Goal Review and 2019 Update

It’s time to update the goals for 2019! But before I want to make a quick review of the 2018 goals :

  • I’ll buy an apartment which will take all my cash reserves (to achieve better terms of financing)

Goal achieved, I’ve bought the property in February and we’ve moved into it in August. And yes, nearly all of my cash went into financing.

  • We’ve got a new family member! I will take two months off and we’ll surf & travel through Europe with Baby Divrider. This means: no new contribution this year.

What an amazing experience. This is recommended to all young families which can afford the time and money doing such a thing. An unforgettable experience. And I even managed to make a contribution in November and December (total 3000€)

  • Maintain projected annual dividend income of $2,608

Achieved and I even increased the forward dividend income by nearly $450 to $3,150.90. But this comes with a caveat. I sold some of my speculation stocks and I’ve used margin on the big market drop end of December. In other words I’ve already used some future buying funds and this will decrease my ability to increase my portfolio in 2019.

  • Use broker cash reserve or sell stocks from overweighting sectors in broker account to diversify into new sectors

Achieved! I sold some GILD and increased my sector diversity substantially. I’ve added stocks in Communication Services, Consumer Cyclicals, Financials, Industrials and Technology.

So let’s see look at the new year:

Goals 2019

Comparing to the exciting last year, this year will be more “business as usual”. The only exception is the decreased saving rate due to our baby and our new apartment. Including paying off the margin balance, the net investment rate will be quite low this year. I don’t know if there will be some secondary income this year.

  • Contribute average $1,100 per month
  • Increase projected annual dividend income to $3,639 (+15%)
  • Increase expected yearly dividend growth rate from 4.57% to 5.5%
  • Improve portfolio tracking and include ratings, payout ratio, debt and EPS/dividend growth

The targeted dividend income includes organic dividend growth (estimated 4,57%) and new investments at a weighted dividend yield of 4%.

I started tracking the expected yearly dividend growth rate for my portfolio and it’s quite low at the moment. I want to improve my rate by buying faster growing companies and maybe by selling some low growth and low yielding stocks.

Last but not least, I want to improve my portfolio tracking to get a better overview of the current “health status”.

Let’s see how this will work out at the end of the year 🙂

Annual Review 2018

The year ended and it’s time to look back and review 2018. First of all it was a remarkable year for me, because we enjoyed our first year with Baby DivRider! This included a two month parental leave for me and 12 months for Mrs. DivRider. We enjoyed the time surfing and travelling along the atlantic coast (picture above) in that time, which was an awesome experience. This also meant a reduction of earnings for both of us. On the other side, if you’re a resident of Germany you’re entitled to receive quite a big financial support from Germany in that time.

We also bought a nice apartment with a beautiful view of the Rhine Valley. This used up all my cash reserves from 2017. But we’ve managed to get a 15 year 2% fixed rate mortgage, despite financing nearly 100% of the property costs, which is really good. Now we’ll pay only a little bit more than renting before. Considering more than doubling the living space and a much higher living quality and a relative high repayment rate, the only regret is not doing this earlier.

With all the drained cash flow and associated buying costs, I was only able to put another $3450 to work. But selling some shares of my speculative investments and some of my dividend portfolio increased my dry powder which lead to multiple buys over the year which also increased my forward dividend income.

I’ve prepared some tables and graphs with all important informations:

Capital Contribution

My initial plan for 2018 was to increase my capital contributions quite a lot, but after using all cash for buying our real estate there was nearly nothing left. Going forward, I’ll try to contribute $1000+ every month for 2019. It would be nice to add more, but there are quite some home improvements I want to realize this year.

Portfolio Changes

These values come straight from my broker and differ a little bit of my own calculations, mostly because of including the fees and some unpublished options plays, which I list separately for myself.

Stock Transactions

As you can see, I went a little bit crazy at the end of the year. I even used a little bit of my margin (interest at 3.5%) to take advantage of the biggest sale in a long time. If I want to reduce the margin, I could further liquidate my speculative portfolio.

Sells

I sold CELG because I wanted to further clean up the portfolio. I’m still convinced of the future projects, maybe I’ll buy BMY to get some exposure to CELG again (and to receive dividends this time).

I also sold OHI because I wanted to reduce the exposure to skilled nursing facilities (I also hold SBRA). Shortly after my sell the situation at OHI brightened up (tenant issues seemingly resolved) and SBRA got hit by the same issues. I still think SBRA is the better choice because of the better dividend payout ratio.

