New Purchase: SBUX

Today, I bought 19 shares of SBUX at $57.17 per share.

Their PE ratio is higher than my preference at about 33. Their entry yield is only 1.4%, and their dividend growth history doesn’t even reach back 10 years.

So you’re probably asking “Why did you buy it then? SBUX doesn’t meet your criteria.” The answer: I’m an opportunist. There’s nothing better than when investors freak out about good news because it wasn’t as good as they’d hoped. Starbucks’ payout ratio is about 49%, and their dividend growth rate is very impressive, it grew 25% last year. This is far more of a growth investment than an income investment.

Starbucks is a staple in our culture, many people can’t start their day without Starbucks coffee (my wife included). The company is not afraid to try new things, such as instant coffee, home coffee makers, and even potentially wine and spirit bars. Starbucks has a great history and a great future, so being able to grab some shares on a dip is a nice opportunity.

New Purchase: WFC

I’ve had my eye on Wells Fargo for a long time as a potential buy. The main reason, is Warren Buffett buys more shares of this company any chance he gets.

Today, I bought 20 shares of WFC at $50.18 per share.

At the time I made this purchase, their PE Ratio was about 12.36. Which is very attractive. Their entry yield is over 3%. Their payout ratio is around 36%, which is pretty low and leaves a lot of room for dividend growth.

This puts me at $544.72/$600.00 for my annual passive income goal for 2016, and $45.39/$100.00 for my average monthly passive income long term goal.

Dividend Income – Mar. 2016

I think it’s important to celebrate wins on the path to your ultimate goal, no matter how small. Sharing my dividend income results with you readers gives you some insight to what is possible as you begin your journey.

My ultimate goal is to be able to live off of the passive dividend income from my investments, so I can just stay at home and play video games. Here is the money I made in March 2016 without lifting a finger.

JNJ- $7.56
CVX- $10.09
EMR- $7.88
IBM- $9.10
MMM- $7.77
MCD- $10.13
BP $31.92
LMT- $8.50

Total: $92.95

Compared to last year, I earned $64.00 in March, so I’ve made an extra $28.95. Compared to December 2015 ($89.60), I made $3.35 more. We’ve made it past the big expenses at the beginning of this year, and I’m now ready to make some new purchases. The problem is that the market has recovered, and I’ve missed the boat on some amazing opportunities. This may just end up being a war chest until something presents itself.

Do you see any good deals out there?

Dividend Income – February 2016

I think it’s important to celebrate wins on the path to your ultimate goal, no matter how small. Sharing my dividend income results with you readers gives you some insight to what is possible as you begin your journey.

My ultimate goal is to be able to live off of the passive dividend income from my investments, so I can just stay at home and play video games. Here is the money I made in February 2016 without lifting a finger.

VZ- $12.43
AAPL- $4.70

Total: $17.13

Compared to last year, I earned no dividends in February, and compared to November 2015, I made $12.45 more. Verizon has a great yield, so that was a big help. So far this year, I am a little bit behind on my savings goal, but I am flush with cash until I know what the last of my wife’s dental work is going to cost. However, I just freed myself of my margin debt in my personal account, it feels good to be free from that.

YUM, Tacos, My Latest Investment

Those of you that know me are aware of my love of Taco Bell. My greatest loss in a zombie apocalypse would be no more Doritos Cheesy Gordita Crunches. So it should be no surprise that I took advantage of YUM Brands’ recent price dip and made myself an owner of my favorite chain. YUM Brands also owns Pizza Hut and KFC, a couple other college favorites.

I bought 13 shares of YUM at $75.95 per share.

At the time I made this purchase, their PE Ratio was about 26. Which is a little high by my standards, but relatively low for YUM. YUM has a 10 year average dividend growth rate of 25.99% and dividend increase of 12.20% just last year. This is pretty nice considering the entry yield is over 2.3%. Their payout ratio is around 63%, which is within my safety margin, but a little on the high side, so it will need to be watched.

This puts me at $514.72/$600.00 for my annual passive income goal for 2016, and $42.89/$100.00 for my average monthly passive income long term goal.

I’m very excited to own the company that provides a majority of my weekend food.

