Monday, January 10, 2011

2011 Dividend Income Goal

2011 Dividend Income Goal
We finished the year with $6,184 in dividend income versus our 2010 year end goal of $6,000. We plan on growing the yearly dividend income for 2011 to $6,700 by the end of the year from our end of year 2010 balance of $6,184. We plan on reinvesting dividends and investing additional money every month into our stock portfolio held at Zecco. In 2010, we saw many dividend increases and this is a welcome change from the cuts in 2008 and 2009.

I will continue to sell some stocks this year from our dividend stock portfolio that have cut their dividends. I also plan to be a little more conservative with my stock purchases for 2011. I will focus on increasing stock purchases into our large blue chips stocks that will represent long term value. I will look to reduce some of my bank holding throughout 2011 as well.

Our long term goal is to have $30,000 in yearly dividend by retirement in 2024. Keep in mind, I don't consider this dividend stock portfolio diversified. I have most of our retirement assets in a diversified mutual fund portfolio with Vanguard.

Friday, January 7, 2011

Review of 2010 and 2011 Financial Plan

The financial markets of 2010 turned down over the summer but ended the year with a nice return. The S&P 500 had a total return (including dividends) of 15.1% for the year. Many dividend stocks increased their dividend payments in 2010, a nice change from the cuts of 2009.

A few years ago I started tracking our yearly progress towards reaching our retirement goals of having $2 million in retirement assets as well as reaching $30,000 in dividend stock income. I originally wanted to complete both these goals by the time I am 60 which is 13 years from now. But with the market decline in 2008, we will have to add a couple of years to our goal and our new plan is to retire at age 62 which is in 15 years. I have been using Bloomberg's Retirement Planner on their personal finance calculators site to come up with what we will need at retirement.

Retirement Assets
In order to reach our retirement goal, we will need an average investment return of 8.5% along with a 10% contribution to our retirement plans for the next 15 years. I have used $95,000 for our annual household income that we will need in retirement. I am using 3% for inflation, 2% for expected salary increases and 8% return on investment during retirement.

We finished 2010 with retirement assets of $615,699 versus our end of year goal of $575,907. So we were $39,792 over goal for the end of 2010.

To calculate the amount needed for the end of 2011, I start with our 2010 year end retirement balance of $615,699 which is the balance of our retirement accounts as well as our taxable stock accounts. We then add the 8.5% investment return which is $52,334 for a total of $668,033. Next I add our retirement contributions of $9,500 which is a 10% contribution for a grand total of $677,533 in retirement assets needed at the end of 2011.

As part of our retirement contributions, we will make contributions to our Roth IRA's as well make 6% contributions to our 401(k) and 403(b) plan.

2011 Retirement Goal
$615,699 2010 year end retirement asset balance
$52,334 8.5% investment return
$9,500 2010 contributions to our retirement accounts
$677,533 2011 year end goal

Net Worth
We finished 2010 with a new worth of $914,573 versus our 2010 Net Worth goal of $836,907 which is $77,666 over the 2010 goal.

2011 Net Worth Goal
$677,533 2011 year end retirement goal
$205,000 House
$30,000 Cash
$6,000 Cars
$3,000 Personal Property
$38,000 529 Accounts
$959,533 Total

Let's hope the 2011 plan goes as well as 2010. I will go over my 2010 Dividend Income Goal on Monday.

Thursday, January 6, 2011

Top 20 Stock Holdings

Here are the top 20 stocks in my Dividend Portfolio as of 12/31/10 ranked by size of holdings. I know some of these stocks no longer pay dividends but I have keep them for gains as the economy recovers. I will look to sell my stocks that are no longer paying dividends throughout 2011.

1. Kinder Morgan Energy (KMP) USA
2. DCP Midstream Partners (DPM) USA
3. Johnson & Johnson (JNJ) USA
4. Barclays PLC (BCS) UK
5. Procter & Gamble (PG) USA
6. General Electric Company (GE) USA
7. CommonWealth REIT (CWH) USA
8. ONEOK, Inc. (OKE) USA
9. American Capital (ACAS) USA
10. Abbott Labs (ABT) USA
11. Aircastle Limited (AYR) USA
12. GlaxoSmithKline (GSK) UK
13. Unilever NV (UN) Netherlands
14. Verizon Communications (VZ) USA
15. Becton, Dickinson and Co (BDX) USA
16. AT&T (T) USA
17. Banco Santander (STD) Spain
18. Exxon Mobil (XOM) USA
19. Newell Rubbermaid (NWL) USA
20. PepsiCo (PEP) USA


