the board of directors.  If they fail to look out for our interests then they need to be replaced with people who will.  I'm not picking on Wells Fargo in particular and I do intend to hold on to my shares.  I'm sure these practices go on at other banks and they just haven't been caught yet.  I'm also equally sure that executives are way over compensated at most major corporations.  It's time shareholders put a stop to it.  

Friday, September 16, 2016


A big part of my investment plan, for the remainder of this year and for 2017, is to bolster middle of the month income.  Currently my portfolio churns out 291 dividend payments per year, with the majority of cash coming in at the beginning and end of each month.  This week's purchase of CHI gives me 4 monthly dividends on the 15th of each month with some quarterly dividends paying on the 15th throughout the year.  So it's a simple matter to boost mid month cash flow by purchasing additional shares of CHI, MAIN, JMP and IGD.  I also plan to buy more shares of CSX which pays quarterly on the 15th.  While it really doesn't matter when I get paid, I just like the idea of a nice stream of cash coming in all month long.

That being said, I have no intention of ignoring the rest of the month.  The purchase of CRF stock for my Roth account this week will significantly boost end of the month income.  I also plan on purchasing shares of CLM  for the Roth account, another end of month paying stock.  Both of these funds have an extremely high dividend yield, so they're great for collecting cash payments, but I won't reinvest the dividends.  I believe you should not reinvest dividends in any fund who's payouts include a large portion of "return of capital."  However, funds like UTG who's dividend is a payout from earnings, it's perfectly O.K. to reinvest the dividends.

Completed three of the thirteen stock purchases from my list for 2017.  I'm getting a little ahead of the game, but I can always add to the list or buy additional shares in current holdings.  One stock I'm very interested in is Prudential Financial (PRU).  They have a low price to earnings and a decent history of increasing dividends since 2002.  They're a bit pricey, at a little over $79, compared to stocks I usually buy, but I think they're worth it.  Then too, they're not a holding of any of the funds I currently own, so there would be no overlap in investment.  I'm not terribly concerned about investment overlap, since individual stocks can outperform funds who hold shares of their stock.  However, it's nice to have some stocks that are not widely held.  

Tuesday, September 13, 2016


I mentioned in a recent post that I already had a strategy in place to deal with a stock market correction, since I've been thinking some type of correction was imminent.  

My old strategy was to stop purchasing any shares until the market leveled off, then purchase as many shares as I could while it was down and on the way up.  I never sold shares unless they stopped paying dividends, not even in the crash of 2008.  I also continued to reinvest all dividends on the way down and on the way up.  This worked out well for me before, even in 2008.  As the market recovered, I ended up with more money in my investment portfolio than I'd ever had before.

However, this time around I decided to play things a little differently.  I'll still hold all current shares, but I will be looking for new stocks to buy and purchasing additional shares of current holdings even as the market drops.  To help offset the loss in value of investments, I have stopped reinvesting all dividends and will collect all payments in FDIC insured interest bearing accounts until price per share of my current holdings drop below my average price per share.  As soon as the share price is below the average price I paid per share, I'll start reinvesting the dividends to add more shares and reduce my average prices.  I figure as long as the price is lower than the original price I paid for the stock, I'll be lowering my cost per share by reinvesting the dividends on the way down and on the way back up.  I've already initiated this plan, in view of last Friday's big drop in the stock market and the further slide yesterday and today.  I'll let you know how it works out.

Some good news to report.  Since the money I transferred from my taxable account to my Roth IRA wasn't available to invest until today, I picked up shares of CRF, TROW and CHI at much lower prices than I expected, so the dividend yield and increase to monthly cash flow are much better than I expected.  Then too, the stocks I sold in my taxable account to fund this purchase have since dropped dramatically, so just by chance, the timing was in my favor.  If the trades are settled by the 15th, I should see dividend income from these purchases by the end of this month.  

Saturday, September 10, 2016


With an expected interest rate increase from the Federal Reserve, the stock market took a near 400 point dive on Friday.  Why the Fed thinks it's a good idea to raise rates now is beyond me.  If they think inflation is under control, they haven't been to the grocery store or a fast food joint lately.  Sure gas prices are cheap, but that has more to do with the Saudi's manipulating the oil market to drive out competitors.  At any rate, the rumor of a rate increase was the trigger that brought the market down.  I've been expecting it to happen sooner or later, so I'd already prepared my strategy ahead of time.  

The first thing I did was to stop reinvesting all dividends and start collecting cash payments instead.  I figure why by in to a falling asset.  The market was already overpriced, so if this is only a temporary setback, I won't have missed much by collecting cash.  If the stock prices continue to slide but dividends remain the same, I'll eventually be able to pick up more shares at the lower prices.  I have no intention of selling anything and will continue to make additional cash purchases.  I've got a big purchase going through for my Roth account on Tuesday next week, so it wouldn't hurt my feelings to see prices drop even more on Monday.  I'll start reinvesting dividends again when the stock market reaches more stable ground.


