Tuesday, April 25, 2017


Just read an interesting article by Warren Buffett on dividends.  He explained Berkshire's policy on dividends, specifically why they do not pay a dividend and how you could generate "dividend like" income by selling a percentage of shares each year.  A very interesting article.  However, it did not answer my question on whether or not Berkshire reinvests dividends they receive on additional shares of stock or do they keep the cash to reinvest elsewhere.

Generally I choose to reinvest all dividends in additional shares of stock.  However, at times it seems contraindicated to do so.  Say you own a large block of stock in a company paying out nice dividends.  Perhaps you bought the shares at a very low price, as I did with UVE.  Now the price is up 100 - 200%, do you still reinvest dividends?  Doing so increases your cost basis, since you're buying new shares at the much higher price.  If you choose to continue holding the stock as I have with UVE, it would seem prudent to take the dividends in cash.  (In this case, I'm still reinvesting in UVE.)  

I mentioned in a post not long ago my strategy for avoiding total losses by taking cash dividends on some of the high risk stocks or funds.  When you collect the dividends in cash, even if the stock price goes to zero, you don't have a total loss because you've still got the cash.  So if you take that a little further, the cash you collect from some of your more questionable investments can be used to help purchase more shares of core stocks for your portfolio.  I've used this many times, collecting cash dividends from current holdings to help pay for new investments or additional shares of low volatility stocks with increasing dividends.  I figure this way I'm still reinvesting dividends, just not always in the stocks that paid them.

At any rate, I must be doing something right.  My monthly dividend income continues to increase every month, even though I've had some holdings cut their payouts.  I always hate to see dividend cuts, but as long as the return is still acceptable and cutting the dividend seems to be the right thing for them to do, I don't mind holding on to these shares.  If they stop paying dividends, I sell immediately.  I don't want any stocks unless they pay some kind of dividend.

Tuesday, April 18, 2017


While my 401k account through work is still the smallest of my 4 investment accounts, the balance is rising rapidly in comparison!  This is mostly attributable to the twice monthly deposits from payroll as the return on investments is only around 3% so far.  However, since the majority of this money is coming from money I would have been paying in taxes, I'm quite pleased with the result.  Within the next two years, it's quite possible the 401k balance could surpass that of my taxable investment account and may even come close to matching my IRA balance!  Pretty amazing considering I just opened the account last year.

Also amazing is the progress I've made with the Roth IRA account.  I opened the account in June of last year and it is now the largest of my 4 investment accounts.  This is mostly due to cash contributions, but I have also transferred some investment cash and dividends from my taxable account to the Roth to reduce taxable income and increase non-taxable income.  It's working out quite well.  Monthly dividend income from the Roth account now far exceeds that from the taxable account and is rapidly gaining on the regular IRA's returns!  

Although 2017 has been a remarkable year for my investments so far, it has not been without it's setbacks.  I have had a couple of dividend reductions, mostly from the bond funds.  But this wasn't entirely unexpected and the dividend yields on these funds are still high enough that I have no plans to sell my shares.  Unrealized returns on the value of my stocks has been pretty lackluster all around.  The 401k has a higher return on share prices than my other 3 accounts combined and it's only 3.99% to date.  However, I've taken measures to boost capital gains in the future and since I'm investing for dividend income, I'm not overly concerned about whether the stocks go up in price.  In fact, since I'm purchasing more shares all the time, through re-invested dividends and additional cash purchases, I'm kind of happy to see the prices drop occasionally, so I can pick up some bargains.

Looks like I just need to stick with the plan for the rest of the year and 2017 will turn out to be another good year investment wise.  

Thursday, April 13, 2017


Spring, a great time to turn your attention to your gardening plans and your plans for growing your portfolio.  This is one of my favorite times of the year, for both reasons.  I am an avid gardener and I enjoy reading all the annual reports that start rolling in this time of year.  Getting a detailed analysis on how each stock has performed in the past year makes it much easier to plan upcoming cash investments with an aim toward maximizing returns.  

So far, I've reviewed about half of the annual reports for the 31 stocks and funds in my portfolio.  A couple of things I've learned, UVE and UTG which both pay modest dividends, seem to have very good prospects as long term investments.  Also liked what I saw in SPHD and SPLV's annual report, so I'll be adding to my holdings on all four this year.  Recent purchases have been aimed at boosting monthly dividend income while reducing volatility.  I consider additional investments in the four stocks/funds mentioned above as low volatility.  So I'll also be on the lookout for a couple of good high yield investments to boost monthly income.

