2013 Reviewed

The end of the year is when many investors reevaluate how they did during the previous year. Dividend growth investing is an investing strategy where the investor buys stocks of companies that consistently pay and grow their dividends, then reinvesting those dividends to compound the income stream.

My primary goal as an investor is to build a well diversified stock portfolio that produces a sustainable and rising income stream. Below I will review the changes that happened to my portfolio in 2013.


Purchases
I started the year with 15 stocks, this reflects purchases I made in 2011, 2012 and one spin-off (ABT spun off ABBV). During the course of the year I made the following purchases:

1. Jan 14: GIS 37 Shares at $40.90
2. Feb 11: MA 3 Shares at $524.00
3. Feb 11: AFL 30 Shares at $50.23
4. Feb 19: WFC 43 Shares at $35.14
5. Feb 25: WMT 21 Shares at $71.00
6. Mar 7: WFC 41 Shares at $36.38
7. Mar 28: MSFT 53 Shares at $28.24
8. May 9: GE 66 Shares at $22.85 
9. Jun 24: DPS 33 Shares at $45.00
10. Jul 25: KMI 39 Shares at $38.67
11. Oct 9: DPS 35 Shares at $43.70
12. Nov 12: TGT 23 Shares at $65.50
13. Dec 31: KO 36 Shares at $41.35

For a grand total of $19,608.35. Most of this money came from deposits, but about $1000 came from dividends my stocks paid. The portfolio ended with 23 different positions.

Sales
I'm a buy and hold investor. I plan on holding my positions for decades, enjoying the dividends they pay me every three months. It's not a buy and forget strategy though, you have to monitor your positions, to make sure the fundamentals remain excellent and the dividends keep growing. This year I sold one company:

1. Sep 30: INTC 50 Shares at $23.00

The reason for the sale was the dividend freeze. I felt uneasy holding onto this Tech company and bought a beverage company with the proceeds.

Dividends
I received $1,068.62 in dividends from my portfolio. This is an amazing 55.31% increase compared to 2012 income, $688.06.

Dividend Growth
Below a table of the amount my current holdings paid in 2012 and in 2013:

Some observations. 
I took ABT and ABBV together, ABBV didn't pay a dividend in 2012 and ABT lowered its dividend. When you take both stocks together, you get a healty raise of almost 8% compared to 2012. ABBV paid out 5 quarters the same amount, I have to investigate this further.

MasterCard knocked it out of the park with a 90% increase. I'm expecting this to continue for the mid term. I expect MA to expand its payout ratio and pump the dividend in the foreseeable future. It's a shame the shares trade at a high valuation, I'd like to add more. For now I just hold the 3 shares.

PSX only paid out twice in 2012, that explains the 195% increase.
 Wells fargo is increasing its payout ratio after it got permission from the FED to do so. This dividend growth rate will not continue. I'm hoping for 10% increases the coming years, until the payout ratio is about 60%, management's target.

The average dividend growth rate is 23.65%. If we take out the 3 big ones (PSX, MA and WFC). The average is 9.94%. This is very nice. If I reinvest dividends, at a 3% yield, I'm looking at about 13% organic income growth. Meaning, if I wouldn't make deposits and just reinvest dividends, my income would grow at a 13% annual clip.


Portfolio
The paper value of my portfolio has grown considerably in 2013. Jan 1st, 2013 The value of my portfolio was $20,795.26. I ended the year with a portfolio worth $46,565.43. This represents an increase of 123.92%  As I said above, about $19,600 from the raise in value came from new purchases, the rest, about $6,000 came from stock price appreciation.


Conclusion
2013 was a great year for me. My dividend income grew considerably, the value of my portfolio grew more than a 100% and I deposited more than I could dream of.  Last but not least I overshot my goal for $1,000 in dividends!

How did your 2013 go?

Thanks for reading.

Latest Buy: KO

Right before the ending of the year I decided to buy some shares of this beverage behemoth.

Today's buy:

• 36 Shares KO @ $41.35

This purchase will add $40.32 to my yearly income. This is based on the $0.28 dividend KO pays every quarter, I'm expecting a dividend raise in February, so the real income amount is higher.

This company needs no introduction. It's the biggest beverage company on the planet. As far as I know, you can get a Coke in every country on the planet (except North-Korea). Coca-Cola is an invaluable brand name and the distribution network is irreplaceable. In the coming years, 700 million people will enter the middle class all around the world, this is where Coke's growth opportunities are.