This is What We Trained For

This year should look very different to you investors than the past few. In the past few months we’ve seen a couple big dips in the market, and you may be starting to worry. It’s an emotion we haven’t had to deal with for some time. Until recent weeks, there was little fear involved with entering new investments which made things pretty easy. This is the time that will show your true colors.

I firmly believe in my Buy Smart Never Sell mantra. If you are investing regularly and intelligently through this year, you will do better in the long run than if you panic even the slightest. Am I predicting a crash? No. Am I predicting a rebound? No. I am predicting that nobody knows what the future holds. If you’re making speculative trades that you hope to make 10-20% gains within a year, this is the wrong blog for you anyways!

Here’s why I believe you should stop worrying and continue your strategy, you will win in every scenario that you don’t sell.

Scenario 1: The market rebounds, by not selling you haven’t lost a single thing, and probably made more money, huzzah!

Scenario 2: Bear Market, by not selling, you don’t realize any losses, your dividends are reinvested at a discount speeding up the compounding process, you continue to buy great companies at a discount as well. Maybe it takes a year or 2, but the market WILL eventually come back to where it was and you’ve made even more money by continuing to invest and reinvest.

Scenario 3: It’s just choppy for a year with no major gains or losses, you pick up deals where you can, and presumable this will be followed by scenario 1 or 2.

Scenario 4: Armageddon. All money becomes worthless and you’re no better or worse off than anyone else because society is collapsing and your new worry is finding beans and gathering weapons to fight zombies. Haven’t you always wanted to fight zombies?

The media gets its jollies by preying on your fears, but the truth is you have nothing to fear if you stick to your strategy (except maybe the zombies, especially if they’re the fast kind).

This isn’t to say you won’t get stressed out seeing your portfolio drop double digit percentages. It will be hard to stay strong and do the right thing, but if you do, you’ll be rewarded.

Stay strong investors!

New Purchases

To achieve my goal of investing $15,000 this year, I’ll need to invest at least $1250 each month (on average). So let’s start this year with a bang! I was able to invest $2000 for January. The 3 stocks I was considering were IBM, MMM, and WFC. So I thought I’d share with you my decision making process for this process.

First of all, These 3 companies each match my basic criteria of a solid history of dividend growth, a PE ratio under 20, a payout ratio under 60%, and a yield over 2.5%. All three are also in short term dips (or long term in the case of IBM).

Next, let’s look at past performance and dividend growth history. 10 years ago, $1000 invested in IBM would be worth $2334 today, in MMM would be worth $3288, and in WFC would be worth $2925. IBM’s dividend grew 18% last year, and on average it grows 23% per year. MMM’s dividend grew 19% last year, and on average grows 9% per year. WFC’s dividend grew 7% last year, and on average it grows 4% per year.

In terms of price growth, they each have grown an average of about 8 to 10% each year in the past. However, the price of MMM and IBM went down 7% last year, where WFC grew 4%. Price trends usually don’t affect my long term investment decisions, but it’s interesting to note the similarities.

Right now, the thing that appeals to me most is the dividend growth potential. So I went with IBM and MMM.

I bought 7 shares of IBM at $135.29 adding $36.40 to my yearly dividend income
and 7 shares of MMM at $144.35 adding $28.70 to my yearly dividend income.

This puts me at $485.94/$600.00 for my annual passive income goal for 2016, and $40.50/$100.00 for my average monthly passive income long term goal.

I’m excited to be doing some serious damage on my goals at the start of the year.

Dividend Income – Dec. 2015

I think it’s important to celebrate wins on the path to your ultimate goal, no matter how small. Sharing my dividend income results with you readers gives you some insight to what is possible as you begin your journey.

My ultimate goal is to be able to live off of the passive dividend income from my investments, so I can just stay at home and play video games. Here is the money I made in December 2015 without lifting a finger.

WMT – $6.00
CVX – $9.97
EMR – $7.80
MCD – $10.05
BP – $31.38
LMT – $8.44
KO – $8.46
JNJ – $7.50

Total: $89.60

Compared to the dividends I earned in September ($71.41), I earned almost $20 more due to compounding, dividend raises, and KO’s dividend being paid out in December rather than . What’s even more exciting is that I can compare this to the results from December 2014. One year ago, I only earned $18.98 for the same period. I’ve quadrupled my December dividend income and then some, after a year I don’t even consider to be that successful.

