Monday, February 3, 2014

Project $3 Million - January Results

This portfolio belongs to a 29 year old person. I manage it for him.

MONTHLY HIGHLIGHTS:

On January 22, this portfolio established an all-time new high at $112,149.31.

Companies that raised the dividend in January:

Dominion Resources - D ...................... up 6.7%
Magellan Midstream Partners - MMP ... up 4.9%
Healthcare REIT - HCN ...................... up 3.9%
Enterprise Products Partners - EPD ...... up 1.4%
Kinder Morgan Partners - KMP ........... up 0.7%
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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 any assets to do so.

The objective also includes having the income stream continue to grow at a rate above 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.
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MISSION STATEMENT:

To earn an income stream that is reliable, predictable and increasing.
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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 what I call, "The Success Formula That Never Fails."

High Quality + High Current Yield + High Growth of Yield + High Total Return

I explain how to use this formula here:

http://seekingalpha.com/instablog/728729-chowder/2360292-the-chowder-rule
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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 needs to be at the end of 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. Monthly cash contributions will be used to add to existing positions, or create new ones.
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STATUS:

To stay on schedule for the $3 Million, in the time allotted, according to the link above, the balance at the end of year 2014 needs to be $100,643.33. This portfolio is ahead of schedule.
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DIVIDEND HISTORY:

January Dividend History: (Last 5 years)

2010 ... $80.25
2011 ... $102.18
2012 ... $142.68
2013 ... $212.71 ... up 49.1%
2014 ... $292.68 ... up 37.6%
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JANUARY DIVIDENDS RECEIVED:

Taxable Account (Dividends Reinvested)

Automatic Data Processing - ADP ... $18.86 ... bot 0.233 shares
Pepsico - PEP ................................. $19.26 ... bot 0.234 shares
Kimberly-Clark - KMB ................... $30.11 ... bot 0.289 shares
Altria Group - MO .......................... $52.06 ... bot 1.398 shares
Philip Morris - PM ........................... $42.22 ... bot 0.511 shares
Kraft Foods - KRFT ....................... $46.38 ... bot 0.855 shares
Sysco Corp - SYY .......................... $33.48 ... bot 0.939 shares
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PORTFOLIO HOLDINGS: ($4,000 equals a full position)

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

ADP ..... 39.518 ... $3,027.08 ... up 69.78% ... Automatic Data Processing
CL ........ 50.736 ... $3,106.57 ... up 52.17% ... Colgate-Palmolive
CVX ..... 31.626 ... $3,530.41 ... up 22.88% ... Chevron Corp
DE ........ 12.000 ... $1,031.52 ... up 3.74% ..... Deere & Company
DEO ..... 30.253 ... $3,631.87 ... up 70.90% ... Diagio, plc
EPD ...... 63.918 ... $4,242.88 ... up 69.03% ... *Enterprise Products Partners
FTR ...... 22.454 ... $105.14 ... (Received in a spinoff from VZ) - Frontier Comm.
GIS ....... 79.016 ... $3,794.35 ... up 32.27% ... General Mills
JNJ ....... 44.66 ..... $3,951.07 ... up 40.75% ... Johnson & Johnson
KMB .... 37.467 ... $4,097.77 ... up 42.95% ... Kimberly-Clark
KMP .... 37.811 ... $3.005.22 ... up 8.32% ..... *Kinder Morgan Partners
KO ..... 112.068 ... $4,238.41 ... up 55.47% ... Coca-Cola
KRFT .. 89.194 .... $4,669.31 ... up 14.23% ... Kraft Foods
LMT .... 47.922 .... $7,231.91 ... up 78.40% ... Lockheed-Martin
MCD ... 36.230 .... $3,411.78 ... up 20.48% ... McDonald's
MMP ... 83.655 ... $5,559.71 .. UP 137.04% .. *Magellan Midstream Partners
MO .... 109.863 ... $3,869.37 ... up 61.91% ... Altria Group
PEP ...... 34.177 ... $2,746.46 ... up 28.63% ... Pepsico
PM ....... 45.436 ... $3,550.37 ... up 1.70% ..... Philip Morris
SO ....... 71.573 ... $2,951.67 ... up 4.35% ..... Southern Company
SYY ... 116.402 ... $4,083.38 ... up 16.60% ... Sysco Corp
Cash ..................... $74.12
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Account Value ...... $75,910.36

*Increased Dividend in 2014
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ROTH IRA: (Dividends Reinvested)

January Dividends:

Altria Group - MO .... $34.95 ... bot 0.939 shares
Realty Income - O ..... $15.35 ... bot 0.398 shares
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PORTFOLIO HOLDINGS: ($4,000 equals a full position)

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

D ......... 75.507 ... $4,923.95 ... up 43.32% ... *Dominion Resources
HCN ... 44.210 ... $2,560.64 ... up 3.67% ..... *Healthcare REIT
IBM ..... 5.000 .... $883.40 ..... dn <4.51%> ... International Business Machines
KMI .... 70.866 ... $2,410.15 .. dn <7.46%> ... Kinder Morgan, Inc
MO ..... 73.758 ... $2,597.76 .. dn <1.24%> ... Altria Group
O ......... 84.659 ... $3,452.39 ... up 12.16% .... Realty Income
PG ....... 35.449 ... $2,716.10 ... up 20.68% ... Procter & Gamble
VZ ...... 120.26 .... $5,774.89 ... up 26.52% ... Verizon
Cash .................... $278.34
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Account Value .... $25,597.62

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

There isn't any matching employer funds in this account. Therefore, 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 Portfolo