The stock is a classic dividend growth stock, it has paid a dividend since 1919 and raised it dividend for more than 50 years. You can almost say, there are three things certain in this world, death, taxes and Coca-Cola's dividend every quarter.

The stock isn't cheap at 21x earnings, but in the last 15 years its price moved out of the stratosphere, in 1998 investors paid more than 40x earnings for a share of KO!

Thanks for reading

December 2013 Dividend Income Update

2013 is over. It was a great year for me. It was my 2nd full year of investing. My passive income was great. It's amazing how my passive income grows. Looking back to my first few months of investing, I was getting $25 a month. Now I pull in $100 regularly. Without further a do, here is the last income update for this year.

Dividends Received

• WFC: $25.20
• PSX: $10.53
• AFL: $21.83
• JNJ: $11.22
• NSC: $7.80
• IBM: $7.60
• CVX: $11.00
• TGT: $9.89
• MSFT: $14.84
• MCD: $22.68

Total dividend income for December: $142.59

My 2013 goal was $1000, I made it! This year total dividend income was $1068.62! I'm still not sure how high I'll set the bar for 2014. 

Thanks fo reading.

Recent Dividend Increases

The main focus of my portfolio is to purchase stocks that raise their dividends in the future. The stream of dividend will grow over time due to reinvested dividends, investing fresh capital and companies raising their dividend. This week three of my companies raised their distributions to their loyal shareholders.



AT&T (T) - Announced that its board of Directors voted to increase AT&T's s regular quarterly dividend by 2.2% to $0.46 per common share versus the previous rate of $0.45 per common share.

General Electric (GE) - Announced a 16% dividend hike. The Board of Directors agreed to raise the company's quarterly dividend to $0.22 per common share up from $0.19 a share.

Mastercard Inc (MA) - Announced on Tuesday that its Board of Directors declared a quarterly dividend of $1.10 per share, reflecting a $0.50 or whopping 83% raise over the previous quarter. On top of that, the Board of Directors also approved a new share repurchase program of $3.5 billion in share repurchases. This buyback program will kick in once the $514M remaining on an existing $2B authorization is used up.
With shares trading almost at $800 a share the company announced a 10:1 stock split. For every 1 share of MA I hold, I'll receive 9 extra. The dividend post split will be $0.11 dollar per quarter.

November 2013 Dividend Income Update

In the month November I opened a new position in TGT. I expected T to announce a dividend hike but it didn't came yet, any day now. After I bought TGT it pulled back some more, I'm contemplating buying more, it's one of the few stocks that seem fairly valued to me.

Here's the dividend update for November 2013:

Dividends Received

• GIS: $14.06
• T: $17.10
• MA: $1.80
• ABT: $2.80
• ABBV: $8.00
• KMI: $34.03
• PG: $10.83

Total dividend income forNovember: $88.62

My 2013 goal is $1000, so far I'm 92.60% of the way there, my progress is tracked here. I just need $73.79 in the next months to reach my goal.

Thanks for reading

Latest Buy: TGT

As I mentioned in my latest dividend update, I had some capital to work with. So I decided to initiate a new position today in a big retailer, Target Corporation.


Today's buy:

• 23 shares of Target Corporation (TGT) @ $65.50

This purchase will add $39.56 to my annual dividend income.

Target Corporation is a retailer, it sells health beauty and household essentials, electronics, food and pet supplies and furniture. This dividend champion has increased dividend payments for 46 years in a row. In 2012 it generated $72 billion dollar in sales and $4.52 in EPS. Target is focusing on their "Long-Range plan": generating $100 billion in sales and $8.00 in EPS in 2017. 

They hope achieving that goal by focusing on expanding same store sales and renovating existing stores, rather than opening a bunch of new stores. Future growth can be realized by increased penetration of the red card. This decreases expenses related for transactions processing other credit cards. Target is targeting middle and upper class consumers. These groups are more focused on quality and diversity of products. That's how Target differentiate itself from Wal-Mart. The company is on track to open 125 stores in Canada this year.

The stock trades for 15-16x earnings which I think is a fair deal. I mean the company raised dividends for 46 years, that means it's a great business and management is doing something right. I'm happy with owning shares and won't mind adding more if the stock drops significantly.

Thanks for reading.

