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Value Dividend Stock: I Bought A Lot of Shares (But It Carries Risk)

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It’s very rare that a core, world-class dividend stock goes on sale. It seems that 3M (MMM) has been on sale for a number of years now, with the discounts getting more heavy in recent years. There’s rarely a free lunch with investing. Meaning: When a stock goes down, there is typically a reason. The question, however, is can the company survive the challenges it faces and re-emerge as a winner? I just published an in-depth video on YouTube sharing my thoughts on 3M’s Q2 earnings report, with my thoughts on their large litigation risks. Without a doubt, MMM is one of the riskier positions in my portfolio, especially when I take into consideration that its ~5.0% portfolio weight. In today’s blog post, I want to share a few of my top-level thoughts about 3M (MMM), but first make sure to watch my YouTube video!

Watch My Brand New Dividend Investing YouTube Video

Thought 1: The Litigation Risk Is Real

3M stock is rallying on the news that they are creating a $1 billion trust for earplug litigation related to their acquisition of Aearo Tech back in 2008. They are also setting aside another $240 million for case-related expenses. I believe the stock has rallied on this news because 1) the exposure is less than previously anticipated and 2) there is some directional level of certainty around the matter (Wall Street hates uncertainty). (Side note: I like to buy when there is uncertainty because I can extract value that way as a long-term investor taking on calculated risk.)

The bigger issue, in my eyes, is their PFAS-related litigation. PFAS is a chemical that can seep into water, air, and soil. At this point in time, the cost of possible/alleged PFAS-relate exposure is unknown. What I do know, however, is we live in a world where anything is possible. Just look at 2022. In fact, I just shared a Dividend Investing Video that highlights some crazy, remarkable trends affecting investors in 2022. Because it’s almost impossible to price risk in 2022, I personally have big concerns around PFAS litigation. (And, the rest of the investing community does as well, hence the forward PE ratio trending in the 13s for MMM.)

Thought 2: I’m Excited About The Healthcare Spin-Off

Also in their Q2 earnings release, 3M announced the spin-off of their healthcare division (anticipated to close by the end of 2023). I was excited to see this because 1) it probably allows the healthcare division to avoid some of the existing litigation risk, 2) healthcare is their fastest-growing division, and 3) I see this being a productive spin-off (much like UTX combining with Raytheon and spinning off OTIS and CARR). I plan to hold onto both New 3M and Healthcare Spin-Off. The only downside here is I’m now going to have yet another position to manage. I have too many positions in my portfolio, and will eventually need to start trimming down, just a little bit.

Thought 3: I Bought A Lot More. What Else Can I Do?

As a dividend stock investor, I am fighting tooth and nail to reach the goal of dividend-based FIRE (financial independence retire early). I’ve made great progress against this goal, but I’m still on the journey. Our world is more uncertain than ever. There is more perceived “risk” in anything these days. MMM is a risky position in my portfolio, but ultimately I’m taking on calculated risk to reach my gaol. At a 4.19% starting dividend yield (with possible growth ahead once litigation is figured out), I cannot ignore the opportunity. What else can I do? Sit home, scared? Or, go out there and fight for my dividend-based freedom? I am choosing the latter, for my personal situation.

Please share in the comments below what you think about 3M stock. As a dividend investor, it’s a bit challenging to see the slow pace of dividend growth in recent years. That being said, the reasonable payout ratio gives me confidence that stronger dividend growth may resume after the litigation challenges have passed. It’s just going to take a good amount of patience. Perhaps I’ll just let this one be (with dividend reinvestment intact) and check back in 5 years.

As we close out today, I want to say “Aloha” and “Mahalo” for reading my blog post and watching my latest YouTube video. Please make sure to subscribe to my YouTube channel for more dividend investing videos.

DISCLOSURE: I am long 3M (MMM), United Technologies (UTX), Otis (OTIS), and Carrier (CARR). 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.

Dividend Stock Investing Tips That I Live By

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Our world and our economy are certainly changing in 2022! In fact, I just shared a YouTube video about Terrible Trends I See For Investors. There’s a lot to worry about. That being said, times of great worry can create huge opportunities for investors with very long-term, multi-decade time horizons. That’s why I’m just sticking to the basics these days, the core tips that have always worked for me during my 20+ years of dividend stock investing. In today’s brand new YouTube video (embedded below), you can see the very tips that I use in my personal dividend stock investing strategy, right now in our ever-changing world.

It’s been a while since I’ve shared a post here on my blog. I thought it would be fun to start posting again, sharing a few of my favorite videos and insights in text. After watching today’s video, you can see the over-arching theme for me is simple – I’m going “back to basics”. I have tried it all, seriously. I’ve had many successes, and I’ve made a few mistakes too. I’m always learning and evolving, as investor. There is one, single strategy that has almost always worked in my personal situation, and that is the strategy of dollar cost averaging into core, quality, world-class dividend stocks (at reasonable prices).

Boring Is Best, With Dividend Stock Investing

These days, my strategy is not that exciting, because I keep doing the same thing over-and-over. In fact, I think this embodies one of the key challenges of successful dividend stock investing: It takes SO much persistence, willpower, and time. I cannot rush the process. There are no shortcuts. I just need to follow my plan, year-in and year-out.

Putting Stanford Computer Science To Work With Dividend Stocks

While the entire process can be daunting, I learned something key during my Stanford Computer Science Days (I majored in CS at Stanford University) that helps greatly with my dividend stock investing. When building a complex, overwhelming computer program, the best practice is to break the complex problem down into really simple parts. Then, it’s possible to assemble all of those easy parts into a complex solution (computer program).

I’m applying the same theory to dividend investing. Dividend investing is not rocket science. It does require tremendous patience and persistence, however. Getting from where I am now to the finish line (Fat FIRE that can support my entire family) can seem a little overwhelming at times. However, all I need to do is take this complex problem and break it into small, easy-to-manage parts. That’s why I’m dollar-cost-averaging into my favorite dividend stocks weekly. I’m typically not making huge purchases (although sometimes I do). I just need to put “one foot in-front of the other”, and keep going. I don’t need to focus on the end result, today at least. I just need to focus on what I can do right now, today! It’s so much more motivating and tangible this way.

Back To Basics

So, it’s back to basics for me, and I’m just building my core dividend stocks brick-by-brick. Then, I’m letting time, reinvestment, and dividend increases do the rest!

