Saturday, December 31, 2011

December Dividend Income

Time to update my dividend income, the final time of the year.  Not a great month by my standards, but I don't own a lot of stocks that pay in December:

Realty Income (O) - $10.16

Duke Energy - (DUK) - $21.25

Wells Fargo Advantage Utilities (ERH) - $42.38

Then, in my Roth IRA:

Armour Residential REIT - (ARR) - $122.10

Total for the month =  $195.89

Then, my total for the year = $16016.10

Not bad!  If all of my holdings maintain there distributions at current levels, the shares that I own currently project to pay around 18K in dividends for 2012.  As I said in a previous post, my goal is to get that number up to 20K.

Hope everyone has a great and safe time tonight and throughout 2012,

Big J

Monday, December 26, 2011

Revisiting Goal #5

Yesterday, I posted my goals for 2012.  I started thinking more about goal #5, which is to generate an additional $2000 per year in dividend income.  Just doing some simple back of the envelope calculations, this is what I find:

8% dividend yield (I know this is high, but I have some stocks in mind that will average this)

(0.08) x $2000 (my dividend goal) = $25,000 total to invest to reach my goal

Sounds like a lot!  But it can be done, here's how:
-I make almost 3k a year in my taxable account in dividends.  All of this money will go towards it.
-I make about 13.5k a year in my bank stock dividends.  Lets say I take 3 of the 4 quarterly checks and put them towards this.  Thats $10,000, leaving me about $12K short.
-For the rest of the 12K, I'll need to invest around 1k a month.  I could almost do that now since my car and tv are paid off, and I can easily do it if I get a new job and downsize the apartment.

So there you go.  The goal is ambitious, but doable. And boy would it be nice to have that extra money coming in next year!

Sunday, December 25, 2011

Goals for 2012

Merry Christmas to all!

2011 was a tough year for me.  I went through a pretty rough patch in the spring/summer which I'm still paying for both emotionally and financially, but things are calming down now.  Then, a few months later, I took a pay cut at work, making life even more difficult.  Because of these things, its been easy to look forward to 2012 and try to figure out what I want to do so that I'm much better off in 12 months time.  Without further ado, my personal financial goals for 2012:

1.  Get a new job.  Fingers crossed, I think I'm pretty close to fixing this one, but nothing is set in stone.  I had a great onsite interview on December 19th that I'm waiting to hear back on, and I have another onsite interview at a different company some time in early January.  I think either of these jobs would be a better fit for me than my current one, and the compensation will be better than my current one as well.  Hopefully I'll have a more clear idea of what is going on by the end of January.

2.  Move into a less expensive apartment.  I'm hoping this one won't be too hard either.  My lease is up at the end of March, and the apartment I'm currently in is one of the last artifacts of my failed engagement.  Its way too big for just one person, so I'm looking forward to downsizing some, and its also pretty far from where I work, so a move closer to work would be nice too.

3.  Start maxing out my 401k.  This one is sort of related to goal 1, as I should be able to do this as soon as I get a new job.  Doing this makes it easier to contribute to a roth IRA, as contributions to 401ks dont count towards one's MAGI. Speaking of roth IRA's:

4.  Contribute as much as possible to my roth IRA.   If I get a new job it might be really tough to contribute to this anymore, so I at least need to make sure that I contribute all I can for 2011.  I'll probably have to wait to do my 2012 taxes to contribute again, just to see where I'm at income wise.

5.  Increase my dividend income by $2000 next year.  I currently make around $18k a year in dividends.  I think 20k a year is a doable goal, especially if goals 1 and 2 get accomplished (and if I can't do #4).

Well there it is.  It will be fun to look back on this list throughout the year to see how I'm doing.  What are some of your goals?  What do you think of these?  Too aggressive/not aggressive enough?

Saturday, December 17, 2011

Some Good News

Sorry for the lack of posts recently.  Things are going ok here; still doing online surveys (since the end of september I've made over 100 bucks), and still dragging myself to work every day.  Since I last posted, I have two very good pieces of news.

First, the bank stock that I owned announced a major dividend increase, from 34 to 40 cents a share.  This represents a quarterly increase for me of over $400!  The dividend will pay around the 15th of January.  Great news for me, considering the recent news I posted that I took a pay cut at work.  And on that matter:

I have an interview with a large biotech company on monday.  I'm pretty excited about this, if I got the job, I think it would definitely be a pay increase, and also be doing things that I want to do.  Wish me luck!

