New Beginnings for a Stock Investor





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I have been pondering a new idea in the back of my mind for some time now. I was looking at my goals for 2016 and thinking I will never get to that 80 thousand dollar mark by the end of this year (2016) just based on normal market returns, free cash allocation and dividends. Previously, my dividend income monthly which my portfolio generated was between $150 and $350 dollars per month. Not to shabby, but a far cry from the amount I need to surpass my goal by the end of the year.

The only way I am going exceed the goals is to basically put my investments on steroids. In the absence of huge deposits of cash and inheritance, the only other way to make this happen is by using the swing trading technique. Without further ado, lets get right into it.

Once I decided to pursue this new technique today, I sold the majority of my stocks for a net profit gain of $1,700 dollars using most of my free trades at Scottrade. I still have 3 free trades left. The total was around $64,000 dollars. This was an emotional experience to part ways from many stocks as most of you probably know. I’ve had most of these companies for a year and a half, however, I knew I needed to implement this plan to basically put my investment career on anabolic steroids per se.

To give you readers a general idea of my strategy..
1.) Pick a solid company (Steady price increases, proven track record, dividend payer)
2.) Buy large amounts of shares
3.) Wait for price to increase
4.) If it declines, keep shares and collect dividends until price rebounds
5.) Only sell with profits.




This technique will definitely work with time. I understand that risks are associated with this technique. A few include: lack of diversification, more susceptible to market trends (positive or negative) and more vulnerable to taxation. No risks No rewards!

Although, I sold most of my long term stocks. I still have a few in my long term portfolio:
AHGP- 5 shares
AMNF- 47 shares
APU-1 share
BAC- 1 share
KMI-111 shares
SBSI-3 shares

Today, I purchased 1850 shares of Hormel Foods (HRL). I will use fundamental analysis to determine when to buy/sell. I will get into more detail in the future on this.

I’m looking for a minimum of 100 dollar profits from each trade to catapult me beyond my goals. If the price per share falters, I will keep the shares until I do make a profit, while collecting those dividends. It may take days or even months.

I will keep this transparent throughout the entire process. I hope to track my net worth from $66 thousand to over a million dollars.

Stay tuned for a detailed analysis of Hormel Foods (HRL) and thanks for the support!

Each transaction will be listed on the page “Day Trading Log”

**Please subscribe to follow my journey.

LOMD

Photo: http://coldfusionnow.org/investing-in-lenr-cold-fusion/

Traveling on Tico Time

Traveling on Tico Time



Whenever you speak to people about rainforests, untouched coastlines and biodiversity, the place that often comes to mind is a land not too far away: Costa Rica. Last week, Diana and I finally took a five-day trip to Costa Rica to experience it for ourselves. After our short vacation in the country, Costa Rica will be in our memories for a lifetime as a place of friendly, local “ticos”, diverse flora and fauna and scenic byways.
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(View of Pacific Ocean)
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(River in Jungle near Arenal Volcano)
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(Jungle with Tucan on branch)
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(Up close and personal with Tucan)
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(Jungle Iguana)

Day 1:

Our journey began at the Liberia- Daniel Oduber airport in Guanacaste, Costa Rica. It took approximately 3 hours of air travel to reach our destination from Raleigh, North Carolina. We rented a car for approximately $350 dollars, which was our primary mode of transportation for the duration of the trip.

The first thing that I noticed during our trip was the extremely high cost of necessities such as beverages, food and gasoline, comparable to that of major metropolitan areas in the United States like Manhattan. Later, it was revealed to us that a 23 percent tax is placed on many food items. In a nutshell, it breaks down to 13 percent government tax and 10 percent service tax.

Tip #1: Bring your own water/alcohol/beverages in a checked bag if you plan to drink and if you are not staying in an all-inclusive.

The drive from the Liberia to La-Fortuna was both scenic and treacherous. As the misty Arenal volcano graced the distant skyline, the roads began gently swaying as elevation increased. As we surpassed one-thousand feet in elevation, the roads became extremely narrow. Hence, the use of bicycles and motorbikes as the main mode of travel for the locals. Iguanas were meandering the shoulders, while the local ticos passed us in blind curves driving recklessly.
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(Lake-Laguna de Arenal)
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(Road trip to Arenal Volcano from Airport)

As we began to drive in our Toyota Rav 4 we passed many local restaurants known as “sodas” and organic produce mini-marts. It became apparent that the Costa Rican government is highly eco-friendly with many implementations to protect their environment. This included numerous wind turbines on the westward facing slopes to harness energy from the periodic passing storms.

As the elevation increased, we approached the Arenal volcano and the clouds became dense with rain. Lava tracks from times past appeared to be black rivers meandering down the side of the mountain.

We stayed two nights at Arenal Manoa. The suites were very nice. They were spacious and had great decor throughout. The landscaping was amazing with many native plants neatly surrounding the sidewalk. The resort offered free breakfast and wifi which were added bonuses. The room charges came to be around 90 dollars per night including taxes.

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(View from hotel)

Day 2: All-day Pass at Arenal Hot Springs Resort

This day was the best day spent on vacation. It began with a quick check-in at the lodge. It was a very tranquil setting overlooking the rolling hills of jungle against a backdrop of the volcano. The pass was only $109 dollars, which included horseback riding through the jungle, river tubing, a nature tour, and all-day access to the hot springs. The water inside of the hot springs contained various elements which were beneficial to many human ailments. The only downside to this five-star resort was not being there longer and the prices of the beverages and food were extremely costly.

Cost of Food: $10-30 dollars per meal/ Alcoholic Drinks 10-20 dollars.

