Saturday, March 30, 2013

Project $3 Million - March 2013 Results

This portfolio belongs to a 28 year old.

Monthly Highlights:

Project $3 Million once again closed at an all-time high. Total portfolio value is $97,365.05. In order for this portfolio to stay on schedule for the $3 Million, the value at year end 2013 needs to be $86,959.44. This portfolio is ahead of schedule and has built in a safety margin in the event the market pulls back.

Companies that have increased their dividends this month:

General Mills (GIS) ... up 15.2%
Colgate-Palmolive (CL) ... up 9.7%
Realty Income (O) ... up 0.2%

Colgate-Palmolive (CL) also announced a 2 for 1 split.
---------------------------------------------------------------------------------

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, and not have to sell the assets to do so.

The objective is also to see the income stream continue to grow and stay ahead of inflation.

A portfolio of $3 Million with a yield of 4% will accomplish the $10,000 per month in income. 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 the 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 Return.

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 and where the portfolio value needs to be in each of those 40 years to achieve 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 are currently being reinvested back into the companies paying the dividend. New cash will be used to add to positions or create new ones.

STATUS:

To stay on schedule for the $3 Million, according to the link above, the balance at year end 2013 needs to be $86,959.44.

Project $3 Million is a year ahead of schedule. Portfolio value at the end of March is $97,365.05.
===================================================================

DIVIDEND HISTORY:

The total dividend for March are $231.49.
Total dividends for 2013 are $736.84. ... 18.6% over ytd 2012.

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 for each quarter is higher than the corresponding quarter of a year ago. I also want to see year over year income growth.

Quarterly Results: (first quarter)

2009 ... $108.00
2010 ... $264.95
2011 ... $542.81
2012 ... $621.20
2013 ... $736.84
==================================================================

MARCH DIVIDENDS RECEIVED:

TAXABLE ACCOUNT: (Dividend Reinvested)

Southern Company (SO) ......... $33.48 ... bought 0.734 shares
Chevron Corp. (CVX) ............ $20.48 ... bought 0.172 shares
Johnson & Johnson (JNJ) ........ $26.44 ... bought 0.337 shares
McDonald's (MCD) ................ $27.02 ... bought 0.274 shares
Lockheed Martin (LMT) ......... $40.42 ... won't be reinvested until 4/1
Frontier Comm. (FTR) ............ $2.04 ..... won't be reinvested until 4/1
-------------------------------------------------------------------------------------------------

PORTFOLIO HOLDINGS:

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

ADP ...... 38.552 ... $2,507.04 ... up 46.32% ... Automatic Data Processing
CL ......... 24.957 ... $2,945.67 ... up 48.00% ... *Colgate-Palmolive
CVX ...... 22.931 ... $2,724.66 ... up 51.32% ... Chevron Corp.
DEO ...... 29.521 ... $3,714.92 ... up 82.44% ... Diagio plc
EPD ....... 61.749 ... $3,722.85 ... up 56.25% ... *Enterprise Products Partners
FTR ....... 20.444 ........ $81.57 ... Shares received in a spinoff from VZ ... Frontier Comm.
GIS ........ 77.35 ..... $3,814.13 ... up 37.01% ... *General Mills
JNJ ........ 43.678 ... $3,561.07 ... up 30.92% ... Johnson & Johnson
KMB ..... 26.42 ..... $2,588.63 ... up 46.85% ... *Kimberly-Clark
KMP ..... 36.08 ..... $3,238.90 ... up 23.20% ... *Kinder Morgan Partners
KO ....... 108.937 .. $4,405.41 ... up 69.25% ... *Coca-Cola
KRFT .... 85.917 ... $4,427.30 ... up 13.26% ... Kraft Foods
LMT ...... 46.151 ... $4,454.49 ... up 15.93% ... Lockheed Martin
MCD ..... 35.369 ... $3,525.94 ... up 29.30% ... McDonald's
MMP ..... 81.311 ... $4,344.45 ... up 96.21% ... *Magellan Midstream Partners
MO ...... 104.466 ... $3,592.59 ... up 63.75% ... Altria Group
PEP ....... 33.248 .... $2,630.25 ... up 27.69% ... *Pepsico
PM ........ 32.832 .... $3,043.85 ... up 28.17% ... Philip Morris
SO ........ 60.052 .... $3,239.92 ... up 19.01% ... Southern Company
SYY .... 112.689 .... $3,963.27 ... up 17.50% ... Sysco Corp.
Cash ........................... $272.66
--------------------------------------------------------------------------------------------------
Account Value: ......... $66,799.05