Thanks for reading my post today and watching my video. I look forward to seeing you in the comments below!

DISCLOSURE: I am long 3M (MMM), Johnson & Johnson (JNJ), Starbucks (SBUX), Caterpillar (CAT), Hawaiian Electric. (HE), and PepsiCo (PEP). I own these stocks in my personal dividend stock portfolio. I am also long Treasury Bonds and I Bonds.

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

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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.

Dividend Investing MerchI 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.

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.

Dividend Investing For Beginners (My Complete Guide)

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My dividend investing YouTube Channel, PPC Ian, is now 29,000 dividend investors strong! With so many new subscribers and so many videos (198 on the topic of dividend investing spanning a staggering 69 hours and 30 minutes), I have received the same request over and over: "Ian, where do I start? Ian, where can a beginner go?" Of course, one route is to just sit down and watch all 198 videos for 69:29:59 straight, although that is probably not practical for most people! Today’s blog post provides an alternate route for those just getting started, it’s my quick guide to get you up to speed!

Today’s blog post is my "get started here" guide for anyone new to my YouTube channel or dividend investing in general. I hope you find this guide helpful. If you do, the greatest way you can thank me is by heading over to the PPC Ian YouTube channel and subscribing! Let’s get started!

What Are These Dividends?

Dividend Investing Beginner's GuideI’m going to start at a philosophical level. Dividends are, in my opinion, the answer to the everyday person’s problems. I’m talking about feelings of stress, financial worry, and even a lack of "greater purpose" in life. I’m serious. Dividends are a life-changing force that bring a smile to my face each and every day. Dividends are the financial stability that allows us to all breathe a bit more, enjoy life a bit more, and be a little bit less tied to typical "job" income (progressively more so over time). More than that, dividends can bring a great sense of purpose to life.

Technically speaking, dividends are payments that stock shareholders (owners) receive for owning a shares of particular company. Let’s take an example: I own stock in McDonald’s (MCD). It’s my number three favorite dividend stock of all time (check out This YouTube video on MCD to learn more). Each quarter, McDonald’s pays me, as a shareholder, $1.16 for each share I own in the form of a cash dividend. Why do they do this? When you buy stock, you become a shareholder. When you are a shareholder, you are a part owner in a corporation. Dividend companies choose to take a portion of their profits, paying it back to shareholders.

Makes sense, right? After all, what’s the purpose of a company? Ultimately, it’s twofold: 1) Fulfill a greater purpose out there (in the case of McDonald’s, they feed billions) and 2) generate profits for the owners. When you’re a shareholder, you are an owner. Great companies, like McDonald’s, give their owners what they deserve: their cut of the profits. (Going to the philosophical level again, when you buy your first share of stock, you are no longer part of the employee class. You get to graduate to the owner class. Being an owner is the way to go in terms of getting the most out of life, in my humble opinion.)

Why Invest For Dividends?

What if I told you that you can earn money while you sleep? Think about it: Right now, you have to get up early, go to work, and earn money through blood, sweat, and tears to pay for everyday expenses like your cup of Starbucks (SBUX) coffee. What if I told you that some of your expenses (or even all of your expenses) can be completely covered without job income? What if I told you that you can sleep in, go for a long run, and then pursue your hobbies, and still pay for that cup of coffee? That’s what dividends are all about.

When you start investing for dividends, you slowly but surely build up a stream of passive income (dividend income). This is to be contrasted with earned income (job income). Earned income is great, and without earned income it’s impossible to have investment capital for dividend stocks. Also, I truly believe that we are all here to fulfill a purpose. So, I’m not saying that work is bad (I work incredibly hard each and every day). In the modern world, however, work can be bad because so many people are forced to work beyond the laws of time and physics. (Side note: Once all of your expenses are covered by dividends, you are then free to choose any "work" you like including pursuing your hobbies full time. Dividends create true choice in life.)

As I get older, especially now that I have a wife and two amazing children, I realize that time is so limited. I only have so many hours I can work a job. My job income is limited by time. However, if I take some of my job income and invest it in dividend stocks, those dividends turn into a stream of passive income! They work while I sleep, providing passive income. Other than the energy spent to earn my investment capital (through active/job income) and the energy to research and find great dividend stocks, dividends are completely passive (require no/little ongoing effort from me). They just come in, and I can then use them to pay bills.

In the early days those dividends will be small and may only pay for a Starbucks coffee here and there. However, one day, the dividend snowball will become so large that it can pay for ALL living expenses. That’s my personal and ambitious goal, especially living here in the expensive SF Bay Area. You can learn all about my Financial Independence Retire Early goals in This YouTube Video About FIRE.

Dividend Companies Vs. Growth Companies

There is a lot of misinformation out there about dividend companies. A lot of folks believe that it’s an "either/or" proposition when it comes to dividends and growth. A lot of people out there say that dividend companies do not grow. Meaning: You get some cool cash flow via dividend checks, but you sacrifice growth. The same people say that you must buy true growth stocks like Facebook (FB), those that do not pay dividends, to experience growth.

While it is true that some of those pure play tech companies that lack a dividend are growing very quickly, I am here to argue that dividend companies also provide growth: Growth in their revenues, growth in their share prices, and growth in their dividends too (we’ll get more to this later)!

It’s truly NOT an "either/or" proposition. Let’s look at my number one favorite stock of all time, Johnson & Johnson (JNJ), as an example. (By the way, make sure to check out This YouTube Video Where I Explain JNJ In Detail.) Comparing 2018 vs. 2008 (from their annual report, their 10-K):

  • JNJ’s revenue is up 30%.
  • Their net earnings are up 18%.
  • And, their dividend is up a staggering 119% (it has been increased for 56 consecutive years).

Now, the growth for Facebook during the same period has, no doubt, been much more substantial. The point, however, is that it’s not "either/or". Dividends offer a relatively conservative strategy (as compared to growth investing) that offers a component of growth and also cash flow (dividend checks paid out to shareholder, like me).