October 2013 Dividend Income Update

In the month October I added to my DPS position. Phillips 66 (25%), Aflac (5.7%), Kinder Morgan Inc. (2.5%, 13.9% YOY) and Abbott Laboratories  (57.1%) announced a dividend hike. Things are going according to plan. I have enough money for one purchase. I'm not sure what I'm gonna buy yet, but it's probably going to be an oil major.

Here's the dividend update for October 2013:

Dividends Received

• DPS: $12.54
• MO: $16.80
• PM: $33.84
• GE: $12.54

Total dividend income for October: $75.72

My 2013 goal is $1000, so far I'm 83.74% of the way there, my progress is tracked here. I just need $162.59 in the next two months to reach my goal.

I'm 100% sure I will meet this goal and already thinking about setting a goal for 2014. Last month I was thinking about  about $1500 in dividends for 2014, but I'm thinking I could do more.

Thanks for reading

Latest Buy: DPS

Today I put some capital to work. The last time I bought something was back in July. The market pulled back the last few sessions due to the debt ceiling soap opera. The cheaper stocks get, the happier I am, because cheap stocks mean great future returns.

Today's buy:

• 35 shares of Dr Pepper Snapple Group Inc. (DPS) @ $43.70

This purchase will add $53.20 to my annual dividend income.

I already had a position in DPS, and decided to average down. The stock seems fairly valued. Management is expecting 2013 EPS to hit the $3.04 - $3.12 range. That means a forward PE between 14 and 14.4 which seems fair for this company. DPS is one a the few consumer staples that doesn't seem fully valued at the moment. The whole sector has been quite expensive the last few months.

On a different note, Coca-Cola's stock also pulled back. Buying now gives me an 3% entry yield which is something you don't get to often with Coke shares. I might pick up some shares of this great company in the near future. I'd love to have a position in Coca-Cola!

Thanks for reading. 

September 2013 Dividend Income Update

Nice month for the portfolio regarding dividends. September treated me with four dividend increases, I decided to sell Intel, and today PSX announced a stunning 25% dividend increase! I love the growing stream of passive income my portfolio is generating. The amount of dividends my portfolio generated this month is a record!


Here's the dividend update for September 2013:

Dividends Received

• WFC: $25.20
• INTC: $11.25
• WMT: $9.87
• PSX: $8.44
• AFL: $20.65
• JNJ: $11.22
• IBM: $7.60
• CVX: $11.00
• NSC: $7.80
• MSFT: $12.19
• MCD: $21.56

Total dividend income for September: $146.78

My 2013 goal is $1000, so far I'm 76.17% of the way there, my progress is tracked here.

I'm 100% sure I will meet this goal and already thinking about setting a goal for 2014. I'm thinking about $1500 in dividends for 2014 would be a nice challenge.

Thanks for reading

Latest Sale: INTC

So, after Intel announced the same dividend for the 6th time in a row I decided to sell my shares. I discussed Intel in this post.

For me, the future is too blurry for Intel. They've missed the Phone market. PC sales are contracting. Future cash flows are hard to predict for me, therefore it is hard to know if the stock is cheap, expensive or fairly valued. I decided to sell and find a better use with the capital.

I sold my 50 Shares for $23.00. I originally purchased them on May 22, 2012 for $26.10. I got $1.125 of dividends in those 16 months. A loss of $1.975 per share or about 7.6%.

This sale reduces my annual dividend with $45.00

I haven't decided what I'm gonna buy yet, XOM, CVX, WMT, Nestle, DPS all seem reasonable at the moment.

I'm Getting Spoiled With Dividend Raises

The main focus of my portfolio is to purchase stocks that raise their dividends in the future. The stream of dividend will grow over time due to reinvested dividends, investing fresh capital and companyie raising their dividend. In the few weeks four of my companies raised their distributions to their loyal shareholders.

Altria Group (MO) - Announced that its board of Directors voted to increase Altria's regular quarterly dividend by 9.1% to $0.48 per common share versus the previous rate of $0.44 per common share.

Philip Morris (PM) - Announced a 10.6% dividend hike. The Board of Directors agreed to raise the company's quarterly dividend to $0.94 per common share up from $0.85 a share.

Microsoft (MSFT) - Announced on Tuesday that its Board of Directors declared a quarterly dividend of $0.28 per share, reflecting a $0.05 or whopping 21.7% raise over the previous quarter. On top of that, the Board of Directors also approved a new share repurchase program up to $40 billion in share repurchases.

McDonald's (MCD) - McDonald's Board of Directors declared a quarterly dividend of $0.81 per share. This represents a 5.2% increase over the company's previous quarterly dividend.