* Increased the dividend in 2013
=================================================================

ROTH IRA: (Dividends Reinvested)

March Dividends:

Conoco Phillips (COP) ....... $27.72 ... bought 0.483 shares
Realty Income (O) .............. $14.62 ... bought 0.329 shares
Dominion Resources (D) ..... $39.27 ... bought 0.689 shares
Health Care REIT (HCN) ... dividend paid last month reinvested this month ... 0.526 shares
------------------------------------------------------------------------------------------------

PORTFOLIO HOLDINGS:

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

COP  .... 42.483 ... $2,553.23 ... 1.08% ..... Conoco Phillips
D .......... 70.51 ..... $4,102.27 .... 23.73% .. *Dominion Resources
HCN .... 42.662 .... $2,897.18 ... 22.19% ... *Health Care REIT
KMI ..... 68.671 .... $2,656.19 ... 5.32% ..... *Kinder Morgan, Inc.
O .......... 81.139 .... $3,679.65 ... 25.68% ... *Realty Income
PG ........ 34.676 .... $2,672.13 ... 22.15% ... Procter & Gamble
VZ ....... 116.67 ..... $5,734.33 ... 30.91% ... Verizon
Cash ...................... $19.72
-------------------------------------------------------------------------------------------------
Account Value ...... $24,314.71

==================================================================

THRIFT SAVINGS PLAN (TSP) - Federal Version of the 401K

There isn't any 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) ... 18.0506 ... $289.05 ...... 4.62%
C Fund (S&P 500) ........ 101.4693 .. $2,023.13 ... 32.37%
S Fund (Small Cap) ........ 76.0287 ... $2,092.56 ... 33.48%
I Fund (International) ...... 84.5292 ... $1,846.02 .... 29.53%
-----------------------------------------------------------------------------------------------
Account Value: ........ $6,250.76

Contribution Allocations:

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

SOLD POSITIONS - REALIZED GAINS/LOSSES:

Company ... Date ......... Gain/Loss ................ Reason/Result

BMY ... 11/09 ... $1,001.21 ... up 25.85% ... Froze dividend, bot VZ and JNJ
CLX .... 06/11 ... $25.25 ........ up 1.57% ..... Concerned with debt, bot KMB
KMR ... 02/11 ... $504.94 ...... up 27.09% ... Replaced with KMP, re: taxable account
O ......... 03/11 ... $639.63 ..... up 34.55% ... Sold @ $35.42, repurchased at $34.43 I don't recall why
VFC .... 10/11 ... $897.99 ...... up 53.07% ... Took profits as dividend dropped under 2%, bot PEP
VZ ....... 05/11 ... $618.16 ..... up 30.15% .... Moved cash to Roth and repurchased VZ adding to an existing position.

ZTR ... 04/11 . <$55.58%> .. dn <17.23%> .. Cut losses, bot SYY
O ........ 01/12 ... $79.73 ...... up 3.01% ......... Moved cash to Roth and repurchased O
UHT ... 01/12 ... $233.60 .... up 10.32% ....... Wanted to spread tenant risk, bot HCN
ABT ... 10/12 .... $872.46 .... up 31.38% ...... Split into two companies, took profits, bot KRFT
FTR .... 03/12 .. <$1,99.49> .. dn <49.90%> ... Took loss, moved cash to Roth, bot COP
NUE ... 12/12 .... $164.61 .... up 7.33% ... Sold, moved cash to Roth, added to COP
-------------------------------------------------------------------------------------------------
Total Cash Gains: ... $3,329.48







































Thursday, March 21, 2013

Time For Another Purchase

It is time to add to an existing position in the portfolio. There are four companies due for an upgrade, they are ADP, CVX, KMB and PEP. Of the four, only CVX is undervalued at this time. In looking at other positions in the portfolio, LMT looks like the best valuation at this point and I'm thinking of adding LMT in the coming days. I think it's going to pull back a little here, so yeah, I'm trying to do a little market timing.

I'm looking at buying with a 5% yield vs a 3% yield with CVX.

The cash flow per share, which is where the dividend and dividend growth comes from, has risen 9 out of the last 10 years. Since we went through two recessions in that time frame, I think that's a strong performance. Earnings per share has risen in 8 out of 10 years. I require earnings to rise at least 7 out of 10 years, so LMT qualifies for purchase. The dividend has been raised for 10 consecutive years.