I Prefer Dividend Stocks To Growth Stocks

At the end of the day, I prefer dividend stocks vs. growth stocks for a few reasons:

  • I will, one day, pay all of my bills with passive income from dividends. Right now, I have the ability to pay a good chunk of my bills with dividends, as I have been investing in such stocks for over 20 years (with the bulk of my portfolio built in the last 10 years). I do not believe in selling shares to pay bills. Why? Stock markets go up and down. What if I need to pay a utility bill and the stock market is way down? In such a situation, growth investors are forced to sell really low. Dividend investors, by contrast, do not need to sell shares. They simply take their dividends and then pay the bills. If one wants true passive income, I do not believe there is a better avenue than dividend stocks.
  • I am a conservative investor. I have tried it all: tech stocks, penny stocks, day trading, and more! At the end of the day, I have found that slow and steady really does win the race. Dividends offer a relatively conservative strategy that I can utilize to build true wealth and cash flow over time. I don’t have to take on the risk of high-flying tech stocks. I simply buy tried and true companies like PepsiCo (PEP). (By the way, make sure to Check Out My YouTube Video on PepsiCo.)
  • I trust companies that pay dividends. When the management team decides to pay a dividend, they show respect to the shareholders (the owners). I truly believe that money sitting around in corporate bank accounts can get wasted on lavish company parties, unnecessary acquisitions, fancy office upgrades, and more. That cash belongs to the shareholders. I trust companies that pay dividends to treat the owners right, and to make smarter choices around their cash management.
  • Dividend investing, in the United States, is relatively tax-efficient. Buying low and selling high (growth investing) can expose one to hefty short-term capital gains taxes (if one needs to sell to pay bills). Qualified dividends, by contrast, are taxed as long-term capital gains. (Check out This YouTube Video To Learn More About Dividends and Taxes.)
  • Dividend investing gives me hope! Life is not always easy (and that is honestly a good thing, since success is so much sweeter that way). With each share of stock that I buy, I am one step closer to covering all of my expenses with passive income. I am always buying dividend stocks (in reasonably small amounts) since I like to stay in the game. That constant buying gives me the confidence and excitement that I am getting to my goal. Dividends are for everyone. They give the everyday person the means to automate income. And, it’s not only the destination that matters. Even $50/Month in Dividend Income starts paying for something! The early success is so motivating!
  • Last, dividend stocks tend to perform well. Certain studies show that dividend stocks (value stocks) tend to outperform growth stocks very long periods of time. Personally, as a Stanford University Computer Science graduate, I know a lot about data. And, I know that data can be used in different ways to tell different stories. So, rather than rely too much on external studies, I just like to run the numbers myself. In this YouTube video, I share how My Stock Portfolio is Beating the S&P 500, with a lot less risk (in my humble opinion).

My Personal Dividend Stock Portfolio

So, you like the strategy and want to see what a typical dividend stock portfolio looks like? I have actually shared My Complete Dividend Stock Portfolio on YouTube. Some fun stats:

  • I own 40 dividend stocks. (I filmed the YouTube video before I owned my newest position of Chubb.)
  • I have been investing for over 20 years, but the bulk of my portfolio has been built in the last 10 years (especially in the last 7 years). A few times in my investing history, I have had to liquidate the lion share of my portfolio to fund a house down payment. I do not envision us moving anytime soon, and I do not anticipate selling my portfolio again. This time, it’s forever and I’m in it to automate all income and cover all expenses!
  • I tend to buy stocks of all sizes: large cap, medium cap, and small cap. I specialize in larger companies since I like those that can stand the test of time without getting pushed around by activist investors and hostile M&A activity (mergers and acquisitions).
  • I have made countless stock market purchase orders. I have placed orders as high as $10,000 and as low as $50. (You can learn all about My Personal Transaction History In This YouTube Video.)
  • My average portfolio current yield is 3.89%. However, this is just my current yield, not yield on cost (a really important topic covered later in this guide and throughout my YouTube channel).

Getting Started With My YouTube Channel

At this time, we’re almost 2,000 words into this guide, and it’s getting really long just like my YouTube videos! I bet your time for a break from reading! To change things up a bit, I want to get you on over to my YouTube Channel, but I first want to give you a quick tour and some hacks.

PPC Ian YouTube Channel Guide:

  • If you want to learn my opinion on a particular stock, please search on YouTube for "ppcian + STOCK-TICKER-HERE". For example, "ppcian WMT" will give you My Video on Walmart. (NOTE: My video titles don’t always include the stock ticker, but YouTube’s search functionality is super smart and will return the right ones for you.)
  • If you want to learn about a particular topic, search for "ppcian + TOPIC-HERE". For example, "ppcian MLP" returns My Video on Master Limited Partnerships.
  • Make sure to check out my video descriptions. They always contain a write-up of the video with helpful insights and links. Also, my newer descriptions contain timestamps. I know a lot of you have limited time, and those timestamps come by popular demand. Simply click a timestamp to fast forward to a particular point in the video that is of interest to you.
  • Don’t forget my playlists. If you head on over to My Playlists Tab, you can quickly find my videos broken down by sub-category. The playlist view makes it a lot easier to find what you’re looking for.
  • Head on over to My Videos Tab to see all of my videos in reverse chronological order. Just scroll down to see the older ones.
  • Make sure to read the comments and participate in our thriving dividend investing community. We are 29,000 dividend investors strong and each video contains a multitude of insights in the comments. I personally try to read and respond to most comments. Many of our older discussions will provide a wealth of information to you.
  • One last bonus hack: Here on my blog, check out the tabs at the top. I link to all of my important whitepapers, guides, and spreadsheets right here on my blog! I have published a ton of free spreadsheets, for example, and they’re all conveniently here on my blog. For example, here’s My Yield On Cost Worksheet.

Let’s take a pause now, and please head on over to my YouTube Channel. Hope you find a video or two that you enjoy. When you come back, it will be time to discuss some metrics!

