dividend stocks

Two Brand NEW Dividend Stocks (I Only Bought One)

From time-to-time, I enjoy adding new positions to my portfolio. I own over 50 dividend stocks, but I keep finding great companies that I want to own. While in an ideal world my portfolio would contain fewer than 30 positions, I have come to terms that my portfolio will probably end up having 60 or more positions.

The way I’m managing this “over diversification” is via smart, core-heavy allocation. Right now, my top 15 positions comprise about 65% of my portfolio by value. And, my top 20 positions comprise a huge 75%. Moreover, I am pushing hard to grow both of these figures. So, I get the best of both worlds. I have a core-focused portfolio while also enjoying the fun (and encouragement) of owning more positions. All stocks are members on my team, they all play a role in my financial freedom.

Lately, I had fun looking at a few ancillary positions. (I guess I got a little distracted, which is ok.) I happened across two companies, Marriott Vacations Worldwide (VAC) and Hapag-Lloyd (HPGLY). I published YouTube videos on both (you can watch them below).

Marriott Vacations Worldwide (VAC) – I Bought It!

Over on Patreon, I share all of my stock trades. So, my Patrons already know that I initiated a position in Marriott Vacations Worldwide (VAC). To my surprise, this position was met by a lot of skepticism from the dividend investing community. (Just check out the comments on my VAC Stock Review Video!) Ultimately, I decided to buy the stock because I trust in my own analysis and extensive first-hand experience with the product. I appreciate healthy debate and skepticism because it helps me test my own thesis. Do I really have conviction in my selection? In this case, I concluded “absolutely yes”. Of course, this is a smaller position in my portfolio, one that carries lots of volatility as it’s in the travel industry which can be cyclical and highly dependent on the overall economy. For me, this is more of a “fun” position.

Hapag-Lloyd (HPGLY) – I Skipped It!

The second new stock I analyzed recently was Hapag-Lloyd (HPGLY), a German container shipping company. All of the metrics look great and a I see a true growth story here over long periods of time. Make sure to watch my video for all the reasons I like this company.

Ultimately, I decided to add this position to my watchlist instead of buying for a few reasons. First, I concluded that it’s time to refocus on core stocks. I can only get distracted with fun, ancillary positions for so long before I refocus on my core objectives. I let myself get distracted, but I cannot lose focus of the core positions that drive the overall portfolio.

Second, I found something funny. The US-based ADR (American Depository Receipt) that is HPGLY has such thin volume that the stock price does not seem to be adjusting to the German shares in real time. (Could be arbitrage opportunities there for a stock trader, but that’s not my personal focus.) With the USD and Euro trading at parity, HPGLY theoretically should always be half the price of HLAG.DE, but that is not always the case (although it is the case right now, as I write this). Basically, even though I never sell, this one may be too thinly traded even for me.

Third, I took the feedback from my German-based subscribers to heart. They suggested some other German companies that may provide even better investments. They suggested I also wait for a cyclical bottom in the container shipping industry. I agreed with the feedback. In this case, I just found I don’t have the conviction that I did with VAC. So, I took the same money and bought more shares of PepsiCo (PEP) instead, although my Patrons already know that!

Having A Solid Watchlist

So, where does this leave me? VAC is a new position. If it trends down more, I may add more. That being said, I really am now back onto core stocks like PEP. HPGLY is on my watchlist along with other amazing companies like WDFC. Eventually, I may pick up shares of companies on my watchlist, but I will only do so in the event of a total stock collapse (deep bargain hunting). Nothing wrong with having a pre-vetted list of great stock selections, should they ever go on sale.

How about you? Do you have stocks you analyze that become “close contenders” but don’t quite make it to your portfolio? Do you like having a watchlist? Do you sometimes buy companies that others don’t necessarily like (as I did in the case of VAC)? Please share in the comments below. And, please make sure to check out my YouTube Channel for more!

DISCLOSURE: I am long Marriott Vacations Worldwide (VAC) and PepsiCo (PEP). I own these stocks in my personal dividend stock portfolio.

