Saturday, April 28, 2012

Recent Purchase

Well, it took me a few months, but I finally decided to make a purchase:

I added to my position in Linn energy by purchasing 160 shares on Friday at 39.70.  Its a little more than I would have liked to pay, but a few things on that to keep in mind:
1.  I plan on keeping these shares for the long haul.  That being said, the dividends that an MLP pays out are not taxed, instead, they go against your cost basis, such that when you sell them, you pay taxes on the capital gains plus the distributions you received from owning them.  Since is pays a distribution in the next few weeks, my new cost basis will be 38.975.
2.  This is a stock I feel pretty comfortable with.  They're a natural gas exploration company that has natural gas prices hedged through the next few years, meaning that the business' success hinges upon the ability to find natural gas rather than demand.  I'll take my chances with that.

So what does this purchase mean for my portfolio?  Well, this purchase will provide $464 of dividend income a year, which actually brings my dividend income for the next 12 months to $20,531!  This purchase and some recent dividend increases, I've surpassed the 20K mark, which was actually my goal for this year!  I guess my modified goal for the year is to try and get to 22K by december, but that might be a bit out of reach.  Soon enough though!

Saturday, April 14, 2012

New Plans with the old 401k

Haven't been posting much, partly because I've been pretty busy, but also due to the markets running wild, and I'm waiting for a bigger pullback than we've seen recently.  I'm sitting on a lot of cash right now though, so I'm hoping to make a purchase within the next week or so.

After much thought, I've decided to roll the old 401k into the new one.  The new plan has more choices (and better choices) than the old one, so that's good.  I changed my mind though from my initial plan, which was to just roll it into an IRA.  I've decided against this due to tax implications.  I currently do not have a non-roth IRA.  Not having one is actually an advantage if your adjusted gross income (AGI) is too high to regularly contribute to a roth.  As it stands without one, next year when my AGI is too high to contribute directly to a roth, I can open a non-deductible IRA, and then immediately convert it to a roth, since there is no cap on the conversion.  Since I don't get an initial tax break on opening the non-deductible IRA, there will be no tax bill on the conversion.  If I were to do this already having an IRA, then there would be a taxable event, as the government would consider the total of all of my IRAs (the non-deductible and the rolled over 401k) when determining my tax bill, and I have obviously received a tax advantage from the 401k, so I would have to pay taxes on a portion of the conversion.  Does all of this make sense?  More importantly, am I right?  Hope to be back to more exciting stuff in the future.

Sunday, April 1, 2012

March Dividend Update

Another month has come and gone, and now its time to give an update on my dividend progress.  March is typically a small month for me, although I did manage to collect more dividends than I did in December, a quarter ago.  Without further ado:

Taxable account:
O - 10.19
ERH - 53.63
DUK - 21.25

Total from Tax account - $85.07

Roth IRA:
ARR - 122.10
STB - 18.66

Total from Roth IRA - $140.76

Dividend Total - $225.83

Not bad!  However I really don't like to count the dividend total from the roth IRA since if something really went wrong, I couldn't rely on it for cash flow.  This total should go up some next quarter, but not a lot, since none of the stocks on my current watch list pay quarterly dividends in Jone.  April though is looking like its going to be another banner month for me, so stay tuned!