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(View from inside lodge at check-in)
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(River tubing)
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(Horseback riding)
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(Amazing river view)
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(hot springs)
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(Blue Jean Frog)

Day 3-5: All-inclusive Resort Hotel Riu Guanacaste, Costa Rica

Day 3 began with a 2-hour drive back through the jungle and mountainous terrain to the driest province in Costa Rica: Guanacaste. We stopped at a few roadside shops along the way and indulged in some rich dark chocolate and picked up a few organic produce items. As we entered the all-inclusive resort, it was located on beautiful grounds with howler monkey noises echoing in the distance and iguanas meandering on the warm sands. As the sun began to set over the Pacific Ocean, we settled in with an ocean view.
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(Sunset)

Day 4: The sunrise was beautiful. The weather was clear and scorching hot. We hired a boat for $45 dollars each which took us snorkeling, fishing and to Coco Beach. It was well worth every dollar spent and we visualized an abundance of wildlife, ranging from octopi to tropical fishes.
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(local croc)

The fishing was great. It yielded an abundance of trigger fish which were prepared for us for a small tip. Delicious!

After fishing, we explored Coco Beach for an hour. Here we picked up a few souvenirs.
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(Flora)

Day 5:We went on a Tempisque River Tour which costed around $70 each, introducing us to the local crocodiles and local, wildlife inhabitants of the river. I would rate this a one star and isn’t worth the money. It was very short and didn’t produce much in the way of flora or fauna.
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(River tour)

Day 6- (Departure)
We left Costa Rica and headed back home with many memories.

Disclosure: The trip was paid mostly using Capital one sky miles.

Photos: Myself

Financial Independence Fund (FIF) Update-May 2016

Hello friends,

**RECORD DIVIDEND MONTH: $352.52 dollars



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(Taken on Costa Rican Vacation-Pacific Ocean)

The time has come to update the Financial Independence Fund (FIF) once again as we start to approach another month.

The Financial Independence Fund (FIF) is the name of my portfolio that will transform me into an independent citizen in a few more decades through dividend reinvesting and dividend increases.

May 2016 has been a busy month and it has flashed by. I was able to take a 5-day vacation in Costa Rica, however, while on vacation I received upwards of $350 dollars in dividends and picked up some new companies. Moreover, this month was the first month my account balance reach upwards of $63,500 dollars. It goes to show how dividend re-investment, new purchases and the power of the market really works favorably and to your advantage.

Overall, May 2016 has been a favorable month for the market and in the dividend department. It began sluggish, but quickly recovered with huge gains toward mid-month. Crude oil finally broke 50 dollars per barrel, inflation has remained stable and the US dollar has strengthened.

I made three new purchases this month using some fresh capital from working and dividends. I managed to invest slightly over 1070 dollars which is above my target goal of 1000 dollars.

I added 20 shares of Abbott Laboratories (ABT) to my portfolio and 7 shares of Royal Dutch Shell Class B shares (RDS.B) and 3 shares of Southside Bancshares Inc (SBSI). All three companies have great fundamentals, nice yields and a proven track record of dividend increases.

The current market value of the Financial Independence Fund (FIF) now stands at $63,959. This is a nice increase from last month of $61,872 This 3.26 percent increase since last month is due to fresh capital allocation which I used to purchase shares mentioned above in addition to capital appreciation.

I’m invested in 38 positions. (Added 3 stocks this month)

The dividend income generated from the Financial Independent Fund was 352.52 dollars. It was a record month!! It was re-invested this month into more dividend paying stocks.

Forward dividend income from purchases this month:
$12.50 per quarter
$50.00 annually
$4.17 monthly

Full Disclosure: Long ABT,SBSI,RDS.B

Comment Below…

Any additions to your portfolio?

photo credit: myself

New Purchase with Dividends: Royal Dutch Shell

Hello Subscribers and fellow bloggers,
shellgasstation
I just arrived back from vacation in Costa Rica. I will post a summary of my vacation with photos in the coming weeks. Stay tuned…

With this being said, I earned over 300 dollars in dividends while on vacation. This really puts in perspective the reason why I try to invest monthly to keep my snowball rolling and continually getting larger, so that one day my entire life will be a vacation.

Today, I bought 6 shares of Royal Dutch Shell Class B shares (RDS.B) for a cost basis of 306 dollars. It increases my stake in the company to 7 shares. RDS.B has a relatively attractive dividend yield of over 7.32 percent.

I purchased 7 shares of Royal Dutch Shell Class B shares on 05/25/2016 for $50.80 per share.

Summary

Royal Dutch Shell plc (LSE: RDSA, RDSB), commonly known as Shell, is an Anglo-Dutch multinational oil and gas company headquartered in the Netherlands and incorporated in the United Kingdom. It was created by the merger of Royal Dutch Petroleum and UK-based Shell Transport & Trading, it is the seventh largest company in the world as of 2016, in terms of revenue, and one of the six oil and gas “supermajors”.

Shell is also one of the world’s most valuable companies. As of January 2013 the largest shareholder is Capital Research Global Investors with 9.85% ahead of BlackRock in second with 6.89%. Shell topped the 2013 Fortune Global 500 list of the world’s largest companies. Royal Dutch Shell revenue was equal to 84% of the Netherlands’ $555.8 billion GDP at the time. As of February 2016, Shell is the world’s second largest oil company.

Shell was vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading. It has minor renewable energy activities in the form of biofuels and wind. It has operations in over 90 countries, produces around 3.1 million barrels of oil equivalent per day and has 44,000 service stations worldwide. Shell Oil Company, its subsidiary in the United States, is one of its largest businesses.

Royal Dutch Shell (RDS.B) Fundamentals

Royal Dutch Shell is very large and diversified oil company. The price per share has been reduced tremendously due to the recent oil slump, crude oil production increases and corporate job cuts. As oil begins to rebound in the coming years, RDS should provide a nice source of dividend income to the Financial Independence Fund (FIF).

The revenue growth put forth by the company has declined over the last year at a pretty rapid pace. It is down 26 percent year over year. The revenue was 247 billion dollars. The revenue should increase at some point in the near future and begin to gradually increase in the coming years as oil prices begin to stabilize and increase. They are projecting crude oil prices in 2017 nearing 80 dollars per barrel.

