April Dividend Income

After 35 years of clocking in and out of work and religiously saving at least 10% annually in my 401K every year, my countdown to financial independence is in sight. Each month is a step closer and let’s look at how this past month is getting me there.

For the month of April I made $3851.96; an increase of 0.61% versus this time last year and significantly below my 12.5% growth target. It is not uncommon for my portfolio to have 1 or 2 holdings have a payout slip to a following month but in April I had 5 holdings slip their payouts to May which greatly limited my year over year growth.  

For the month, I was quiet with trading and just did my usual purchase of ETF SCHD.  I know, kind of boring but it is what it is. On a better note, I did receive 7 dividend raises from BHB, CSWC, DFS, IBM, JNJ, PG, & SO that added $116.63 to my forward annual income.

On the home front I finally got my HVAC system replaced and no one was happier than my wife as she was not a fan of keeping the wood burning stove going when I was not home. To replace both the heat and air conditioning the total bill was $13K, expensive but it should last until we hit the ripe old age of 80.  

I started work on my raised garden and finished planting all my cool weather crops and planted lettuce, radish, carrots, beans and potatoes.  I’m working on building up the second half of my raised garden which I will plant near the end of May for my warm weather crops which so far I have targeted tomatoes and cucumbers.  I will have room for a couple more plants and contemplating what else to grow.

On the work front my company went through layoffs.  We lost a very significant contract this year and seeing where our business is headed, I anticipate more layoffs every year through 2028.  While I was spared this round, and most likely a couple more I know at some point I will become a target.  I am considering pulling in my early retirement by an entire year and leave on my terms. Technically I can do it but the exact details of how will be in flux depending on my expenses.  I currently still have two children at home but once they leave it should get clearer.

Now here are the metrics we love to see.

Dividends Received

Date	Symbol	Company	Amount
4/3/23	AGR	AVANGRID	$24.81
4/3/23	ALL	ALLSTATE CORP	$5.46
4/3/23	DIVO	AMPLIFY ETF TR CWP ENHANCED DIV	$110.98
4/3/23	WMT	WALMART INC	$15.01
4/4/23	BEPC	BROOKFIELD RENEWABLE CORP	$73.91
4/4/23	GRMN	GARMIN LTD	$79.55
4/4/23	KMB	KIMBERLY-CLARK CORP	$18.00
4/5/23	IRM	IRON MTN INC	$500.07
4/5/23	TU	TELUS CORPORATION	$60.70
4/10/23	MRK	MERCK &CO. INC	$162.29
4/13/23	BBY	BEST BUY CO	$22.90
4/13/23	GSK	GSK PLC	$94.02
4/13/23	MPW	MEDICAL PROPERTIES TRUST INC	$222.94
4/14/23	AQN	ALGONQUIN PWR UTILS CORP	$206.66
4/14/23	LEG	LEGGETT &PLATT INC	$311.45
4/14/23	NEWT	NEWTEKONE INC	$148.85
4/14/23	O	REALTY INCOME CORP	$11.32
4/14/23	PKG	PACKAGING CORP OF AMERICA	$23.86
4/14/23	WPC	WP CAREY INC	$589.85
4/17/23	CPT	CAMDEN PROPERTY TRUST	$15.34
4/17/23	EPR	EPR PROPERTIES	$85.49
4/18/23	ACRE	ARES COMMERCIAL REAL ESTATE CORP	$252.35
4/19/23	BCE	BCE INC	$430.45
4/19/23	MAIN	MAIN STR CAP CORP	$38.57
4/19/23	PSEC	PROSPECT CAP CORP	$98.13
4/28/23	BNS	BANK OF NOVA SCOTIA	$38.94
4/28/23	OGE	OGE ENERGY CORP	$150.31
4/28/23	M1 Finance	M1 DIVIDEND GROWTH ACCOUNT	$59.75