In looking forward, analyst projections are a 5 year annual return of 14.9%, again very strong numbers and the highest in the defense industry.

The Chowder Rule is a total dividend return metric that I require for purchase. As a dividend growth investor, I focus on the dividend growth. I look at the current yield and add the 5 year compounded annual growth rate (CAGR) to come up with a total return number. I require that number to be 12% or more.

The current yield is 4.70% and the 5 year CAGR is 22.89% for a total return of 27.59%, well above the 12% requirement.

The company is rated 1 for safety by Value Line, the highest rating you can have. They have an A++ financial rating.

The main concern with LMT is the budget cuts as a result of sequester. Since the market looks forward 6 months or more, I think most of that has already been priced into the stock. Value Line thinks that LMT will weather the budget cut storm better than the other defense contractors.

So, in following the formula for success in investing ... High Quality + High Current Yield + High Growth of Yield = High Total Return has been met with this selection.

If the price is up on the day near the close, I'll enter the position today. If the price is down on the day, I'll wait for tomorrow.




Saturday, March 2, 2013

Project $3 Million - February 2013 Results

This portfolio belongs to a 28 year old.

Monthly Highlights:

Project $3 Million once again closed at an all-time high. Total portfolio value is $92,362.58. In order for Project $3 Million to stay on schedule, the value at year end 2013 needs to be $86,959.44. As you can see,  we are ahead of schedule and have built a safety cushion in the event the market pulls back.

Companies that have increased their dividends this month:

Coca-Cola (KO) ... up 9.8%
Kimberly-Clark (KMB) ... up 9.5%
PepsiCo (PEP) ... up 5.6%
-----------------------------------------------------------------------------------

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 the 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 Return.

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 and where the portfolio value needs to be in each of those 40 years, to achieve 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 are currently being reinvested back into the companies paying the dividend. New cash will be used to add to positions or create new ones.

STATUS:

To stay on schedule for the $3 Million, according to the link above, the portfolio balance at year end 2013 needs to be $86,959.44.

Project $3 Million is a year ahead of schedule. Portfolio value at the end of February is $92,362.58.
====================================================================

DIVIDEND HISTORY:

Total Dividends for February are $292.64.
Total dividends for 2013 are $505.35. ... up 15.7% over 2012.

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 for each quarter is higher than the corresponding quarter of a year ago. I also want to see year over year income growth.

Year To Date - Year Over Year:

2009 ... $78.94
2010 ... $179.16
2011 ... $348.34
2012 ... $436.75
======================================================================

FEBRUARY DIVIDENDS RECEIVED:

TAXABLE ACCOUNT:  (Dividend Reinvested)

General Mills (GIS) ................. $25.33 ... bought 0.605 shares
Enterprise Products (EPD) ...... $40.25 ... bought 0.762 units
Kinder Morgan (KMP) ........... $45.87 ... bought 0.522 units
Magellan Midstream (MMP) ... $40.26 ... bought 0.792 units
Colgate-Palmolive (CL) ........... $15.39 ... bought 0.138 shares
-----------------------------------------------------------------------------------------------------

PORTFOLIO HOLDINGS:

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

ADP ..... 38.552 ... $2,365.55 ... up 38.06% ... Automatic Data Processing
CL ........ 24.957 ... $2,855.83 ... up 43.49% ... Colgate-Palmolive
CVX ..... 22.759 ... $2,666.22 ... up 49.77% ... Chevron Corp
DEO ..... 29.521 ... $3,533.96 ... up 73.56% ... Diagio, plc
EPD ...... 61.749 ... $3,499.32 ... up 46.87% ... *Enterprise Products Partners
FTR ...... 20.444 .... $84.64 ... Shares received in spinoff from VZ ... Frontier Comm.
GIS ....... 77.35 ...... $3,577.44 ... up 28.51% ... General Mills
JNJ ....... 43.341 .... $3,298.68 ... up 22.46 ...... Johnson & Johnson
KMB .... 26.42 ...... $2,490.88 ... up 41.31 ...... *Kimberly-Clark
KMP ..... 36.08 ..... $3,150.14 ... up 19.82% ... *Kinder Morgan Partners
KO ...... 108.937 ... $4,218.04 ... up 62.05% ... *Coca-Cola
KRFT .... 85.917 ... $4,165.26 ... up 6.56% ..... Kraft Foods
LMT ...... 35.151 ... $3,093.29 ... up 9.59% ..... Lockheed Martin
MCD ..... 35.095 ... $3,365.61 ... up 23.68 ...... McDonald's
MMP ..... 81.311 ... $4,078.56 ... up 84.20% ... *Magellan Midstream Partners
MO ...... 104.466 ... $3,504.83 ... up 59.75% ... Altria Group
PEP ....... 33.248 .... $2,519.20 ... up 22.30% ... *PepsiCo
PM ........ 32.832 .... $3,012.34 ... up 26.85% ... Philip Morris
SO ........ 68.318 .... $3,074.99 ... up 14.36% ... Southern Company
SYY .... 112.689 ... $3,624.08 ... up 7.44% ..... Sysco Corp
Cash ...................... $802.45
-------------------------------------------------------------------------------------------

