Dividends Received

Total dividends received during the month were $218.33, consisting of:

• $29.04 The Coca-Cola Company (KO)
• $7.57 Vanguard Intermediate-Term Bond ETF (BIV)
• $11.48 Genuine Parts Company (GPC)
• $14.96 Automatic Data Processing, Inc. (ADP)
• $31.68 Kimberly-Clark Corporation (KMB)
• $27.00 Leggett & Platt, Incorporated (LEG)
• $24.00 Cincinnati Financial Corp. (CINF)
• $38.00 Sysco Corp. (SYY)
• $4.90 PowerShares Emerging Mkt Debt (PCY)
• $29.70 Medtronic, Inc. (MDT)

Dividend Stock Purchases

The following securities were purchased during the month:

• 30 Shares Johnson & Johnson (JNJ) providing $64.80 in annual dividend income
• 50 Shares Harleysville Group Inc. (HGIC) providing $72.00 in annual dividend income
• 58 Shares AT&T, Inc. (T) providing $97.44 in annual dividend income
• 40 Shares Automatic Data Processing, Inc. (ADP) providing $54.44 in annual dividend income

Also, I liquidated my position in Vanguard Intermediate-Term Bond ETF (BIV).

Annualized Dividend Income

Including the above purchases, my annual PCP dividend income is now $2,494.16 at the current dividend rates. This is up $293.84 from last month’s $2,200.32 amount. The PCP has never had a monthly decline in annualized dividend income.

Portfolio Returns

• Month: 2.31%
• Year-to-date: 11.98%
• Life-to-date: 15.30% (annualized)

My PCP holdings are always available by selecting the Holdings option from the menu in the header. The next PCP update will be mid-December.

(Photo: sanja gjenero)

Dividends Received

Total dividends received during the month were $166.53, consisting of:

• $24.81 Wal-Mart (WMT)
• $7.78 Vanguard Intermediate-Term Bond ETF (BIV)
• $12.01 Vanguard Long-Term Bond ETF (BLV)
• $16.15 United Technologies Corp. (UTX)
• $8.71 Emerson Electric Co. (EMR)
• $18.36 Johnson & Johnson (JNJ)
• $15.47 Consolidated Edison Inc. (ED)
• $4.94 PowerShares Emerging Mkt Debt (PCY)
• $18.70 McDonald’s Corp. (MCD)
• $39.60 Harleysville Group Inc. (HGIC)

Dividend Stock Purchases

The following securities were purchased during the month:

• 34 Shares Colgate-Palmolive Co. (CL) providing $72.08 in annual dividend income
• 30 Shares Abbott Laboratories (ABT) providing $59.84 in annual dividend income
• 132 Shares Medtronic, Inc. (MDT) providing $118.80 in annual dividend income

Also, I liquidated my position in Vanguard Intermediate-Term Bond ETF (BIV).

Annualized Dividend Income

Including the above purchases, my annual PCP dividend income is now $2,200.32 at the current dividend rates. This is up $13.66 from last month’s $2,186.66 amount. The PCP has never had a monthly decline in annualized dividend income.

Portfolio Returns

• Month: 4.57%
• Year-to-date: 8.49%
• Life-to-date: 13.00% (annualized)

My PCP holdings are always available by selecting the Holdings option from the menu in the header. The next PCP update will be mid-November.

(Photo: sanja gjenero)

My goals were defined in this December 1, 2007 Investing Goals post and updated in my 2010 Investing Goals post. Below is an updated version of the table found in the original post.

The above information covers the current month and year-to-date through the current month.

Click here for a Detailed Historical Progress Table.

For the month, annualized dividend income increased $330, and Yield on Cost (YOC) decreased 0.01%. This month’s changes were a net of new purchases and dividend changes (no sales for the month). Let’s examine each of the these categories:

Purchases: The $399 increase in annual dividend income and 0.02% decrease in YOC related to the following purchases (yield at the time of purchase):

• $79 McDonald’s Corp. (MCD) 3.12%  [Analysis]
• $81 General Dynamics Corp. (GD) 2.64% [Analysis]
• $90 Automatic Data Processing, Inc. (ADP) 3.37% [Analysis]
• $149 iShares S&P U.S. Preferred Stock Index (PFF) 5.67%

Only PFF increased my YOC, while three securities lowered it. As noted in earlier updates, I generally expect YOC to drop each month since most new investments will yield less than my current YOC, and dividend increases will not be sufficient to offset it.