DISCLAIMER: All information and data on my YouTube Channel, blog, email newsletters, white papers, Excel files, and other materials is solely for informational purposes. I make no representations as to the accuracy, completeness, suitability or validity of any information. I will not be liable for any errors, omissions, losses, injuries or damages arising from its display or use. All information is provided AS IS with no warranties, and confers no rights. I will not be responsible for the accuracy of material that is linked on this site.

Because the information herein is based on my personal opinion and experience, it should not be considered professional financial investment advice or tax advice. The ideas and strategies that I provide should never be used without first assessing your own personal/financial situation, or without consulting a financial and/or tax professional. My thoughts and opinions may also change from time to time as I acquire more knowledge. These are, as discussed above, solely my thoughts and opinions. I reserve the right to delete any comments for any reason (abusive in nature, contain profanity, etc.). Your continued reading/use of my YouTube Channel, blog, email newsletters, whitepapers, Excel files, and other materials constitutes your agreement with and acceptance of this disclaimer.

COPYRIGHT: All PPC Ian videos, Excel files, guides, and other content are (c) Copyright IJL Productions LLC. PPC Ian is a registered trademark ™ of IJL Productions LLC.

Bank Stock Analysis & The Power of Our Community

By PPC Ian Leave a Comment Jan 8 4

A big purpose of PPC Ian Dividend Investing For Everyone is community. We are a community of like-minded dividend investors, almost 50,000 strong, and we support each other. The community is becoming stronger and stronger, and we have experts around the world with deep knowledge across many different sectors.

I recently filmed a video on bank stocks, specifically analyzing an existing position of mine, Bank of Montreal (BMO), versus some of the large US banks, Wells Fargo (WFC), Bank of America (BAC), and JP Morgan Chase (JPM). When it comes to analyzing dividend stocks, especially consumer non-cyclicals, I consider myself one of the true experts out there. In certain niches, such as sin stocks, I consider myself one of the top analysts around. When it comes to banks, however, I’m newer to the game.

Ian’s Bank Stock Video

It’s a new year, so I figured I would just go for it. It’s this thirst for knowledge that makes life interesting. I have said this a few times on my YouTube Channel, and I cannot stress it enough: The knowledge that comes from investing is perhaps greater than the profits!

When I filmed my bank stock video, I specifically asked members of the community to comment with thoughts, ideas, and feedback, especially those with deep experience analyzing bank stocks. Today’s blog post encapsulates a few lessons I personally learned from the community, and the research I embarked upon after receiving feedback. We are nearly 50,000 dividend investors strong and there is true strength in our community. We are dividend investors supporting other dividend investors!

Goodwill – My Knowledge Evolves

As a fundamental stock analyst, I have always enjoyed analyzing balance sheets. I especially pay attention to cash and cash equivalents when it comes to assets, and debt when it comes liabilities. Concepts like goodwill and intangibles have always been rubbish to me (not true assets). Even more tangible assets like inventories are deeply discounted in my modeling. My overall viewpoint here does not change. However, my understanding of how goodwill works at a technical level has evolved. Here’s what I learned:

When a company acquires another, there are three variables that matter (when it comes to goodwill): Purchase Price (P), Assets of the company being acquired (A), and Liabilities of the company being acquired (L). When P is greater than A – L (meaning the company making the acquisition pays more than book value for the acquisition), the difference is carried on the books as goodwill. Then, as each year progresses, there is an opportunity to charge down goodwill for impairment should the acquisition not perform as expected (it’s worth less than previously thought).

Personally, I never assigned value to goodwill in my modeling, and that doesn’t change. I don’t think it’s a true asset. In my opinion, if a company is to go bankrupt and liquidates all assets to pay off liabilities, I do not think the company will get much value for their goodwill. There’s not much of value there except, possibly, some trademarks and patents. Even, then, I do not think goodwill is worth much in a liquidation setting. Hence, my viewpoint on goodwill stays the same.