Big J

Saturday, December 3, 2011

November Dividend Update

Well, its been a pretty rocky month for me personally.  I took a paycut at work, and there's really no telling how much longer I'll be employed period.  I knew this was a possibility, which is one of the reasons I really wanted to focus on saving and investing for cash flow.  The whole situation has forced me to take a long hard look at how much I'm making in dividends currently to see if I could live off of them currently.  I think it would be close, but I'd be much better off waiting longer.  However, I just got the news this morning that my bank stock dividend is going up 5 cents a share quarterly, which represents over a 300 dollar a quarter increase, which is great for me!  Anyway, on to the November dividend update:

CLMT - $279
LINE - $414
O - $10.16
ERH - $42.38

TOTAL = $745.54

Not bad!  I'll be happy when the Feb-May-Aug-Nov dividend totals are over $1000, but 'm getting close to it!

In other news, I'm thinking of getting rid of one of my savings accounts and just taking the money and buying up shares of a very conservative dividend stock (think PG, JNJ, etc.).  Thoughts?

Friday, November 25, 2011

Recent Purchase

On this recent dip, I decided to add to a position of mine.  Its ERH, a closed end fund, which I feel are an important part of a balanced portfolio.  I purchased 155 shares of it  at 10.45.  This pays out a distribution monthly, so starting January 3, I'll be receiving 53.63 per month total from this position. I'm pretty happy about this, although unfortunately not all of the news is good on the finance front, as I had to take a 10% pay cut at work.  My postings might be scarce for a while as I spend more of my free time looking for a new job.  Looking forward to the day when I'm able to respond to a pay cut by simply walking out the door for good.

Thursday, November 10, 2011

Recent Purchase

Well, I finally purchased stock for my re-vamped Roth IRA.  If you recall, I wrote a few weeks ago about how I was changing around my roth IRA.  I've had my eye on ARR for quite some time now.  Today was the ex-dividend date, so I decided to go ahead and buy today on the dip.  I bought 1110 shares at 6.97.  Using the current dividend yield, I will be collecting $122.10 per MONTH.  I realize this is a pretty risky play, but the idea here is to purchase high-yield, high risk stocks in the beginning, and then over time, use the large dividends and annual contributions to purchase incrementally lower yield/risk stocks.

I'll be collecting some dividends next week in my taxable account, so I'll be looking to buy something there soon as well.

Big J

Sunday, November 6, 2011

A New Source of Cash Flow

I'm still waiting for a dip in the market to purchase some stocks for my roth.  Also, I should have more money in my taxable account sometime early next week, so I plan on making a purchase there as well.

I wanted to take a quick minute to tell people about a nice little source of cash flow I found - taking online surveys.  In the last month, I've made over 60 dollars from the comfort of my own home just taking surveys.  I use global test market.  I'm getting no compensation for plugging them, I just thought it would be of interest to those who read this blog.  In the month of September, I made almost 80 bucks in dividends, the amount I made in surveys this past month almost equaled that, and I didn't have to put down any of my own money to do it.

Happy Investing,
Big J

Sunday, October 30, 2011

October Dividend Income

Well, another month has almost passed, making it time to take a look back and see how I did dividend-wise.  This was a great month for me; I'm almost debt free now (hope to be totally debt free by the end of the year) and I finally have my roth IRA in the brokerage house I want it in; I'm now just waiting on a market dip to purchase stocks for it.  I also made a 2500 dollar contribution to it, I hope to make the full 5k contribution in the next few months.  As far as dividends in taxable accounts, it was a great month:

ERH - 42.38
NM - 18.00
O - 10.16
GE - 15.00
CIM - 195.00
Bank Stock - 2954.00

TOTAL - $3,234.54

As far as what I did with the money, the bank stock money went towards the 2500 I recently put into the roth; the rest was put in a savings account.  The dividends from the other stocks are just sitting idle for the time being in my scottrade account; I'll collect some more dividends in the beginning of November, plus now that I don't have a car payment, I can throw some more money in there, and aim to make another purchase in my taxable account next month as well.