Dividend Changes: The $4 decrease in annual dividend income and the 0.03% decrease in YOC related to the following dividend changes (a=dividend stated in annual terms, q=quarterly, m=monthly):

• ($4) Invest Grade Corp Bond (LQD) $5.53a>$5.48a
• $1 Long-Term Bond ETF (BLV) $3.94a>$3.95a
• ($2) Intermediate-Term Bond ETF (BIV) $3.41a>$3.39a
• ($3) Emerging Markets Sovereign Debt (PCY) $1.65a>$1.64a
• $4 Clorox Corporation (CLX) $0.50q>$0.55q

Sales: The $65 decrease in annual dividend income and the 0.04% increase in YOC related to the following sales:

• ($65) AFLAC Inc. (AFL)

This month I exceeded my 2010 goal of $9,500 in annualized dividend income. With four months to go, I am confident of achieving $10,000 in annualized dividend income by December 31, 2010, assuming minimal dividend cuts.

That’s it for this time. The next monthly progress update will be early October.

(Photo: sanja gjenero)

A bond is a debt security in which the issuer agrees to repay borrowed money with interest at fixed intervals. Bondholders have a creditor stake in the company. Technically, bonds do not pay dividends, but instead they pay interest. However, bonds are an important allocation for many income investors, thus I chose to include them in this series. There are certain things an informed investor needs to understand before purchasing bonds.

Interest rates play an integral part in determining the current value of a bond. Interest rates and the price of a bond are inversely related. The longer the time until a bond matures, the more susceptible its price is to changes in interest rates. Consider two bonds, one that has a maturity of 30 years and another with a 7 day maturity. If after both bonds are sold, interest rates go up one percent, the price of both bonds will decline since new investors expect to earn the prevailing interest rate. However, the interest rate decline will affect the price of the 30 year bond more than the 7 day bond, due to the longer period of “lost” earnings. It works the same in the other direction – if interest rates drop the bond holder will sell it at higher price which lowers the yield to the market rate.

In summary, longer-term investments have lower rate volatility at the expense of higher price volatility. Therefore, the term of the bond purchased should be dictated by your long-term investment goals. If your goal is capital preservation, short-term is the most appropriate investment. If an investor is willing to hold a bond until it matures and values lower rate volatility, then a longer-term investment will likely better meet this investor’s needs.

Like preferred stocks, many investors choose not to research and buy individual bonds. Instead, they have opted to make their bond investments in funds. Consider the following bond funds:

Vanguard Long-Term Bond ETF (BLV) – Yield: 5.16%
Vanguard Long-Term Bond ETF seeks to track the performance of a market-weighted bond index with a long-term dollar-weighted average maturity. It maintains a dollar-weighted average maturity consistent with that of the Index, which generally ranges between 15 and 30 years.
- Total Assets: $2.9 billion
- Expense Ratio: 0.14%
- Holdings: 40% US Corporate, 39% US Treasury, 8% Foreign Corp, 5% Foreign Govt, 8% Other
- Distributions: Monthly

Vanguard Intermediate-Term Bond ETF (BIV) – Yield 4.32%
The investment seeks to track the performance of a market-weighted bond index with an intermediate-term dollar-weighted average maturity.The fund maintains a dollar-weighted average maturity consistent with that of the index ranging between 5 and 10 years.
- Total Assets: $9.8 billion
- Expense Ratio: 0.14%
- Holdings: 45% US Treasury, 37% US Corporate, 9% Foreign Corp, 5% Foreign Govt, 9% Other
- Distributions: Monthly