Tuesday, April 11, 2017


In earlier posts this month, I talked about selling SPHD shares in my taxable account to lock in some capital gains and take advantage of tax break by transferring the cash to my IRA.  All that worked out well, but by purchasing shares of CHI and VZ with the money I transferred, I nearly doubled monthly income on that portion of my investments and increased overall monthly dividends by nearly 10%!  It's a win, win, win situation!  Of course I'll have to pay taxes on the capital gains next year, but I can offset that by contributions to my IRA in 2017.

My next big purchase will be ORA and JNJ, sometime around the end of this month or the beginning of next month.  While they won't add a great deal to monthly dividends, they are both solid investments and should add a measure of stability to my portfolio.  I always try to balance out the high risk/high return investments with more solid, low volatility plays.  Recent political tensions may make it possible for me to pick up these shares at a lower price.  We'll just have to see how it all plays out.

While the overall value of my investments may suffer a setback in the near future, I'm looking at it more as an opportunity to pick up extra shares at a better price.  As long as dividend income continues to increase, I'm not terribly concerned with the price of the stock.  After all, my plan is to draw on the dividend income in retirement, not to live on cash from selling stock.

Friday, April 7, 2017


Talk about making changes, after watching a video on the future of geothermal energy and the massive amounts of untapped reserves in the U.S., I decided now might be a good time to get in on the rush to invest in geothermal technology.  Did a lot of research and came up with ORA from an article I read on Motley Fool.  There were a lot of cheaper stocks, mostly with no earnings or no dividends, so I'm going with ORA for their positive earnings and quarterly dividend payouts.  While their 0.65% dividend yield is nothing to get excited about, it's the potential for staggering capital gains and future dividend increases that appeal to me.  

While it remains to be seen whether geothermal will really take off and break the oil industry's hold on world energy markets, if for no other reason, investing in clean energy is the right thing to do.  I'm just hoping it will also be the profitable thing to do.  At any rate, I'll be collecting dividends every quarter.

Thursday, April 6, 2017


After doing more research, I decided to drop ABT from my stock purchase plan and replace it with PFE.  While I think ABT is a great company, it seems too overpriced for my tastes, so I switched to the more reasonably priced PFE.  Put in an order to purchase shares of CHI and VZ for my IRA account next Tuesday.  The CHI purchase is for boosting monthly dividend income and VZ is a long term play, but also carries a nice quarterly dividend.

Later this month, as cash on hand permits, I'll be buying JNJ and PFE for my Roth IRA.  Once this month's stock purchases are complete, I'll be up to an annual total of 397 dividend payments per year.  Plan on spending the rest of the year increasing current holdings through reinvested dividends and additional cash investments.  Looks like I'm still on track to double dividend income again this year, but we'll have to see how it goes.  Thinking about replacing my car this year, which means I might have less cash to invest, so it really depends on how all that works out.

Wednesday, April 5, 2017


The month of March set another record, not only for the highest month for dividend income this year, but also by beating out March 2016's earnings by well over 100%!  April too, is off to a good start with 9 dividends collected so far, equaling over 50% of last year's April income.  Still have 20 more dividends to go for this month, so it's pretty safe to say April 2017 will also show a 100%+ increase over last April!

It's tax time and I have to admit it hasn't gone smoothly for me this year.  Big changes in the tax software I use made it more difficult for me to file.  Also led to an omission of filing a needed form on my part, which in turn led to a letter from the IRS and a delay in collecting my tax refund.  Got the form filled out and mailed and I must say the IRS made it very simple to straighten out the problem, so thanks to the good folks in Kansas City office!

Been very busy at work, lots of extra hours and big changes with a new boss at the helm.  Some I think are most definitely for the better, other changes I'm taking a wait and see approach to.  Always try to keep in mind that I can't get too worked up about anything, don't want them taking away my employee of the year award.  Just thankful to have a job that I like and good people to work with, but the benefits are not bad either.

After making some adjustments in my portfolio to simplify next years taxes, I'm taking my investments in a new direction by adding some big blue chip stocks.  Put in order to purchase stakes in JNJ, ABT and VZ.  Also want to add to my currents stakes in UVE, CSX and GLW.  Sold my shares in SPHD in my taxable account for a small profit and transferred the money to my IRA for a tax deduction.  I intend to buy back SPHD later in the year, since I believe it is a great long term investment, but I'm buying the shares for my Roth IRA so the future income and capital gains will be tax free.  Added BLW, although I'm a little iffy about it, to my IRA for the monthly dividend.  But I'll be taking the dividend payments in cash on this one, just to be on the safe side.

Overall, things are going well.  Income continues to increase at a rapid pace, which never ceases to amaze me.  I keep thinking it's got to slow down sometime, but so far it's showing no signs of doing so.  Doesn't get any better than that.