The big surprise was Microsoft. I expected a 2-3 cent, or 9-13% raise, I'm got a 22% raise! Great. This is what it's all about. Seeing my dividends get raised. It makes my day when I read I'm getting a pay raise, especially when it's way more than I expected!

Thanks for reading.

August 2013 Dividend Income Update

Another month over, another month of dividends hitting my account. The taper-talk is getting a bit old. Interesting to see what happens to the market when the FED reduces stimulus. I have been building op some capital in the last few months, even tough I'm long stocks, I root for a pullback in the markets, I have some dry powder I'd like to use!


Here's the dividend update for August 2013:

Dividends Received

• GIS: $14.06
• T: $17.10
• MA: $1.80
• ABT :$2.80
• ABBV: $8.00
• KMI: $33.20
• PG: $10.83

Total dividend income for August: $87.79

My 2013 goal is $1000, so far I'm 61.49% of the way there, my progress is tracked here.

Looking forward, next month will be a big month for me, more than half of my positions will be paying out. I'm also expecting dividend increases from MCD, MSFT and PM. I can't wait!

Thanks for reading

Brown-Forman Analysis

I know there are a lot of stock analysis out there in the blogosphere. All the big dividend growth stocks like JNJ, KO, PG, XOM and MCD are well covered. I decided to analyze a stock that isn't been looked at as much. Recently I was looking at Brown-Forman. All data in this analysis is found in the 2013 Annual Report, found here: Investor relations Brown-Forman

Overview

Brown-Forman manufactures, bottles, imports, exports and markets a range of alcoholic beverage brands. A large chunk of its revenue comes from the Jack Daniel's line. The company produces recognizable brands for which consumers are willing to pay a premium in order to enjoy them. 

The company has been paying dividends since 1949 and raising it for 29 years, making it a Dividend Aristocrat. 

The Numbers

An overview of the last 10 years:

For convenience, I put the most important numbers in charts:

Net sales have grown from 1,992 million to 3,784 million. An average growth rate of 7.4% during those years.

Diluted EPS has grown from $1.06 to $2.75. An average growth rate of 11.2%.
Dividends (excluded special dividends) have grown from $0.43 to $0.98 per share. An average growth rate of 8%.

Some notes:

• Outstanding shares have been steadily decreasing from 228.7 million to 215 million. This means management is returning cash to share holders through buybacks.

• As we can see, Long term debt suddenly rose from $503 million to $997 million 2012 vs 2013. This might be a red flag and something to look further into. Although, the debt to capital ratio is at 35% which isn't exceptionally high if we look at the historical debt to capital ratio. 

• We can see very high profit margins, hovering in the low 20% for the last decade. Return on equity between 20% and 30% even through the Great Recession. Overall, the numbers seem pretty damn solid. 

Behind the Numbers

Of course, a company is not just numbers on a piece of paper. It's a real entity, providing high quality alcoholic beverages for the consumer to enjoy. The business provides jobs to 4,000 people. It rewards its shareholders. It creates economic activity which benefits society by generating taxable income, which supports our schools, military and social programs.

Here's an overview of some of the brands Brown-Forman produces:

A look inside a Brown-Forman Cooperage company. It shows men working and making the barrels in which the Bourbons and Whisky's get distilled.

Expected Returns

Today the stock trades at around 25 times earnings. This is not sustainable in my view for the long run. Let's say that in 2023 the stock will trade at 20x earnings. Now, I have to project EPS and dividend to be able to calculate total returns. Let's look at three possible outcomes. A "normal", an optimistic and a pessimistic scenario.

Normal scenario
The normal scenario: The next ten years Brown-Forman is able to perform in the same way it has for the last decade: Growing EPS at 11.2% and dividends at 8%. In 2023 the EPS would be $7.95 and along the way you would have gotten around $17.62 in dividends. Assuming you don't reinvest dividends, your total return would be 20x$7.95 + $17,62 = $176.62. Bought at today's price ($68.59) that would mean a compounded annual return of 9.9%

Optimistic scenario
The optimistic scenario:The next ten years Brown-Forman is able to perform  25% better than it has for the last decade: Growing EPS at 14% and dividends at 10%. In 2023 the EPS would be $10.19 and along the way you would have gotten around $19.98 in dividends. Assuming you don't reinvest dividends, your total return would be 20x$10.19 + $19.98 = $223.78. Bought at today's price ($68.59) that would mean a compounded annual return of 12.6%

Pessimistic scenario
The pessimistic scenario: The next ten years Brown-Forman is able to perform  25% worse than it has for the last decade: Growing EPS at 8.4% and dividends at 6%. In 2023 the EPS would be $6.16 and along the way you would have gotten around $15.55 in dividends. Assuming you don't reinvest dividends, your total return would be 20x$6.16 + $15.55 = $138.75. Bought at today's price ($68.59) that would mean a compounded annual return of 7.3%

Based on these assumptions Brown-Forman will generate between 7.3% and 12.6% shareholder returns through 2023, this is assuming you would not have reinvested dividends, if you do this, the calculated returns would be higher obviously.