Gross profit margins are around -0.81 percent. According to graphical analysis of the stock, gross profit margins have decreased over the last five years from around 15 percent to -0.81 percent at the end of the quarter 1 in 2016. It is positively correlated with crude oil prices and pretty standard across the sector. It’s assets have decreased to 416 million from upwards of 500 million.

Earnings per share, however, was shocking in May 2016. Earnings per share at last report was 0.22, but was forecasted at 0.14 cents per share.

Royal Dutch Shell, is still a king in the oil industry. Even though the latest earnings per share was lower than previous years, it can still provide great returns for any investor especially as crude oil prices rise, and the company uses countermeasures such as reduction in capital expenditures and job cuts.

Moreover, the stock has increased its dividend for decades, which is remarkable considering crude oil prices are cyclical. RDS pays a nice dividend of $0.94 cents per quarter. The current ratio or liquidity ratio is 1.04 which is relatively low and indicates that RDS has good financial strength to pay short term financial obligations. The current dividend yield is around 7.3 percent.

Profitability metrics are slightly lower than the sector. Currently, the firm has averaged a net margin of 0.97% and return on equity of 1.08%. At the time of the post, these values appear lower than the sector averages, but in the coming months I foresee these values increasing once the commodity prices rebound and transport volumes increase.

Qualitative Aspects

I’ve long been debating about adding more oil sector shares in my portfolio. I have chosen this stock because it seems to have great revenue, great net margins with plenty of room for growth as the crude oil prices rebounds and a low cash to debt ratio.

First, RDS is subjected to crude oil prices per barrel. Since oil is near decade lows, I feel that this purchase can only go up from here.

Second, RDS is expanding and acquiring new ventures such as BG Group.

Third, RDS pays a nice hefty dividend and has been increasing it for decades regardless of crude oil prices.

Risks

Royal Dutch Shell is in the oil sector and it is highly volatile. This makes it more riskier than a lot of the consumer-goods companies. This stock operates with huge debt although its lower than most companies in the sector. Falling oil prices will decrease revenue and in return lower profit margins. Lower oil prices will also provide interference in the company’s expansion plan if it decides to conduct any new acquisitions. Another dynamic which affected the share price was the acquisition of BG Group. Shell forked out 54 billion dollars which definitely decreases free cash flow in a time when cash is decreased from lower commodity prices.

Valuation

Royal Dutch Shell P/E ratio is extremely high, but the good news is this value doesn’t tell the entire story. I’m not to shocked by this value. The projected forward PE ratio is 11.47. The current PEG value is 0. This indicates that the company is expected for higher returns. Some analyst project the share price ranging from 80 to 100 dollars.

Conclusion

Overall, I think Royal Dutch Shell is a super major oil company with a proven track record. I chose this company because they have increased dividends for decades. I think as the 54 billion dollar acquisition is paid off over the coming years and oil prices increase, it should be able to divert more cash flow into further expansion and dividend growth. Currently, I think you can say that RDS is spending money now, so it can be poised to reap the rewards in the future.

These purchases add $5.64 to my quarterly dividend income or $22.56 to my annual dividend income based on the current $0.94 quarterly dividend.

Full Disclosure: Long RDS.B
Some values are approximations
I used FRIP from Scottrade which lowers cost basis due to no transaction fees.

Sources:
http://www.gurufocus.com/term/peg/RDS.A/PEG/Royal-Dutch-Shell-PLC

https://en.wikipedia.org/wiki/Royal_Dutch_Shell

https://finance.yahoo.com/q/ks?s=RDS-B

https://www.stock-analysis-on.net/NYSE/Company/Royal-Dutch-Shell-PLC/Ratios/Profitability

http://www.nasdaq.com/symbol/rds.a/dividend-history

image: http://prospect.rsc.org/blogs/cw/wp-content/uploads/2010/07/shellgasstation.jpg

Please subscribe and let me know what you think? Do you own RDS.B? Would you buy RDS.B? Why or Why not?

LOMD

New Purchase: Abbott Laboratories

Hello Fellow bloggers and Subscribers,
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Today, I bought 20 shares of Abbott Laboratories (ABT) for a cost basis of nearly 770 dollars. It increases my stocks in the healthcare sector.

I purchased 20 shares of ABT on 05/16/2016 for $38.26 per share.

Summary

Abbott Laboratories is an American worldwide health care company. It has 73,000 employees and operates in more than 150 countries. The company headquarters are in Lake Bluff, Illinois. The company was founded by Chicago physician Wallace Calvin Abbott in 1888. In 2014, revenues were $20.2 billion.

Abbott has a broad range of branded generic pharmaceuticals, medical devices, diagnostics, nutrition products, including Ensure, a line of meal replacement shakes.

The company’s in-vitro diagnostics business performs immunoassays and blood screening. Its medical tests and diagnostic instrument systems are used worldwide by hospitals, laboratories, blood banks, and physician offices to diagnose and monitor diseases such as HIV, hepatitis, cancer, heart failure and metabolic disorders, as well as assess other indicators of health.

Abbott Laboratories (ABT) Fundamentals

Abbott is a rather solid, highly diversified healthcare company with a host of medical items, diagnostic tests and nutritional products. As a healthcare stock, it should almost be recession proof and provide nice returns for the Financial Independence Fund (FIF).

The revenue growth put forth by the company has remained rather steady over the last few years. It has stabilized around $4.8 billion (quarterly) to $5 billion from 2014 to 2015. Its revenue growth is down 3 percent.

Gross profit margins increased from an average of around 48 percent to 56 percent over the last three years since the spin off of AbbVie. It’s assets have remained steady from 38 billion to 40 billion over the last three years.

Earnings per share, however, was a surprise in March 2016. Earnings per share at last report was 0.41. Analysts are predicting 0.61 next quarter.

Abbott Labs is a king in the healthcare sector. Even though the latest earnings per share was mediocre, it can still provide great returns for any investor, especially as health care costs continue to rise, hospital stays increase and more children are born.