C Fund (S&P 500) ....... 106.0372 ... $2,444.32 ... 31.04%
S Fund (Small Cap) ....... 91.9957 .... $3,038.42 ... 38.59%
I Fund (International) ..... 97.4812 .... $2,391.54 ... 30.37%
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Account Value: ................................ 7,874.28

Contribution Allocations:

C Fund ... 20%
S Fund ... 35%
I Fund .... 45%
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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

KMR ... 02/11 ... $504.94 - up 27.09% - Replaced in taxable account with KMP
O ........ 03/11 .... $639.63 - up 34.55% - sold @35.42 bot back @34.43 don't recall why
ZTR .... 04/11 .... <$55.58> - dn <10.09%> - Cut losses, bot SYY
VZ ...... 05/11 ... $618.16 - up 30.15% - Moved to Roth and added to existing position
CLX ... 06/11 ... $25.25 - up 1.57% - Concerned with debt, replaced with KMB
VFC ... 10/11 ... $897.99 - up 53.07% - Yield dropped below 2%, bot PEP

O ....... 01/12 ... $79.73 - up 3.01% - Moved to Roth
UHT .. 01/12 ... $233.60 - up 10.32% - Wanted to spread tenant risk, bot HCN
FTR ... 03/12 .. <$1,095.08> - dn <49.90%> - Dividend cut, cash to Roth, bot COP
ABT ... 11/12 .. $872.46 - up 31.38% - Company split, took profits, bot KRFT
BP ..... 12/12 ... <$554.03> - dn <17.23%> - Took loss, cash to Roth, bot COP
NUE .. 12/12 .. $164.61 - up 7.33% - Slow dividend growth, cash to Roth, added to COP

COP ... 04/13 ... <$2.46> - dn <0.10%> - Froze dividend, bot MO
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Total Cash Gains ... $3,330.43






























































11 comments:

  1. hi, Chowder:
    how do you keep track of companies that raised the dividend monthly?

    thanks

    ReplyDelete
    Replies
    1. That's easy! I keep a spiral notebook handy and list monthly each company that is due to raise the dividend in that month. When the announcement comes out, I write down the percentage of the increase.

      For example, when I open my notebook, I see that KO, KMB, PEP and DE are due to announce dividend raises in February.

      Every day after 6 PM, when the numbers are updated, I go to this site to see who raised or lowered their dividend, and if any company I own shows up, I mark it down in my notebook.

      http://online.wsj.com/mdc/public/page/2_3022-dividends.html?mod=topnav_2_3000

      Delete
  2. cool, thanks for the link.
    I look forward to this blog updates for years to come...

    ReplyDelete
  3. chowder, great idea with your $3 million portfolio. I like most of your portfolio holdings and wish you good luck for a great return in 2014. I also have a small portfolio on my blog long-term-investments.blogspot.co.uk and I hope that it will become one day as big as yours.

    ReplyDelete
  4. Chowder,

    What's your general feeling on Roth IRA's/Dividend Stocks? I have a brokerage account with both a taxable and a rollover IRA, both of which are compiled of dividend growth stocks. I also have a decent sized Roth IRA with Vanguard in a few of their Admiral Total Market funds, but I'm considering two options:

    1) Leave the Vanguard funds to grow. Start a new self-managed Roth in dividend payers.
    2) Move everything over to a self-managed fund, buy all dividend payers, and continue the maximum annual contributions in this fund.

    What do you think? And who would you target for Roth allocation?

    Thanks! You're doing some amazing work on this portfolio.

    ReplyDelete
  5. I think a Roth Ira is a great idea for dividend growth companies.

    Each of us must do what we think is right. Each of us must strive to live within our own comfort zone. In my case, the only Mutual Funds I own are the ones I'm forced to own because there are no other choices in investing the money elsewhere.

    This portfolio has dividend growth companies in both a taxable and a Roth Ira account. Any company in either of these portfolio's are a target for purchase in a Roth Ira when the valuations are suitable.

    There are a couple of exceptions though. MLP's listed as Partnerships are designed for taxable accounts because most of the distributions are return of capital and those distributions are not currently taxed until you've held the MLP's long enough to have a zero cost basis. MLP's listed as C-Corp's are suitable for a Roth.

    REIT's are better suited for tax deferred accounts because they are taxed at ordinary rates as opposed to the qualified rate. So, you shelter those potential higher taxes.

    International companies that charge foreign taxes are better suited for taxable accounts if you wish to maximize the dividend return. Countries that charge foreign taxes take the taxes out of the dividend before it is paid. You can claim a foreign tax credit on your annual tax forms up to 15%, I believe. So, if you are charged foreign taxes within an Ira, you can not claim any of the foreign taxes.

    ReplyDelete
  6. hi, Chowder:
    in your next posting, please let us know how you think of KMI, KMP....M*'s Jose sounds worried, too.
    thanks

    ReplyDelete
  7. What is it that worries you about KMI and KMP?

    ReplyDelete
  8. Barron's bearish article, and would it follow BWP's path..etc. and underperform..etc.
    you know that.
    I am in red with KMI and KMP. wondering if I should add on weakness or just ride it out...

    ReplyDelete
  9. Kinder isn't a BWP or a LNCO. LNCO caused an SEC inquiry. I don't see that happening with Kinder. BWP self-imploded. I don't see that happening with Kinder either. I see Kinder continuing to grow their business with mergers.

    I'm considering adding to my Kinder position.

    I could be wrong in my assessment, but Kinder is one of the most financially strong MLP's out there. I believe their financial strength avoids the problems of BWP and LNCO who never qualified for consideration in our portfolios due to their lack of financial strength.

    ReplyDelete
  10. thanks, chowder.
    that's very reassuring.

    ReplyDelete