Monday, January 7, 2013

Portfolio Changes

There are two changes in the Roth Ira today and 1 change in the Taxable Account.

In the Roth:

Purchased 68 shares of KMI @ $36.72. ... Purchased 42 shares of COP @ $59.48.

These two positions replaced BP and NUE.

In the Taxable:

Purchased 23 shares of SO @ $43.85.

This was the result of accumulating $1,000 in cash and SO was due to be added to. SO is now a full position.

Thursday, January 3, 2013

Project $3 Million - December 2012 Results

This portfolio belongs to a 27 year old.

PRIMARY OBJECTIVE:

Income replacement! ... The objective is to start earning an income stream now, to replace the income that will be earned throughout the working years. The goal is to achieve $10,000 per month income in retirement. The income stream will need to continue to grow to stay ahead of inflation. A portfolio of $3 Million with a yield of 4% will accomplish that objective. Hence the title of this portfolio ... Project $3 Million.

MISSION STATEMENT:

To earn an income stream that is reliable, predictable and increasing.

STRATEGY:

To focus on the safety of the dividend, then to focus on the growth of the dividend, and then to focus on total return. The formula to be used to put this strategy into effect is:

High Quality + High Current Yield + High Growth Of Yield = High Total Returns.

TACTICS:

To contribute $500 per month to the portfolio, look to earn 8.25% annually, compounded over 40 years (to age 65). The beginning portfolio value at the time of establishing these goals was $42,204.42.

The link below shows the compounding effect to be used in achieving the $3 Million.

http://www.planningtips.com/cgi-bin/savings.pl?amt=42205.00&dep=500&cmp=annually&int=8.25&yrs=40&Calculate.x=50&Calculate.y=12

All dividends will be reinvested back into the companies paying the dividend. New cash will be used to add to positions or create new positions.

STATUS:

To stay on schedule for the $3 Million, according to the link above, the portfolio balance at the end of 2012 needed to be $74,355.59.

The portfolio balance end of year 2012 is $84,710.60. ... The portfolio is ahead of schedule!
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YEAR END PORTFOLIO VALUES:

2009 ... $42,205.42
2010 ... $54,949.87 ... up 30.2%
2011 ... $73,303.61 ... up 33.4%
2012 ... $84,710.60 ... up 15.6%
==================================================================

DIVIDEND HISTORY:

Total dividends for December ... $247.33
Total dividends for 2012 ... $2,808.46 ... a new record.

THE CHOWDER INDEX:

The Chowder Index is what I use to determine if the portfolio is accomplishing its goals or not. Since the priority is income replacement, and we want that income to grow, we want to see where the income in any month is higher than the corresponding month a year ago. I also want to see a year over year increase in the income.

Monthly Results: Year Over Year:

December 2009 ... $207.43
December 2010 ... $179.20
December 2011 ... $260.87
December 2012 ... $247.33

The results are being affected by special dividends in the month of December in some years more than others, which is why the numbers don't improve year over year. I don't know how to adjust for that, other than make sure the remaining 11 months of the year follow through.

With that in mind, here are the year over year results!

2009 ... $684.38
2010 ... $1,693.33
2011 ... $2,404.02
2012 ... $2,808.46 ... up 16.8%
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DECEMBER DIVIDENDS RECEIVED:

TAXABLE ACCOUNT:  (Dividend Reinvested)

Southern Company (SO) ......................... $21.96 ... bought 0.504 shares
Chevron (CVX) ...................................... $20.31 ... bought 0.188 shares
Johnson & Johnson (JNJ) ........................ $26.21 ... bought 0.368 shares
Coca-Cola (KO) .................................... $27.59 ... bought 0.735 shares
McDonald's (MCD) ............................... $26.80 ... bought 0.296 shares
BP, plc (BP) ........................................... $33.98 ... bought 0.826 shares
Lockheed Martin (LMT) ......................... $39.92 ... bought 0.44 shares
Frontier Comm (FTR) ............................. $2.00 ..... bought 0.459 shares
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Portfolio Changes:

NUE raised the dividend 0.7%

Sold NUE and BP. ... Proceeds are in cash and will be transferred to the Roth Ira.
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PORTFOLIO HOLDINGS:

Symbol ... Shares ... Mkt Value ... Gain/Loss ... Company

ADP ...... 38.267 ... $2,178.54 ... up 28.40% ... *Automatic Data processing
CL ......... 24.819 ... $2,594.58 ... up 31.38% ... *Colgate-Palmolive
CVX ...... 22.759 ... $2,461.16 ... up 38.25% ... *Chevron Corp
DEO ...... 29.521 ... $3,441.56 ... up 69.02% ... *Diagio, plc
EPD ....... 60.987 ... $3,054.23 ... up 30.39% ... *Enterprise Products Partners
FTR ....... 19.985 ... $85.54 ... Shares received in spinoff from VZ ... ~Frontier Comm.
GIS ........ 76.745 ... $3,102.03 ... up 12.46% ... *General Mills
JNJ ........ 43.341 ... $3,038.20 ... up 12.79% ... *Johnson & Johnson
KMB ..... 26.195 ... $2,211.64 ... up 26.86% ... *Kimberly-Clark
KO ....... 108.937 .. $3,948.97 ... up 51.71% ... *Coca-Cola
KRFT .... 85 .......... $3,864.95 ... dn <0.04%> .. Kraft Foods
LMT ...... 35.151 ... $3,244.09 ... up 14.93% ... *Lockheed Martin
MCD ..... 35.095 ... $3,095.73 ... up 13.76% ... *McDonald's
MMP ..... 80.519 ... $3,477.62 ... up 59.96% ... *Magellan Midstream Partners
MO ...... 103.083 ... $3,240.93 ... up 50.84% ... *Atria Group
PEP ....... 32.993 ... $2,257.71 ... up 10.55% ... *Pepsico
PM ........ 32.522 ... $2,720.14 ... up 15.89% ... *Philip Morris
SO ........ 45.318 ... $1,940.06 ... up 15.45% ... *Southern Company
SYY ..... 111.70 ... $3,536.42 ... up 5.82% ..... *Sysco Corp
Cash ..................... $6,020.92
==============================================================

Account Value ..... $62,352.10

*Means increased the dividend
~Means decreased the dividend
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ROTH IRA: (Dividends Reinvested)

December Dividends:

Realty Income (O) ............ $12.10 ... bought 0.297 shares
Dominion Resources (D) ... $36.46 ... bought 0.704 shares
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PORTFOLIO HOLDINGS:

Symbol ... Shares ... Mkt Value ... Gain/Loss ... Company

D ............ 69.821 ... $3,616.73 ... 10.39% ... *Dominion Resources
HCN ...... 42.136 ... $2,582.52 ... 10.42% ... *Health Care REIT
O ........... 80.204 ... $3,225.00 ... 11.73% ... *Realty Income
PG ......... 34.426 ... $2,337.18 ... 7.79% ..... *Procter & Gamble
VZ ....... 115.332 ... $4,990.42 ... 15.49% ... *Verizon
=============================================================

Account Value: ..... $16,786.59

No Portfolio Changes
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THRIFT SAVINGS PLAN (TSP) - Federal Version of the 401K

There isn't any company match in this account. Only 5% of income is being contributed. Index Funds and Life Cycle Funds are the only options to choose from.

Fund - Tracking Index ........ Shares ...... Value ....... Percentage of Portfolio

F Fund (Fixed Income) ... 16.9694 ... $271.70 ..... 4.88%
C Fund (S&P 500) ........ 100.5604 .. $1,812.70 .. 32.53%
S Fund (Small Cap) ......... 73.6928 .. $1,793.48 .. 32.19%
I Fund (International) ........ 80.9324 ..$1,694.03 ... 30.40%
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Account Value ...... $5,571.91

Contribution Allocations:

F Fund ... 10%
C Fund ... 10%
S Fund ... 35%
I Fund ... 45%