Dividend Investing Metrics

Here’s where it starts getting a bit more technical. I’m not going to get too technical today, since this is a beginner’s guide. I am, however, going to quickly outline the metrics that matter to me when selecting and managing my dividend stocks:

  • Revenue Growth: I like companies that consistently growth their revenue over time.
  • Earnings (and Earnings Per Share) Growth: Again, up and to the right.
  • Gross Margins, Operating Margins, and Net Margins: I prefer companies that have sold margins, since such margins are indicative of a competitive moat in the form of brand and intellectual property. And, great margins give a buffer should the company hit hard times. Of course, some industries are characteristically higher margin (software, for example) than others (utilities, for example).
  • Strong Balance Sheet: I prefer those balance sheets that carry little debt, and positive shareholder’s equity (assets greater than liabilities). With interest rates at historic lows, many companies these days have taken on huge debt to fund share buybacks and acquisitions. These days, it’s a bit tougher to find those rock solid balance sheets, so it’s always refreshing when I find one.
  • Growing Cash Flows: Sometimes, net earnings do not tell the entire story. I like to look at the statement of cash flows to ensure that the business is growing true cash flow over time.
  • Dividend Yield: Calculated as the dividend per share (annually) dividend by share price, I like starting dividend yields that are anywhere between 2% and 8%. Lower than 2% is typically a bit too low for me (won’t provide meaningful cash flow in sufficient time). Above 8% is sometimes indicative of a "yield trap", a company that may not be able to maintain the dividend. Of course, there are always exceptions.
  • Dividend Growth: I like companies that tend to grow their dividend over time. Those companies that grow their dividend get me to financial freedom the fastest because I can buy now and receive more dividend income with each year that passes. Typically, my favorite companies raise their dividend by 7% on average, per year.
  • CAGR (Compound Annual Growth Rate): The CAGR formula helps dividend investors understand the average growth rate of any of the metrics discussed thus far (especially dividends). Just Google CAGR for the formula. Given an ending value, a starting value, and years elapsed, CAGR shows the average amount the given metric has grown per year (on average).
  • Payout Ratio: Calculated as dividends/EPS, payout ratio gives a sense of how much of earnings are going to dividends and how much are being retained. Payout ratios differ by industry. Utilities tend to pay out most (all) of earnings. In general, for a household brand name company like Procter & Gamble (PG) or Kimberly-Clark (KMB), I like payout ratios in the 40-60% range over the long-run.
  • Yield On Cost: There are two ways to calculate yield on cost: Simple Yield on Cost and Yield on Cost With Dividends Reinvested. Since these topics are a bit more involved, I have linked each of the terms in the prior sentence to my YouTube videos explaining them. I love these metrics because they give a sense of how far along I am and how hard my capital is working for me. They literally show me the dividend yield I am receiving (on my purchase price) after holding onto a position for number of years. On Altria (MO), I am now yielding 20% on cost on my first tranche (simple yield on cost). Meaning: For each $100 invested (not counting reinvested dividends), I am yielding $20 per year.
  • Market Capitalization: Simply put, market cap shows how much a company is worth. I like to diversify by all different market caps (one reason I own 40 stocks), so I have exposure to small, medium, and large enterprises. My average market cap tends to skew a bit larger.
  • Dividend Consistency: Since I invest for dividends and dividends alone, I always enjoy understanding how many consecutive years a company has paid dividends and also how many consecutive years a company has increased its dividend. I always apply CAGR calculation to here to understand dividend growth over time, on average.
  • Share Price: Typically, I enjoy buying additional shares of my favorite companies when share prices are down (and the stock is in value territory).
  • PE Ratio: Also known as the Price/Earnings Ratio, this metric gives a sense of value. Lower PE Ratios are good, as they indicate the company is trading at a lower multiple of earnings.

Dividend Growth Investing

Ok, that’s enough with the metrics for today’s beginner’s guide! I want to now take a moment to pay homage to the phrase "Dividend Growth Investing" (notice the word "Growth"). I don’t typically invest in dividend stocks. I invest in dividend GROWTH stocks. Meaning, my companies:

  • Grow their business (revenue, earnings, and cash flow)
  • Grow their dividends over time (dividends are not static but actually grow)

Of course, we already covered why it’s not "either/or" when it comes to dividend stocks vs. growth stocks. I like those that exhibit both! This is so important because those companies that are actually growing have the financial means to grow their dividends. And, those companies that grow their dividends give me a higher yield on cost over time! Meaning: My invested capital progressively works harder for me. I have time on my side, I can wait for the dividends to grow. And, after years have passed by, the compounding of those dividend increases gives me a huge yield on cost!

At the end of the day, dividend growth investing works because of The Miracle of Compound Interest. (Make sure to check out the YouTube video I just liked, to really understand how the math works.) I’m talking about:

  • Corporate revenues and profits growing.
  • Dividends growing over time.
  • Dividends being reinvested to buy more shares (until one chooses to tap into dividends to pay bills.) There’s a key example at the beginning of My Latest Video that goes into this concept in detail.
  • More capital being invested over time.
  • It all compounds tremendously over time!

At the end of the day, I’m throwing a lot at you here. The key insight is that compound interest and time work on your side. Invested capital is important too, but if you have some time until your retirement (or early retirement), that time and the nature of compound interest can get you a lot more cash flow than you would think! Slow and steady wins the race. Dividend investing is for everyone!

Helpful Websites and Tools

On my YouTube channel, I regularly share stock analysis, like My Recent Analysis of United Technologies (UTX) and Raytheon (RTN). Where do I pull the metrics for my analysis?

  • First and foremost, I like to go the actual corporation websites and pull their annual reports (also called 10-Ks). I have to spend some time digging, but I always prefer pulling data direct from the source. Such annual reports offer the most helpful info on the income statement, balance sheet, and statement of cash flows. Worth noting: I also like to follow quarterly reports (10-Qs), but I do not place quite as much weight. I am investing forever, so quarterly fluctuations and results do not matter to me quite as much, as I’m all about the long-term.
  • I also make use of the Nasdaq website. Nasdaq is great for showing dividend per share history over time. If you Google "STOCK-TICKER dividend history", Nasdaq always shows up towards the top.
  • Last, I like to make use of Yahoo! Finance. Yahoo! Finance offers great summarized data, but I always like to verify data just in case.

Now, you may be wondering what’s a great place to get started actually buying dividend stocks? I tend to suggest the following avenues to newer investors: Dividend Reinvestment Plans (check out my YouTube video) and also Large, Established Brokerages (also check out my YouTube video).

The financial industry builds up a lot of data about how commissions can eliminate results. And, that is true for many investors who pay ongoing commissions. Dividend investing tends to be commission-friendly since one buys and holds forever. As such, as long as my buy commissions are less than two percent (and my dividend reinvestment is free or close to it), I do not get too worried about commissions. I actually prefer to pay commissions if I can leverage a really big, reputable, and well-established brokerage firm.

No More Drama

The stock market is full of drama. I’m talking about people literally shouting on the trading floor. I’m talking about stock prices surging and then plummeting. I’m talking about people on TV giving their opinions on how the world is ending! I’m talking about IPO (initial public offerings) in companies that have no promise of earning anything, ever!