That said, my technical understanding evolves as I had previously though that the company making the acquisition could arbitrarily assign goodwill at a certain level. I had even thought that a company could assign goodwill to its own operations. This is not the case, it’s a strict mathematical formula based on the acquisition cost.

Intangible Assets – My Knowledge Evolves

In my investigation of goodwill, I also learned some new knowledge about intangible assets. When it comes to trademarks, for example, they will typically show up as goodwill when a company acquires another (and the company being acquired has trademarks of value). Sometimes a company will purchase intellectual property (not purchase an entire company just some patents and trademarks), and such property becomes an intangible asset on the balance sheet of the company making the purchase.

However, when a company organically builds a brand name or patent portfolio, my new understanding is that there is no arbitrary mechanism to assign value to such intangibles on the balance sheet. Those home-brewed intellectual property assets typically cannot be valued on the balance sheet because the market has not validated their worth via an asset sale. Previously, I had thought that there was a mechanism to value home-brewed patents and trademarks.

While my overall philosophy remains the same (I don’t assign any value to goodwill nor intangibles in my own balance sheet analysis), it was truly fun learning these technical details about goodwill and intangible assets, furthering my own education. The beauty of dividend investing is the education never ends, even after being in the game for 20+ years.

Tier 1 Capital Ratio – Measuring a Bank’s Leverage

On the topic of banks, one subscriber also mentioned the importance of analyzing the Tier 1 Capital Ratio. Tier 1 Capital Ratio is defined as shareholder’s equity (assets minus liabilities) dividend by risk-adjusted assets. It’s a measure of leverage.

According to the Basel III Accord (and international standard that has been set to help provide worldwide stability in the banking system), banks must maintain a minimum Tier 1 Capital Ratio of 6% or higher. The higher the Tier 1 Capital Ratio, the better. Let’s compare for the banks in my analysis (from the last available annual reports).

Wells Fargo (WFC): 13.46
Bank of America (BAC): 13.2
JP Morgan Chase (JPM): 13.7
Bank of Montreal (BMO): 13.0

Based on this analysis, JPM is looking the strongest, with WFC as the runner-up. That said, WFC’s ratio is down year-over-year, so I’ll keep an eye on it. My beloved BMO is not looking as good, on this particular ratio, although the Canadian banks in general are much more levered than their US counterparts (different way of doing things and hence my overall interest in diversifying with WFC).

Just thought I’d share a few recent nuggets of wisdom with you all today. Wishing you all a fabulous 2020 of dividend investing! Thanks to all the experts in the community to contribute knowledge that helps us all!

Support PPC Ian

Want to say thanks for my YouTube videos, blog posts, investing workbooks, and overall work invested into the community? I now offer a custom line of dividend investing merch! You can support PPC Ian while showing you love for dividend stock investing. You can find my merch store here: https://teespring.com/stores/ppcian. Also, please do not forget to subscribe to My YouTube Channel.

DISCLOSURE: I am long Bank of Montreal (BMO). I own this stocks in my stock portfolio. Also, I will be initiating a position in Wells Fargo (WFC) soon.

Because the information herein is based on my personal opinion and experience, it should not be considered professional financial investment advice or tax advice. The ideas and strategies that I provide should never be used without first assessing your own personal/financial situation, or without consulting a financial and/or tax professional. My thoughts and opinions may also change from time to time as I acquire more knowledge. These are, as discussed above, solely my thoughts and opinions. I reserve the right to delete any comments for any reason (abusive in nature, contain profanity, etc.). Your continued reading/use of my YouTube Channel, blog, email newsletters, whitepapers, Excel files, and other materials constitutes your agreement with and acceptance of this disclaimer.

COPYRIGHT: All PPC Ian videos, Excel files, guides, and other content are (c) Copyright IJL Productions LLC. PPC Ian is a registered trademark ™ of IJL Productions LLC.