Account Value: ....... $62,981.30

*Increased the dividend in 2013
~Decreased the dividend in 2013
================================================================

ROTH IRA: (Dividends Reinvested)

February Dividends:

Verizon Communications (VZ) ... $59.40 ... bought 1.338 shares
Procter & Gamble (PG) ............. $19.35 ... bought 0.25 shares
Realty Income (O) ..................... $14.56 ... bought 0.325 shares
Health Care REIT (HCN) .......... $32.23 ... dividend paid waiting on discount price to reinvest
Kinder Morgan, Inc. (KMI) ....... $25.16 ... bought 0.671
----------------------------------------------------------------------------------------------

PORTFOLIO HOLDINGS:

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

COP ..... 42 ......... $2,433.90 ..... dn <2.57%> ... ConocoPhillips
D .......... 69.821 .. $3,909.98 .... up 19.34% ...... * Dominion Resources
HCN .... 42.136 ... $2,702.60 ... up 15.56% ...... *Health Care REIT
KMI ..... 68.671 ... $2,545.63 ... up 0.93% ........ *Kinder Morgan, Inc.
O .......... 80.81 ..... $3,688.98 ... up 26.63% ...... *Realty Income
PG ........ 34.676 ... $2,641.62 ... up 20.75% ...... Procter & Gamble
VZ ....... 116.67 .... $5,428.66 ... up 23.93% ...... Verizon
Cash ...................... $19.72
------------------------------------------------------------------------------------------------

Account Value: ...... $23,371.08
===================================================================

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) ..... 17.6886 ... $283.06 ...... 4.71%
C Fund (S&P 500 ) ........ 101.1735 ... $1,944.34 ... 32.35%
S Fund (Small Cap) .......... 75.2701 ... $1,978.84 .... 32.93%
I Fund (International) ......... 83.3336 ... $1,803.96 ... 30.01%
----------------------------------------------------------------------------------------------

Account Value: ....... $6010.20

Contribution Allocations:

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

SOLD POSITIONS - REALIZED GAINS/LOSSES:

Company ... Date ... Gain/Loss ... Reason/Result

BMY ... 11/09 ... $1,001.21 ... up 25.85% ... Froze dividend, bot VZ and JNJ
CLX ... 06/11 .... $25.25 ........ up 1.57% ... Concerned with debt, bot KMB
KMR ... 02/11 ... $504.94 ..... up 27.09% ... Replaced with KMP, re: taxable account
O ....... 03/11 .... $639.63 ..... up 34.55% ... Sold @ $35.42, repurchased at $34.43 (don't recall why)
VFC ... 10/11 .... $897.99 .... up 53.07% ... Took profits as dividend dropped under 2%, bot PEP
VZ ..... 05/11 ..... $618.16 ... up 30.15% ... Moved cash to Roth and repurchased VZ adding to position
ZTR ... 04/11 ... <$55.58%> .. dn <17.23%> ... Cut loss, bot SYY
O ...... 01/12 ...... $79.73 ....... up 3.01% ... Put cash in Roth and repurchased O
UHT ... 01/12 .... $233.60 ..... up 10.32% ... Wanted to spread tenant risk, bot HCN
ABT ... 10/12 .... $872.46 ..... up 31.38% ... Merger, took profits, bot KRFT
FTR .... 03/12 ... <$1,099.49> ... dn <49.90%> ... Second dividend cut, bot D with remaining cash
BP ..... 12/12 ... <$544.03> ... dn <17.23%> ... Took loss, moved cash to Roth, bot COP
NUE .. 12/12 .... $164.61 .... up 7.33% ... Sold, moved cash to Roth, bot COP
=================================================================

Total cash gains .... $3,329.48