Conclusion

Overall the company looks great. It holds a portfolio of great brands, it enjoys customer loyalty, high profit margins, solid growth numbers, possibility's to expand in emerging markets and international developed country's. This is a company I like to have a big stake in. To me, this company sort of resembles Coca-Cola, only with alcoholic beverages.

The company seems to be doing a good job consistently growing revenue, EPS and dividends. The company isn't very sensitive to recessions.

With quality comes a price. The stock isn't cheap right now, it trades at 25 times earnings. Based on today's fundamentals and future projections, I would pick up shares when we see it trading at $63.

Either fundamentals per share have to improve, or the market price would have to come down. I stay on the sidelines for now.

Thanks for reading

What I Look For in Dividend Stocks

My investing strategy entails purchasing high quality dividend growth stocks. The goal of my investing portfolio is to purchase stocks that will raise dividends in the future. The stream of dividend income will be used to fund my early retirement, making be completely financial independent. The dividend growth will protect my income stream against inflation.

But what exactly am I looking for in stocks. These are a few specific characteristics I'm looking for when researching stocks.

Strong competitive advantage
The first thing I'm looking for are strong competitive advantages. This is what Warren Buffett calls "wide moat businesses". It is very difficult to take away market share from such businesses due to their customer loyalty.

These features protect the companies from competitors and help them generate higher return on equity and charge higher prices to customers.

Wal-Mart, a very successful retailer, has marketed itself as the lowest price retailer for almost everything consumers spend their money on. Due to the size of Wal-Mart it is enable to to squeeze lower prices from it suppliers, they pass these low prices on to the customer. The low prices are Wal-Mart's competitive advantage.

The Coca-Cola Company, worlds biggest soft drink producers, is best known for its most prominent drink, Coke. It's a strong global brand, consumers a willing to pay a premium for the product. There are alternatives to Coke, like Pepsi, but any Coke drinker can taste the difference between a Coke and a Pepsi. The quality of Coca-Cola is the reason why multiple generations keep drinking the sugar flavored drink. This strong band name is a competitive advantage The Coca-Cola Company has. Another company with a portfolio of strong brand names is Philip Morris Co. It sells cigarettes outside the united states and owns the strong Marlboro brand.


A steady business model
A steady business model, what does that mean? It means that the business isn't subject to rapid changes. This results in shying away from start-ups and most technology companies. Technology has to be innovative, if it's not, it will lose its competitive advantages. In the tech sector, moats can evaporate quickly, we all remember Eastman Kodak, market leader in camera's in the past, now basically bankrupt. It failed to adept to the  a big market changer, the digital camera.

A steady business model like Coke is much more appealing to me. The company has been selling sugar flavored syrup for over 130 years now, this makes the profits very predictable and thus easy to predict future profits and future dividend growth.

Small companies do not have establish their moats yet. Shying away from small companies might result in me missing out on the next Apple. You just have to remember, for every success story like Apple, there are 100 not-so-success stories. I can't pick the next Apple, so I'm not trying to. I stick to steady businesses.


A strong balance sheet
When researching a stock, I always take a look at the balance sheet. I'm looking for a low debt/equity ratio.  I want the company to be able to cover its interest payments very generously (interest coverage ratio). I do not like companies with big debt loads, this could bring problems in the future when interest rates rise.

Some companies have huge amounts of cash sitting on the balance sheet. Microsoft for example has more than 70 billion dollars in cash & equivalents the last time I checked. This bale of cash, if used intelligently, can provide great shareholder returns. This money can be used for expansion of the business, acquisitions, share buybacks and dividends. A strong balance sheet is always a plus.



