Saturday, November 1, 2014

9 Steps to Build and Manage a Dividend Portfolio

There are various approaches to designing and managing a personal stock portfolio. Some approaches are more like a science, while others are more like an art.
A portfolio of dividend stocks is more than the sum total of its contents. For most investors, it should have a clear overarching strategy and a certain amount of diversification. In addition, it should be combined with other asset classes for complete diversification, as well as personal finance strategies for building wealth.

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Friday, October 31, 2014

United Technologies (UTX): A Diversified Dividend Powerhouse To Consider

United Technologies Corporation (UTX) provides technology products and services to the building systems and aerospace industries worldwide. This dividend achiever has paid a dividend since 1936 and increased it for 20 years in a row. Back in June 2013, when the Board of Directors approved a 10.30% increase in the quarterly dividend to 59 cents/share.

The company has managed to deliver a 10.20% average increase in annual EPS over the past decade. United Technologies is expected to earn $6.86 per share in 2014 and $7.52 per share in 2015. In comparison, the company earned $6.17/share in 2013.

United Technologies has consistent history of share repurchases. The company has been able to reduce the number of shares outstanding from 1.006 billion in 2004 to 916 million in 2014.

The annual dividend payment has increased by 14.40% per year over the past decade, which is higher than the growth in EPS. Future growth in dividends will likely match rate of increase in earnings per share, and be somewhere around 10%/year.

United Technologies has been able to generate a high return on equity, which has ranged between 19.70 in 2014 to 25.20% in 2008. I generally like seeing a high return on equity, which is also relatively stable over time.

Currently, United Technologies is attractively valued at 14.60 times forward earnings, and has a dividend yield of 2.40%. I recently added to my position in the stock, and plan on adding further this year, subject to availability of funds.

Full Disclosure: Long UTX and GE

Relevant Articles:

Should income investors give General Electric a second chance?
14 Dividend Growth Stocks I Bought On the Dip Last Week
Why Dividend Growth Stocks Rock?
Dividend Paying Companies I recently added to my income portfolio
Multi-Generational Dividend investing

This article was written by Dividend Growth Investor. If you enjoyed this article, please subscribe to have future articles emailed to you [Email] or follow me on Twitter [Twitter]

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Thursday, October 30, 2014

Using Extreme Frugality In The Beginning To Get Things Rolling

Life is a journey. An ever-changing one, at that.
As such, it would be unrealistic to expect that one would maintain the same lifestyle or same ideas about life from childhood to death. We grow. We learn. We change. We hope to become better versions of ourselves as we age.
At least, that’s what I’m really after. A better version of myself. And I’m most “me” when I’m free, not constrained by a 9-5 where a boss dictates my every movement. When I work. When I eat. When I go home.
So not long after I first started walking the path to financial independence I was willing to do whatever it took to better my situation. I had a pile of student loan debt. I had very little cash. I had no investments. Basically, my options were pretty limited. And financial independence or retiring early is all about maximizing your options. Increasing flexibility. Making your life whatever you want it to be.

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Wednesday, October 29, 2014

Dividend Income Update: September 2014

Every year or so my brain tells me that I have a hankering for some deep fried chicken from the Colonel. So I indulged my craving and I went there for supper this week. It only takes one meal to remember why I never eat there but this trip was a little unnerving. Six years ago I could get a ten piece meal for $23. Now they sell the same meal, with only 8 pieces of chicken for $30. That’s a huge price jump let alone you get even less chicken. It’s like a double inflation squeeze by increasing the price and decreasing the amount of product. I’m no math scientist, but that’s a hell of a lot more than the 2% inflation rate my government keeps reporting to me each year.

I left actually feeling slightly panicked thinking about my future; taking my possible future grand kids to “Soylent Fried Chicken” and paying 800 credits for a meal. I’m sure it would end in a stern lecture to the kid working the counter about how in my day, it would only cost $23 and that I remember when the internet never existed!  I know a lot of people my age don’t even think twice about inflation but they should be very, very concerned. Keeping  your money in a savings account making .5% while everything is going up 4-5% means you won’t be eating any Soylent Chicken…it means you WILL be the Soylent Chicken!

If companies keep inflating their prices, then their dividend increases should keep up with it. At least that’s what I’m betting on. Just recently Emera increased their dividend 6.9% from $1.45 per share to $1.55 per share. That doesn’t seem like a whole heck of a lot, but if you look at the big picture it’s actually pretty sweet. I bought some shares of Emera for $23 which means my yield on cost is now 6.74%. Next year I’ll bet you I’ll be making over 7% on that same investment. When’s the last time you had and investment that increases your return every year without having to sell it? What about an investment that pays you that return with cash money and is not just some statistic in a graph that your adviser points to, saying you made that much?

I love Dividends!

No matter how much time passes, I still get excited about dividend investing. It’s a slow process to build up your wealth but getting paid along the way sure helps build confidence in it. Why, this time last year I was tallying up the dividend income to be $398 for September. This year my dividend income for the month of September was:


That’s enough dividend income to pay for a car payment or a year’s supply of sardines and crackers if I were to retire tomorrow. I would need to be really hungry to make that work but I’m sure I could. That makes my year to date total dividend income to be $4815. Not quite enough to hang up the old cover-alls just yet, but someday it will be. Until then, I’ll just keep doing what I’m doing; becoming wealthy one dividend payment at a time.

This article was written by The Loonie Bin. If you enjoyed this article, please consider subscribing to his feed.

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