Passive Income Update – Sep 2015

Welcome to our monthly passive income update for Sep 2015. This is part of the scorecard series where I track our dividends and other sources of passive income. I also include changes and updates related to our portfolio during the month.

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These 5 Dividend Heros Offer You Safeness In Crises Times

As fears of a global growth weakness increases, investors should look for safe haven alternatives to survive a potential market crash.

The following five dividend stocks grew sales, GAAP earnings per share, and free cash flow during the 2008/2009 financial crisis, allowing them to raise their dividends and outperform the S&P 500 by more than 25% in 2008.

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7 High-Rated Dividend Stocks With Above Target Returns

It doesn't take a genius to determine that most dividend stocks are now trading in excess of their calculated fair value. However, capital appreciation is not the primary reason for investing in dividend stocks. Dividend fundamentals are what drive my purchase decision, and if I could only look at one metric it would be the Net Present Value of the Money Market Differential (NPV MMA Diff.)

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Weekend Reading Links - October 25, 2015

For your weekend reading pleasure, the articles listed below contain some of the best dividend and value investing insights found on the web. They were written by various members of the Dividend Investing and Value Network over the past week:

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Dividend Growth Update – Third Quarter 2015

Welcome to another dividend growth update!

Earlier this year, I started publicly tracking dividend growth as it relates to my portfolio. I’ll update this information every quarter, which will provide relevant and important information on dividend raises announced by the companies I hold equity in, the size of those dividend increases, and how that affects my bottom line with real-life numbers in real-time.

What you see below is every company that I currently own a stake in that declared a dividend increase during the second quarter of 2015. So the ex-dividend date or pay date won’t be counted here. In addition, I only count stocks if I was long before the increase was announced. If I buy a stock shortly after a dividend increase was announced, then I don’t count it here. So this is a true reflection of an actual increase in my income, down to the dollar.

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Recent Buy of CenterPoint Energy (CNP)

The market goes up and down – sometimes wildly so – from day to day, but it mostly goes up over the long haul.

That’s something I try to keep in mind while I routinely turn rotting dollars into growing and passive cash flow. There was a day, years ago, when The Coca-Cola Co. (KO)‘s stock seemed expensive at $5.00. And I’ve seen that phenomenon play out in real-time over a short period of time – I’ve been at this for less than six years, yet I lament not being able to buy more KO at $26.39, which was the price I paid when I initiated a position in the company back in July 2010.

So while I strongly advocate not buying overvalued stocks, keep in mind that the stock market is filled with thousands of stocks. And while some may very well be pricey at any given moment, there are likely many others that aren’t. Moreover, what might appear to be a price on the upper end of what you’d be willing to pay may become cheap in hindsight when looking back on it. While inflation may be low right now, I think the opportunity cost of sitting on cash over a long period of time is as high as ever.

With that said, I recently took advantage of what I think is a really solid opportunity on a stock that’s dangling in value territory right now. While this stock isn’t necessarily of superior quality across the board compared to its nearest peers, I think the price warrants strong interest right now. It’s basically a company that operates at a similar level to many others in its space, but is available for a somewhat significant discount, pushing its yield well above its recent historical norm.

I purchased 65 shares of CenterPoint Energy, Inc. (CNP) on 10/6/2015 for $18.62 per share. I then added another 15 shares on 10/20/15 for $18.56 per share.

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Coca-Cola 20% discount at $41

Summary:

Coca-Cola is the world’s largest beverage manufacturer. Its leader position makes it one of the most beautiful money making machines on the market.

KO’s distribution network is one of its most powerful competitive advantages. It can introduce any type of beverage across the world in a heartbeat.

However, currency headwinds coupled with an increasing taste for healthy products has slowed down Coca-Cola’s revenue growth potential.

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Outlook for October 2015

Its the official start of the fall season and the market dynamics are in full swing. We have started seeing some wild gyrations in all the markets – stock, bond, commodities and forex markets. The prime focus is of course on whether the US Fed will raise the rates this year. The Fed passed on the opportunity to raise rates in September and have kicked the can down the road – which the market did not take well. The bond market is pricing-in the probability of an increase in interest rates up in the low-to-mid-40% range for December of 2015 (by 25 basis points). It is important to keep in mind that the Fed still sees deflationary pressures everywhere in the market causing them to stumble in their path to higher rates. Whether the Fed will do it or not remains to be seen. No move is expected in October.

