Dividend Investing - Month 7

The month of September provided a 1.55% increase in avg. monthly dividend gain.  Although its a small gain, it is STILL a gain!  I also keep in mind that I get a whopping 2-4% max. increase in my salary ONCE a year with my day job. 

At this point in time, I am still concentrating my efforts on debt reduction.  High payout ratios for our dividend stocks are not sustainable and usually end in tragedy.  I think the same about me with my personal debt.  If I lose my job and am still forced to make interest payments on loans, what will my payout ratio become?  I don't even want to think of the figures.

A few stocks I will be following for October, MCD, INTC and NSC.




Disclaimer: I am not a financial planner, advisor, or accountant. The financial actions mentioned were only suited for my own risk tolerance, strategy, and ideas. Copying another's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

Real Estate: Real-life risks associated with leveraging.

A while back I wrote an article called "Cash vs. Mortgage, and a Scenario." There I explain a few key differences between paying cash for investment properties, or mortgaging them.  Today I reviewed my real-estate portfolio and was in shock about how much risk I am really taking on.  I want to provide insight for my viewers to see some real-life examples and to further motivate me to pay my debts off!

I went into my investment properties with nothing down, since I really had nothing to give.  This leverage allowed me to take on long-term debt without using any short term cash.  Having three properties in the portfolio provides 8 renting possibilities.  Assuming no property destruction and no tax benefits, here are the 8 outcomes:

As you can see above, vacancies result in serious financial consequences.  To help minimized risk, I have tenants sign 1-year leases which are staggered so the possibility of multiple vacancies is reduced.  But still, things still can happen that can put me in a bind.  Over the years I have established a hefty emergency real-estate fund for tough times ahead (though this could be easily wiped out should multiple vacancies occur over extended periods of time).

Having real-estate debt has always put a damper on my dividend investing contributions.  I often opt to pay additional cash onto the principal over purchasing a good-valued dividend stock.  This results in less long-term debt and risk.  If I manage to pay off the properties, here is how the 8 outcomes would look like:

After reviewing the chart, the risk here is almost non-existent.  All 3 properties would need to be vacant in order to have a negative cashflow!  If this was the case for me every month I would have a much easier time getting additional properties or helping the dividend-investing portfolio.

It is important to note; that when vacancies occur there are always repairs that need to be done (or house cleaning).  This is usually a minimum of $150 if you have a professional involved.  Insurance and taxes have been included in the scenarios above, making the data easier to digest.

Disclaimer: I am not a financial planner, advisor, or accountant. The financial actions mentioned were only suited for my own risk tolerance, strategy, and ideas. Copying another's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

Rental Property - Ranch House 2

Description: 3 bed, 2 bath, 1500 square feet, 1 acre.

Major work completed:
Everything, built this house from the ground-up.

Financial Information:
Estimated monthly cash-flow: $240.43

Disclaimer: I am not a financial planner, advisor, or accountant. The financial actions mentioned were only suited for my own risk tolerance, strategy, and ideas. Copying another's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

To protect the tenants and their identities, this is only a visual representation of the rental property, not the actual home itself.

Dividend Investing - Month 6

The average monthly dividend payment experienced a significant increase this month.   A 16.77% jump was the result of making a quick sale and investing the proceeds into other companies.

I have been good so far at separating my emotions from the facts and focusing on the RRR values of my positions.  As mentioned in my previous post, the RRR value of WMT just couldn't cut it anymore, and I had no problem dropping this position and picking up new ones to take its place. 

I figured my emotions wouldn't get in the way of the transactions but sometimes you just never know.

Using my RRR theory about evaluating stocks, price gets pushed to the side and allows me to focus on the long term benefits of my positions.  This is the average monthly dividend payments!  Watching stock prices constantly rise and fall make me dizzy, while watching these payments consistently rise gives me hope for the future.  But do remember, higher stock prices lead to lower RRR values ~ which will help you sell when stock prices go up.

Disclaimer: I am not a financial planner, advisor, or accountant. The financial actions mentioned were only suited for my own risk tolerance, strategy, and ideas. Copying another's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.