Goals for 2020

I recently discussed if I reached my goals for 2019. In this post I will elaborate on my financial goals for 2020. Here goes!

1. Deposits

New money is the fuel to my dividend machine! I've setup two monthly (automatic) payments.

• € 300,- towards my tax free retirement account.
• € 300,- towards my regular investment account.

I will increase my regular deposits toward my investment account to € 300,- per month, so € 3.600,- for this year.

For my tax free retirement account I can can still deposit around € 10.000,- tax free because my employer pension does not fully reach the tax treshold, therefore I am eligible to fund my tax free retirement account with my own money. Last year I deposited around € 1.900,-.  For this year I am setting a goal of € 3.600,- for this year.

Finally I would like to increase my ownership position in the company where I'm employed. I work as a consultant for a midsize consultancy firm specialised in real estate and area development. I currently have a medium stake which I'd like to increase a bit. So therefore I will save another € 1.800,-.

So all in all I want to deposit at least € 9.000,- this year towards my various investments. This is almost 60% more than I deposited last year. However, I think this is achievable!

2. Forward dividend income

Currently my dividend income is around € 1.700,- before tax. With the combination of invested capital, dividend growth en reinvestment of received dividens I am hoping to reach a forward dividend income of € 2.050,- (before taxes). This would mean an increase of 20%.

This it! It's just two simple goals. The first one is actually the most important. The 2nd is mostly a derivative and something I don't have a lot of influence on. I decided to not set another goal, for instance for blogging, as I don't want to feel obliged to write if I don't feel like it. Best of luck to you all in 2020!

Review 2019: How Did My Dividend Growth Portfolio Perform?

In this post I will take a closer look at my portfolio performance during 2019. It's been a formidable year in terms of price appreciation, that's probably not a big suprise.

26% rate of return

First, let's take a look at the rate of return of my portfolio. I started the year with a portfolio value of roughly € 31.400. During the year I deposited around € 3.800,- which consisted of about € 2.200,- in my regular brokerage account and almost € 1.600,- in my employer stock program. The ending value of my portfolio is € 43.500,-. The rate of return when taking into account the timing of my deposits during the year, is about 26%.

I've made some benchmark calculations using national and global total return stock indices (VWRL, AEXGR and SWTSX). These alternatives would have returned about 25 to 29% last year. This is without taking into account the costs for these alternatives. So all in all I am doing just fine with my dividend growth portfolio, especially because my portfolio has a beta of around 0,7x so it supposedly is less volatile than a broad index.

28% more dividends received

During 2019 I received about € 1.340,- in dividends after taxes. Note: I can reclaim the 15% dividend tax with my yearly tax return. This amount is 28% higher than last year!

37% higher forward dividend income

I started last year with a forward dividend income of € 1.225,- (before taxes). Currently my dividend growth portfolio is expected to generate about € 1.680,-. This is an increase of 37% which is totally awesome and definitely bodes well for next year.

So all in all it was a solid great year! The downside is that stocks are becoming more expensive to purchase. In a few days I'll provide an update about my first purchase this year.

How was your 2019? Are you satisfied?

Goal Review of 2019: How Did I Do It?

Last year I wrote about my goals for 2019. This post will describe whether I reached these goals or nog. In short, my goals were as follows:

1. Deposit at least € 4.000,-

• € 1.800,- regular investment account
• € 1.400,- tax free retirement account
• € 800,- employer stock program

New deposits are the fuel to my dividend growth machine. So how did I do it?

• I deposited just over € 2.200,- in my regular brokerage account. So pass!
• I deposited just over € 1.900,- in my tax free retirement account. Another pass!
• I purchased € 1565,- worth of stock certificates in my employer stock program. You can read about it here. Three passes!

All in all I deposited about € 5.700,- which is more than expected. A halfyear pay raise at my job definitely helped to advance on these goals.

2. Annual forward dividend income of € 1.400,-
I wanted to reach a annual forward dividend income of € 1.400,- (before tax). Currently the meter says about € 1.700,- (slightly rounded upwards). So this one is a beat as well! There are two major reasons.