Dividend investing erases all the drama. In fact, I do not even care about my aggregate portfolio value, since I never plan to sell. When you buy and hold forever with no plan of selling, it truly is a liberating experience. You free yourself from the worries of stock market fluctuations. (Of course, I do check my portfolio value form time to time just to feed by ego and as an overall signal if the companies I own are doing ok.)

At the end of the day, the only metric I follow closely is my aggregate dividend income. Regardless of the economy, the types of companies I own tend to pay (increasing) dividends over time. Even during a horrible recession, I can watch my dividend checks come in (at increasingly higher levels). And, I can measure the percentage of my expenses covered by such dividends.

Even greater: When the stock market is in the gutter, I can take comfort that new capital (and reinvested dividends) are buying more shares at progressively lower prices. I love a plummeting stock market because it allows me to reach financial freedom faster. Dividend investing really is a drama-free strategy. We all have enough to worry about in our lives, our stock portfolios should not be another cause for concern. Our stock portfolios should be a source of comfort, another stream of income that can work when you cannot (24/7)!

Investing Prudently

This guide would not be complete if I failed to mention risk. Any stock market strategy, including dividend investing, carries some element of risk (especially since the stock market is towards the end of one of the largest bull market runs of all time). A Stock Market Crash could be around the corner.

I am literally ready for my stock portfolio value to drop 50%, and I am fine with that! Why? I only invest for dividends, I do not care about short-term portfolio value (I actually get excited when stocks are down since I can buy more value that way), and I do have some cash on the sidelines for emergencies (an emergency fund). Ultimately, you will need to assess your own risk tolerance. (Stock market investing may not be for you if you would be concerned about a 10% portfolio value drop.) And, you will certainly want to consider paying off all debt and creating an emergency fund before beginning any stock market investing.

Dividend investing does carry an element of risk, but quite frankly anything in life worth having carries an element of risk!

Dividend Investing Is For Everyone

I created my YouTube channel, PPC Ian, to share my passion for dividends with the world. PPC Ian is dividend investing for EVERYONE. It’s my firm belief that everyone can start small, go slow and steady, and build a meaningful stream of dividend income. That dividend income can provide great comfort, meaning, and purpose in your life.

Also, along the way, do not forget that your dividend income can also be used to make our world a better place. For example, you could choose to donate a portion of your dividends to charity. Or, you could allow your dividends to buy your own time back so you can do good deeds first-hand. Dividends open up a world of greatness. I wish you tremendous success on your personal dividend investing journey!

DISCLOSURE: I am long McDonalds (MCD), Starbucks (SBUX), PepsiCo (PEP), Chubb (CB), Walmart (WMT), Procter & Gamble (PG), Kimberly-Clark (KMB), Altria (MO), and United Technologies (UTX). I own these stocks in my 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.

Dividend Stock Pick

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I truly enjoy a good buying opportunity in the stock market. I invest for dividends, and one day my dividends will cover all of my living expenses. When my favorite stocks go down in share price, my starting dividend yield goes up (in other words, I reach financial freedom faster). Needless to say, I love a good buying opportunity (and these have been very rare in recent years due to the overall lofty stock market).

Dividend Investing For EveryoneLately, I have enjoyed buying shares of my favorite industrial companies, because they have been plagued with lackluster earnings reports and overall macroeconomic issues. Our strong economy and overall bull stock market is in its late stages, in my opinion. A recession and stock market crash is on the horizon, most likely, within the next few years. As leading indicators, some of my favorite industrials are starting to exhibit weakness. This is to be expected, as they are cyclical. Large B2B (business to business) purchases can be delayed, unlike a consumer purchase of Huggies Diapers by contrast.

Regardless of market conditions, I am always averaging into stocks because I am unable to perfectly time the market and I enjoy immediate cash flow. After all, I want the opportunity to tap into my dividend cash flow at any time. I solely invest for cash flow, and do not care about capital appreciation (although I do view long term capital appreciation as a proxy of solid company performance). Some of my favorite industrials are on sale right now and I am buying!

One of my favorites (in fact my #10 favorite dividend stock of all time) is 3M (ticker MMM). Over the past few weeks, I have truly enjoyed averaging into this industrial stock, with a rare 3.44% starting dividend yield and a PE (2019 forward) in the 17.58 range. And, these guys sport a 5-year dividend CAGR (compound annual growth rate) of 11% (although I expect dividend increases to slow a bit over time). I expect to continue adding to my 3M position throughout 2019 as long as the share price remains low.

Everyone knows about my stake in 3M and my latest purchases from my 3M YouTube videos. However, there is another industrial stock that I have owned for years that is also a relative market value right now. (It’s not a top 10 favorite stock like 3M, and is a smaller position, although one I love.) It seems like nobody talks about this stock. It’s a smaller one, but a powerful one from a dividend standpoint (they have increased their dividends for the last 48 years, a track record only surpassed by 10 US companies). I’m talking about Leggett & Platt (LEG).

For those unfamiliar with Leggett & Platt, they produce white label beds, springs, and furniture. When you go to a hotel room or an office, for example, a good portion of the furniture are likely from Leggett & Platt (or at least assembled with Leggett & Platt parts). They are also involved in the automotive, aerospace, wire, rod, fabric, machinery, hydraulic cylinder, and specialty foam industries too. With their recent acquisition of Elite Comfort Solutions, a foam mattress company, Leggett & Platt has truly solidified themselves as a leader in the mattress segment. At the end of the day, everybody needs to sleep and everyone enjoys sleep so much more with a comfortable mattress. I do not see Leggett & Platt’s business going anywhere.

At a high level, there are five key reasons I absolutely love Leggett & Platt right now!

  • Reason 1: Their starting dividend yield is a sweet ($0.40 * 4) / $37.90 = 4.2%, a very solid starting yield in this market.
  • Reason 2: They recently raised their quarterly dividend from $0.38 to $0.40, an increase of 5.3%. Such an increase shows that management is very confident in the business, despite the macroeconomic issues. A shareholder-friendly company, they have increased their dividend for the last 48 years!
    • In the last 5 years, their dividend is up 33% or 5.92% per year on average (CAGR).
  • Reason 3: Looking at the average analyst estimate of $2.47 2019 forward EPS, I get a 2019 forward PE ratio of $37.90 / $2.47 = 15.34.
  • Reason 4: I originally initiated my LEG position at $29.43 per share back in 2013. At $37.90, I feel like we are getting into really low share price territory from a historical perspective. I love purchasing shares in 2019 in the $30s.
  • Reason 5: Dividend payout ratio is reasonable. At $1.6 per year, dividends represent 65% of EPS, providing the company sufficient buffer for the unexpected. (Worth noting: Management does want the payout ratio to reach 50%, meaning dividend growth will likely be a bit slower until the ECS acquisition is fully digested.)