Moreover, the stock has increased its dividend for the past 44 years. It pays a nice dividend of $0.26 per quarter. The current ratio or liquidity ratio is 1.54 which is relatively low and indicates that ABT has good financial strength to pay short term financial obligations. The current dividend yield is around 2.72 percent.

Profitability metrics are slightly higher than the sector. Currently, the firm has averaged an operating margin of 10.0% and return on equity of 6.03 %. At the time of the post, these values appear higher than the sector averages which appear solid.

Qualitative Aspects

I have been wanting to add more companies in the healthcare sector for some time now. I view this sector as a steady source of dividend income that is unrivaled by many other sectors. Most stocks belonging to this sector have years of dividend growth and nice capital appreciation over time.

First, ABT is highly diversified. They have great products that you can see on the shelf of your big box stores such as Similac, Pediasure, Ensure, Glucerna etc..to diagnostic tests to medical devices used only in hospitals.

Second, ABT is launching a new Go & Grow by Similac® Food Mix-Ins™ (Mix-Ins). It is the first toddler product designed to mix into your toddler’s favorite foods like yogurt, oatmeal and macaroni and cheese.

Third, ABT has 44 years of increasing dividends.

Risks

Abbott Laboratories is fairly well sheltered from corrections and recessions. The largest risk associated with the healthcare sector is major lawsuits on certain drugs and/or devices. In addition, regulations placed on the companies from the federal government may pose an investment risk. Overall, I feel fairly sure that this investment is a solid one with many years of great returns.

Valuation

Abbott Laboratories P/E ratio is modest at 23. The cash to debt ratio is 0.46. This value is attractive and is lower than 79 percent of the companies in this sector. The debt to Equity ratio is fairly low at 0.42. All these values indicate that ABT stock is fairly attractive at current levels with significant room for growth in stock price and dividends.

Conclusion

Overall, I think Abbott Laboratories is a healthcare company with a proven track record. I chose this company because they have increased dividends for almost a half of a century. Furthermore, ABT sells common products everyday families use. These products are non cyclical which means that the purchasing is continuous. As the population continues to age and the need for more products increases the company should be poised for success.

These purchases add $5.20 to my quarterly dividend income or $20.80 to my annual dividend income based on the current $0.26 quarterly dividend.

Full Disclosure: Long ABT
Some values are approximations
I used a free trade from Scottrade which lowers cost basis. I have 38 free trades left.

Sources:
http://www.gurufocus.com/term/deb2equity/ABT/Debt-to-Equity/Abbott-Laboratories

http://www.abbott.com/investors/overview.html

https://en.wikipedia.org/wiki/Abbott_Laboratories

Please subscribe and let me know what you think? Do you own ABT? Would you buy ABT? Why or Why not?

LOMD

Financial Independence Fund (FIF) Update-April 2016

Hello friends,

Well, the time has come to update the Financial Independence Fund (FIF) once again as we start to approach another month. The Financial Independence Fund (FIF) is the name of my portfolio that will transform me into an independent citizen in a few more decades through dividend reinvesting and dividend increases.
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I feel extremely honored and thankful that I’m able to post these updates every month with positive results most of the time. It goes to show how dividend re-investment, new purchases and the power of the market really works favorably and to your advantage.

One of the main reasons why I post this every month is not only to keep track of my portfolio as it progresses, but to log the significant dividend increases it endures each quarter while inspiring others to do so.

This month has been rather positive as the market has made a great rebound from the dip in February 2016. Oil has been rising, world markets have stabilized slightly, and interest rates are relatively low, which in turn has made most sectors rebound quite nicely. The only thing I regret is not having more cash on hand in those tough times to pick up more shares at a better value.

I made several purchases this month using some fresh capital from working, dividends and the sell-off of 40 shares of Walmart (WMT), 60 shares of New York Community Bank and 113 shares of Kinder Morgan. A recent slump in earnings and dividend slashes prompted these transactions. The free cash allowed me to open six new positions. My primary purchases in the dividend department were Colgate Palmolive (CL), LTC Properties (LTC), and Old Republic International Corp (ORI). My analysis revealed that these stocks were trading for attractive long-term prices, with an acceptable yield and great cash flow.

Moreover, I added three additional REITS to my portfolio. I added Chatham Lodging Trust (CLDT), Healthcare Property Investors (HCP), and Bluestone Residential Growth REIT (BRG). Chatham Lodging Trust and Bluestone Residential Growth REIT were trading at an attractive valuation and pays Monthly. In addition, Healthcare Property Investors (HCP) has been increasing dividends for 31 years and pays quarterly.

All five of these stocks have favorable financials and should be able to reward the (FIF) with quality dividends for years to come.

The current market value of the Financial Independence Fund (FIF) now stands at $61,872. This is a nice increase from last month of $58,475. This 5.49 percent increase since last month is due to fresh capital allocation which I used to purchase shares mentioned above.

I’m invested in 35 positions. (Added six stocks this month)

The dividend income generated from the 35 positions was 217.04 dollars. It will be re-invested next month into more dividend paying stocks.

Full Disclosure: Long CL, CLDT, LTC, BRG, HCP, ORI

Comment Below…

Any additions to your portfolio?

photo credit: http://www.123rf.com/stock-photo/moving_money.html?mediapopup=13514458

New Purchase: Old Republic International Corporation

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I made a new purchase: 8 shares of Old Republic International Corporation for a cost basis of 146.00 dollars.

This morning, I bought another company using some spare money and a free trade from Scottrade. It’s always a good feeling turning cold hard cash into cash flow. I’m here to tell you, small investment increments add up to large sums over time.

The stock has a relatively high dividend yield of 4.2 percent, in addition it boasts a long history of dividend increases which is regarded as highly favorable with this sector.

I purchased 8 shares of Old Republic International Corporation on 04/25/2016 for 18.25 per share.