1. I deposited more money into my regular brokerage account; and
2. I now add my employer stock dividend to my annual forward dividend income.

Even without the last reason I still would have reached my goals, albeit with a much smaller margin.

3. Four quarterly buys
Another pass!

1. Quarter 1: AT&T
2. Quarter 2: Unilever
3. Quarter 3: Brookfield Renewable Partners
4. Quarter 4: Johnson & Johson
5. Bonus buy in Quarter 4: Brink

4. Regular blogging

Finally I wanted to blog more regularly about my dividend portfolio and my progress. I had about 50 blog posts this year. The majority were minor updates about dividend raises but I am satisfied nonetheless. It keeps me motivated in order to reach my goals. For me, that's the most important reason of blogging.

All in all it was a solid year. In a next post I will provide an overview of my goals for next year. Thanks for reading!

How was your 2019? Did you reach all your goals?

How I Saved € 500 in a few clicks!

Today I will elaborate a little bit about how I was able to save roughly € 500 with a few clicks. It's only applicable for my Dutch readers, but the general principle is interesting nonetheless.

I am the happy owner of a student loan which I collected during my college period. I am obligated to pay it back in 15 years after a grace period of 2 years. Currently I am about halfway. The interesting thing though is that the interest part of this debt is linked to our government bonds and fixed for a period of 5 years. I just started a new period of 5 years for which my interest rate is.... 0,0%!! That's free money in my eyes :-)

The 2nd interesting thing is that we have the option to receive another grace period of 5 years (or multiple grace periods, for a total duration of 5 years). This gives me the option to stop paying back my student loan, and redirect this cash flow to my mortgage for which I have to pay about 2,5% interest. The real interest rate is a little bit lower however, because I get to deduct the interest payed with my income taxes. However, it's still a net saving and if I do this for 5 years straight, I will save about € 500.

Other advantages are that I might be able to receive a better rate when my mortgage period ends in 7 years because I have a better Loan-to-value. And if I die in the coming 5 years, my student loan will be cancelled anyway but my family still has the benefit of a slightly lower mortgage.

The only risk is that the interest rates will go up in 5 years. However, if I spend the money on extra payments for my mortgage I actually reduce the interest rate risk because my morgage has a higher interest rate  and it has to be refinanced in 7 years anyway.

Just some random thoughts about my personal finance situation. I will post later about my goals for 2020 and the results for December 2019.

Do you have student debt? Do you want to get rid of it or would you consider delaying payments in order to boost your dividend income?

Goals for 2019

I've read a few posts of fellow bloggers about their goals for 2019. Earlier I promised I would tell a little bit more about my plans for this year. Here goes!

1. Deposits

I've setup two monthly (automatic) payments.

• € 50,- towards my tax free retirement account.
• € 150,- towards my regular investment account.

I am eligible to fund my tax free retirement accounts with roughly € 1.400,- this year. So 12x € 50,- is € 600,-. From last year I expect to receive a tax break of € 800,-. In May 2019 I will use this money to fund my tax free retirement account for the remaining contribution room.

Finally I would like to increase my share in the company where I'm employed. I work as a consultant for a midsize consultancy firm specialised in real estate and area development. The firm is owned by its employees and everybody has the oppurtunity to participate. The value of the company and its shares is based on a fixed formula where the last three years of earnings and the forecast for the current year are averaged and multiplied by a factor. Share owners receive a dividend and the amount depends on the company earnings and liquidity position. I currently have a small stake which I'd like to increase a bit. So therefore I need to save another € 800,-.

So all in all I want to deposit at least € 4.000,- this year towards my various investments.

• € 1.800,- regular investment account
• € 1.400,- tax free retirement account
• € 800,- employer stock program

2. Forward annual income (dividend portfolio)

Currently I am expecting to receive around € 1.200,- (before tax) in dividends in 2018. Because of new deposits (see #1), dividend reinvestment and dividend growth, I am targeting an annual forward dividend income of € 1.400,- (+16%). Let's break it down:

• New deposits: +€75,-
• Reinvestment of dividend income: +€50,-
• Dividend growth: €75,-.