Now, this business does not come without risk. From a size standpoint, their market capitalization is $4.96 billion. Overall in terms of my dividend stock portfolio, Leggett & Platt is one of my smaller positions. I like smaller companies because they provide diversification to the portfolio and have potentially more upside (easier to grow when you are smaller vs. larger). That said, smaller companies can sometimes be more susceptible to competitive forces and adverse M&A activity (hostile takeovers and private equity, for example).

Perhaps more than this, however, I am concerned about foreign competition. While Leggett & Platt has been in business since 1883 and literally invented the bedspring, one must always keep their eyes on lower cost alternatives from overseas in our now global economy. In fact, recent company releases even discuss a foreign "anti-dumping" matter they are currently working on. Due to their large patent portfolio, breadth of capabilities, and multitude of business units, however, I generally believe LEG has staying power.

I’d like to close out today’s dividend stock profile with some interesting metrics from Leggett & Platt’s 2018 annual report:

  1. This is a very high revenue (and lower net margin) business. Net earnings in 2018 were $306 million on $4.270 billion of sales! ($306 / $4,270 = 7.17% net margin)
  2. Revenue growth trends are nice. 2018 is up, in particular due to the ECS acquisition. However, even looking pre-acquisition (2017 vs. 2013) revenue has increased steadily each year and is up 13.4% in total.
  3. Earnings per share are up nicely in the 5-year period. Comparing 2018 vs. 2013, EPS is up 68.66%.
  4. Net cash provided by operating activities is a bit less "up and to the right" as compared to revenue and EPS (it’s a bit more up and down). That said, it has increased by 5.5% over the 5-year period. This will be a key metric to watch in upcoming annual reports.
  5. The balance sheet appears to be well-managed with assets exceeding liabilities (positive shareholder’s equity). It will be important to watch the balance sheet, however, now that the ECS acquisition has been completed. (I hope they pay down debt quickly, over the coming years.)
  6. Their business is very diversified! Following are sales by product line:
    • Bedding Group: 21%
    • Automotive Group: 19%
    • Fabric & Flooring Products Group: 17%
    • Work Furniture Group: 7%
    • Consumer Products Group: 11%
    • Home Furniture Group: 9%
    • Wire Group: 9%
    • Aerospace Products Group: 4%
    • Hydraulic Cylinder Group: 2%
    • Machinery Group: 1%
  7. LEG has a nice Patent and Trademark portfolio. The patents, in particular, create a competitive moat.
    • 1,427 patents issued
    • 598 patents in process
    • 980 trademarks issued
    • 143 trademarks in process
  8. Sales are geographically diverse, although I’d like to see even more international exposure.
    • USA: 63%
    • Europe: 12%
    • China: 12%
    • Canada: 7%
    • Mexico: 4%
    • Other: 2%

While Leggett & Platt will never be a core position in my 40-stock portfolio, I am so proud for it to play a supporting role. That’s why I went ahead and purchased more shares today at $37.90, and I’ll continue to look for opportunities to pick up more shares throughout the year. Ultimately, I believe in their diversified business, I love the exposure to industrials (I tend to be underweight in that sector), and I’m a fan of the 4.2% starting yield!

DISCLOSURE: I am long Leggett & Platt (LEG), 3M (MMM), and Kimberly-Clark (KMB). I own these stocks in my 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.

If I Could Only Own 1 Stock, This Would Be It

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Several subscribers recently asked about my favorite dividend growth stock of all time. Specifically, they asked which dividend stock I would own if I had to place all of my investment funds in one single stock. My answer is quite simple, as Johnson & Johnson (ticker: JNJ) is already the largest position in my portfolio. Today’s video explains why Johnson & Johnson is my favorite stock for dividends, complete with fundamental analysis.

Let’s Start With My Investing Video

Here’s What My Johnson & Johnson (JNJ) Video Is All About

I get started in today’s video with some high level thoughts. Why do I like this stock so much? It really comes down to some high level concepts including:

  • Predictability (and stability)
  • Incredible margins (gross profit and operating)
  • Population trends (aging US population and growing global population)
  • More!

Next, I dive into my Johnson & Johnson fundamental stock analysis. Specifically, I discuss concepts including:

  • Revenue Growth: I really enjoy how revenue is up 25% comparing 2007 and 2017. I also like how revenue tends to grow predictably on a year-by-year basis. It’s like clockwork.
  • US versus international mix: International sales are getting close to representing 50% of this company’s mix.
  • Incredible Margins: Gross profit is at 66.8% (wow!) and operating profit is at 23% (both from the 2017 annual report).
  • Dividend growth: I invest for passive income and cash flow! I need to buy companies to put cash in my pocket, cash that can be used to pay the bills. Johnson & Johnson is a great example, as they’ve raised their dividend over 105% comparing 2017 to 2007.

Despite stellar fundamentals, it looks like Johnson & Johnson has a PE ratio in the 22.94 range right now (possibly a bit lower). (NOTE: I pulled this number when I originally filmed this video, back in April, 2018.) I backed into this number, since EPS is thrown off by one-time tax items. Certainly, the stock is priced for perfection, but it always seems to be! While I’m not buying this stock in 2018 (other than reinvesting dividends), I do want to buy more. I’m waiting for a correction, although I never expect a big one with this stock.

Of course, there are a few risk factors with JNJ. I close out discussing those potential risks:

  • Patent expiration and the need to always innovate in their pharmaceutical division.
  • Overall pricing of their products (the US health care system is broken).

Related Dividend Investing Videos On My YouTube Channel

Want to learn more about my dividend growth investing strategies? Here are a few popular videos on how I would hypnotically invest different sums of money.

Disclosure: I am long Johnson & Johnson (JNJ). I own this stock in my portfolio.

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

All content on my YouTube channel is (c) Copyright IJL Productions LLC.

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

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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.

Related Dividend Investing YouTube Videos

As mentioned in today’s video, I have quite a few related videos to share with all of you! Following is my long list of related investing videos that you may want to check out.

First, let’s jump into videos that discuss hypothetical scenarios of starting all over again. Following are the ways I would start, if I were hypothetically starting over with different amounts of money!