Vanguard Short-Term Bond ETF (BSV) – Yield: 2.74%
The investment seeks to track the performance of a market-weighted bond index with a short-term dollar-weighted average maturity. The fund’s dollar-weighted average maturity is not expected to exceed 3 years
- Total Assets: $9.8 billion
- Expense Ratio: 0.14%
- Holdings: 52% US Treasury, 24% US Corporate, 14% US Agency, 8% Foreign Corp, 2% Other
- Distributions: Monthly

Vanguard Total Bond Market ETF (BND) – Yield: 3.98%
The investment seeks to track the performance of a broad, market-weighted bond index. The fund maintains a dollar-weighted average maturity consistent with that of the index, ranging between 5 and 10 years.
- Total Assets: $68.8 billion
- Expense Ratio: 0.14%
- Holdings: 33% Mtg Pass-thru, 29% US Treasury, 19% US Corporate, 7% US Agency, 12% Other
- Distributions: Monthly

Invest Grade Corp Bond (LQD) – Yield: 5.44%
The investment seeks results that correspond generally to the price and yield performance, before fees and expenses, of the iBoxx $ Liquid Investment Grade index. The fund typically invests at least 90% of assets in the bonds of the underlying index, and at least 95% of assets in investment-grade corporate bonds.
- Total Assets: $12.2 billion
- Expense Ratio: 0.15%
- Holdings: 82% US Corporate, 18% Foreign Corp, 0% Other
- Distributions: Monthly

Emerging Mkts Sovereign Debt (PCY) – Yield: 6.44%
The investment seeks investment results that correspond generally to the price and yield (before fees and expensed) of an index called the DB Emerging Market USD Liquid Balanced index. The fund normally invests at least 80% of total assets in emerging markets U.S. dollar-denominated government bonds.
- Total Assets: $520.3 billion
- Expense Ratio: 0.50%
- Holdings: 80% Foreign Govt, 20% Other
- Distributions: Monthly

20+ Year Treasury Bond (TLT) – Yield 3.95%
The investment seeks results that correspond generally to the price and yield performance, before fees and expenses, of the Barclays Capital U.S. 20+ Year Treasury Bond index. The fund generally invests at least 90% of assets in the bonds of the underlying index.
- Total Assets: $2.4 billion
- Expense Ratio: 0.15%
- Holdings: 100% US Treasury
- Distributions: Monthly

Some authors have minimized the importance of bonds in a portfolio primarily focused on dividend growth securities. You can ignore them, but as the past decade has shown it may be to your own peril.

Full Disclosure: Long BLV, BIV, LQD, PCY. See a list of all my income holdings here.

(Photo: Steve Woods)

My goals were defined in this December 1, 2007 Investing Goals post and updated in my 2010 Investing Goals post. Below is an updated version of the table found in the original post.

The above information covers the current month and year-to-date through the current month.

Click here for a Detailed Historical Progress Table.

For the month, annualized dividend income increased $267, and Yield on Cost (YOC) decreased (0.08%). This month’s changes were a net of new purchases and dividend changes (no sales). Let’s examine each of the these categories:

Purchases: The $248 increase in annual dividend income and (0.09%) decrease in YOC related to the following purchases (yield at the time of purchase):

• $84 Harleysville Group Inc. (HGIC) 4.05% [Analysis]
• $94 Sysco Corp. (SYY) 3.45% [Analysis]
• $70 Vanguard Intermediate Bond ETF (BIV) 4.33%

All the above purchases lowered my YOC. As noted in earlier updates, I generally expect YOC to drop each month since most new investments will yield less than my current YOC, and dividend increases will not be sufficient to offset it.

Dividend Changes: The $19 increase in annual dividend income and 0.01% increase in YOC related to the following dividend changes (a=dividend stated in annual terms, q=quarterly, m=monthly):

• $1 Canadian National Railway Company (CNI) $0.236q>$0.241q 0.00%
• $1 iShares Invest Grade Bond (LQD) $5.71a>$5.73a 0.00%
• $13 Sysco Corp. (SYY) $0.24q>$0.25q 0.00%
• $4 Emerging Markets Debt (PCY) $1.61m>$1.63m 0.01%

Sales: There were no sales in this month.