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7 Most Undervalued Stocks In Warren Buffett's Basket

In a market that seems to have more downside than up, it's better to start with companies that generate more stable earnings such as companies in sectors of Consumer Staples, Utilities, and Healthcare.

Warren Buffett is a smart guy and some of the professional investors cover his activities. What we can do is to look at his Holdings and select those with an undervalued tendency.

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4 Dividend Stocks For Healthy and Wealthy Retirement

Americans are worried that they might not have enough money for retirement. Women who outlive their husbands are at special risk, with 40 percent of widows living almost exclusively on Social Security. There are a lot of worried retirees out there.

According to WebMD excessive worrying can lead to suppression of the immune system, digestive disorders, muscle tension, short-term memory loss, premature coronary artery disease and heart attack. This isn't the way to spend our golden years. Here are some things we can do about it today for a healthy and wealthy retirement tomorrow...

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Weekend Reading Links - October 18, 2015

For your weekend reading pleasure, the articles listed below contain some of the best dividend and value investing insights found on the web. They were written by various members of the Dividend Investing and Value Network over the past week:

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Sector Overview – Canadian Banks

This article provides a sector overview of the Canadian banks. The Canadian banks are counted amongst the safest and most stable financial institutions of the world and have a proven track record of being conservative and focusing on long term growth and prosperity. It is no wonder that the banks routinely find themselves in portfolios of most long term focused investors and make for a great core position. The banks are also great for income focused investors as they paid a good starting dividend and also raise those dividends regularly. Now that Canada is facing a lot of headwinds in the economy, most bank stocks have been beaten down and provide a great opportunity to initiate/add to the position.

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7 Stocks To Buy And Hold For The Next Quarter Century

The challenge with investing in such competitively advantaged businesses is that they often trade at a premium. 

Sometimes, however, a stock-market downturn can present investors with the opportunity to buy these top stocks at bargain prices.

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4 High-Yielding Utilities With A Growing Dividends

Long considered the domain of “widows and orphans”, utilities have developed a somewhat stodgy reputation. Why are utilities considered good for widows and orphans?

Here a few reasons: 1. They are generally less volatile than the market as a whole (low beta). 2. Their products are something that people continue to need and use no matter what the economy is doing, thus, 3. Their dividends tend to be more stable and secure.

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Weekend Reading Links - October 11, 2015

For your weekend reading pleasure, the articles listed below contain some of the best dividend and value investing insights found on the web. They were written by various members of the Dividend Investing and Value Network over the past week:

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An Exciting New Beginning

First off, I’m terribly sorry about my absence as of late. But I do think it’s all been for a good cause.

While I haven’t been writing new content three times per week like you readers have long come to expect, I have been working hard behind the scenes to solidify the future and legacy of this site and its message.

As such, I’m here today to announce a new, exciting path forward for the site that is more sustainable than ever before.

Handing Over Day-To-Day Management

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Freedom Fund Update – October 2015

Well, the time has come to update the Freedom Fund once again as we start another month. The Freedom Fund is my portfolio, and I think it’s aptly named. My portfolio is my way to freedom; freedom from a job I don’t desire to purchase goods I don’t need to impress neighbors I don’t care about. This journey is all about freedom and flexibility. One day, the dividend income this portfolio generates will fully cover my expenses and my time will be completely my own. What could you possibly want to own more than your time?

I’m extremely fortunate that I’m able to post these updates every single month, which shows the power of monthly contributions to investments because of the high savings rate I maintain. It shows how a relatively large sum of money can be built through the power of time, patience and perseverance.

It’s important to keep in mind that while updating the overall value of my portfolio is important for historical reference and keeping track of total return, as well as giving context to the dividend income I earn, my main focus is on the rising dividend income stream the Fund provides.

