Sunday, August 20, 2017

Sometimes the best moves are no moves

I have a little less than $50 in my Robinhood account right now. A combination of sividends and money from a Lending Club account I am phasing out. I have to admit I was ready to pounce on all kinds of options. I had about 7 different ideas of what I could add a share of. With the little dip in the market there were plenty of chances to lower my cost basis. But I had to be honest with myself. The reason I had 7 ideas, was because I didn't really have one. I had scanned a few metrics and read a little on each of them. But the reason I was considering adding a share, was more the desire to add a share than anything else.

But I can't react to every tiny dip in the market. If something isn't jumping out at me, there is no pressure to buy just because I haven't in a while. It's hard because I want my money to be working for me and not sitting in a bank or my Robinhood Account.

What I've noticed about myself is that at this stage of my young DGI career is that I don't panic when it comes to the selling side. If anything I need to learn to sell sooner in some instances. But I can be an impulsive buyer. I'm an impulsive person by nature. So I must constantly remind myself to be more patient and to properly research before jumping in. As long as I'm using Robinhood, I will be making a lot of small buys. But I want to make sure, I'm taking the proper time to think and research and not pouncing on the flavor of the day.

Monday, August 7, 2017

Recent Buy SBUX

Today I grabbed two shares of Starbucks for $55.60 per share. I wish I had more money to spend here. But some car repairs and lower summer salary (because of my family leave), have left me a little tight this month. My new administrative salary kicks in next month and I'm hoping to have more to invest then. This is about a 14 percent decline from it's 52 week high. SBUX has raised it's dividend each of the last 6 years. The yield is a little low at 1.80 percent, but with a 48.3 percent payout ratio there is room to grow. Starbucks is a Morningstar Wide Moat stock with a 4 star rating. Currently 27 of 33 analysts rate Starbucks a buy or Strong buy. The average price target of the 27 analysts is $64.87.

But what I really like about Starbucks is it's ability to adapt it's model. They have traditional stores kiosks, and beverage trucks. They offer premium high end coffee as well as smoothies and new food options. Starbucks has more company owned stores than there competitors and it seems that they are constantly innovating and altering their model. They have rapidly expanded into Asia and have a strong brand recognition. What I see with Starbucks is a decent valuation with room for sustainable dividend growth over the next few years.

Disclosure: Long SBUX

Disclaimer

Material presented on 'Dividend Seedling' is for informational and entertainment purposes only and is the opinion of the author (a social studies teacher and not a financial advisor). None of the information should be relied on or taken as investing advice or a recommendation to invest. None of the information or opinions expressed, constitutes a solicitation of the purchase or sale of any security or investment of any kind. Please do your own research before making any investments. Do not making any purchases unless you are prepared to lose your entire investment.

Sunday, July 30, 2017

July Dividends

Another month of dividends is in the books. This July I brought in $4.15 total. That may not seem very impressive on the surface. But this is the first month I can look at my year over year progress. In those terms this small time investor is very happy. In 2016 I earned 0.94 in my first dividend month ever.  This puts my year over year growth rate at 293 percent. What even nicer is that both stocks I owned in 2016 increased their dividends since last July. I received a 9.9% growth rate from Disney and a 4.3% growth rate from GE.  Ironically I've bought a lot of GE lately and GE was the first share I ever bought. However, I won't see any new dividends from my latest GE buys until next quarter. Here is the dividen breakdown for July 2017.

TIF $1.50
O      $.85
GE    $.24
DIS $1.56

Disclosure: Long everything.

Disclaimer

Material presented on 'Dividend Seedling' is for informational and entertainment purposes only and is the opinion of the author (a social studies teacher and not a financial advisor). None of the information should be relied on or taken as investing advice or a recommendation to invest. None of the information or opinions expressed, constitutes a solicitation of the purchase or sale of any security or investment of any kind. Please do your own research before making any investments. Do not making any purchases unless you are prepared to lose your entire investment.

 

Friday, July 21, 2017

Some More Dollar Cost Averaging with GE

I love going bargain shopping. Just hoping I'm finding value and not a value trap. Purchased 2 more shares of GE today @25.81 per share. I think I will be looking elsewhere for the near future. But overall I'm happy with the GE buys this month. 