Also mentioned in today’s video, here’s some info on my personal stock portfolio, on my small, medium, and large/core strategy. Learn about My Personal Asset Allocation.

Each year, I like to set strategic themes for my buy orders (pillar 1 of my strategy). This year, my strategic theme spans Procter & Gamble and Kimberly-Clark. Learn all about my Dividend Investing Strategic Themes for 2018.

While I don’t buy many net new stock positions these days, when I do I’m all in. (In the sense that I will keep buying and averaging in until the position reaches full size.) Here’s a stock I just started buying, General Mills (pillar 2 of my strategy).

While I mainly focus on pillars 1 and 2 of my buy order strategy, I just can’t pass up a good opportunity. I also like to make incremental buy orders of dividend portfolio stocks that are "on sale". This year, I’m Buying Some Southern Corporation.

And, I’m Buying Realty Income Too.

Last, I want to share my recent analysis of Coca-Cola. While I own this stock in my portfolio (and it’s a core position), I won’t be buying more this year. It’s just not "on sale" right now, and it doesn’t fit my strategic pillars. That said, if I were hypothetically starting all over again with a net new portfolio, perhaps things would be different. Here’s My Coca-Cola Dividend Stock Analysis.

Disclosure: I am long Procter & Gamble (PG), Kimberly-Clark (KMB), General Mills (GIS), Southern Company (SO), Realty Income (O), and Coca-Cola (KO). I own these stocks in my portfolio.

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

All content on my YouTube channel and blog are (c) Copyright IJL Productions LLC.

Of Course I Own This Dividend Stock: Coca-Cola (KO)

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Hey, everyone! Long time since I’ve posted here on my blog. Why? I’ve been completely focused on my job, family, and (in my limited spare time) Youtube Channel. These days, My PPC Ian YouTube Channel about dividend growth investing is flourishing (up to 16,000 subscribers and growing!). As such, I wanted to take this opportunity to start sharing some of my favorite YouTube videos here on my blog. I hope you enjoy this one about one of my favorite dividend stocks of all time, Coca-Cola (KO)! Do you enjoy investing in dividend stocks? Please share your thoughts in the comments section below!

My Coca-Cola (KO) Dividend Investing Video

Investing Video Description and Notes

Of course I own this particular stock in my dividend stock portfolio! It’s a big, blue chip company, one that has an incredible brand (perhaps the best ever). Margins are great (incredible), and it has staying power. And, of course, they raise the dividend consistently. In fact, since first purchasing shares in 2011, I’m already yielding 5% on cost. I’m talking about The Coca-Cola Company (ticker: KO).

After my recent Video Analyzing The Kraft-Heinz Company (KHC) and how I’m staying away due to the large controlling interest owned by Warren Buffet and 3G Capital, I started receiving a flurry of questions about Coca-Cola, perhaps Warren Buffet’s most famous investment. So, I just had to film this video to share why KO is quite different than KHC in my opinion.

Today’s video is a long one with a thorough fundamental stock analysis of KO and also high level insights about my personal investment philosophy. It’s a good one. Some highlights:

  • Learn about yield on cost and why I’m personally yielding 5% on my Coca-Cola stock.
  • Learn about Coca-Cola’s rich history of increasing dividends on an annual basis (quite aggressively).
  • See why it’s a good thing (in my opinion) that Warren Buffet is involved here.
  • Learn about their portfolio of brands.
  • See how I analyze their Annual (10-K) and Quarterly (10-Q) reports.
  • Learn about Coca-Cola’s underperformance (vs. the S&P 500 and their peer group) in recent years, and how I don’t really mind (it’s all about long-term perspective when investing for passive income).
  • See how refranchising and tax reform are really affecting Coca-Cola’s numbers.
  • Revenue, gross profit, operating income, income before taxes, and income after taxes are all down!
  • That being said, could Coca-Cola be turning the corner? Watch today’s video to find out!
  • Learn about Coca-Cola’s organic sales growth and their long-term refranchising vision (through my eyes, at least).
  • See why it’s really difficult to pinpoint a PE ratio here.
  • Am I a buyer of KO here? Watch the video to learn more!

While this is a long video, I invite you to hang in there. The investing insights, in my opinion, are worth the time investment.

Want to connect on Instagram? Please reach out!

Related PPC Ian Dividend Investing Videos

Discussed in today’s video, please find below links to other related dividend investing videos.

Disclosure: I am long Coca-Cola (KO). I own this stock in my portfolio.

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

All content on my YouTube channel and blog is (c) Copyright IJL Productions LLC.

My Favorite Dividend Stocks For 2018 and Beyond

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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)

PPC Ian Dividends Yield On CostI 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:

  1. 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).
  2. 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.
  3. 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.

All content on my blog and YouTube channel is © Copyright IJL Productions LLC.

I Invest For Dividends and Financial Freedom

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I have always been obsessed with investments that pay cash flow. I’m talking about investments that pay me regular dividend checks (often in growing amounts) just to hold said companies. There is nothing more exciting in personal finance than when one sees their money working for them, while they sleep!

Check This Out These Are Dividend ChecksOver the last 20+ years, I have personally built a dividend stock portfolio with over 30 positions in world-class companies. My dividend portfolio is driving an increasing stream of passive income that gets larger with each year that passes. Whether we are in a bull market or bear market, I am always averaging into my favorite dividend-paying stocks, building my stream of passive income.

While my blog, PPC Ian, has roots in digital advertising and careers, I am now also spending considerable time sharing my passion for personal finance online. I have mostly accomplished this via my quickly growing PPC Ian YouTube Channel (now over 2,000 subscribers). However, I also want to start sharing some of my personal finance insights here on my blog too. After all, this blog is a reflection of me. At the end of the day, I think you will find that there are so many parallels between digital marketing and investing.

Today’s post introduces my passion for dividend investing. If you’ve been wondering about dividends and my personal strategy, this post is for you! Also, I’m thrilled to share some of my recent videos too.

What Is A Dividend?

Many publicly-traded companies choose to pay dividends. A dividend is a cash distribution from a company. When one buys stock in a company, they are a part owner in said company. Just for being a part owner, one gets a cut of the profits, in the form of cash dividends. Companies that pay dividends take a portion of their net income and literally distribute it to shareholders. Such companies, in my opinion, are shareholder friendly and truly care about their owners.