3. Four quarterly buys

I am planning to purchase new shares on a quarterly basis. I am pooling together monthly deposits and dividends to purchase new blocks of shares for around €700,- each time. Since last year I pay a platform fee of €5,- per month but this fee is deducted from any transaction costs in that month. So this works out to one "free" trade per month for a cost of €60, per year. This new fee structure is used by various cheap brokers in The Netherlands, so I really have no alternative.

4. Regular blogging

Because of my new monthly deposit and the fact that I am planning to buy on a quarterly basis gives me a lot lot of motivation to invest more time in my writing. Mainly for my blog but perhaps some Seeking Alpha articles as well. The extra income is nice but that's not the goal persé. I am targeting to write a weekly blog (so about 52 blogs in total). 

So that's it for now. Let's see how this year turns out!

What do you think of my plans?Are your plans for 2019 ready? 

Dividend growth 2017 and 2018

Today I am going to look back a bit on the growth of the dividends of the companies I own. Normally I do this more frequently but in the past two years I haven't updated my blog. So here goes!

In 2016 I received about €785 in dividends. This is net (after dividend tax) and calculated using the USD.EUR rate at the time of the dividend payment. In reality however I don't convert and just use the USD to reinvest in a new purchase. This is a rather big decline compared to 2015. There are several reasons:

• Various serious dividend cuts
• Kinder Morgan (KMI)
• Billiton (BBL)
• Textainer (TGH)
• Spin-off Baxalta from Baxter and subsequent dividend reduction.

In 2017 things got better. I received a net amount of €856 which is an increase of 9%. I haven't deposited any new funds so I guess in a normal year I can expect this kind of dividend growth. The current yield of my portfolio is around 4% so the average weighted dividend growth of my existing holdings is around 5%.

In 2018 the growth in dividend income was slightly higher (+10%). I received some big increases (>15%) in 2018. Billiton, Kinder Morgan, Aflac, Union Pacific and T Rowe Price come to mind. However my biggest holdings in terms of income (Royal Dutch Shell and Omega Healthcare) decided to keep the dividend at its place. This kind of muted the overall dividend growth. I don't expect these kind of raises at my current job, so I'm quite satisfied with a 10% increase.

I expect a higher dividend growth in 2019, because I started to deposit new funds on a monthly basis. Depending on the amount of available funds I hope to achieve a growth of 15-16%. More on that later though!

How was your 2018 dividend wise? Are you satisfied with your dividend growth?

Recap of the last two years of dividend growth investing

So earlier I told you a little but about my leave of absence ?

Let's give you a brief update of my buys and sells in the last two years:

• I dripped a few shares of RDSA with their regular dividend. My position is becoming quite large. As of now it is almost 10% of my portfolio and about 15% of my forward dividend income. For now I still believe that RDSA is doing the right things. With extra deposits in the future its weight in my portfolio will slowly come down.
• In January 2018 I purchased 25 shares of Realty Income (ticker: O) for a purchase price of roughly $53. I loved (and still do!) their monthly dividend rhythm. Current price is about $62 so for now it has been a great investment for a currency neutral rate of return (including dividends) of 23% annualized.
• In October 2018 I sold my shares of  SOUHY, the mining spin-off from Billiton I got back in 2015. It was a rather small position but still performed nicely! Accounting for the dividends its rate of return was about 20% per year. Too bad the position was so small!

So as of now I will give a more detailed update whenever I enter into a new position or add to an existing one.

Back after more than two years!

I posted my last blogpost in December of 2016, more than two years ago. What happened??

Life happened I guess. Two years ago we just purchased a new home. Obviously we needed the money for all kinds of stuff for our new home. So deposits into my investment account were stopped. After that we got pregnant! Again. But not with one baby, but with two! So all in all, we went from one 3yr old boy to a wrecking crew of three. I can tell you, that's a hell of a lot of work. As of now the oldest is over 4yr old and in kindergarten. The twins are 1yr old. Everyone is healthy and in great shape, so I suppose everything's alright. But I hope that kind of clarifies my leave of absensce.