Summary

Old Republic traces its beginnings to 1923, although several acquired subsidiaries began operations much earlier. The Company is one of America’s 50 largest shareholder-owned insurance businesses. It is primarily a commercial lines underwriter serving the insurance needs of a large number of organizations, including many of America’s leading industrial and financial services institutions. Its subsidiaries actively market, underwrite, and provide risk management services for a wide variety of coverages, mostly in the general and title insurance fields. A long-term interest in the mortgage guaranty and consumer credit insurance lines has devolved into a run-off operating mode in recent years.

Old Republic International Corporation (ORI) Fundamentals

Old Republic International Corporation (ORI) is rather a solid, diversified company that is fairly boring in terms of capital appreciation year over year. Meanwhile, in the dividends department it is a great company with over 25 years of dividend increases.

The revenue growth put forth by the company has increased over the last few years at a pretty steady pace. It went from $5.4 billion to $5.766 billion from 2013 to 2015.

Gross profit margins remain around 55 percent since 2014. It’s total assets of 17 Billion experienced growth of 3.20 percent during the year of 2015. Over the last 5 years, total assets have grown 2.50 percent.

Earnings per share, however, was a disappointment to the general consensus in 2016. Earnings per share at last report was $0.33, down from last year. The fiscal year is estimated at $1.27. Last years EPS totaled $1.48.

Old Republic International Corporation is still a dividend aristocrat, which will impress any investor in the long term game of dividend reinvestments. Moreover, the stock has increased its dividend for the past 25 years which is remarkable. Another great attribute that the stock offers is a nice dividend of $.1875 cents per quarter. The current ratio or liquidity ratio is 0.00 which is low and indicates that ORI may have difficulty to pay short term financial obligations, but it can borrow against assets and prospects to cover the short term obligations.

Profitability metrics are slightly lower than the sector. Currently, the firm has averaged a net margin of 6.13 percent and return on equity of 9.3%. At the time of the post, these values appear higher than the sector averages.

Qualitative Aspects

For sometime now, I have been wanting to add ORI to my portfolio. Lets talk about ORI…

First, ORI is a diversified insurance underwriter. Its portfolio includes:
GENERAL INSURANCE
TITLE INSURANCE
RFIG RUN-OFF BUSINESS
LIFE & ACCIDENT INSURANCE

Second, ORI is primarily a commercial lines underwriter serving the insurance needs of a large number of organizations, including many of America’s leading industrial and financial services institutions. This is great because these tend to be more stable than personal services.

Third, ORI pays a 4.2 percent dividend which is significantly higher than the S&P 2.5 percent.

Fourth, ORI has increased dividends for 25 consecutive years.

Fifth, ORI’s cash flow, sales growth, Price/sales has beat all other peers.

Risks

Old Republic International (ORI) is an insurance underwriter. It does come with some risks, but for the most part it is fairly stable considering most of its business deals with large financial and government instiutions. One concern is that ORI earnings growth is at 2.7%. Where as, other financial/insurance peers average around 13 percent, which is 300 percent more than ORI. The stock price has remained at a slow growing pace over the last decade or so; experiencing no sharp spikes in price per share. Some other variables which come into play in this sector are weather-related disasters such as hurricanes,tornados and flooding. Any of these events can pose a significant threat due to policy claims and payouts. Furthermore, there are regulation implementation from the federal government which can alter insurance companies fundamentals.

Valuation

Old Republic International Corporation P/E ratio is relatively low at 12.32. The forecasted P/E ratio for next year is around 13. The PEG ratio is around 1.4 which means the share price is fair. ORI has a fairly low Debt to Equity ratio of 0.25 and a low debt to cash ratio of 0.17.

Conclusion

Old Republic International Corporation (ORI) is a company with a proven track record. I chose this company because they have increased dividends for over 25 years, while increasing assets and revenue simultaneously. A few aspects which make this stock very attractive is the revenue generated, debt, PE ratio, dividend growth and dividend yield.

This purchase add $1.5 to my quarterly dividend income or $6 to my annual dividend income based on the current $0.1875 quarterly dividend.

Full Disclosure: Long ORI
Some values are approximations
I used a free trade which lowers cost basis. I have 46 free trades left.

Sources:

http://www.nasdaq.com/symbol/ori/pe-ratio

http://www.themarketsdaily.com/analyst-actions/old-republic-international-corporation-nyseori-yearly-eps-estimate-at-1-27/144694/

http://www.gurufocus.com/term/cash2debt/ORI/Cash-to-Debt/Old-Republic-International-Corp

http://www.nasdaq.com/symbol/ori/revenue-eps

http://www.oldrepublic.com/about.htm

Please subscribe and let me know what you think? Do you own ORI? Would you buy ORI? Why or Why not?

LOMD

New Purchase: Healthcare Property Investors (HCP)

During normal trading hours today, I turned some free cash from Scottrade into some dividend cash flow. Thats right, I earned 200 dollars from Scottrade through the “special” that just ended for transferring my stocks from my old Charles Schwab account to my new Scottrade account. Additionally, I earned 50 free trades. I also used one of these to make the purchase.
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Today, I bought 10 shares of Healthcare Properties Investors, Inc for a cost basis of 335.66 dollars. It increases the number of REITs in the Financial Independence Fund, but adds a new dimension in the healthcare division. It has a relatively high dividend yield of 6.9 percent, in addition it boasts a long history of dividend increases which is regarded as highly favorable with this sector.

I purchased 10 shares of Healthcare Property Investors, Inc on 04/22/2016 for 33.56 per share.

Summary

HCP, Inc. is a fully integrated real estate investment trust (REIT) that invests primarily in real estate serving the healthcare industry in the United States. HCP’s portfolio of assets is diversified among five distinct sectors: senior housing, post-acute/skilled nursing, life science, medical office and hospital.

A publicly traded company since 1985, HCP: (i) was the first healthcare REIT selected to the S&P 500 index; (ii) has increased its dividend per share for 31 consecutive years; (iii) was the first REIT included in the S&P 500 Dividend Aristocrats index; and (iv) is recognized as a global leader in sustainability as a member of the Dow Jones and FTSE4Good sustainability indices, as well as the recipient in three of the past four years of both of the GRESB Global Healthcare Sector Leader and the NAREIT Healthcare Leader in the Light Award.