Dividend Changes

SYM	2023	2022	Difference	% Change	Notes
ACRE	$252.35		$252.35	100.00%	New Position
AGR	$24.81	$23.91	$0.90	3.76%
ALL	$5.46	$3.40	$2.06	60.59%
AMNF	$0.00	$42.60	-$42.60	-100.00%	2023 Payout in May
AQN	$206.66	$307.69	-$101.03	-32.83%	Dividend Cut
BBY	$22.90		$22.90	100.00%	New Position
BCE	$430.45	$410.73	$19.72	4.80%
BEPC	$73.91	$70.08	$3.83	5.47%
BLV	$0.00	$21.29	-$21.29	-100.00%	Sold Position
BNS	$38.94	$29.01	$9.93	34.23%
CM	$0.00	$293.22	-$293.22	-100.00%	2023 Payout in May
CPT	$15.34	$14.42	$0.92	6.38%
DIVO	$110.98		$110.98	100.00%	New Position
EPR	$85.49	$85.49	$0.00	0.00%
GRMN	$79.55	$68.23	$11.32	16.59%
GSK	$94.02	$203.95	-$109.93	-53.90%	Dividend Cut
HYG	$0.00	$21.20	-$21.20	-100.00%	Sold Position
IRM	$500.07	$498.67	$1.40	0.28%
KBAL	$0.00	$2.45	-$2.45	-100.00%	Sold Position
KMB	$18.00	$17.06	$0.94	5.51%
LEG	$311.45	$269.39	$42.06	15.61%
MAIN	$38.57		$38.57	100.00%	New Position
MPW	$222.94	$192.37	$30.57	15.89%
MRK	$162.29	$149.88	$12.41	8.28%
NEWT	$148.85		$148.85	100.00%	2022 Payout in Mar
NUSI	$0.00	$18.28	-$18.28	-100.00%	2023 Payout in May
O	$11.32		$11.32	100.00%	New Position
OGE	$150.31	$142.64	$7.67	5.38%
PFF	$0.00	$48.38	-$48.38	-100.00%	Sold Position
PKG	$23.86	$4.04	$19.82	490.59%
PSEC	$98.13	$155.54	-$57.41	-36.91%	Reduced Position
TU	$60.70	$57.93	$2.77	4.78%
VCLT	$0.00	$14.96	-$14.96	-100.00%	Sold Position
WMT	$15.01	$14.75	$0.26	1.76%
WPC	$589.85	$577.88	$11.97	2.07%
XRMI	$0.00	$29.73	-$29.73	-100.00%	2023 Payout in May
M1 Finance	$59.75	$39.44	$20.31	51.50%
Total	$3,851.96	$3,828.61	$23.35	0.61%

March Dividend Income

After 35 years of clocking in and out of work and religiously saving at least 10% annually in my 401K every year, my countdown to financial independence is in sight. Each month is a step closer and let’s look at how this past month is getting me there.

For the month of March I made $5829.00; an increase of 9.09% versus this time last year. I am fairly satisfied with the result even though it is below my 12.5% growth target.  The reason for my optimism is I lost a large contribution from Newtek One (NEWT) which represented ~10% of my end of quarter monthly income as it switched from being a BDC to a bank, significantly reduced its dividend, and shifted its new dividend payout at the start of a quarter versus the end.  

For the month I did my regular purchase of ETF SCHD.  I also sold my entire position in Kimball International (KBAL) and reinvested the funds into SCHD.   KBAL shot up in price after receiving a buyout offer. However, it was an extremely small holding for me so while the total percentage return looked great the total dollars gained were minimal.

On the home front I was planning on replacing my HVAC system in April but my furnace had other ideas and decided to kick the bucket at the start of the last week of March and I have been without heat for the last couple weeks.  Luckily, I have a wood burning stove, so all is good and since I was already planning on replacing my HVAC, I had the funds available to replace it with no financial impact.  I will get my new system installed at the end of April and it should last me another 25 years, I just have to live with wood heat a few more weeks.  

On the health side, my elderly sister has left the nursing home and we set her up in a new place to live.  Her new home only represents 21% of her income so financially she should be fine.  Considering her physical limitations and somewhat negative demeanor this has been a drain both physically and mentally.  Yet now we see this coming to an end by the end of April.

With my time finally freeing up after spending years helping my extended family, I now have free time to do things for me and my immediate family.  First up is a new raised garden bed kit to grow some vegetables.  After that I want to get back to landscaping my grounds and then turn inside to the house for needed repairs & upgrades.  Feels good focusing on something productive for me & my family again. Now here are the metrics we love to see.