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Dividend Income Update – September 2015

Another month has passed by and it’s time for me to post an article on my favorite subject: dividend income. The reason why I love to publish articles updating my dividend income is because it’s pure numbers. It’s hard to argue the success of long-term dividend growth investing when you can slowly and surely see dividend income rise over time, getting closer to covering one’s expenses.

A new all-time record for dividend income was hit this past month!

While breaking records for monthly dividend income will be something that a dividend growth investor routinely does if they’re regularly adding fresh capital and reinvesting dividend income, this record is special for a big reason, as you’ll see below.

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Recent Buy – Amgen Inc

A cornerstone of dividend growth investing is to stay focused on buying quality assets and ignoring the noise surrounding uncontrollable parts of the economy. I have employed this measure and look for decent opportunities whether the overall market is up or down. My only focus is to increase my dividends/income year after year and try not to time the market in order to attempt outperformance. While there are some good value finds in sectors such as energy, commodities and financials, one sector that was begging some attention in my portfolio was healthcare. I decided to put some cash to work in this sector as I am confident that it will do well over the course of years to come. Healthcare is the one sector seeing robust inflation while the rest of the economy faces either headwinds or stagnation.

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The Best Technology Dividend Growth Picks Now!

As dividend growth investor, you have a large field to decide where to put your money.

Recently, I’ve introduced a few dividend growth picks from the consumer goods sector with the highest dividend yields. 

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Dividends4life: 9 Dividend Stocks With With A 10%+ Dividend Growth Rate

The difference between an income investor and a dividend growth investor is time and the understanding of how compound growth works. If you are 67 years old and need income today, you will likely select a different group of stocks than an enlightened 27 year old that doesn't necessarily need the income today. The 27 year old has the the luxury of time to grow a superior yield, while the 67 year old may be forced to assume additional risk to buy a higher current yield.

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Weekend Reading Links - October 4, 2015

For your weekend reading pleasure, the articles listed below contain some of the best dividend and value investing insights found on the web. They were written by various members of the Dividend Investing and Value Network over the past week:

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Autumn 2015 Dividend Stock Newsletter

This has been an interesting time for markets. China's market crashed, and global markets around the world responded with milder crashes and volatile rides.

And yet the US still has a highly valued market.

According to historical valuation assessments of the broad market, such as the Shiller P/E, the U.S. stock market is still valued at a premium compared to its historical mean. This is probably partially the result of the unusually long stretch of low interest rates. And when discounted cash flow analysis, or other versions of that like the dividend discount model, are performed on individual stocks, many of them have been valued at a premium lately.

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3 Dividend Growth Stocks with Wide Margins of Safety

The recent drop in the stock market is opening doors to many opportunities. While some investors have felt the heat and decided to abandon ship, others may just find a perfect entry point to make new purchases.

In such volatile markets, wise use of a margin of safety becomes one of your best tools to make the right investing decision. Remember that during a correction, not all stocks are trading at discounts – some of them are simply bad investments and won’t recover.

The difference between catching a falling knife and buying a strong but undervalued company with a margin of safety is a thin line. The whole process behind analyzing a company is crucial and this is where valuation comes into play.

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Dividend Companies I am Considering in October

The stock market has been showing signs of weakness this quarter. Little did I know that the stock market will go down so quickly after I wrote my article titled " are you ready for the next bear market" back in early August of this year.

For those of us who are in the accumulation stage, this is welcome news, since it means that future dividend income is available at lower cost today. To paraphrase Warren Buffett, whether it comes to socks or stocks, everyone loves a good sale.

For whatever reason, the environment today feels a lot like we are going to see lower prices in the foreseeable future, as long as the S&P 500 stays below 2000 points. After all, the stock market only started going down one or two months ago (though many cyclical companies had been drifting lower before that). It is interesting to note that through July of this year, most of the gains on the S&P 500 came from just six stocks. So we might actually see further weakness in major stock indices from here.

We have all been trained to buy on weakness over the past 6 years. If this doesn’t work for this correction, and it actually does turn into an actual bear market, I wonder how many will abandon stocks altogether

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