Here are the top 20 holdings of the Tweedy, Browne Worldwide High Dividend Yield Value Fund as of 12/31/10:

1. Kimberly-Clark (KMB)
2. Roche Holding
3. Zurich Financial Services
4. CNP Assurances
5. Total SA (TOT)
6. Muenchener Rueckver
7. Johnson & Johnson (JNJ)
8. Novartis AG (NVS)
9. Federated Investors (FII)
10. Eni (E)
11. Diageo PLC (DEO)
12. Exelon (EXC)
13. Philip Morris Intl (PM)
14. BAE Systems PLC
15. ConocoPhillips (COP)
16. IGM Financial Inc
17. Vodafone Group PLC (VOD)
18. Pearson PLC (PSO)
19. Genuine Parts (GPC)
20. Automatic Data Processing (ADP)

Wednesday, January 5, 2011

December Dividend Income Update

My Annualized Dividend Income as of the end of December increased to $6,184 from $6,168 over the past month. This means my dividend stocks will pay $6,184 in dividends over the next 12 months.

I made around $250 of dividend stock purchases for the past month from new purchases and dividend distributions. The stock market was up big for the month and we continue to see companies increasing their dividends this year.

We have reached our 2010 Dividend Income Goal of $6,000. We started the year with $5,468 in annual dividends. I plan to continue selling off some stocks that are no longer paying dividend throughout the year and add a few hundred dollars a month to our dividend paying stocks.

Most of my stocks are held in my Zecco Trading account and the rest are DRIPs. The dividends from my stocks are reinvested but I am keeping track of the amount of income I could receive once I retire or choose to receive the dividends in cash.

I will post my Top 20 Stock Holdings on Thursday.

Tuesday, January 4, 2011

December Net Worth Update

As of the end of December our Net Worth increased to $914,573 from $876,663 for the month which is a 4.32% increase. The increase in net worth is tied to the increase for the stock market in December. The total of $914K is our all time high for net worth.

The breakout is as follows:
ASSETS
Retirement Accounts $481,769
Taxable Accounts $133,900
Cash $46,000
Home $205,000
Cars $7,000
Personal Property $3,000
Kids 529 Accounts $37,904

Here is the summary for this month:

The S&P 500 returned 6.6% for the month of December. The US economy continues to show signs of slow growth.

We are still debt free since we paid off our credit card debt. We will continue to use our credit cards for rewards but payoff the balances each month. I received around $100 in dividends for the month and have used the cash from these dividends and $200 to make additional stock purchases.

We will be building up our cash over the next few months to increase our cash reserves. You can click on my Net Worth graph on the right to see the changes in each category from the previous month. We continue to fund our Roth IRA's each month.

I will post my Dividend Income Update on Wednesday.

Monday, January 3, 2011

Barron's 10 Favorite Stocks for 2011

Barron's has a recent article with their favorite picks by Andrew Bary. Some are dividend stocks that I currently hold and will be making additional purchases this year. Our 10 Favorite Stocks for 2011

Barron's has identified 10 big-caps worth buying now.

ExxonMobil

It's no accident that the world's best-managed energy giant has the industry's most attractive asset mix. Even so, ExxonMobil's stock (ticker: XOM) has been a laggard since the company agreed in late 2009 to purchase XTO Energy, a large U.S. natural-gas producer. The deal increased Exxon's exposure to the gas market, which now accounts for almost half its daily energy output, just as domestic gas prices were tumbling.

At around 73 a share, Exxon trades for 12.5 times estimated 2010 profits of $5.87 a share, and 11 times projected 2011 net of $6.46. Exxon pays a dividend of $1.76 a share and yields 2.4% and could rally to 90 a share in 2011, particularly if U.S. gas prices rebound.

United Continental Holdings

U.S. airline operators have grown stronger in the past two years because mergers have created an oligopoly: United Continental (UAL), Delta Air Lines (DAL) and AMR (AMR), parent of American Airlines, now account for more than 70% of industry revenue. Pricing discipline has held, planes are flying full and spending on new aircraft has been restrained. Rising oil prices remain a risk for 2011, but United still would be profitable even if crude tops $100 a barrel. The stock could hit 35 in 2011.

JPMorgan Chase

Wall Street loves JPMorgan CEO Jamie Dimon but has been cool toward his stock. JPMorgan shares (JPM) rose just 2% in 2010, to 42, badly trailing the 22% gain in the bank-stock index. Disappointments during the year included the lack of a dividend boost, high expenses and the bank's exposure to the mortgage-market mess.