Healthcare Property Investors, Inc (HCP) Fundamentals

Dividend Growth Chart of HCP
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Healthcare Property Investors, Inc (HCP) is rather a solid, diversified REIT with a recent slump due to a few situations which have unfolded over the last year or so. One the major reasons why the stock plummeted last quarter and the previous quarter was due to the Department of Justice investigation with medicare fraudulent claims at the HCR Manorcare facilities. This is HCP’s largest tenant, therefore outcome uncertainty drove the cost per share downward. Furthermore, the recent hype of raising US interest rates, which in turn would slow any expansions the REIT may pursue. These coupled together has reduced the stock price over 10 percent over the last few quarters.

The revenue growth put forth by the company has increased over the last few years at a pretty rapid pace. It went from $1.8 billion to $2.6 billion from 2013 to 2015. The revenue should continue rising in the the coming years as the REIT expands and diversifies and as the baby boomers begin to need more acute/skilled nursing care.

Gross profit margins declined over the last few years. Dropping from around 85 percent to 75 percent since 2013. Thats almost a 10 percent drop in gross profit margins in a two year span. It is something to take note of, but its nothing to raise an eyebrow at. It’s assets have increased from 17 billion to 21 billion over the last five years.

Earnings per share, however, was a surprise to the general consensus in all of 2015 and early 2016. Earnings per share at last report was $0.80, up from $0.79, which is a 1.27 percent gain. The revenue generated in the last quarter was 668 million up from the forecasted 6.38 million.

Healthcare Property Investors, INC , is still a dividend aristocrat, which will impress any investor in the long term game of dividend reinvestments. Moreover, the stock has increased its dividend for the past 31 years, which is remarkable. Another great attribute that the stock offers is a nice dividend of $.575 cents per quarter. The current ratio or liquidity ratio is 2.19 which is relatively low and indicates that HCP has good financial strength to pay short term financial obligations. This value means HCP is above 79 percent of the other healthcare related REITS in this regard. The current dividend yield is around 6.9 percent.

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Profitability metrics are slightly lower than the sector. Currently, the firm has averaged a net margin of -89 percent and return on equity of -24.5%. At the time of the post, these values appear lower than the sector averages, but in the coming years I see these values stabilizing as debt is paid, higher growth rate of facilities and an increased elderly population.

Qualitative Aspects

For sometime now, I have been wanting to add a health care REIT in my portfolio. I have been debating between HCN, HCP or LTC. Eventually I hope to add all three of these, but for now with limited funds I will only add HCP. Lets talk about HCP…

First, HCP is a highly diversified REIT. Its portfolio includes:
-Hospitals
-Senior housing
-Post acute/Skilled nursing
-life sciences
-Medical Offices

Second, HCP is expanding and acquiring more locations in the U.S. and other countries including United Kingdom.

Third, HCP will eventually pay down debt in a few years (decreasing the debt to income ratio), while acquiring more locations. Moreover, the aging baby boomers will need more of the facilities which should increase revenue.
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Fourth, People will always need health care/facilities due to illnesses, immobilization etc

Risks

Healthcare Property Investors, Inc is a healthcare related real estate trust. For the most part it is fairly stable considering its in the healthcare industry. HCP operates with huge debt, however, with the steady increasing populations and expansion projects implemented, HCP should continue to be highly profitable. A few things that can jeopardize the stock would be audits from the Federal Justice Departments, lower reimbursement rates, shorter stays due to technology i.e. medicines, surgeries. Also, rising interest rates or extremely high inflation rates which are unlikely at this point in time would damper expansion efforts.

Valuation

Healthcare Property Investors, INC P/E ratio is relatively low, but the good news is this doesn’t tell the entire story because it’s a REIT. Therefore, lets analyze the FFO value. This value looks at funds from operations; or should we just say cash flow from operations. The FFO value in 2016 was 2.74-2.80 which is a decrease year over year from the projected 3.17. Thats a slight decrease over the last year which is a result of new reimbursement models being implemented and shorter length stays in nursing/hospital facilities.

Conclusion

Overall, I think Healthcare Property Investors Inc, (HCP) is a REIT with a proven track record. I chose this company because they have increased dividends for over 30 years, while increasing assets and revenue simultaneously. Even though there are shorter length stays, lower consensus, and new reimbursement models being implicated, I think HCP still has a strong hold in every investors portfolio. A few aspects which make this stock very attractive is the future of the company; namely the increasing baby boomer age and higher health care costs which should reap huge profits for the REIT.

These purchases add $5.75 to my quarterly dividend income or $23 to my annual dividend income based on the current $0.575 quarterly dividend.

Full Disclosure: Long HCP
Some values are approximations
I used a free trade/free $200 dollars from Scottrade which lowers cost basis. I have 47 free trades left.

Sources:

http://www.gurufocus.com/term/pfcf/HCP/Price-to-Free-Cash-Flow-ratio/HCP-Inc

http://www.zacks.com/stock/news/206753/hcp-q4-ffo-and-revenues-beat-estimates

http://www.hcpi.com

Please subscribe and let me know what you think? Do you own HCP? Would you buy HCP? Why or Why not?

LOMD

Recent Buy: Energy Transfer Partners

The market has been going up the entire week with the rising oil prices, and the release of the first quarter earnings reports. With this being said, I always look to turn cash into cash flow.

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Today, I bought 14 shares of Energy Transfer Partners (ETP) for a cost basis of nearly 500 dollars. It increases my stake in the company to 79 shares. It has a relatively high dividend yield of over 12 percent, in addition it boasts a high PE ratio which is seen in many Master Limited Partnerships (MLPs).

I purchased 14 shares of Energy Transfer Partners on 04/20/2016 for $35.03 per share.

Summary

Energy Transfer Partners, L.P. is a master limited partnership owning and operating one of the largest and most diversified portfolios of energy assets in the United States. ETP has natural gas operations that include approximately 24,000 miles of gathering and transportation pipelines, treating and processing assets, and storage facilities.

