It has been a very unproductive week as I have been fighting a stomach virus and am probably only about 80% of normal currently. I am on the mend and should be back to 100% in a few days, but the day I had off work to go Christmas shopping found me in bed until 6 pm. Then I got up for 4 hours and went back to bed. Oh well, life happens from time to time. I plan to get a little caught up today on the past week’s mail.
Stock Dividend Links
In the meantime, I have some links that I would like to share with you. Since I have thinking about stock dividends lately and will be sharing my plan for increasing my own dividends in tomorrow’s post, I thought I would share link based upon that theme.
First up, Mark talks about BP as a dividend play. I think everyone needs to have some exposure to energy stocks since it is such an important part of daily life.
Next up, Dividends4Life shares Dividend Stock to Shield Your Portfolio from Inflation. I have already invested in Intel and am looking at Nucor as part of my plan.
This next link at Dividend Growth Investor has the Aristocrats List for 2012. This is a great list to start with if you are looking to get into dividend investing as the Aristocrats are companies that have increased dividends for 25 consecutive years. So not only are they reliable in their payments, but those payments are growing. Safety and growth is an awesome combination for wealth building.
Money Reasons shares his thought on using dividends to pay for expenses. Personally, I think it is a good idea. I do plan on ultimately using dividends and rental income to fund my retirement allowing the principal to remain intact for generations.
The Dividend Blog Guy has a fun quiz on becoming a dividend investor. I enjoyed it, but was a little disappointed that I couldn’t get my score.
Carnivals Featuring CFM This Week
Next I wanted to provide links to the various carnivals in which I had articles included over the past week. I must say a big thanks to Melissa from Mom’s Plans for doing all this submitting and tracking for me. I would be in a grand total of zero carnivals if it were up to me since I barely have time to do what I want to do and enjoy doing which is writing and keeping up with the other personal finance blogs on the web.
With Melissa on the job, I am able to be included in 3 or 4 carnivals each week which is certainly much better than zero.
Carnival of Financial Planning #213 hosted at PT Money.
Yakezie Carnival — Mighty Ducks Edition hosted at 20s Finances.
Totally Money Carnival — Building Wealth Edition hosted at Faith and Finance.
The Wealth Builder Carnival #56 hosted at My Wealth Builder.
Be sure to stop by a few of these carnivals and check out some of the other articles that are featured. I am sure that all you regular readers already had a chance to check out the ones that I wrote.
That’s all I had for now. I need to get going on that stack on my desk and get working on tomorrow’s post. Have a good remainder of the weekend.
I have had enough of hearing about Europe and their debt crisis. Actually, I have had enough of watching the impact of constant hope followed by inaction on my portfolio. The stocks in my retirement account go up and then down. They go down some more and then go up again. I simply wish that a decision would be made. It really isn’t that the market seems all that volatile to me, but it feels stuck in a narrow range.
Over the past year, the Dow Jones Industrial Average has had a low of 10,404 and a high of 12,876. But if you look at this 2 year chart which I got from Fidelity where I have my retirement accounts, you can see that since August there hasn’t really been a nice trend. Stocks have been up and then back down and up and back down. It truly looks like a roller coaster, and to be be quite frank, I am getting sick of it!
Will today finally bring an end to the European debt news cycle so that we can move on to some other things that might establish some sort of trend in the US stock market. It is hard to make decisions when it feels like you are being beaten around like a crab on the deck of Deadliest Catch!
Comfort from Dividend Stocks
At least I can take comfort in my decision to try to increase my returns from buying more dividend stocks in my retirement account. I added together the dividends that I have gotten so far in the fourth quarter of 2011, and it my highest total in 2 years. In fact, it looks like my goal of $1000 per quarter that I wanted to accomplish in 2012 was too easy to achieve and will be done this quarter since I have 2 more stocks that will be making payments.
In fact, AK Steel (AKS) will be paying out a dividend today. And Seadrill (SDRL) will be paying toward the end of the month on 12/21.
I promised that I would outline some of the changes to my portfolio that I would be making to increase the dividends that I receive. I plan on outlining this in detail over the weekend and posting it on Monday along with my revised goal for 2012.
