May 2013 Dividends Received
- Apple, Inc. (AAPL) – $27.45
- Bristol-Myers Squibb Co. (BMY) – $23.85
- Kinder Morgan Inc (KMI) – $38.00
Total dividends received during the month of May: $89.30
This is 97.8% improvement upon the $45.14 in dividends I received in May 2012. However, this is difficult to directly compare since only BMY was owned in May 2012 and the other stocks are new. I am up to $240.83 for the year so far. June should be a great month, as 7 of my 10 stocks pay out in the June quarter. I’m 24% toward my $1,000 annual dividend goal for 2013.
Full Disclosure: Long AAPL, BMY, KMI
I’ve been trying to move away from ETFs and into individual stocks. I still hold SCHA (small cap) and SCHV (large cap value) ETFs, which have been doing great from a capital gains perspective. I maintain approximately $2,000 in each of them right now. As of today, my total cost basis for SCHA was $6,625 and total realized/unrealized capital gains of $1,848; total cost basis for SCHV was $2,939 with realized/unrealized capital gains of $644.
I had also been holding on to a small portion of SCHD (~$3000) but recently sold all of my holdings in SCHD to finance many recent stock purchases. Total cost basis for SCHD was $10,500 with a realized capital gain of $1,503. SCHD was a dividend ETF that had a distribution yield of approximately 2.8%. I felt that I could do a better job picking individual stocks with not only a higher initial yield but also with a track record of dividend growth.
Today I sold my remaining SCHD and used the proceeds to buy Wells Fargo & Co (WFC). This will add $97.20 to my annual dividend (an increase from the approximately $80.79 that was estimated from SCHD). My average dividend yield will also increase from 3.07% to 3.12%. Estimated annual dividend is now $983.92.
My entire portfolio is here.
||Expected Annual Dividend
|Wells Fargo & Co
Full disclosure: Long SCHA, SCHV, WFC
With the combination of my brokerage and Roth IRA hitting $30,000, I decided to slightly modify my portfolio allocation from mostly ETFs to mostly stocks with a few ETFs. I sold large portions of SCHV, SCHA, SCHC, and SCHD in order to have the capital to invest directly in individual stocks. I then picked an assortment of stocks that I feel were at a reasonable entry price, had an adequate yield (around 3% or greater), and good history/ projection of continued dividend and earnings per share increases. As I’m only 29 (soon to be 30 in July), I’m not super concerned with entry price…I’ll be contributing to this portfolio for many years to come and am more interested in dividend growth.
With the adjusts in my portfolio below, my overall portfolio dividend yield will have increased from around 2.5% to 3.1%, increasing my expected annual dividend amount from $750 to $938 (at the current portfolio value of $30,000). With regular purchases throughout the remainder of 2013, I should be able to easily raise the annual dividend amount past my goal of $1,000 for the year 2013. I have decided to allow the dividends to be automatically reinvested. I know that this might force purchases of “overvalued” equity but feel that in the long-term, the dollar-cost averaging will work out okay.
I’ll also try and be more diligent with updating the blog to reflect new purchases and monthly dividends.
My current portfolio can be viewed here.
Here’s the recent purchases below:
||Expected Annual Dividend
Disclosure: Long AAPL, AFL, AVA, CVX, HRS, KMI
Apple had recently announced its 4th quarter 2012 earnings report. Despite posting a record $13.1 billion in profit, Apple’s stock has dropped significantly from its all-time high of around $700. I’m posting a few articles that puts their “disappointing” quarter into some perspective:
The $13.1 billion in profit Apple posted for the first quarter of 2013 is the most profitable quarter for a tech company in history, just edging out the record $13.06 billion set in the first quarter of 2013 — also by Apple.
A comparison of Apple’s record quarter to those of the other most profitable companies in the United States shows Apple head and shoulders above its American peers. Apple’s $13.1 billion in profit is 31 percent more than the $10 billion of its closest competitor, oil giant ExxonMobil, which briefly surpassed Apple in market cap following investors’ negative reactions to the most recent quarter.
Apple’s record profits contrasted with Amazon’s hopes to turn a profit:
Apple’s profits for fiscal 2012 reached above $40 billion, making it the only tech company to ever reach that benchmark. In fact, it’s a feat only ever matched by oil giant Exxon Mobil.
Here’s a chart from Charles Schwab’s On Investing that shows that trying to time the market doesn’t really work. Rather, it’s best to constantly invest as much as your finances and situations allow.
The question that everyone is asking is “Does it really work?”
The idea behind dollar-cost averaging makes sense: buy more shares when the price is cheap and less when the price is high with the hope of lowering your average cost per share. This is compared to the idea behind lump sum investing: the longer you have your money in the market, the more money you will make. This strategy works best if you have the money available as a lump sum. Lump sum investing is probably the best investment strategy because historically the market has risen substantially over time.
For those of us who do not have a lump sum available to invest (like me…since I just started a job), dollar cost averaging, while maybe not the greatest strategy for everyone, significantly beats leaving the money in a money market or checking account until you get to a “lump sum.” It also is important to make the monthly investment without commissions, be it a mutual fund or an ETF or a stock through a dividend reinvestment plan. Investing $50 a month into a stock with $8.95/trade cost would cause you to effectively lose greater than 17% of that investment each month to commissions.
Below is a snippet from an Op-Ed piece that Warren Buffett wrote:
THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.
So … I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.
A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now. …
Continue reading Warren Buffett’s opinion editorial, Buy American. I Am.