Many large blue chip companies, like Procter & Gamble (PG) and Kimberly Clark (KMB), pay dividends on a quarterly schedule. And, they have a track record of increasing dividends each year. This is where the real magic happens: One is handsomely rewarded (via an increasing stream of dividend income) for buying and then holding for years (or even decades) on end.

If one holds their shares in a brokerage account, dividends often show up electronically in one’s cash balance, as they are paid out. If one holds stock directly, with a transfer agent, dividends will either be sent in the mail (in the form of a check) or can often be automatically reinvested to buy additional shares of the issuing company.

At the end of the day, dividends are a form of income automation. One can either get a job and work for money (active income) or hold stock and receive dividends for doing nothing (passive income). My journey has been one of saving as much active income as possible and then converting it into passive income. (I save money from my job and then buy dividend-paying stocks, and have been doing so for a very long time.)

While one may think it takes thousands to get started, that’s just not true. In fact, I encourage you to check out my recent video about how I literally counted up loose change that was sitting around doing nothing, and converted it into a dividend stream of $30/year in perpetuity! That $30/year will now always be there, and will grow over time – how inspiring!

What Is Financial Freedom?

What is the end goal of all this income automation? At the end of the day, I aim to achieve the holy grail of dividend investing: financial freedom. This is the precise point where my stream of dividend income covers all of my living expenses.

Many dividend investors live extremely frugally and/or play geo arbitrage (they move to locations geographically that are cheaper) to achieve financial freedom quicker. (If expenses go down, it’s easier to cover said expenses, as less dividend income is required.) I totally respect everyone in the dividend community, and understand why this route is appealing. That being said, this strategy is just not for me. I enjoy living in the expensive San Francisco Bay Area and also enjoy some fancy things. As such, financial freedom will take me a bit longer than other dividend investors, and I am ok with that.

While financial freedom has the potential to totally change one’s life, how do I personally envision my future self? Honestly, not too different from my present self. I still plan on being a family man, blogger/vlogger, commercial real estate developer, digital marketer, and investor (of course). That said, I will likely utilize my freedom to up the bar with our philanthropy, travel a bit more (and cross some destinations off my bucket list), and spend even more time pursuing my passions. I truly believe that one has to stay busy and productive, even once financial freedom is achieved.

At its core, dividend investing is about investing in dividends and not stuff. As mentioned, I do enjoy some of the finer things in life. That said, I also need to keep it in perspective. Financial freedom is goal number one, and I think you’ll enjoy my recent video about this very topic.

Which Companies Pay Dividends?

It just so happens that some of the largest, most stable, and most notable brands in the world pay dividends. It’s a win-win since such blue chip companies tend to reward investors with dividend income while providing incredible stability. I like to think of it as the "sleep at night" factor. I never lose sleep owning dividend companies because (1) I’m in it for the dividends and not capital appreciation (although capital appreciation is a nice bonus) and (2) I’m confident in the long-term prospects of such companies.

Of course, not all dividend companies are great just because they pay dividends. This is where stock analysis comes into the picture. It’s critical to analyze each and every dividend stock candidate thoroughly before it is worthy of buying. That being said, this is the topic of another post, so please stay tuned. (Although, if you want to jump ahead right now, I do have a few videos on my YouTube channel covering fundamental stock analysis in depth.)

In my personal portfolio, I like representation from most major industries and sectors out there. Thankfully, I have found great dividend companies across the board. Following are some of my favorite industries: healthcare, consumer non-cyclical (think: food/beverage and basic goods), industrials, utilities, retail, restaurants, real estate (real estate investment trusts or REITS), technology, energy, transportation, and more.

Also worth noting; Dividends are not just a US-centric thing. Companies from all over the world pay dividends. It’s easy to gain international exposure via (1) US firms that do a large percentage of their business overseas and also (2) via ADRs (American Depository Receipts) where foreign-based firms trade on US stock exchanges.

Which Companies Do I Personally Like?

Want some examples? I’m personally buying Kimberly Clark (KMB) and Procter & Gamble (PG) this year. You may be familiar with Kimberly Clark because they produce such amazing brands as Kleenex tissues and Huggies diapers. You may be familiar with Procter & Gamble because they produce Tide detergent and Gillette razors. Their products are literally throughout my entire house (and most houses in America).

I personally like these companies for 2018 because they are core holdings of mine (positions that I love and I see contributing a strong percentage of future dividend income). Moreover, they appear to be "on sale" right now. While I own over 30 stocks, I only buy a handful at any given time (those that are trading at discounted valuations). In other words: While others are running away, I like to buy. I think you’ll enjoy my new video highlighting my personal investment themes for 2018, with a focus on acquiring more KMB and PG.

How Can One Get Started?

As with anything in life, it all starts with research and education. I’m a swimmer and a runner. In fact, I just swam 3,000 yards the other day (took about one hour of continuous swimming). The first 500 yards were the hardest, as my muscles felt the most fatigue and strain getting warmed up. Then, as endorphins kicked in, the rest was easy. And, I probably could have gone further, but it’s important to pace oneself and conserve power for the next time.

Dividend investing is exactly the same. Those early days will be the most difficult, as one makes mistakes and learns the basics. However, after a while, it becomes reasonably easy. In fact, the biggest challenge experienced by dividend investors is one of patience and persistence. It literally takes decades of converting active income into passive income to reach financial freedom (unless one is starting with a phenomenal base). And, this is why it’s important to "pace oneself", just as in my swimming example.

Dividend investing is not a "set it and forget it" strategy. One is not just going to invest a lump sum of money. Rather, it’s a strategy of dollar cost averaging over time. One will typically buy stock (in small, bite sized quantities) at regular intervals. Because it’s a process, I personally believe it’s always best to get started sooner than later.

If one is interested in getting started, I have found that my video on How To Invest $10,000 is particularly helpful. The most popular dividend video on my YouTube channel, it seems like many investors just starting out have $10,000 seed capital. Learn how I would personally invest my first $10,000 if I were starting all over again in the following video.

Of course, it’s important to note that I’m just sharing my personal strategy here. I cannot comment on anyone else’s situation. At the end of the day, it’s important that each dividend investor develop their own, unique strategy. Thanks for reading, and I hope to see you over on my YouTube channel!

Disclosure: I am long Kimberly-Clark (KMB) and Procter & Gamble (PG). I own both of these stocks in my portfolio.

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

All content on my blog YouTube channel is (c) Copyright IJL Productions LLC.