A history of paying and increasing dividends
Being a dividend growth investor, I focus on dividend paying stocks. I want my portfolio to produce a rising stream of income that protects my principal and income from inflation. Companies which have raised their dividend for decades typically are mature and  stable businesses, which generate a sufficient amount of cash to expand and share with the shareholders in the form of dividends and share buybacks. When a management has committed itself to raising the dividend year after year, it gets ingrained in the corporate culture.


An attractive valuation
I don't want to pay too much for a business. No matter how wonderful a company is, no business is worth any price. Overpaying for businesses could result in sub par total returns. We saw this during the dot-com boom or irrational exuberance in the late nineties. Household names like Coca-Cola and Wal-Mart were trading for 40 times earnings. The investor who bought stocks at those valuation were experiencing sub par total returns for the last 13 years.

As a rule of thumb, I do not to pay more than 20 times trailing earnings for a stock, unless I feel very confident about the future growth prospect of a business.


Conclusion
I briefly discussed a few characteristics I look for in businesses.Of course there are multiple other factors I take into account.  When I think of buying a stock, I don't ask myself the question: "What will go up next week?" I think about the things I discussed above. These are things make a business a good business, in my opinion.

When the business is good, the stock will eventually follow.


Thanks for reading

July 2013 Dividend Income Update

A bit of a disappointing month for me. INTC didn't raise the dividend. I decided not to sell yet and make a decision on whether to sell or not in the future. NSC did raise the dividend only 4%. I was really hoping for something a little bit more than that, given their previous raises were substantially higher. I also added some KMI shares to my portfolio.

All that said, dividends just keep rolling in like clockwork.

Here's the dividend update for July 2013:

Dividends Received

• MO: $15.40
• PM: $30.60
• GE: $12.54

Total dividend income for July: $58.54

Small month compared to the previous, but that's because only three positions paid me this month.

My 2013 goal is $1000, so far I'm 52.71% of the way there, my progress is tracked here.

Looking at the market, there aren't any stocks that stand out as bargains right now to me. Some things look fairly valued. I have some capital ready to allocate into a great business, if the opportunity arises, I'll grab it.

Thanks for reading

Latest buy: KMI

I decided to put some more capital to work in an energy business I already had a stake in.

Today's buy:

• 39 shares of Kinder Morgan Inc (KMI) @ $38.67

This purchase will add $62.40 to my annual dividend income.

Kinder Morgan Inc (KMI) owns and manages a diversified portfolio of energy transportation and storage assets in the United States and Canada. Kinder Morgan Inc operates like a giant toll road and receives a fee for its services, avoiding commodity price risk. KMI owns the general partner and limited partner units in Kinder Morgan partners (KMP). 

I already had a position in Kinder Morgan Inc. This purchase boosts the total position up to 83 shares.
Recently Kinder Morgan Inc announced to boost its dividend to $0.40 from $0.38. This pushed the current yield over 4%.

It's very likely Kinder Morgan Inc boosts the dividend at the low double digit for at least a few more years. The high current yield and the dividend growth makes this an attractive buy in my opinion. 

Thanks for reading

I am very close to selling my Intel shares

Today Intel announced its dividend for Q3. The board of directors decided to keep the dividend static for the fifth quarter in a row, I was really anticipating a  raise of at least 1 cent per share.

This forces me to make a decision. Intel is losing the tablet and mobile business, therefore future earnings are hard to predict. While the stock might appear cheap now, it could be considered a value trap by some.

I held onto the stock for its raising dividends and high yield. A dividend that is static for five consecutive quarters, that is not a good sign. Although it might be a smart move by the board, conserving cash to strengthen the business.

I'm just not sure how to interpreted this. I might sell in the near future and use the proceeds to buy something that I'm more sure of.

I have to think about it for a little bit. Do I hold onto the stock, or do I sell and buy something else? I'm interested to see what other bloggers will do with their Intel shares. I know a lot of dividend growth investors have a position in Intel. What do you think, sell or hold?

Thanks for reading.

Warren Buffett on rising Coca-Cola dividends

Warren Buffett is one of the most successful investors in history. Berkshire Hathaway's chairman has a reputation of eloquence in his annual shareholder letters. I was reading the 2010 annual letter to shareholders this morning. One of my favorite passages came from page 18, he was talking about how time is the friend of the wonderful business.

I couldn't agree more. I try to spot great businesses, acquire them for a reasonable price, let time do the heavy lifting and compounding work its magic. A great business at some point generates more money in the form of dividends than you put into, you can use that money to fund your lifestyle, retire early or buy more pieces of great businesses.