How I Know Which Dividend Stocks To Buy (At Any Given Time)

By PPC Ian Leave a Comment Nov 19 5

I’m excited to continue sharing my favorite PPC Ian YouTube videos about dividend growth investing, right here on my blog. Today’s installment is an important video all about allocating capital to the stock market. With a portfolio of 38 dividend paying stocks (it was 37 at the time I filmed this video), I have many choices (existing positions) that I could build upon when adding more dollars. Learn how I look at the tradeoffs and make the right decisions!

Let’s Start With My Dividend Investing Video

Now, Let’s Jump Into The Philosophy Behind My Video

I own 37 dividend stocks in my stock portfolio. On any given month, I’m almost always averaging in (buying more shares). How do I know which stock(s) to buy at a given time? How do I invest my hard earned capital in dividend stocks, while looking at things both logically and emotionally? Today’s video shares my very strategy.

Before even starting, it’s important to recognize whether one is looking at a net new portfolio or an established one. While most of today’s video covers the strategy of how I buy stocks for my established dividend portfolio, I also discuss how things would differ for a newer portfolio.

Next, I dive into my personal pillars for success.

Pillar 1: I enjoy setting strategic buy order themes each year. Each January I pick a few stocks that I’ll focus on accumulating any given year. This year (2018), it’s Procter & Gamble and Kimberly Clark. My analysis is based on fundamentals. By setting the theme early in the year, I stay focused and determined. Next year (2019), I’ll be focused on My Core Stocks.

Pillar 2: When I invest in a new position to my established stock portfolio, I go "all in". Meaning: I will start with a small lump sum investment, and then I keep averaging in until my position reaches its desired size (and, at a minimum, my "full size" for a small position). I believe in good housekeeping and dislike 1-off positions in my portfolio.

Pillar 3: I’m always looking out for great investment opportunities. Since I own 37 stocks, several of them are always on sale at any given time. While I like to first focus on pillars 1 and 2, I will buy "on sale" stocks as well, when opportunities present themselves.

Pillar 4: Certain of my stocks fall into trading ranges, more or less. I like to place a small amount of capital in them, each time they hit the bottom of the trading range.

At the end of the day, this strategic framework keeps my investing vey logical and pragmatic. It keeps me focused on doing the right things, avoiding all the noise out there. It also, however, leaves some room for emotion which I think is actually important for dividend growth investors.

My Favorite Dividend Stocks For 2018 and Beyond

By PPC Ian Leave a Comment May 21 0

It’s been a while since my last blog post! I have been busy at work on my PPC Ian YouTube channel, uploading two new dividend investing videos each week. A lot is happening in the stock market this year, with many of my favorite dividend stocks going on sale, so I thought it would be a great opportunity to share a new blog post about investing. Let’s dive into the dividend stocks I’m personally buying in 2018 (and beyond)!

My Second Favorite Dividend Stock of All Time: PepsiCo (PEP)

I have literally been waiting years for this stock to go on sale. Thankfully, it recently plummeted to a multi-year low of $97.51 and I am all over it at these levels. With their recent dividend increase of 15%, PEP now pays out $3.71/year (a starting dividend yield of 3.8%. It’s quite rare to experience such a high starting yield for this company, so I’m incredibly excited to be increasing my position right now. And, I hope it goes down more! I love being a dividend investor because I invest for cash flow and don’t really care about capital appreciation. In fact, the further PepsiCo declines, the higher my starting dividend yield (meaning more immediate cash flow).

I love PepsiCo for so many reasons including the following:

We all need to eat and drink
Diversification of revenue across many different foods and beverages
Strong exposure to the growing snack food category
Fabulous history of rewarding shareholders via dividends!
Products spanning fun for you, better for you, and good for you categories

Want to learn more about PepsiCo and my experience buying this company? Check out my recent YouTube video:

2018 Is Not The Time To Buy Oil Stocks (In My Humble Opinion)

Just a few years ago, oil companies were so out of favor. With OPEC flooding the market with oil and the price per barrel in the gutter, nobody wanted to touch oil companies. I took a contrarian opinion and took positions in supermajors at bargain basement prices. Fast forward to 2018 and the oil companies are doing great (so it’s certainly not the time to by now at inflated prices, in my humble opinion).