After one month, I still expect to achieve my goal of an annualized dividend income of $9,500 by December 31, 2010.

That’s it for this time. The next monthly progress update will be early March.

(Photo: sanja gjenero)

Online Cash Receipts are the collected earnings from my online endeavors. Most of which is advertising on the my various blogs. The year-to-date $147.40 Online Expenses relates to registering 3 domains (DividendsValue.com, Dividends4Life.com and TheDiv-Net.com) and paying my annual hosting fee. The Interest Income line is interest earned on cash balances in an ING account I set up for the PCP. The Gain/(Loss) line is for market changes to the PCP (realized and unrealized). December Dividends of $76.24 included:

• $8.11 Vanguard Intermediate-Term Bond (BIV)
• $9.44 from Vanguard Long-Term Bond ETF (BLV)
• $8.82 Johnson & Johnson (JNJ)
• $16.80 BP plc (BP)
• $8.71 Emerson Electric Co. (EMR)
• $15.34 Consolidated Edison Inc. (ED)
• $9.02 The Coca-Cola Company (KO)

The portfolio was up in December, for the year and since its inception. Online earnings in December once again surpassed the $3,000 mark. A large portion of the increase is related to the strong interest in D4L-Premium Services. The premium service has continued grow each month. Traffic on Dividend Value set a record in December, breaking the previous record set in October 2009.

During the month of December, I purchased the following securities:

• 34 shares McDonald’s Corp. (MCD) providing $74.80 in annual dividend earnings
• 16 shares Johnson & Johnson (JNJ) providing $31.36 in annual dividend earnings
• 40 shares PowerShares Emerging Markets Debt (PCY) providing $64.40 in annual dividend earnings

Including the above December purchases, my annual PCP dividend income is now $688.68 at the current dividend rates. I ended the month with $3,395.78 in cash, enough to purchase two or three stocks in January. Through December, I have purchased 13 stocks this year, including at least one in the last eight consecutive months. I continue to believe the current cash balance and recent earnings will support the purchase of at least one stock each month.

My PCP holdings are always available by selecting the Holdings option from the menu in the header. The next PCP update will be mid-February.

(Photo: sanja gjenero)

My goals were defined in this December 1, 2007 Investing Goals post and updated in my 2009 Investing Goals post. Below is an updated version of the table found in the original post.

The above information covers the current month and year-to-date through the current month.

Click here for a Detailed Historical Progress Table.

For the month, annualized dividend income increased $257, and Yield on Cost (YOC) decreased (0.03%). This month’s changes were a net of new purchases and dividend changes (no sales). Let’s examine each of the these categories:

Purchases: The $252 increase in annual dividend income and (0.02%) decrease in YOC related to the following purchases (yield at the time of purchase):

• $68 McDonald’s Corp. (MCD) 3.61% [Analysis]
• $63 Johnson & Johnson (JNJ) 3.03% [Analysis]
• $121 Emerging Markets Debt (PCY) 6.26%

All the above purchases, except PCY,  lowered my YOC. As noted in earlier updates, I generally expect YOC to drop each month since most new investments will yield less than my current YOC, and dividend increases will not be sufficient to offset it.

Dividend Changes: The $5 increase in annual dividend income and (0.01%) decrease in YOC related to the following dividend changes (a=dividend stated in annual terms, q=quarterly, m=monthly):

• ($3) Vanguard Inter. Bond ETF (BIV) $3.48a>$3.45a -0.01%
• ($2) iShares Invest Grade Bond (LQD) $5.74a>$5.71a 0.00%
• $2 Emerson Electric Co. (EMR) $0.33q>$0.335q 0.00% [Analysis]
• $20 McDonald’s Corp. (MCD) $0.50q>$0.55q 0.01%
• ($17) Eaton Vance Global Dividend Fund (ETO) $1.46m>$1.40m -0.01%
• $4 Emerging Markets Debt (PCY) $1.59m>$1.61m 0.00%
• $1 Vanguard Inter. Bond ETF (BIV) $3.45m>$3.47m 0.00%

Sales: There were no sales in this month.