Disclosure: Long GE

Wednesday, July 19, 2017

Finance Lessons From Dad

It has been nearly two years since my father passed. There was a lot to admire about the man. I can't remember him ever raising his voice. He was born in 1930 near the start of the great depression. He served in the Korean War. Despite not having a college education he was intelligent and street savvy. Along with his brother he built a construction business that thrived in the 1970's and 1980's.

He made a lot of money. He owned horses, boats, bought stock, and ate at nice restaurants. He gambled quite a bit. He was able to accomplish this in spite of heart problems that plagued him for more than 45 years and eventually led to his death. He wasn't the father of the year. He married three times. Did not provide the emotional support my older half siblings needed.  He left the state when I was 12 to move to warmer weather and escape two ex-wives and other issues in our home state. After 12, I spoke to him frequently on the phone. Didn't visit him enough.

I'm not bitter about the relationship it was largely a positive one. He didn't provide much for me financially. But partially because his court settlement didn't require him to do so.

My mother is and always was a spender. I think he justified not turning money over to her in that he didn't think it would be used for the right things. Perhaps there was some truth for that, but he left her with more of her fair share of the financial burden. In the end he didn't plan better in terms of supporting his children and himself. The way I see it there are three lessons that can be learned from his mistakes.

1. Not Planning for a Rainy Day -- As a child of the depression, I'm surprised he didn't do better here. However, in his defense I don't believe he thought he would live as long as he did. His business did so well in the 1980s. Business was booming and the stock market was taking off. He got caught up in it and enjoyed it. He retired and left his business to my brother. I think he hoped the business would continue to boom and he'd get a piece. My brother wasn't cut out to run the company and it went bankrupt. Soon after the market dried up and he was out of luck.

2. Not Investing in What You Know -- When my dad moved down south I think he felt he was too old for construction. To be honest he was. But he was also too old to run a fast food franchise. This is something he knew little about, but still went in with a partner and bought one. According to him his partner was lazy. The franchise wasn't doing well really at any point. Then his heart started acting up again. He was forced to sell his stake in the franchise and took a big loss. He did meet a woman and get married for the third time. She stayed by him for over 20 years and took care of him in the end. So there is a happy ending. But he was largely depended after that and spend he latter work years as a telemarketer.

3. Not Investing as Much In Financial Independence as the Kid's College Fund -- In my heart I believe my father was naive and not malicious. As a child I was shown the thousands he had saved for my college each year. I believe he felt this was money to give me a start. That if he gave it to my mom, it would be used differently. He built a very nice college fund for me. But then went broke and had to use the money. In the end I received a thousand dollars towards my tuition and $2,000+ in a savings bond from when I graduated. It was there I learned the power of compounding. I believe it was purchased for $500 when I was around 3.

As a child I did receive one finance lesson and three pieces of financial advice. The lesson was his giant jar of pennies. He would take me to work with him and let me keep whatever pennies I could roll as a kid. It taught me the value of hard work. But also that there were better ways to make money than rolling pennies and that education was probably the way for me to get there.

As for the advice:

1. To make any money in stocks you need at least $25,000. Probably true during his day of expensive brokers. But you can tell from the nature of this blog, I'm taking a different approach.

2. Read books of highly successful people and follow their blue print. I believe there is some validity there. With the internet it is so easy to make those connections.

3. Any fool can make money. It takes a real man to keep it. I'm working on it dad. I miss you every day.

I don't fault my dad for his choices or his circumstances. I had an amazing childhood in many ways. I was lucky to have the opportunity to go shark fishing on his boat. I was fortunate to have a great listener that I could come to for advice. There was a lot that I learned from him. I'm grateful for the time I had with him. But I want more for my children. It's why I'm planning for my own independence. I want to build a stable future for myself and my posterity.

Monday, July 10, 2017

Grabbed two more shares of GE

I put out a limit order today for 2 shares of GE at 25.88 and got it. I feel like I'm doing the limbo. This stock keeps going lower and lower,  seemingly without reason. There has been a change in leadership that is welcome. There is a 3.69 percent yield at current levels and a payout ratio of 58.9 percent. There was some speculation about the dividend, but it appears to be safe. In fact they are paying down debt. Morning Star gives them a 4 star rating.