ETP also acquired the general partner interests, 100% of the incentive distribution rights, and a 32.4% limited partnership interest in Sunoco Logistics Partners L.P. (NYSE:SXL), which operates a geographically diverse portfolio of crude oil and refined products pipelines, terminalling and crude oil acquisition and marketing assets.

In January 2015, Energy Transfer Partners announced it would acquire its affiliate Regency Energy Partners for around $11 billion.

ETP also holds a 70% interest in Lone Star NGL, a joint venture that owns and operates natural gas liquids storage, fractionation and transportation assets in Texas, Louisiana and Mississippi. In addition, ETP holds controlling interest in a corporation (ETP Holdco Corporation) that owns Southern Union Company and Sunoco, Inc. ETP’s general partner is owned by ETE.

Energy Transfer Partners (ETP) Fundamentals

Energy Transfer Partners is rather a solid, diversified company with a recent slump due to the hard hit it took from falling crude oil prices. As oil begins to rebound in the coming years, ETP should provide a nice source of dividend income to the Financial Independence Fund (FIF).

The revenue growth put forth by the company has declined over the last year at a pretty rapid pace. It went from $48 billion to $55 billion from 2013 to 2014, however, it dropped to 34 billion in 2015. The revenue should plateau at this point and begin to gradually increase in the coming years as oil prices begin to stabilize and increase.

Gross profit margins peaked in 2012 and were around 37 percent, but then rapidly declined over the next few years. According to graphical analysis of the stock, gross profit margins have increased over the last two years from around 9 percent to 18 percent at the end of the 2015 year. It is truly remarkable when a company can increase profit margins in difficult times when oil is at five year-lows. It’s assets have increased from 17 billion to 65 billion over the last few years. The earnings have tripled over the last three years from 456 million to 1.4 billion.

Earnings per share, however, was a disappointment in December 2015. Earnings per share at last report was 0.02, but was forecasted at 0.42 cents per share. The revenue generated in that quarter was 5.8 billion down from the forecasted 8.94 billion.

Energy Transfer Partners, is still a king in the pipeline industry. Even though the latest earnings per share was a disappointment, it can still provide great returns for any investor, especially as crude oil prices rise and the projects underway are complete. Moreover, the stock has increased its dividend for the past 3 years, which isn’t jaw dropping, but it pays a nice dividend of $1.055 per quarter. The current ratio or liquidity ratio is 1.14 which is relatively low and indicates that ETP has good financial strength to pay short term financial obligations. The current dividend yield is around 12.2 percent.

Profitability metrics are slightly lower than the sector. Currently, the firm has averaged a net margin of 0.79% and return on equity of -6.24%. At the time of the post, these values appear lower than the sector averages, but in the coming months I foresee these values increasing once the commodity prices rebound and transport volumes increase.

Qualitative Aspects

I’ve long been debating about adding more oil sector shares in my portfolio. I have chosen this stock because it seems to have great profit margins, increasing revenue with increasing assets during a time when oil is nearing its bottom. ETP is highly diversified with its new acquisitions and it pays a strong dividend.

First, ETP is greatly sheltered from the price of crude oil, as it provides a fee based service for transportation, processing and storage of the product.

Second, ETP is expanding and acquiring new ventures such as Regency Energy Partners in 2015 and Sunoco in 2012.

Third, ETP pays a nice hefty dividend and has been increasing it for the last three years.

Fourth, ETP is working on a 9 billion dollar project and looking to put SIX more pipelines into working order by the end of 2016. They project they can maintain 4-17 percent increases in volumes compared to last year as the new projects are put in operation.

Fifth, As debt is paid down in the next few years from higher profit margins as a result of higher crude oil prices and higher transport volumes it should be reflected in the return on investment through higher dividends and capital appreciation.

Risks

Energy Transfer Partners is in the oil sector and it is highly volatile. This makes it more riskier than a lot of the consumer-goods companies. This stock operates with huge debt, however, falling oil prices will decrease revenue and in return lower profit margins. Lower oil prices will also provide interference in the company’s expansion plan if it decides to purchase other subsidiaries or start new projects. Another dynamic which affected the share price was the ongoing merger failure with Williams Companies.

Valuation

Energy Transfer Partners P/E ratio is extremely high, but the good news is this doesn’t tell the entire story because it’s a Master Limited Partnership. One ratio we’ll look at is P/DCF ratio. ETP is approximately 8x. The value indicates that the share price is not as high as suggested by the PE ratio. Therefore, the company compared to others in the sector has more economical space to grow. This especially holds true if the company implements the other new pipelines into use by the end of the 2016 fiscal year.

Conclusion

Overall, I think Energy Transfer Partners (ETP) is a pipeline company with a proven track record. I chose this company because they have increased dividends, while increasing assets and revenue simultaneously. Furthermore, ETP stands out in the sector when it comes to the addition of new subsidiaries and projects. I think as the 9 billion dollar pipeline project ends in the next year or so and oil prices increase, it should be able to divert more cash flow to pay down debt; further increasing profit margins. Currently, I think you can say that ETP is spending money now, so it can be poised to reap the rewards in the future.

These purchases add $14.77 to my quarterly dividend income or $59.08 to my annual dividend income based on the current $1.055 quarterly dividend.

Full Disclosure: Long ETP
Some values are approximations
I used a free trade from Scottrade which lowers cost basis. I have 47 free trades left.

Sources:
http://www.fool.com/investing/general/2015/02/08/how-to-value-mlps-price-to-distributable-cash-flow.aspx

http://www.fool.com/investing/general/2013/09/29/how-to-value-mlps-price-to-distributable-cash-flow.aspx

https://en.wikipedia.org/wiki/Energy_Transfer_Partners

http://www.gurufocus.com/term/ev2ebitda/ETP/EVEBITDA/Energy-Transfer-Partners-LP

https://ycharts.com/companies/ETP/assets

Please subscribe and let me know what you think? Do you own ETP? Would you buy ETP? Why or Why not?