Lesson: This is how the stock market works. In fact, I just filmed a video about my experience buying BP at bargain basement prices, achieving a yield on cost upwards of 8% on certain of my lots purchased. You can learn more by watching my YouTube video:

Consumer Non-Cyclical Companies Have No Future

I am seeing history repeat itself here, although this time in the consumer non-cyclical sector. I love consumer non-cyclical stocks, they are the bread and butter of my portfolio. It just so happens that these companies are facing an incredibly rough 2018. PepsiCo is a great example. Others include Procter & Gamble (PG), Kimberly-Clark (KMB), and General Mills (GIS), all three of which I am purchasing in 2018 at bargain basement prices. (And, I believe further downside is in the cards.)

What’s happening here? I believe there are three factors placing pressure on these companies:

With interest rates rising, income minded investors have other options. Dividend-paying stocks are not the only game in town anymore (as bonds become more attractive).
Due to issues of scale, growing pains, and the overall Amazon effect, many of these companies are facing slowing revenue growth. While I believe revenue growth will resume, it could take some time. Fortunately for bargain shoppers like myself, most people cannot wait (especially stock market analysts) and these stocks are facing downward share price pressure.
We are heading into an inflationary environment and the raw cost of producing consumer products is increasing, squeezing margins. Inflation is here, and these companies will need to optimize and innovate to keep high margins. Thankfully, they mostly have high margins to begin with and will weather the storm, in my opinion.

As a long-term dividend income investor (I solely buy stocks for cash flow), I love these types of opportunities, and I’m thankful to buy at progressively lower prices.

Want to learn more about my perspective on consumer non-cyclical companies having no future? Check out my recent YouTube video:

Want to learn more about two of my favorite stocks for 2018, Procter & Gamble and Kimberly-Clark? Check out this YouTube video:

Want to learn about my brand new position in General Mills? Check out this YouTube video:

Worth noting, the starting yields on these three names are really great right now. PG is at 3.94%, KMB is at 3.81%, and GIS is at 4.40%. It does not get much better than that for such world-class consumer non-cyclical stocks, ones that have a history of consistently raising their dividends over the years!

I Love Utilities For Their High Current Yield

To close out today’s post, I want to add a note about utilities (especially regulated electric utilities). I love these types of companies because they are literally government-enforced monopolies (others cannot just come in and compete with them). And, they pay fabulous dividend yields (which are getting progressively better as these stocks face downward pressure).

As with consumer non-cyclical stocks, utilities are facing some pressure in 2018 due to rising interest rates. Utilities tend to carry a lot of debt, so rising rates could place pressure on margins. Moreover, rising rates give income-minded investors other investment opportunities.

That said, this is not the first time utilities have experienced a rising interest rate environment, and I am sure they will weather the storm via innovation and price increases.

This year, I’m buying Southern Company (SO) at a wonderful 5.21% starting yield. Want to learn more about my position in SO? Make sure to check out this YouTube video:

2018 Is A Great Year For Dividend Investors

I love being a dividend investor because I don’t worry about down markets. In fact, I look forward to them. 2018 is the most exciting year for dividend investors in quite some time, and I’m truly thrilled to be adding to my PEP, PG, KMB, GIS and SO. Are you a dividend investor? Which dividend stocks are you buying in 2018?

Want to learn even more about dividend investing? Make sure to check out my recent blog post about how I Invest For Dividends and Financial Freedom.

Disclosure: I am long PepsiCo (PEP), BP (BP), Procter & Gamble (PG), Kimberly-Clark (KMB), General Mills (GIS), and Southern Company (SO). I own these stocks in my portfolio.

Disclaimer: I’m not a licensed investment advisor, and today’s blog post (and related videos) are just for entertainment and fun. This blog post (and related videos) are NOT investment advice. Also, I’m not a tax advisor and today’s blog post (and related videos) are NOT tax advice. Please talk to your licensed investment advisor before making any financial decisions.