It's not my favorite stock in the world. I'm not going to mortgage the farm to buy GE. But at this value and yield, I'll find room to grab a couple of extra shares here and there.

Disclosure: Long GE

A Portfolio I Didn't Choose, Would Have Never Planned, but Absolutely Love.

A financial planner would have warned me against it, thankfully it wasn't really their choice (or mine for that matter). My children's combined college fund is currently 8 times my retirement savings. It is more than 5 times my house fund. It is a larger sum than my wife and I make in a year. Looking back on it, I wouldn't have planned it any other way.

This was a choice my mother made. The same mom that had a reputation for being terrible with money most of her life. The mom that showered me, and everyone else with gifts, when she had nothing. The same mom that lived most of her life in credit card debt, squandered multiple gifts and bailouts, and until recently lived paycheck to paycheck. This is a mom that had the vision to make an incredible financial decision, that keeps me responsible, accountable, and motivated, while providing for my children's future and supporting an early retirement. Turns out she is pretty good with money after all. 

About a year ago she came into a very large windfall. Members of my family were secretly taking bets about how long until she was in debt again. There were some reasons for initial concern. Within two months of receiving the money she spent half of it on a large house without selling her first one, along with a fancy new car.  Went on a European vacation. What she did next was interesting. She was extremely generous with us.  Then sold her old house and slowed her spending. Her generosity was incredible, but it came in a way I didn't immediately understand or appreciate. I was thankful don't get me wrong. But the help came in a way that provided mild short term financial relief.

The first thing my mother did was payoff my remaining student loan debt. About $10,000. That freed up  $250 per month for me.  This allowed me to increase my rent payment $250 a month and relieve some of the financial burden from my wife. We had our second child on the way. We were wondering how we were going to afford quality daycare without dipping into our savings. I had just finished a graduate program which freed up another $500 a month which was being applied to that. So with this help and the $500 not being applied to the graduate program, we had $750 plus cost of living increases to apply to child care. Suddenly it seemed more manageable.

My mother could have given us more money easily. We never asked. We respected it was her money and her choices. We realized we were old enough to take care of our own bills. But at the same time it was difficult not being able to put much away. And I feared a bunch of presents we didn't need, while we were struggling to pay the bills. That had been the way the money had gone in the past. A good chunk of money is being spent that way still. But if the rest of it goes that way it is fine, because of a second action my mom took.


The second generous thing my mother did for us was essentially taking care of college for my two girls. She opened two 529 plans with lump sum deposits in their name. Some of my family members (especially my in-laws) didn't understand this. The money could have been used to buy you a house. Buying a house at that point would have been the worst decision we could have made. My wife and I were both at points in our careers where we were looking to jump jobs. Tying ourselves down to a house would have limited our options. We may have also bought something larger than what we needed. And we then would have had to buy adult furniture. Something that isn't needed with two messy toddlers.

The 529 plans did three things for us.

1. It kept us frugal and ambitious: I wanted to be able to provide my children with a certain standard of life. I needed to achieve a certain salary to get there. At the same time I loved the current role I was in. The financial pressures I felt, gave me an added incentive to move forward with my career and begin investing more money.

2. A better start for my children: I think at one point my wife and I were paying around $1,100 in combined student debt. My children will graduate debt free. They even have the option of working to earn scholarships and applying that money to a house. I'm really going to work to instill the concept of school being work and using their 529 plans as an opportunity to be paid for their efforts.

3. A simpler retirement path: The path to retirement just got a whole lot easier. Step 1: Buy a house. Step 2: Achieve money needed for financial independence. In 17 years my children will both probably be in college. I will be 55 years old. I don't believe, I could think about retirement with a college bill of 80-120k per year hanging over my children. Barring a market disaster my children will have no college debt. I have a third small 529 plan that I started before my mom received her money. I still contribute $25 per month just to keep growing it. This money will be used to help supplement graduate school or something not covered in the initial plan. If it is not needed, I will just let it continue to appreciate and possibly convert it to a 529 for future grandchildren. It's amazing to be able to think about a potential college fund for a grandchild started 25-30 years before they were born. 

In conclusion: The gift applied this way, has kept me motivated, frugal, and simplifies things down the road.

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Sometimes the best moves are no moves

I have a little less than $50 in my Robinhood account right now. A combination of sividends and money from a Lending Club account I am phasi...