Buffett on Coke's rising dividends:

Other companies we hold are likely to increase their dividends as well.  Coca-Cola paid us $88 million in 1995, the year after we finished purchasing the stock.  Every year since, Coke has increased its dividend.  In 2011, we will almost certainly receive $376 million from Coke, up $24 million from last year.  Within ten years, I would expect that $376 million to double.  By the end of that period, I wouldn’t be surprised to see our share of Coke’s annual earnings exceed 100% of what we paid for the investment.  Time is the friend of the wonderful business.

When you start out collecting these stocks that pay rising dividends it might be frustrating because the cash generators only produce a trickle in the beginning. But a trickle becomes a drip, a drip becomes a stream, a stream becomes a torrent and a torrent becomes a deluge. That's how compounding works. It starts small and starts growing, faster and faster. Nobody started his first year dividend investing and getting thousands of dollars in passive income immediately. It starts small, that shouldn't stop you from beginning.  You have to start somewhere!

For more shareholder letters from Warren Buffett, read more at www.berkshirehathaway.com/reports.html

Thanks for reading.

June 2013 Dividend Income Update

Small correction in the market this month. Mostly due to Fed chairman Ben Bernanke speaking, he will stop pumping $85 billion in the economy somewhere in 2014-2015, at least that's the plan.

I don't think much about it. I keep accumulating shares in wonderful companies that give me an ever increasing amount of dividends. This is the plan, what the Fed is planning to do won't change that plan.

Day to day fluctuations in the paper price of my portfolio has no effect on my happiness. My time horizon is decades, I can ride out the volatility.

Here's the dividend update for June 2013:

Latest buy: DPS

Finally, a little correction in the market! Why is this a good thing? I'm an investor in the accumulating phase of his life. I want my stock be as cheap as possible now, so I can buy the most dividend income and future profit with my dollars today.

When I walk into a supermarket and I see there is a big sale going on, I'm a happy guy. When stocks become cheaper, I'm a happy guy. I'd love it if stocks slide lower from here.

Today I decided to put some capital to work.

May 2013 Dividend Income Update

 Another dividend update. Slight pullback right at the end off the month in the stock market. There might be some buying opportunities. My companies just send in the dividends like clockwork, giving me cash to deploy. Here is the dividend update for May 2013:

Why are you saving so much?

Back in December my family went to Berlin to celebrate new years eve there. In Berlin It's called "Silvester".  It was a great time. The times when I'm most happy, is when my entire "core family" is together, meaning me, my brother, my sister, brother in law, and my parents. Somehow it brings me great joy to see them all together at the same time.

Back then, my brother in law asked me the following question: "Why are you saving so much, and why are you investing it?"

To be honest, I didn't have an answer ready, and just said "I don't know, Isn't saving money the right thing to do?" and that was the end of the conversation really. Deep down I knew this wasn't the answer that really did it for me, recently i started thinking about this, a lot. This simple question really struck me, why am I saving my money, why am I not enjoying it now? 

Fast forward to today, I started thinking about that question. And I came up with what is the right answer for me. Even though, I couldn't articulate that question in the way I wanted to five month ago, I can do that now.

I have the passion to be rich, I don't want the two million dollar house or the Bugatti, I want the independence, I am desperately craving it. 

I've turned 23

This week I've turned 23. It was a great day spent with my family. This is a nice time to look back at some things I've achieved over the last year.

Life is really about incremental improvements, going to bed every day a little wiser, a little richer, a little more closer towards you goals. I can proudly say that I'm exponential wiser now that one year ago when I turned 22.

I'm still light years away from my goals, but I'm getting there, step by step, dollar by dollar, book by book.
I didn't realize though that I made quite some progress in the last few years. I'm sitting on a blue chip portfolio that just crossed the $37.000 mark, pumping out dividends. I have no debts and each day I learn new things about investing, finance and accounting, the field I love.

Thank you everyone for reading, and good luck with your milestones!

Latest buy: GE

In April I haven't bought any stocks, instead I accumulated some cash. A lot of dividend growth stocks are pricey. There are a hand full of stock that I like at today's prices. Those include Chevron, Exxon, General Electric and IBM.

Toying around with the idea of buying Visa

Really, Visa? As a dividend growth investor my main goal is to create a portfolio containing high quality dividend paying stocks, which hike their dividend yearly, giving me an ever growing passive income stream of dividends to, finally, live off.