I exceeded my revised estimate of annualized dividend income of $7,000. However, as anticipated, I fell short of my my original goal of $8,000.

That’s it for this time. The next monthly progress update will be early February.

(Photo: sanja gjenero)

My goals were defined in this December 1, 2007 Investing Goals post and updated in my 2009 Investing Goals post. Below is an updated version of the table found in the original post.

The above information covers the current month and year-to-date through the current month.

Click here for a Detailed Historical Progress Table.

For the month, annualized dividend income increased $193, and Yield on Cost (YOC) decreased (0.10%). This month’s changes were a net of new purchases, dividend changes and sales. Let’s examine each of the these categories:

Purchases: The $226 increase in annual dividend income and (0.09%) decrease in YOC related to the following purchases (yield at the time of purchase):

• $87 Nucor Corporation (NUE) 3.38%
• $56 United Technologies Corp. (UTX) 2.25%
• $83 Vanguard Inter. Bond (BIV) 4.29%

All the above purchases lowered my YOC. As noted in earlier updates, I generally expect YOC to drop each month since most new investments will yield less than my current YOC, and dividend increases will not be sufficient to offset it.

Dividend Changes: The $5 decrease in annual dividend income and (0.03%) decrease in YOC related to the following dividend changes (a=dividend stated in annual terms, q=quarterly, m=monthly):

• $5 Vanguard Inter. Bond ETF (BIV) $3.41a>$3.48a 0.00%
• $11 Vanguard Long Bond ETF (BLV) $3.90a>$4.00a 0.01%
• $1 iShares Invest Grade Bond (LQD) $5.72a>$5.74a 0.00%
• ($20) Eaton Vance Global Dividend Fund (ETO) $1.53a>$1.46a -0.02%
• ($2) Emerging Mkts Debt (PCY) $1.60a>1.59a -0.01%

Sales: The ($28) decrease in annual dividend income and 0.02% increase in YOC related to the following sale:

• ($28) M&T Bank Corp. (MTB) 0.02%

I sold my entire position in MTB after the company announced another $0.70/share dividend. This ensured that 2009′s dividend will be flat with 2008.

I have exceeded my revised estimate of annualized dividend income of $7,000. However, I will fall short of my my original goal of $8,000.

That’s it for this time. The next monthly progress update will be early January.

(Photo: sanja gjenero)

My goals were defined in this December 1, 2007 Investing Goals post and updated in my 2009 Investing Goals post. Below is an updated version of the table found in the original post.

The above information covers the current month and year-to-date through the current month.

Click here for a Detailed Historical Progress Table.

For the month, annualized dividend income increased $169, and Yield on Cost (YOC) decreased (0.06%). This month’s changes were a net of new purchases, dividend changes and sales. Let’s examine each of the these categories:

Purchases: The $359 increase in annual dividend income and (0.04%) decrease in YOC related to the following purchases (yield at the time of purchase):

• $84 Emerson Electric Co. (EMR) 3.34%
• $77 Procter & Gamble Co. (PG) 3.04%
• $198 PowerShares Emerging Mkts Sovereign Debt (PCY) 6.15%

All the purchases, except PCY, lowered my YOC. As noted in earlier updates, I generally expect YOC to drop each month since most new investments will yield less than my current YOC, and dividend increases will not be sufficient to offset it.

Dividend Changes: The $37 decrease in annual dividend income and (0.04%) decrease in YOC related to the following dividend changes (a=dividend stated in annual terms, q=quarterly, m=monthly):

• $3 Canadian National Railway Company (CNI) $0.217q>$0.236q 0.00%
• ($3) Vanguard Intermediate-Term Bond ETF (BIV) $3.46a>$3.41a 0.00%
• ($15) Vanguard Long-Term Bond ETF (BLV) $3.46a>$3.90a -0.01%
• ($6) iShares iBoxx $ Invest Grade Corp Bond (LQD) $5.79a>$5.72a -0.01%
• ($17) Eaton Vance Tax-Adv. Global Dividend Fund (ETO) $1.59m>$1.53m -0.02%
• $1 Realty Income Corp. (O) $0.14237m>0.14268m 0.00%

Sales: The ($153) decrease in annual dividend income and 0.02% increase in YOC related to the following sale:

• ($153) Vanguard REIT Index ETF (VNQ) 0.01%

In October I continued the process of trimming back my ETFs/CEFs income holdings with the sale of VNQ and have now sold all the ETFs that currently I plan to sell.  I will continue to evaluate the performance of the ones I continue to hold.