Saturday, October 29, 2011

Banking Hiccup

I keep savings accounts at 2 different banks.  No real good reason, I opened a second one a few years ago when they were giving away $150 dollars to open up an account.  For that second one, I rarely deposit/take out money from it, and for the most part, I don't pay attention to it.

Once a month I check on all of my accounts.  When I went to check on that particular account this month, I noticed that I was charges a 30 dollar maintenance fee.  I immediately called the bank, and I was told that I wasn't keeping enough money in the account for them to waive the fee.  Mind you, I only have $19,500 in that account, so I guess it's understandable on their end, right (what a joke)?  They wouldn't refund me over the phone, so I took a trip down to the local branch.

The woman at the bank was more than happy to refund the fee, and put me into the appropriate account.  You see, if she hadn't, I was fully prepared to close my account, TAKE CASH, and make her stand there and count every last dollar.  I guess the 30 dollar fee wasn't worth it to her.  Moral of the story - keep track of these banks; I had no idea they were going to start charging this fee.  Also, if something like this happens to you, STAND UP FOR YOURSELF.  This isn't their money, its yours!  They should be happy that I've given them access to almost 20 thousand dollars to loan out at a higher interest rate than what they are paying me at, they're not doing me a favor by keeping my money for me!

On a good note, all of the money in my roth ira has transferred over to the new account and I'm simply waiting on a market dip to make some new purchases.  Also, October was a great month for my dividend total; the update is coming out soon!

Saturday, October 22, 2011

Roth IRA almost rolled over, now what to buy?

I've filed the paperwork for the conversion for my roth from a mutual fund company over to a discount brokerage.  I'm looking at about another week to 10 days before the money transfers.  Until the transfer is complete, I'm trying to figure out how I want to invest the money.  We're not talking about a lot of money here; after combining both the transferred cash and the new contribution, somewhere around 7k, so my initial investment will probably only be in one thing; with future contributions being used to purchase other things.

My initial idea was to purchase shares of an mREIT.  These are companies that make money by financing real estate.  In essence, they are borrowing cash at short term (smaller) rates and then lend the cash for mortgages at long term (higher rates), but it is somewhat more complicated than this, as a lot of times they're just buying mortgages and re-securitizing them to sell to another mREIT or some other entity.  The other thing about mREITs that is appealing is that they must pay out 90% of their earnings to shareholders in the form of a dividend, so yields can be quite high.

I currently own one mREIT - Chimera (CIM) (which invests primarily in non-agency (non-governmnet) backed mortgages in my taxable account.  These are inherently riskier investments, as we're all aware with the risks of real estate investments these days, but it currently yields close to 18%.  I still think this a good buy right now, however I think I'm going to invest with another mREIT.  A roth IRA is a good place to invest in one of these, as the high yield is protected from taxation.  The two I'm currently considering are as follows:

Annaly Capital (NLY) is sort of the parent company of chimera, except that it invests in agency backed mortgages, making it a safer play.  Its currently trading around 16 dollars a share, with a dividend yield right at 15%.

Armour residential reit (ARR) also invests in agency backed mortgages, but it focuses on residential real estate.  Its currently trading at 6.78 per share, with a dividend yield at 19.4%.  I should mention that ARR is a fairly new company, probably riskier than NLY, and recently trimmed its hefty dividend by 8.5%.  I feel though at this price, its a great buy, as the book value is 7.11 per share.

The grand idea here with my roth is to initially invest it in high risk, high yielding stocks, then step down in both yield and risk with future purchases.

What do you think?

Saturday, October 15, 2011

A rule for 401k's

Well, after almost 6 months, my old 401k came out of the "blackout" period and was finally deposited into my new one.  I don't think the whole process is supposed to take 6 months, and probably it would still be going if enough people hadn't complained.  So this week, I logged on to see what funds I should move this money into, and I was surprised at what I found.

The first thing - we still don't have access to "thousands" of funds, just the same old, tired 20 dogs we had before.  Ok, well maybe there are SOME decent funds in here, so I go and take a look at the fund histories in an attempt to pick them out.  The first thing I notice is a fund called "cash reserves" which from what I understand, is nothing more than a money market fund.  Interestingly, the 10-year return on this fund is 2.04%.  Not bad, but certainly not great.  However, since its just money market investments, you can't really expect much.   What shocked me was the sheer number of funds that had a 10 year history, yet came in markedly worse than 2.04%, with several coming in negative.

