Dividend Retirement Portfolio Purchase:
I am currently in the process of converting 65% of my 401k account to dividend growth stocks, which I am calling my Dividend Retirement portfolio. This is the portfolio that will hopefully pay for my early retirement and then will be passed on to my children.
As part of this 401k conversion I recently initiated a position in Cummins Inc (CMI). For a detailed analysis on CMI, please read my recent post, “CMI Dividend Stock Analysis.” Here are some of the highlights:
- CMI dividend yield is 2.2%
- Average 5 year annual dividend growth is 32%
- Earnings have grown 33% annually over the past 5 years, and are expected to grow 12% annually over the next 5 years
- CMI has very little debt, with a debt to equity ratio of just 0.22
- I am expecting a dividend increase next quarter
CMI Purchase Details
- Purchase date: 5/26/2015
- Portfolio: Dividend Retirement
- Sector: Industrial Goods
- Industry: Diversified Machinery
- Shares purchased: 21
- Cost per share: $140.2699
- Commissions: $14.95
- Cost basis: $2960.62
- Yield: 2.21%
- Expected annual income: $65.52
Buying 21 shares of CMI adds $65.52 per year of dividend income, bringing my total up to $1,335.48. I also expect a dividend increase from CMI next quarter. If they continue with their 25% increases I can expect a $16 raise almost immediately.
This purchase brings my Dividend Retirement portfolio yield on cost down to 3.17% from 3.25%. This is acceptable given the phenomenal dividend growth CMI has shown over the past 5 years.
Dividend Empire Portfolio Purchases:
I also made a couple of purchases in my Loyal3 account today (part of my dividend empire portfolio). This portfolio is strictly for my descendants. I will never touch the money except to pay for my children’s expenses. My goal is to have this portfolio compound over many generations.
The funds I used to make these purchases came from a local bowling tournament where I won $175. Any time I make a little bit of money on the side it goes straight into my Loyal3 account. Loyal3.com is a perfect place to invest such a small amount because they don’t charge commissions.
My current holdings in Loyal3 are relatively small investments in Hershey (HSY) and McDonald’s (MCD). I am contributing $25 per month into each holding and will increase that monthly amount over the next few months.
With my $175 winnings I decided to add to my Hershey holdings and initiate a position in Gap (GPS). My analysis of HSY can be found HERE. I haven’t published my analysis of GPS yet but I will get to it at some point. Here are the details of my purchases:
HSY Purchase Details
- Purchase date: 5/27/2015
- Portfolio: Dividend Empire
- Sector: Consumer Goods
- Industry: Confectioners
- Shares purchased: 0.8023
- Cost per share: $93.48
- Commissions: $0
- Cost basis: $75
- New yield on cost (entire position): 2.30%
GPS Purchase Details
- Purchase date: 5/27/2015
- Portfolio: Dividend Empire
- Sector: Consumer Services
- Industry: Apparel Stores
- Shares purchased: 2.635
- Cost per share: $37.95
- Commissions: $0
- Cost basis: $100
- Yield: 2.42%
These purchases bring my Dividend Empire portfolio yield on cost to 3.34% and add $4.15 to my expected annual income (now $581.15). I get paid an extra $1 per quarter just for having a good night at bowling!
What do you think of these buys? Anyone else pick up these stocks recently?
It’s great that your 401k plan let you buy individual stocks. Mine won’t let me. More reason to retire and take over the account.
The $25 will add up. One of my friend put $50 per month and after a year and half, she for $1500, man! Talking about the power of growth, granted it’s been a great 6 year bull run, so she couldn’t go wrong.
Hello Vivianne. Yes I was quite pleased to find out my 401k plan offered what they call a self directed account. There is an annual fee and the trades cost me $14.95 but I still think it’s worth it. Thanks for stopping by!
Ken
Nice moves and write up! Especially liking CMI here. I really like how detailed and planned out your accounts and their purposes are. Keep getting those ‘turkeys’ to add to the loyal3 account, great job
Thanks Ryan! I appreciate the feedback. I’m taking the summer off from bowling so I’ll have to fund loyal3 some other way. I suppose it’s time to sell some of my junk on eBay.
Ken
I’d say that you have a very well positioned portfolio. I’ve been buying some zsl recently, which is a silver inverse (short) etf.
Thanks for the feedback IT. I’m not too familiar with ZSL – strictly dividend growth stocks for me these days. Looks like ZSL is trending up though. Best of luck to you.
Ken
Thanks for sharing! Great purchases! I really like CMI. Talk to you soon!
-LOMD
Thanks LOMD. I wish I would have waited a bit on CMI. It got hammered the last two days. Oh well…I’m in it for the long haul!
Ken
Solid buys all around though none happen to be in my long term portfolios. I think I like the CMI buy best. I looked at them a while back but never pulled the trigger. Thanks for bringing this solid dividend payer back to my attention.
Thanks DivHut. CMI just kept popping up in every screen I ran so I finally decided to take a closer look. I definitely liked what I saw. Glad I was able to jog your memory.
Ken
I really like the HSY and CMI buys; I’ve been eyeing them myself. Can’t really complain about MCD either. I am interested in why you chose GPS. I went for VFC in the clothing space, but a lot of people seem to like GPS. Haven’t looked at it closely myself.
Hi DD – I’ve been running a screen lately that includes various parameters for dividend and financial strength/growth and GPS came out on top in the clothing space. After their recent pull back I decided to pull the trigger on a very small position. I will take a look at VFC as well since I like to spread my money thin in my Loyal3 account. Thanks for stopping by!
Ken
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