2016 Goals

So, as much as I hate to, I need to keep myself accountable for the goals I set last year. Let me start by saying “GOOD RIDDANCE” to 2015. This was a rough year, so while I didn’t achieve my goals, I still feel like I gave a valiant effort given the circumstances.

2015 Goals Review

1. Achieve 50% savings rate for one month
To be honest, I’m not sure if we did this or not. We might have had a month where our expenses were only 50% of our income, but for the most part, 2015 was a rough year with many unexpected expenses. Believe it or not, December was a really good month for us, so I’m going to call this one a “Maybe” because any success would have been offset by other terrible months.

2. Save $18,000
Not even close. However, we slightly changed this goal half way through the year to be me maxing out my IRA contribution (which I ended the year $1000 short) and paying off my wife’s student loans. We haven’t fully achieved those goals either, so this is still a fail.

3. Try cooking a new healthy dish every month
I experimented a little in the kitchen, but really didn’t achieve this goal to its entirety. I’m beginning to feel a lot like the person that makes their goals and doesn’t follow through on them, but I honestly did put in a reasonable effort throughout the year.

4. Lose 10 pounds by June
I’m pretty sure I didn’t achieve this in June (or since). However, I did successfully establish the healthy habit of working out every morning before work. There is the possibility that I have lost 10 pounds of fat throughout the year, but I’m still pretty heavy. I did a lot of experimenting throughout the year on portion sizes and workouts, and I believe I have the ammunition to make this goal a reality going forward (holidays excluded). So I’m still going to call this a pseudo-success, because while I didn’t lose the weight, I have establish habits and have a plan that I know works going forward.

2016 Goals

Now, it’s time to outline my goals for 2016. I have a good feeling about this year.

1. Save $15,000 in our Joint Account
Last year, I had a lofty savings goal, and life required that I change that. This year, our goal is a little more reasonable. It will still take work to achieve this, but I think this will be a good year. This means saving an average of $1250 per month, which should be quite achievable on our usual budget. A lot of the big stressful expenses of 2015 are behind us, so 2016 should be a good year.

2. Break $600 in annual passive income
If I’m sticking to my valuation standards and achieve the $15,000 goal, this one should be easy. This will mean we’ll have an average of $50 per month in dividends, and that will continue to grow.

3. Try a new brown bag lunch every month
I have been making burritos for lunch for the past year, and in the interest of variety, I’d like to try some different options. This is basically the same goal as last year. I’ll also be cutting portion sizes and making changes to lose some fat in 2016.

4. Reach a zero margin balance in my personal investing account.
I have been doing more speculative trading lately than I should be, and I’ve been risking money I don’t have by using margin debit. My goal for this year is to cut that crap out, and either inject more cash, or sell the speculative trades to bring down my margin debit. This is basically a gambling problem backed by debt, and I’m getting to old for that kind of behavior. It only started being a problem last year, and I’m looking to make that the end of it too.

5. Place in the top 500 in a Diablo 3 Season for one class.
At the end of the last season, I reached rank 846 on the Hardcore Crusader leaderboard. In 2016, I want to finish a season in the top 500 on the hardcore leaderboard for whichever class seems the most fun. The first season will start on January 15, but I’m going to miss a few key weekends, so I’m aiming for the second season of the year, most likely starting in April.

Frugal Advice: Gift Card Deals

This is my favorite time of year. During the holidays, everyone is hawking their gift cards. Including my favorite local eatery: Taco Bell. This year, their deal is a large drink and 2 supreme doritos locos tacos for free when you buy a $20 gift card.

This is one of my favorite techniques. I get to rack up some extra points/miles/cash back on my credit cards, some free food, and a gift card I will absolutely use. That last part is especially fun in January where it looks like I spent a lot less than I did.

‘Tis the season to keep an eye out for deals on the things you enjoy regularly. I am not condoning taking advantage of a deal just for the sake of the deal. If it’s not something you already would have spent money on, you’re falling for their trap. So be smart, but take advantage of the opportunity this season provides.

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