In the meantime, I suppose that I will sit back and enjoy the news coming out of Europe and try to guess whether stocks will go up or down. It doesn’t really matter if I am wrong since I know that the next day will bring the opposite so we will just be right back where we started.
Readers: Is the constant roller coaster of the market making you nauseous? Is it affecting you at all? Are you a longer term investor who ignores the fluctuations?
On another note, I do have a different 401(k) which now has a match. That money is going into mutual funds, but the match helps guarantee me a profit no matter what happens and the bi-weekly deposits help with dollar cost averaging. So maybe, I shouldn’t be too fatigued after all? If the market plunges next year, it will be good these early investments to buy more shares cheap. After all, I still have 27.5 years before I need to withdrawal.
Have a great weekend!
Since I started blogging about financial topics earlier this year, I have been following and reading other financial bloggers as part of the overall community. There are many bloggers that write specifically about stocks that pay dividends, and as a result of following such bloggers, I have found a new interest in the wisdom of investing for yield.
Now I must admit that I knew that historically about half of the performance of the S&P 500 was attributable to dividends but coming out of the greatest bull market in history, it has been difficult to step away from thoughts about growth and capital gains. But now that I am getting older and wiser, I am starting to grasp the need for consistent returns.
I have really enjoyed reading about dividend investing from many of these other bloggers and will list some of them at the end of this post. But in the meantime, I would like to state that I am newly committed to increasing the dividend yield on my retirement portfolio.
Looking at the Past
In order to see where I am going and what goals may be achievable, I need to know where I have been in the past. I took the time to go back over the past 8 quarters and added up my total dividend payments for each of those quarters and included them in the nifty graph below:
As you can see from the graph, my dividends have ranged from a low of $104.78 in the second quarter of this year to a high of $236.07 in the first quarter. This was the result of switching my 401(k) precious metal investment from Goldcorp (GG) to Silver Wheaton (SLW) which pays a lower yield.
I did this since SLW has tended to be a little more volatile in the past which helps to increase the premiums from selling covered calls. However, I am wondering whether or not I should be focused on more consistency.
I still want to have some exposure to the inflation trade since I feel that the amount of liquidity that will eventually flood the system will result in a return of increasing prices. The only question is whether I want that exposure to be through precious metals or energy. Energy stocks tend to have higher dividend yields so I really looking at those.
Looking at the Present
Currently of the 8 stocks that I have in my retirement portfolio, only 4 pay dividends, and one of those was added in the past week (more on that in a future post). Intel was only added in the third quarter so you can see that I haven’t been in many dividend stocks. I think it is safe to say that there is room for improvement in this aspect of my portfolio.
I figure that as I close out current positions which could happen by the end of the year, I will be replacing those positions with new stocks which pay out anywhere from 3-5% in dividends and using my current strategy of selling covered calls to boost the yield.
Looking to the Future
Over the next year, I would like to get the majority of my portfolio invested in stocks that pay dividends and increase my quarterly dividend income to $1000. Ultimately, the plan would be to be able to live off dividends while leaving the principal intact. Now $1000 is not a lot of income for retirement, and I will obviously have to reinvest that money plus the covered call premiums to grow that total. But I do have over 2 decades before I will want to start drawing on that income anyway so I bet I can increase that number.
Obviously, I will have to keep tracking this on a quarterly basis and will do so now that I took the time to enter it all into a spreadsheet where I track my stock basis already. I think that this goal is achievable since even though half the stocks pay quarterly dividends, the yield is fairly low and the proportion of my portfolio in those stocks is less than 50%.
And Now for Those Dividend Bloggers
Here are some of the dividend bloggers that I have been following and using for ideas:
Dividend growth stocks offers 12 blue chips for when the chips are down.
Matt at Dividend Monk analyzes Exxon Mobil.
The dividend pig looks at Microsoft as a potential addition to a portfolio.
Dividend Mantra (love the name) recently added Medtronic.
Finally, Mike at The Dividend Guy Blog offers up tips to reduce volatility.
There are other great dividend blogs out there. Do what I do and read for ideas and invest according to your own criteria.
Readers: What are your thoughts on dividends? Do you intentionally try to increase dividend income like I plan? Do you invest for growth instead? What do you think of my plan? Thanks for reading.