As of now we are more or less settled - in our home as well as in life - so I can redirect some cashflow into my investment account. During the past two years I haven't deposited any new funds towards my account, but I did reinvest the received dividends on occasion. In a future post I might elaborate a bit more on that. For now I just want to let you know I am back!

I hope to interact more in the coming period with my fellow dividend growth investors or people interested in personal finance in general.



 

Evaluation of first year DGI

I have started DGI last year around July/August. Already a year has passed and it's time for me to evaluate my first year as a dividend growth investor. The aim of the portfolio is to provide replacement income when I would like to work less in the future, to help put my kids through college or whatever is necessary in the future. This update summarizes the portfolio progress from August 2013 till August 2014.

I need help with English grammar!

Dear readers, a few days ago I wrote an updated article for Seeking Alpha about Textainer Group Holdings, a position of mine. I got feedback suggesting the content of the article was fine, however it needed a good copyedit. Since English is not my native language, are there any readers out there willing to proofread an article and show me where I need to fix the grammar?

Your help would be much appreciated, thank you very much! :)

Liebster Award

Dividend for Starters nominated me for a Liebster Award. Thanks again for your nomination Dividend for Starters, I was unaware such a nice award exists! This is an award bloggers could give to each other in order to get to know him/her better. The goal is to answer their questions and then invite 5 other bloggers to do the same, with questions of my choosing.

Help me look for European companies which pay quarterly dividends!

Right now the most of my income comes from US dollars which makes it volatile due to changing EUR.USD-rates. I would like to diversify my dividend income stream between companies listed in Europe and USA. Maybe in the future I can add other currencies as well (UK or CHF, to be able to purchase GlaxoKlineSmith or Nestle). Of course the most important thing is that I want to invest in great companies with solid business fundamentals, good history of earnings and dividends and shareholder friendly management.

Screening process

Amateur investors have their own habits in the process of screening stocks. Though probably for most DGI'ers the monthly list of David Fish is a great starting point. You can find the list at this website: http://dripinvesting.org/tools/tools.asp. The Excel-spreadsheet lists almost every (useful) indicator for companies who've paid dividends for at least 5 years (="challengers"), 10 years (="contenders") and 25+ years ("champions"). In this post I will describe some of my thinking in regards to the most recent CCC-list of August 30th.

Investing approach - Dividend Growth Investing

There are two ways to getting paid while investing – capital gains and dividends. A stock’s capital gain is significantly impacted by what the broader market does in a given period. Of course certain stocks have more risk than others, but the price of a stock is the result of short-term supply and demand and may – at times – be illogical, chunky or erratic.

On the other hand, dividends are usually paid whether the broad market is up or down. In his book ‘The Little Book of Big Dividends’ the author Charles B. Carlson mentioned that roughly 40 percent of the stock market’s long-run total return comes from dividends. Companies like Coca Cola or Procter & Gamble are making profits every quarter and returning them to their shareholders. Should we suppose to be worried if the stock price declines on broader market news? Or possibly some “earnings miss” by analysts at banks or brokers who earn their money if people speculate with their money, instead of investing with it?

Starting my journey!

As of this week I will start my journey of becoming a Dividend Growth Investor (DGI). I've read a lot about the topic and feel that this type of strategy suits me very well. I've thought about investing and retiring early a lot the past few years and feel it has come together with DGI.

The coming months will be used to get my feet wet, transfer money to my broker and purchase initial positions. However I don't want to sprint ahead but thoroughly investigate the stocks I plan on investing in. On my watchlist for the coming period will be the usual suspects for any dividend growth portfolio:

• Procter & Gamble (PG)
• Coca-Cola (KO)
• McDonalds (MCD)
• Johnson & Johnson (JNJ)
• Wal-Mart Stores (WMT)
• ExxonMobile (XOM)

I feel energized! By monitoring and writing on this blog I will be able to track my progress and goals. Let me know what you think about it!