Which leads me to a rule I'd like to propose - any fund that has a 10 year history and can't beat a cash reserve account has no business in a 401k plan, and should be removed.  In all honesty, the fund shouldn't even exist, but if people want to go out of their way to own these dogs, then that's their problem.  Remember, you're PAYING a fund manager who in the last 10 years, can't even beat a basket of money market accounts.  Why are these things in here?  Does anyone out there agree with me?

Wednesday, October 12, 2011

Calumet Announces Distribution Increase

One of my recent purchases, Calumet Specialty Products (CLMT) announced a distribution increase from 49.5 cents per share to 50 cents per share.  My expected distribution of $276.25 this quarter went up to $279.  Not much, but every bit helps!  Hopefully, more good news is on the way.

Saturday, October 8, 2011

Another reason to change my roth IRA

I've written before that I want to switch my roth IRA account from oppenhiemer to a discount brokerage, and I planned on doing it towards the end of this month.  I got a letter in the mail yesterday further reinforcing that decision. 
It was the oppenhiemer funds account statement.  Since my last statement, I have lost close to 15% of value in the fund.  This isn't to be unexpected, the markets have had a rough few months.  The kick in the teeth comes in the fees that I have been charged for the privilege of losing money.  At least with scottrade or something like that, I get charged once when I pruchase, and once a long way in the future when I sell.  Anyway, I hope to get the paperwork rolling on this after my big dividend check comes in on the 16th.

Saturday, October 1, 2011

September Dividend Income

Well, another month comes and goes as we approach winter (my least favorite season).  It was certainly and up and (mostly) down month for the markets.  My net worth took a hit, but this was still a good month for me, as I was able to pay off my car and put myself that much closer to being debt free.  As far as dividend income goes, September was a small month (as expected) as I don't own many stocks that pay out in september.  I'd like to change that, does anyone have any good suggestions of what to buy?

Dividends paid out:
ERH - $42.38
O - 10.14
DUK - 21.20

Total for the month:  $73.77

So overall, a quiet month for me on the investing front, but as I've posted before, next month should be interesting...

Saturday, September 24, 2011

Time to get in?

Anyone not living under a rock this week knows that the stock market took a big dive.  Not the end of the world for a dividend investor, so long as the price decrease doesn't coincide with a dividend cut.  That being said, I have about 40K on the sidelines in money market accounts.  I sort of consider this my emergency fund, although I'm not sure what kind of forty-thousand dollar emergency I might ever encounter.  So is now the right time to take some/all of that money and invest in stocks?  If so, which ones?  I'm leaning towards holding off for now, and see where things are in a month.  What would you do?

Sunday, September 18, 2011

Life After Debt: The Next Phase

After paying off my car this week, I can't help but spend some time thinking about how I want to invest what used to be my monthly car payment.  Also on the horizon is my big dividend check, which comes around the 16th of October.

I feel like my first order of business is to straighten out my Roth IRA.  I started a Roth in 2002 without really knowing what I was doing.  I went into the bank I was using at the time and sat with one of those financial planners at "the desks" and set the thing up.  It was in in B shares of what is now the oppenhiemer main street fund (I had no clue what I was doing at the time).  The exit penalty should have expired by now, so here's the plan as I see it:

Next month, go to scottrade and with the dividend check I'm getting, open a new roth IRA there.  Once the account is established, roll over the oppenhiemer funds into this account.  This will give me approximately $7500 dollars in the account.  As I can, I will continue to put money into this account until the end of the year until I have reached my 5k contribution limit.  Then, in subsequent years, do the same thing, until I get wildly rich and can no longer contribute to a roth because my MAGI is too high (I know, really wishful thinking).

As far as investing goes, my thought is to set up a ladder-like effect, first investing in extremely high yielding (and much riskier) dividend stocks, then stepping it down to lower yields (and also lower risks).  I was thinking for the first investment, maybe an mREIT first (ARR has piqued my interest recently), followed by one of the telecoms, and then finally, utilities and consumer staples (think PG, JNJ).

Any thoughts?  This plan is by no means set in stone.


