Saturday, May 31, 2014

Dividend Increases, May 17-31, 2014

Time again to report on dividend increases announced for stocks in my watch list. I compile this information to see if any of my DivGro stocks have raised their dividends so I can make yield on cost (YoC) adjustments and properly track DivGro's projected annual dividend income. Another reason is to review dividend increases for stocks I don't own.

Friday, May 30, 2014

Diversify!

One of my goals for 2014 is to increase the number of holdings in DivGro to 36 and to balance those holdings across all 10 sectors in my watch list. I reconstructed my watch list, following a similar approach to the one I use every month to identify 10 candidate stocks. In doing so, I arrived at a new target distribution for stocks by sector. This process of diversifying DivGro is going quite well.

Diversification is a way to reduce risk by adding variety to a portfolio. Assuming individual stocks are not perfectly correlated, the positive returns of some stocks should offset the negative returns of others. According to Investopedia, studies have shown that "maintaining a well-diversified portfolio of 25 to 30 stocks will yield the most cost-effective level of risk reduction". Increasing the number of holdings beyond 25 to 30 stocks will reduce risk further, but at a diminishing rate.

Sunday, May 18, 2014

Dividend Increases, May 1-16, 2014

Every two weeks I report on dividend increases announced for stocks in my watch list, mainly to see if any of my DivGro stocks have raised their dividends. When that happens, I make yield on cost (YoC) adjustments and recalculate DivGro's projected annual dividend income. Another reason is to review dividend increases for stocks I don't own to see if some likely candidates present themselves.

Saturday, May 10, 2014

Recent Buy: PMT

May 9, 2014: Bought 120 shares of PMT at $20.94 per share.

Founded in 2009 and based in Moorpark, California, PennyMac Mortgage Investment Trust (PMT) is a specialty finance company that invests primarily in residential mortgage loans and mortgage-related assets. Operating as a real estate investment trust (REIT), the company is not subject to federal corporate income taxes if it distributes at least 90% of its taxable income to shareholders.

PMT is a Dividend Challenger with a 5-year streak of dividend increases. It pays quarterly dividends in January, April, July and October. The current dividend is 59¢ per share, so starting yield on cost is an impressive 11.27%.

Thursday, May 8, 2014

10 Dividend Growth Stocks for May, 2014


This year, in an effort to balance my portfolio holdings across all 10 sectors in my watch list, I've changed the way I look for candidates. Rather than search for the best available candidates, I search for the best available candidates by sector. My purchases since January have diversified DivGro to at least 2 holdings per sector, except for Materials, in which I have a single holding. I'll continue to bias purchases with the goal to diversify DivGro, but only if I can identify candidates with good dividend yields and strong dividend growth rates trading at a discount to fair value.

Tuesday, May 6, 2014

Monthly Review: April 2014

In April, I added 2 new stocks to DivGro and compiled a new watch list. The additions pushed DivGro's projected annual dividend income above $4,000! This means I'll be earning $4,000 every year in perpetuity, assuming I keep DivGro as is and dividends are not reduced.

According to Wikipedia, a perpetuity is an annuity that has no end, or a stream of cash payments that continues forever. That is exactly what DivGro is for me – a perpetuity.

Of course, I intend to continue adding stocks to DivGro, which will increase the stream of cash payments. Also, since DivGro is a portfolio of dividend growth stocks, I'm expecting the stream of cash payments to increase even if I did not add more stocks to DivGro.

Monday, May 5, 2014

Dividend Increases, April 16-30, 2014

Last month, several stocks in my watch list announced dividend increases. I own shares in no fewer than 6 of these stocks! While ETP's increase is quite small at 1.63%, the other increases vary between 4.76% (APU) and 10% (TRV). Any dividend increase above 7% is great in my mind, as that certainly beats inflation and, therefore, represents real growth.

The reason I compile this information is to monitor dividend increases for stocks I own in DivGro so I can make yield on cost (YoC) adjustments and properly track DivGro's projected annual dividend income. Another reason is to review dividend increases for stocks in my watch list that I don't own, to see if any interesting candidates present themselves.

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