But JPMorgan easily could top 50 a share in 2011, as its profits rise to $4.61 a share from under $4 in 2010. The bank, which is overcapitalized, is expected to lift its dividend to about 80 cents a year from a current 20 cents, and announce a large stock buyback.

Barrick Gold

Gold-mining stocks theoretically should outperform the metal in a bull market because mining profits are leveraged to gold. Yet Canada's Barrick Gold (ABX) and another industry leader, Newmont Mining (NEM), haven't delivered. Barrick shares, at 53, are little changed since early 2008 despite a 50% rise in gold to more than $1,400 an ounce.

Wal-Mart Stores

Wal-Mart (WMT) sorely lagged in a strong retailing group in 2010, rising just 1% to 54, while Target (TGT) and Costco Wholesale (COST) each gained about 25%. Wal-Mart can't simply blame the poor financial condition of its customers, because rivals Dollar General (DG) and other retailers catering to budget-minded shoppers did well.

At 13 times project profits of $4.05 a share in its fiscal year ending in January, and 12 times fiscal 2012 estimates of $4.45, Wal-Mart looks inexpensive. Even with some merchandising miscues and flat domestic comparable-store sales, its profits likely rose 11% in 2010 and could increase a further 10% in 2011. The company gets little credit for its fast-growing international operations, which now account for more than 20% of earnings.

Cisco Systems

The subject of a positive cover story in last week's Barron's ("Ending the Cisco Skid," Dec. 27), Cisco Systems has seen its stock (CSCO) fall 15% in 2010, to 20 and change, one of the year's worst performances among big-cap technology stocks. Yet Cisco remains the world's leading networking-equipment maker, and probably can generate annual profit growth of 10%.

The stock is trading for 12 times projected profits of $1.61 a share for the fiscal year ending in May. Strip out net cash and investments of almost $5 a share, and Cisco is even cheaper at 10 times earnings.

Pfizer

Once the most exciting growth company among large drug producers, Pfizer (PFE) has become the prime example of the industry's woes. The company's troubles include drug-pipeline disappointments, overpriced acquisitions and looming patent expirations on lucrative drugs such as Lipitor.

Much of the bad news already is factored into Pfizer's depressed shares, which trade around 17.50, or for eight times projected 2011 profits of $2.29 a share. As Barron's recently noted, Pfizer can't do much about its patent problems. But it can raise its dividend, buy back a sizable amount of stock and consider the sale or spinoff of valuable businesses such as consumer and animal health that now are buried within the company. Pfizer could see its stock trade into the low 20s in 2011.

General Motors

GM's November initial public offering was the biggest, hottest deal of the year. But the stock (GM) barely budged from its IPO price until lifting last week amid a slew of Buy recommendations from Wall Street analysts who had to wait 40 days from the IPO date before beginning coverage of the auto maker.

The analysts could be right in predicting that the stock, trading around 36, could hit 45 or so in 2011. JPMorgan analyst Himanshu Patel, with a $44 price target, noted last week that GM has the No. 1 market share in both the U.S. and so-called BRIC countries (Brazil, Russia, India and China), including a lucrative joint venture in China that could be worth $15 billion, almost a quarter of GM's market value.

Entergy

Shares of traditional electric utilities rose about 10% in 2010, but Entergy and many other utilities exposed to the wholesale- power market declined as weakness in natural gas depressed power prices.

Entergy stock (ETR) fell about 13% during the year, to 71, and now trades for less than 11 times projected 2011 profits of $6.57 a share. The stock yields 4.7%. Entergy operates regulated utilities in the South and owns a group of nuclear-power plants, including the two Indian Point reactors in New York, that sell power in the open market. The regulated business probably is worth about $50 a share, or 12 times projected 2011 profits, meaning investors aren't paying much for the nuclear fleet.

PepsiCo

The packaged-foods giant has a powerhouse portfolio of beverages and snack brands, but it is valued like a slow-growth food company. At 65, PepsiCo (PEP) trades for 14 times projected 2011 profits of $4.61 a share—a discount to rival Coca-Cola's (KO) P/E of 17. Pepsi also provides a secure dividend yield of almost 3%. Bulls see the stock topping 70 in 2011, and it could do even better if sluggish trends at Frito-Lay North America and Gatorade reverse.

Disclosure: The Div Guy owns shares of XOM, PFE and PEP at the time of this post.