Based on year-to-date results, I am on target to meet or exceed my revised estimate of annualized dividend income on December 31, 2009 of $7,000. This is $1,000 below my original goal of $8,000.

That’s it for this time. The next monthly progress update will be early December.

(Photo: sanja gjenero)

First, some background. As a result of massive and growing deficits in The United States and our willingness to print enormous sums money meet our increasing obligations, many have called for the collapse of the U.S. dollar. Tim Hanson in a recent article quoted the following:

• Swiss banker Dr. Konrad Hummler wrote “It’s time to take advantage of the recovery of the U.S. dollar to get one’s currency diversification in order.” (i.e. get out of dollars)
• Warren Buffett wrote in the NY Times “Fiscally, we are in uncharted territory” and concluded that “Unchecked greenback emissions will certainly cause the purchasing power of currency to melt. The dollar’s destiny lies with Congress.”
• Bill Gross of Pacific Investment Management Co. (PIMCO), which manages the biggest bond fund in the world, advises investors to sell dollar investments ‘before the central banks and sovereign wealth funds do’.
• Commodities specialist Jim Rogers announces his new favorite currency — the Chinese yuan.

I have long recognized the importance of holding international investments. In addition, to international funds held outside my income portfolio, I hold individual dividend stocks with large global presences such as:  The Coca-Cola Company (KO) – Analysis, Johnson & Johnson (JNJ) – Analysis, The Procter & Gamble Company (PG) – Analysis, McDonald’s Corporation (MCD) – Analysis and  Wal-Mart Stores, Inc. (WMT) – Analysis.

However, when it comes to debt I am 100% invested in U.S. debt funds. In response to the article referenced in the opening paragraph, two readers who read it on Seeking Alpha left some intriguing comments as follows in part:

Mad Hedge Fund Trader said “A number of readers have asked me to come up with a safe, high yielding investment in which to hide out in case the equity markets swoon again. That means they are looking for a security that offers a high fixed return, denominated in a strong currency that will benefit from future upgrades that will boost the principal over time. All of that is another name for the Invesco PowerShares Emerging Market Sovereign Debt ETF (PCY). The fund [...] pays a handy 6.42% dividend. This beats the daylights out of the nine basis points you currently earn for cash, the 3.40% yield on 10 year Treasuries, and still exceeds the 6.42% dividend on the iShares Investment Grade Bond ETN (LQD), which buys predominantly single “A” US corporates. The big difference here is that foreign bonds are issued in strong foreign currencies instead of weak dollars, and have a rosy future of further credit upgrades to look forward to.

Old Trader added “TEI and GIM are a couple of other foreign debt funds to consider. Templeton Emerging Markets Income Fund (TEI) is primarily emerging markets, Templeton Global Income Fund (GIM) is global sovereign…both are run by Templeton. “

You can read their full comments and others here.

Up to this point I had assumed that non-U.S. debt would have the same variability as non-U.S. dividends, which I deemed as unacceptable for my income portfolio. I ran some quick numbers on PCY’s dividend comparing it to LQD. Surprisingly, its standard deviation from 11/07 to 9/09 was 0.01489 compared to 0.02817 for LQD over the same period (Yahoo data + iShares to fill in some LQD blanks). LQD is one of my core bond holdings, but it is quickly approaching full allocation, so I’ve been looking for some other alternatives. A higher yield and lower standard deviation on its dividend makes PCY worth looking into.   I also plan to spend some time looking at TEI and GIM.

Full Disclosure: Long KO, JNJ, PG, MCD, WMT, LQD. See a list of all my income holdings here.

(Photo: ilker)