Saturday, September 17, 2011

Paid off the car!

A big moment for me happened this week, I finally paid of my car, a 2010 Subaru Impreza.  I'm hoping that I won't have a car payment for a long time now!  Next (and last) on the list is paying off my TV, which I hope to do by the end of the year.  Then my investing can kick into high gear!

Thursday, September 8, 2011

Recent Purchase

I got the dip I had been waiting for today, and I picked up 58 shares of CLMT.  The stock (MLP) took a pretty hefty haircut today, closing at 18.00 per share.  This is due to the company selling 11 million units (shares) to finance some debt that was generated in the purchase of an oil refinery.  I'm confident that this is a good entry point for this stock.  At its current price its distribution (dividend) is yielding 11%.  My purchase means an additional $28.71 per quarter at the current distribution.  I'm not concerned with the possibility of a distribution cut at this point, as they recently raised it from 0.475 to 0.495 per share per quarter.  Anyway, I'm happy with this one; I've had my eye on CLMT for a while.  Time will tell how good of an investment it is, what do you think?

Saturday, September 3, 2011

August Dividend Income

Well, August was another good month for me, my total portfolio jumped in value by about 3k, and my dividend income was up slightly from the previous quarter.  Since most of my dividends pay by the quarter, to do monthly comparisons, I typically compare August with May, February and November.  While these months yield good dividends for me, they aren't as good as January, April, July, and October, but I'm working on that.  Without further ado:

O - $10.14
ERH - $42.38
LINE - $414.00
CLMT - $247.50

I'm looking to take this money and add to my position in CLMT, as I feel it is slightly undervalued right now.  What do you think?

Sunday, August 21, 2011

Why I don't really like my 401k

If you read any main stream financial advice tailored for just about anyone, advice to contribute to a 401k is always there.  The three major reasons why anyone would contribute to a 401k is as follows:
  1. Contributions do not count towards your modified adjusted gross income (MAGI).  So lets say you make 50k a year, and contribute 10% (5k) of that towards your 401k.  Come tax time,  you will only be taxed on 45k, which will in turn lower your tax bill.
  2. The match.  Although not as generous as they were before the 2008 downturn, some employers still offer some sort of match to their employees contribution, usually limited to a certain percentage or yearly dollar amount.  Not contributing when your employer has a match is sort of like throwing money away.
  3. In theory, it should be better than a savings account.  Your investment choices are a basket of mutual funds, managed by professionals.  They should be able to beat the 0.3% a year a savings account spits out, right?
So whats not to like?  Well, a lot.  My employer matches up to 4%, but in order to get that, employees need to contribute 6%.  I contribute the 6% and nothing more.  In fact, if there was no match, I wouldn't contribute anything.  I probably still shouldn't contribute anything, but maybe I'm a sucker.  Why do I feel this way?

  1. The fund choices.  I work for a small company, so when we first started our 401k, we had about 10 fund choices.  None of them have done particularly well since 2007, and to have picked the right ones you would have been better off throwing darts blindfolded at them.  The funds I chose aren't that hot, but at least I haven't lost money, or I wouldn't have lost money, if it hadn't been for:
  2. The fees.  Even the bond funds have fees associated with them.  I'm all for giving someone money when they're doing a good job for me, but managing money is so black and white - you either made me money, or you didn't.  If you didn't make money, what exactly am I paying you for?  My employer is already paying you to manage the 401k's at the company.
  3. The pomp and circumstance surrounding these investment vehicles.  Ok, so this point is a little irrational, but hear me out.  A few months ago (April) we changed over to a new company to manage or 401k plan.  They sat all of the employees down, and trotted in this man with a tacky looking watch and an ill-fitting suit.  He came in claiming we now had access to thousands of funds, and charts showing how much money we were going to have after 30 years as a result of all of this.  He also claimed that we now had direct access to a professional money manager (him) that we didn't have with our old plan manager.  The fact that we had access to so many funds actually piqued my interest, I mean there are some mutual funds out there that consistently beat the dow, even minus the fees.  So after he left, I emailed him the names of some of the funds I liked to see if they were on the list.  I heard nothing back.  I waited 2 weeks and picked up the phone to call.  He claimed he was just about to write me back to let me know that he was just about to dive into research on the funds I sent him.  Needless to say, I still haven't heard back.  Further, our old 401k still hasn't transferred into this new one, almost 4 months later, so even if I could get a list of the funds we have access to, I couldn't transfer into anything new. I'm not impressed.
  4. Its pretty illiquid.  Taking money out of a 401k before retirement is not a good idea.  First, its now taxable upon withdrawal, plus an early withdrawal penalty (I believe 10%).  You can also take a loan out against it, but that might be an even worse idea.  I've known a few people to do this, it doesn't end well.  And I get it, its supposed to be for retirement, but you know what?  Life happens.  I might someday need the money in there today to make it until tomorrow, who is the government to take a cut of my money that I might need for a financial emergency?  Is that really better than these payday loan places everyone shakes their head in shame at?  And the whole time in the background, the fee collectors are laughing, knowing that as long as it remains illiquid, people are stuck paying fees.
So there you have it.  I'll still keep contributing to get the match, but nothing more for now.  The only thing that could make me contribute more is if my MAGI goes above 105k, thus preventing me from contributing to a roth IRA, but I'm still below that for now.

