Hello from the Depths of an MBA Program

I know I should focus this blog, but if you ever flip through my idea journal, you’ll see that focus is not my strong point (which is how HBS came about in the first place).  I’ve learned that I need to expend enough energy to at least decide if an idea may have legs.  Then I need to find additional people to run with the idea (with me), so the idea can go somewhere.  Well, I’m not going to talk about ideas in this post (that’s for later), this is simply a recap of the past seven or eight weeks.

I have enough material for 10 posts, but I’m tired and time is short (bedtime was about 45 minutes ago…).  Life has been busy since I wrote my last post.  I can very quickly recap:

1) Friday before classes started, I got a phone call from one of my residents to inform me that a van drove into the living room.  I received this phone call at 11.59pm; I had been asleep for about two hours, so I was really groggy and trying to make sense of what my tenant really meant by “a van is in the living room”.  Believe me, it’s just not worth speeding 60MPH while 3x over the legal limit to try to get to the bottle shop before it closes at midnight (see when I got the call from my tenant…).  There are about 1000 complications to this crash…the driver was violating parole, the driver was drunk, the insured (van owner) has not spoken with either insurance company yet (???)

I received a quote for construction and the repairs have started (ever ponder how to suspend an entire story of brick?):

Really nothing more to report on this one.  Questionable tenants moved out, so I can renovate their side (with the help of my brother!) and get that rerented.  Hopefully generate a little more cash flow, but again the renovations were REALLY unintended, so there may be a near term cash crunch.

2) I’m going to brag here a little, so if you don’t like bravado, move to ‘3’ below.  School is going well.  Received grades for the first Mod (essentially a quarter; 4 mods per year, two year program).  Grades are A, A-, A-, B-.  Overall a 3.53.  One of my professors took the time to write me about my contributions in class.  Here is what he had to say “As you well know, I enjoyed working with you this fall.  In fact, I looked forward to our class time together with some anticipation, which is a really good sign for someone who has been teaching MBA’s for more than 25 years now.  I thought we created a good experience together this year. Thank you”.  I realized that I haven’t received feedback like that from any superior (boss or otherwise) for probably eight years.  It honestly felt really good to read that email.

3) The Flip….well, it hasn’t sold yet.  I’ll have to make some tough decisions about it (eg keep as a rental, drop the prices, or ????).  Back to running some numbers.

4) Because “idle hands make the devil’s business” (or something like that), my wife asked that I finish remodeling our 2nd floor.  Destruction is complete and I’ve started installing bits and pieces.  My brother helped with sanding this weekend and left looking like a coal miner.  There was a random dead animal that fell from the ceiling.  Looks bigger than a mouse and was surrounded by a bunch of nuts…maybe a chipmunk?  I also found two carefully folded $10 bills from 1950 (worth $200 after inflation).  Also, found one potentially unrequited love note.:

My help is a TON of fun to have around (this was right before my helper strapped on her tape measure, grabbed her hammer and started rolling carpeting to be thrown in the dumpster)

IMG_20141009_074628812 (1)

5) Odds and ends:
– Drive to 5 is still moving forward, albeit slowly
– I’m biking to school most days now, so gas consumption is significantly lower.  Should have details at the end of the year.
– I’ve been reading “Lincoln” by David Herbert Donald.  It is so packed with information that it is a slow read, but entirely worth it.  Look for a book report, probably in 2015.

Drive to 5 Update: April 2014

Keep Calm

Yes, this is when I discuss my recent purchases and changes to my Drive to 5.  I’m working (slowly) to my 5 for the year.  The impetus for my Drive originally came from Jason at Dividend Mantra.  Just like anything, it took me a few months to understand his philosophy on dividend growth stocks.  Originally, I assumed dividend growth stocks were a combination of growth and dividend stocks.  As I learned, dividend growth stocks are stocks which reliably grow their dividends.

As I have learned, pay raises are not guaranteed.  Even though growing dividends are not guaranteed, a company that is growing its dividends generally tries to continue to grow the dividends.  Stopping the growing dividends and/or reducing the dividends generally signals a potential weakness in the underlying business.

Since I last wrote, I have added a few shares of Intel (INTC) and SeaDrill (SDRL).  In addition, a few of my positions have increased their dividends (YES! dividend growth investing is actually working for me).  Specifically, KMI and O increased their dividends.

I am now earning $129.85 per year in forward dividends, or an increase of 57% from the start of the year.  I am still $370.85 away from my goal however.

In order to help push along my dividends for the year, to try to hit my 5, I am working more in the field (at my day job) in a position that pays a ‘hazard’ pay of $5/hr.  I realize this isn’t much, but it’s something.  I plan to use all of that money as ‘bonus’ investments.

Disclosure: Long INTC, SDRL, KMI, O

Drive to 5 Update

Keep Calm

I’ve got a goal this year that I am calling my Drive to Five.  Essentially, I’ve got a goal to be in a position to receive $500/year in dividends (qualified and/or ordinary).  This $500/year is ‘forward looking’ meaning that on Dec 31, 2014, I need to own stocks which would pay a minimum of $500/year in dividends from Dec 31 2014 to Dec 31 2015.

Just like you’re not supposed to put all your eggs in one basket (stock), one of my unstated goals for FI is to have a few diverse streams of income, the anchor being the rentals.  In an ideal world, when I hit FI, I would like my stock portfolio to pay out a minimum of $5,000 annually.

This year, I started with about $82/year in dividends.  With my most recent purchases of KMI and SDRL, my annual total is up to about $116, a 40% gain.  The $116/year isn’t a huge sum of money, but I’d bet that if I came to you once a year and asked for $116, there would be a pause before you answered!

 

Disclosure: Long KMI and SDRL
Photo: logmycalls.com

Drive to 5

United-States-Five-Hundred-Dollar-Federal-Reserve-Note

 

I have a goal for 2014 to increase my annual dividend income in my taxable accounts to $500/year.  This is my “Drive to 5” goal.  I measure my progress by looking at the forward projections for my dividend income, rather than the money I have actually received.  If I meet or exceed my Drive to 5 goal, at the end of 2015, I will have received more than $500 in dividend income.

Why $500?  I don’t know.  I probably should have chosen $600, because my average monthly dividend would be $50/month, which is easier to remember than $41.66/month.  I couldn’t think of a good rhyme for “_______ to 6”.

How do I plan to achieve my goal?  Any ‘windfall’ income that I receive will be invested in my Drive to 5; each month, I invest approximately $200 in a few dividend paying stocks.  Lastly, I will simply have to dedicate some of my regular income to the Drive.

To figure out how much money I will need for all of 2014, I assume an average dividend of 5%,  which means I will need to invest approximately $8230 for the year.  That is a really good chunk of change and a lofty goal, but with careful planning and smart purchases, I think it’s a doable goal.  Most of my dividend paying stocks are in DRIP type accounts, meaning all dividends get reinvested into the stock, generally at no cost to me.  This helps reduce (slightly) how much I need to invest.

I entered 2014 with forward dividend income of $82.55/year.  By the end of January 2014, that figure had grown to $88.54 through the purchase of some additional Intel stock.  I still have to make up $411.46 to hit my 5.

My current Drive portfolio includes: GE, INTC, HSY, KMI, O, ARCP.

Please note: I am long all positions mentioned in this post.