LOMD

Recent Buy: Chatham Lodging Trust

The market has been going up and down recently at a pretty rapid pace; however, I’m looking at the long term trends in the market which are generally positive. This frame of mind is something I try to keep in sight, especially when I turn dead cash into cash flow.
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There are thousands of companies out there, some are overly priced while others are undervalued. I try to apply a few select principles to evaluate each stock before making my final purchase. A few of these values I look at are: the PEG ratio, P/E ratio, dividend growth and earnings. I rarely look at dividend yield.

Today, I sold 63 shares of New York Community Bank for a cost basis of nearly 980 dollars. This was due to a recent dividend cut from 0.25 cents per share to 0.17 cents per share.

The stock I purchased is modest across the board. It has a modest P/E ratio, PEG value and over five years of dividend increases. Another added bonus is it pays MONTHLY.

I purchased 43 shares of Chatham Lodging Trust (CLDT) on 04/15/2016 for $21.63 per share.

Summary

Chatham Lodging Trust is a self-advised, publicly-traded real estate investment trust focused primarily on investing in upscale extended-stay hotels and premium-branded, select-service hotels. The company owns interests in 133 hotels totaling 18,177 rooms/suites, comprised of 38 properties it wholly owns with an aggregate of 5,679 rooms/suites in 15 states and the District of Columbia and a minority investment in two joint ventures that own 95 hotels with an aggregate of 12,498 rooms/suites.

Chatham Lodging Trust (CLDT) Fundamentals
Chatham Lodging is rather solid with a nice upward trend over the last few years. I think my purchase of this stock was at a very attractive price, therefore I think it will reward my Financial Independence Fund (FIF) with nice returns over the long haul.

The revenue growth put forth by the REIT has been rather steady over the last four years. It went from $73 million to $255 million in a very short time frame. The revenue should continue to increase for many years as the trust adds more locations, fuel prices stabilize and the job market rebounds with many people looking to travel.

On the flip side, gross profit margins tend to be lower into the latter half of 2015 and early 2016 due to new purchases and outstanding debt. It’s assets have increased from 222 million to 1.3 billion over the last few years. However, the gross profit margins still hovers around 3.5 percent, but in recent years it has been nearly 50 percent. The net income is roughly $8.6 million.

Earnings per share, however, has remained relatively flat. Earnings per share is roughly around two and half percent and is projected to grow nine percent compared to the industry standards.

Chatham lodging is comparable to most other REITS in the financial sector even though its projected price per earnings is almost five points lower than the sector’s average. Moreover, the stock has increased its dividend for the past 3 years, which isn’t jaw dropping, but it pays monthly which is a major bonus. The current payout ratio is 52 percent, which will allow the REIT to make annual dividend increases at a moderate rate. From 2014 to 2015, Chatham increased the annual dividend payout 28 percent. Year to date, the company has already rewarded shareholders with one dividend increase and a bonus dividend of 0.08 cents per share. The current dividend yield is around 6.2 percent.

Profitability metrics are slightly lower than the sector. Currently, the firm has averaged a net margin of 11.91% and return on equity of 4.88%. At the time of the post, these values appear to be solid, but in recent years they have had a greater range than I would like to see.

Qualitative Aspects

I’ve long been debating about adding more than a few REITs to my portfolio. I have chosen this REIT because it diversifies my portfolio even more. Hotels and lodging adds a new dimension that should reward the Financial Independence Fund as the population continues to grow exponentially and travel becomes more prevalent with easier modes of travel.

First, Chatham Lodging mainly invests in lower-cost facilities, and not in the full service hotels which has higher operational costs and lower profit margins. Utilizing this fundamental, it should be able to expand more aggressively while increasing dividends.

Second, Chatham is expanding and acquiring bigger and better chains in more favorable locations. The portfolio consists of Hilton and Marriott brands. Over half of the hotels are located along the East and West Coasts which are hot spots for tourism.

Third, I think the valuation right now is fairly good. I will explain shortly.

Fourth, the dividend is paid monthly. This will allow me to compound at a more rapid pace.

Risks

Chatham Lodging is in the hotel industry and it is cyclical. This makes it more riskier than a lot of the fortune 500 companies such as Coca Cola, or Walmart. This REIT operates with a huge amount of debt with small profit margins. Furthermore, rising oil prices may damper travel which in turn, could result in decrease stays in the Hotels or shorter stays altogether. In addition, hard economic times can crunch the profit margins due lack of funds for travel, although a great percentage of occupancy is via corporate travel. All in all, this stock is not recession proof by any means.

Valuation

The P/E ratio for CLDT stands at 9.35. Thats a fairly low value, but doesn’t tell the entire story since this is a REIT. Therefore, lets analyze the FFO value. This value looks at funds from operations; or should we just say cash flow from operations. The FFO value in 2011 was 0.89 and in 2016 it is 2.52. Thats a significant increase over a few short years. Since last year, Chatham has increased its FFO by 10 percent. When the graphical analysis is compared to the dividend growth, it is almost a mirror image boasting a ten percent dividend yield. This is certainly a positive trend and tends to be increasing nicely year after year. Another value is the PEG ratio. CLDT PEG ratio is slightly over 1 which means the price per share is fair at the current value.

Conclusion

Overall, I think Chatham Lodging Trust is a pretty solid REIT which will reward its shareholders for many years to come. It is one of few stocks that pays monthly. The fundamentals are fairly solid and the valuation places this stock in the “time to buy category”. Even though its a cyclical stock, the cycle should continue for at least another five years as long as oil prices remain stabilized and the economy trends upward.

These purchases add $4.73 to my monthly dividend income or $56.76 to my annual dividend income based on the current $0.11 monthly dividend.

Full Disclosure: Long CLDT, KO, WMT.

Sources: Photo credit: http://phx.corporate-ir.net/phoenix.zhtml?c=237429&p=irol-irhome