Saturday, August 20, 2011

First post - About me

I've been an avid believer in dividend investing for several years now, from my very first purchase of rochester gas and electric at the ripe old age of 12.  I went on to college, and then started graduate school in the fall of 2002 in a biochemistry program, and for most of that time I did practically no investing.

Then in 2003, the wonderful woman that was my grandmother passed away.  We were pretty close, it was a tough loss for me.  Upon her death, she willed to me shares in a small community bank that pay a not spectacular, but steady dividend.  It didn't make me uber rich or anything, but the value of the shares was still a substantial sum of money for a 23yo to walk into.  Instead of doing what most people that age would do, which is sell the shares, take the massive tax hit, and by the material possession du jour (clothes, new car, maybe a condo), I decided to keep the stock.  It had some sentimental value, and besides, it spit out a quarterly dividend of about 1200 bucks, which was nice for a graduate student to have coming in every 3 months.

As time progressed, both the dividend and the value of the stocks incrementally increased.  In eight short years, the value of the position I inherited more than doubled, and today the quarterly dividend check is almost 3k.  In the meantime, my potential earning power was increasing.  I finished my PhD in 2007, worked as a postdoc for 2 years, and now work as a scientist for a biotech startup company.

In 2008, I finally had saved up enough money to open an account at a discount brokerage.  I decided to go right back to the well, and start to diversify away from my inherited stock by purchasing shares in other companies that pay dividends.  As of today, these investments (which I will describe in detail at a later time) pay about 1k a quarter in dividends.  I also purchased some physical gold and silver in 2009, and you don't need to be a financial expert to know how well that investment is doing :).

So at this point, I'm working at a job I really like and am compensated nicely for, all while simultaneously making about 4k a quarter in dividends.  What could possibly go wrong?  Well, life happens.  While I probably could have made 16k a year work in grad school, I live in a much more expensive area in the country now.  Further, I just got done going through a very costly, both financially and emotionally, period of my life.  Its a story for another time (and probably another blog).  Let's just say that marriage is not in my future.  But the dark cloud that was once overhead is now clear, and it could have been much worse than it turned out.

I feel like I was granted a new lease on life.  So what do I want it to look like going forward?  I want to cut down on expenses.  That means clearing my car debt and credit card debt ASAP.  I'm actually hoping to have both paid off by the end of the year.  Next, I'd like to take the money that I've been using to pay these things down monthly, plus the 4k in quarterly dividends that I receive now, and ramp up my investment efforts.  Lets face it, while I like my job, its a tough economy out there and I work in a highly specialized, pretty shaky industry (startup biotech).  This blog will document my journey towards greater financial freedom.

A few other things.  While I enjoy reading some great dividend blogs out there (Dividend Mantra, Early Retirement Extreme, Dividend Partisan, Dividend Pig, etc., my journey is much different.  I've been granted a head start, which I'm grateful for, but I think it allows me to take a few more risks.  I also really like my job, so I'm not counting on having to touch either the principle or the dividends for a long time from here on out.  I guess this is just a long winded way of saying, "The investments I choose are probably not right for you, and maybe not me either, as I'm really a scientist having some fun with money on the side."  Anyway, hope you enjoy it.