I got one assignment of a SBRA put option from 2017, which led to a purchase of 100 shares in April which I sold shortly after for a small profit. I further decreased my exposure in November after reading the Q3 report and the newly published tenant issues.

I sold SKT because I’m not convinced anymore that my portfolio needs exposure to outlet centers.

I reduced my exposure to GILD, because I don’t see the near term growth kicker and I wanted to free up some cash to purchase other more visible opportunities.

Buys

ABBV, BATS (BTI), BLK, CVS, FDX, GNTX, ITW, MO, NVDA, PM, T, TROW, V, VER

I tried to balance between sectors, high and low yielding stocks and I used to grab the opportunities when prices were attractive. Please ask, if you’re interested in the reasoning for a specific stock.

Dividend Income

I’ve received $2289 in dividend income in 2018! That’s nearly $191 a month. Note that this tracked income got already deducted by the withholding tax (mostly 15%). As I’ve to pay 26.38% tax in total on my dividend income, but reduced by some tax exemption and the already paid withholding tax, this isn’t the final net value.

The year over year comparison of my dividend income is misleading as I’ve adjusted the portfolio quite a lot over the years which resulted in a constant decrease in portfolio dividend yield. Going forward, I think this will be more “pointing upward”. But this is the result of my personal journey into the world of dividend growth investing until now and there is no denying in the (sometimes costly) things I’ve learned. I’m still relatively young and my journey will continue decades, so I forgive myself for my early mistakes.

Looking at 2019, I hope the volatility continues and gives us more buying opportunities like we saw in december. The only problem: my shopping list is quite long and my cash reserve is quite low. But I think that’s always the case in a downturn stock scenario. The key is to keep adding when valuation is attractive and to identify the highest quality for the lowest price. I also hope to give a portfolio review on a quarter-by-quarter basis for this year.

Also a big thanks to “Dividend Growth Machine” at Seeking Alpha which inspired me to do my review this way.

Portfolio Update January 2018

It’s time for another update, since my last portfolio update was October 2017.

Purchases

Company Stock Units Price Date Cost
Tanger Factory Outlet Centers SKT 100 $22.81 2017-10-27 $2281.00
Vereit VER 200 $7.29 2018-01-18 $1458.00

 

Sells

none
 

Options

Stock Open Date Exp Date Type Strike Price Premium Fees
UNIT 2017-11-02 2018-04-20 Put $20.00 $190.00 $3.50

 

There aren’t too many updates, but I took some opportunities with the increased pressure in the REIT sector and the especially the retail REITs last year. I will increase my exposure in this segment if the price pressure continues to give us discounts due to the always recurring rate fears.

Guidance 2018

I’m going to buy a nice apartment for myself which will heavily influence my ability to invest this year. I will adjust my new goals accordingly. Nearly all my cash will be used to get a good mortgage at exactly 2% interest rate with a fixed mortgage term over 15 years and the possibility of 5% down payments per year. I think these are great conditions considering my low equity ratio under 10%. I just had to take the opportunity because it’s more expensive to rent. And if everything goes well this year, I don’t have to liquidate anything in my portfolio.
But nevertheless, I’m very interested to see what this year will bring for me. Maybe I can fetch some side jobs and get my emergency funds back to a convenient level and maybe even add some positions in my portfolio. But that would be extremely ambitious as I’m also planning to make an unpaid two month summer vacation this year, but we’ll see.

Dividend Income Update – December 2017

Dividends

  • BP (BP) – $29.75
  • Royal Dutch Shell (RDS-B) – $65.80
  • Ensco (ESV) – $8.00
  • National-Oilwell Varco (NOV) – $1.91
  • Gilead (GILD) – $66.30
  • Teva (TEVA) – $6.15
  • Helmerich & Payne (HP) – $29.75

Total dividends received during the month of December: $207.66

Total dividends received in 2017: $1453.94
Projected forward yearly dividend income: $2207.62
Projected forward average monthly dividend income: $183.97

Total option premiums received from closed options during the month of December: $0

Total income: $207.66

Dividend Income Update – November 2017

Dividends

  • Omega Healthcare Investors (OHI) – $55.25
  • Kinder Morgan (KMI) – $15.94
  • Sabra Health Care (SBRA) – $44.21
  • CVS Health (CVS) – $8.50
  • Tanger Factory Outlet Centers (SKT) – $29.11

Total dividends received during the month of November: $153.01

Total dividends received so far in 2017: $1246.28
Projected forward yearly dividend income: $2239.69
Projected forward average monthly dividend income: $186.64

Total option premiums received from closed options during the month of November: $0

Total income: $153.01