If you've ever read any books on building wealth, chances are good that you've heard the expression, "Pay yourself first."  Great advice.  Part of every dollar you earn should be yours to keep and you should put yourself at the top of the list when it comes to paying out your hard earned cash.  So if you're following this advice, that's great!  But how about getting paid again from every dollar you pay out?  Sound crazy?  Trust me, it isn't.  

I got paid yesterday and deposited my check in the bank.  When I got home, I sat down to pay some bills.  First, I paid myself by scheduling two savings deposits.  Then I scheduled payments for the rest of my monthly bills.  By the time I was finished, there wasn't a lot left of my paycheck.  However, this morning I was going over the annual report from just one of the mutual funds I own shares in and every company I'd written a check to the day before was listed as a stock holding.  This fund pays me a monthly dividend, so every month when I pay my bills I get some of that money back.  As it turns out, I'm now in the enviable position of owning stock, either directly or through fund investments, in every single company I do business with.  So no matter who I'm giving money to, I'm going to get some of it back in the form of dividend payments.  I pay myself first by contributing to my 401k and making savings deposits before paying any bills.  But even when I pay bills or make any type of purchases at all, I'm always paying part of that money back to myself.  

Who do you do business with on a day to day basis?  Chances are awfully good, if you are doing repetitive business with them, others are as well.  Doesn't it just make sense to own stock of the companies you give most of your money to?  If you're going to give them money every month, buy some of their stock or a fund that owns their stock and get some of your money back. 

Monday, September 5, 2016


In an earlier post, I mentioned that I was buying shares of ABT for my Roth IRA as part of a three stock purchase to boost monthly dividend income.  Since then, I've made out my investment schedule for the rest of this year and 2017.  One of the purchases I included on my list is TROW.  When I checked their dividends per share and their ex dividend date I discovered that I could replace ABT with TROW and collect my first dividend on the 29th of this month instead of waiting until November.  I also calculated the dividend for cash invested and TROW will pay over 20% more for the same amount of cash invested!  So I made the switch.

I'll still be buying shares of ABT, hopefully in time to collect the dividend for November.  I'm very excited about my stock purchase list.  It's a mix of high dividend yield cash cows, 5 star Morningstar rated funds with monthly dividens and big blue chip dividend aristocrat stocks.  So far I've managed to balance out the higher risk high yield investments with lower yield high quality stocks with a history of raising dividends.  We'll see if that holds true in 2017.  I'm pretty confident in the new stocks I'm planning to purchase and the companies I intend to buy more shares of.   

Friday, September 2, 2016


While making out my stock purchase plan for the remainder of this year and for 2017, I noticed that I was collecting well over 50% of all my dividends from my taxable account.  In line with my current strategy of reducing taxes I looked for and found a way to cut taxable income and increase monthly cash flow at the same time.

This is how I did it:  I sold half my shares of AOD at a small loss, which will help offset the gains from the sale of DON and cut my taxes for 2016.  The money I received from the sale will be transferred to my Roth IRA and used to purchase a stake in CHI.  CHI pays a monthly dividend, replacing the number of payments lost from the sale of DON.  It's dividend is also higher than AOD, so I'll gain a 1% increase in overall dividends starting in October of this year.  This will also reduce taxable income in my regular investment account and increase non-taxable income from the Roth IRA.

Along with yesterday's transactions, I've managed to increase monthly cash flow by 6%, while reducing taxes, with no additional cash out of pocket.  This has worked out so well, I'll definitely be looking for more ways to fine tune my total investment portfolio.

I'm still of the opinion that we will see a market correction within the next 6 months, so I'll continue to boost cash positions by collecting some dividend payments in cash and boosting personal savings. 

Thursday, September 1, 2016


Just collected my first 6 dividend payments for the month of September, which was a great way to start off the month!  However, on an even brighter note, I figured out a way to boost monthly dividend income an additional 5% per month, with no cash out of pocket.  

Here is how I did it:  I sold my shares of DON for a gain of a little over 15%.  I'm taking that money from my taxable account and transferring it to my Roth IRA.  Once the cash is transferred, I'll use it to buy shares of CLM and ABT.  The monthly dividend from CLM will be nearly three times what I received from DON, although it is a higher risk fund.  To balance out the risk, the more stable shares of dividend aristocrat ABT, will add additional income with it's quarterly dividends.  Even though I created a taxable event by selling DON in my taxable account, the impact on my taxes will be minor and I'll be receiving tax free income through the Roth account from now on.  

I should complete the entire transaction in time to collect my first dividend from CLM this month.  My first payment from ABT won't be until November, but I'm happy that it will add another payment to the middle of the month, since I already collect most of my payments on the first or last part of the month.  I like to keep the money flowing in all month long, so I like seeing more middle of the month payments.