The portfolio's of fellow dividend growth investors are typically stuffed with stocks like Coca-Cola, Procter & Gamble, Exxon, Chevron, Johnson & Johnson, General Mills, Wal-Mart Stores, McDonald's and Philip Morris. Notice how Visa is not on that list.

April 2013 Dividend Income Update

Time for my favorite article, a dividend income update. Here is the dividend update for April 2013:

My blog hit 1,000 visitors since installing the Globe Tracker!

I'd like to take a moment to thank you. Today my blog hit its 1,000th visitor. That's not pageviews, but individuals who take time out of their day to read about whatever I write.

I started this blog for two reasons:

• To track my progress, so I can read it years from now to see how I started out investing.
• Just a place to put some thoughts, what ever is on my mind. Sometimes I'm just staring out of the window, thinking, I really want to make a habit to put those thoughts on paper. Again, so I can read them years from now, to see what I was thinking. 

When people find it interesting to read what I have to say, that's just an extra! I know that there are some blogs out there from other investors who have hundreds of thousands of views, but for me, 1,000 people is still a lot! It's awesome that people from America, Europe, Asia, Australia and all corners from the world read this. Fifteen years ago that would be unthinkable. All hail technology!

Thanks for reading.

The first $100,000 is the hardest

I'd like to talk about how hard it is to accumulate 100,000 from a standstill, a great Charlie Munger quote:

March 2013 Dividend Income Update

Anther month gone, another dividend update. Here is the dividend update for March 2013:

Latest buy: MSFT

Work. Save. Buy quality stocks that throw off ever growing amounts of cash. When I'm buying an investment, I'm buying additional household income. Then wash, rinse, repeat. The cycle becomes self reinforcing. Today, I bought some more additional household income.

I'm such a cliche right now

If you would walk into the door right now, you would burst into laughter at the absurdity. Here its 3 a.m. I'm sitting at my desk, reviewing the annual report of the Royal Canadian Bank  and Royal Dutch Shell, thinking about investments, about compounding my wealth, going over my own personal income numbers, drinking single malt scotch, all this while listening to Johan Sebastian Bach at full blast.

Latest buy: WFC

New DOW record! Looking at the market, I see some overvalued stocks, especially in the consumer staples. Pepsi Co. has a 20 P/E, Kellogg's has a 22+ P/E. Further more, MLP's and REITs are being bid up by yield-hungry investors.

And then, there are some stocks nobody wants to touch and everyone seems to be afraid of, the financials... *Insert dramatic sound*

February 2013 Dividend Income Update

Another month behind us, it's amazing how fast time flies by! Here is the dividend update for February 2013:

Latest buy: WMT

The DOW is almost at its nominal all-time high. That doesn't mean all stocks are expensive, some are, some are fairly valued, and some are cheap. Even in an overvalued market, there are opportunities to pick op great businesses for reasonable prices. Back during the dot-com boom, it was really a large-cap stock bubble. Small stocks were perfectly fine. Most never were overvalued terribly, so they just kept plugging away as the tech bubble popped.

That said, I decided to pick up this dividend champion.

It was a good day for dividend growth investors

Sloppy growth, high unemployment, Europe in a recession, unsustainable Government debt, wars... These two dividend champions respond to the economic struggles by raising their cash distribution at a healthy clip:

The joy of dividends

Consider the following scenario:

Your friend, Joe, just got a job at Wal-Mart for $10 an hour. After FICA and other withholding he takes home $8. Over the course of the next two weeks Joe works 86 hours. That's 10 days, 8.6 hours a day, from 9.00 till 17.36, without breaks, sitting behind the cash register, sweeping floors and dealing with customers. 
At the end of this period his manager writes him a check for $688. Joe walks out of the building, to the parking lot, hands me the check without saying a word. I put it in my pocket, step into my car, and drive off into the sunset. Those 86 hours, as Joe was working, I was playing video-games, hanging out with friends, reading, watching movies and relaxing. Yet, I now have his paycheck.

Latest buy: WFC

With the markets skyrocketing towards their all-time highs, it becomes harder and harder to find quality businesses for reasonable prices. That said, I stick to the plan: Saving a large portion of the money I make and buying solid companies every month, build a solid portfolio while I'm still young and reap in the rewards later.  Let compounding do the heavy lifting for me.

January 2013 Dividend Income Update

Here's my first dividend income update:

Welcome

Welcome to my first post! I am not sure what direction this blog will go. I will talk about my journey to increase wealth through dividend growth investing. Looking forward to the journey!