Dividends Received

Date	Symbol	Company	Amount
3/1/23	ALE	ALLETE INC	$180.21
3/1/23	DIVO	AMPLIFY ETF TR CWP ENHANCED DIV	$112.02
3/1/23	PNW	PINNACLE WEST CAPITAL CORP	$222.66
3/1/23	PSX	PHILLIPS 66	$32.18
3/1/23	SJM	SMUCKER J M CO	$19.93
3/1/23	XRMI	GLOBAL X FDS S&P 500 RISK	$54.32
3/1/23	XYLD	GLOBAL X FDS S&P 500 COVERED	$147.23
3/2/23	FAST	FASTENAL	$15.10
3/3/23	ENB	ENBRIDGE INC	$255.49
3/6/23	SO	SOUTHERN CO	$72.22
3/7/23	JNJ	JOHNSON &JOHNSON	$202.94
3/8/23	AMGN	AMGEN INC	$13.20
3/9/23	CMI	CUMMINS INC	$45.35
3/9/23	DFS	DISCOVER FINANCIAL SERVICES	$15.89
3/9/23	MSFT	MICROSOFT CORP	$75.65
3/10/23	CVX	CHEVRON CORP	$25.48
3/10/23	IBM	INTERNATIONAL BUS MACH CORP	$160.63
3/10/23	SNA	SNAP-ON INC	$39.50
3/10/23	UPS	UNITED PARCEL SERVICE INC	$385.12
3/10/23	WBA	WALGREENS BOOTS ALLIANCE INC	$73.51
3/13/23	MMM	3M CO	$63.79
3/15/23	AVA	AVISTA CORP	$159.42
3/15/23	EPR	EPR PROPERTIES	$85.49
3/15/23	FAF	FIRST AMERICAN FINANCIAL CORP	$171.40
3/15/23	NWL	NEWELL BRANDS INC	$25.56
3/15/23	O	REALTY INCOME CORP	$10.33
3/16/23	BHB	BAR HARBOR BANKSHARES	$56.72
3/16/23	DUK	DUKE ENERGY CORP	$70.74
3/16/23	GM	GENERAL MTRS CO	$13.55
3/16/23	OGN	ORGANON &CO	$6.43
3/16/23	PRU	PRUDENTIAL FINANCIAL INC	$561.85
3/16/23	VLO	VALERO ENERGY CORP	$36.72
3/17/23	R	RYDER SYSTEM INC	$59.68
3/20/23	CMP	COMPASS MINERALS INTERNATIONAL INC	$28.65
3/21/23	MAIN	MAIN STR CAP CORP	$68.05
3/22/23	PSEC	PROSPECT CAP CORP	$98.13
3/23/23	QCOM	QUALCOMM INC	$177.49
3/23/23	UL	UNILEVER PLC	$60.39
3/24/23	LMT	LOCKHEED MARTIN CORP	$28.18
3/24/23	WM	WASTE MANAGEMENT INC	$50.53
3/27/23	NUSI	ETF SER SOLUTIONS NATIONWIDE NASDQ	$16.46
3/27/23	SCHD	SCHWAB US DIVIDEND EQUITY ETF	$498.92
3/30/23	TROW	PRICE T ROWE GROUPS	$26.39
3/31/23	ARCC	ARES CAPITAL CORP	$588.39
3/31/23	AVGO	BROADCOM INC	$9.61
3/31/23	BEP	BROOKFIELD RENEWABLE PARTNERS PARTNERSH	$295.94
3/31/23	BP	BP PLC SPONSORED ADR	$10.40
3/31/23	CSWC	CAPITAL SOUTHWEST CORPORATION	$96.14
3/31/23	CTO	CTO RLTY GROWTH INC	$97.37
3/31/23	KHC	KRAFT HEINZ CO	$10.01
3/31/23	PEP	PEPSICO INC	$61.96
3/31/23	WEYS	WEYCO GROUP INC	$26.99
3/31/23	M1 Finance	M1 DIVIDEND GROWTH ACCOUNT	$108.69

Dividend Changes

SYM	2023	2022	Difference	% Change	Notes
ALE	$180.21	$137.32	$42.89	31.23%
AMGN	$13.20	$11.66	$1.54	13.21%
ARCC	$588.39	$551.61	$36.78	6.67%
AVA	$159.42	$146.43	$12.99	8.87%
AVGO	$9.61	$8.37	$1.24	14.81%
BEP	$295.94	$280.60	$15.34	5.47%
BHB	$56.72	$49.50	$7.22	14.59%
BLV	$0.00	$13.34	-$13.34	-100.00%	Sold Position
BP	$10.40	$8.59	$1.81	21.07%
CMI	$45.35	$40.74	$4.61	11.32%
CMP	$28.65	$28.65	$0.00	0.00%
CSWC	$96.14		$96.14	100.00%	New Position
CVX	$25.48	$23.96	$1.52	6.34%
CTO	$97.37	$61.62	$35.75	58.02%
DFS	$15.89	$12.95	$2.94	22.70%
DIVO	$112.02		$112.02	100.00%	New Position
DUK	$70.74	$66.77	$3.97	5.95%
ENB	$255.49	$249.40	$6.09	2.44%
EPR	$85.49	$77.71	$7.78	10.01%
FAF	$171.40	$163.33	$8.07	4.94%
FAST	$15.10	$12.76	$2.34	18.34%
GATX	$0.00	$55.27	-$55.27	-100.00%	Sold Position
GM	$13.55		$13.55	100.00%	Div Reinstated
HYG	$0.00	$19.47	-$19.47	-100.00%	Sold Position
IBM	$160.63	$152.12	$8.51	5.59%
JNJ	$202.94	$185.52	$17.42	9.39%
KHC	$10.01	$9.60	$0.41	4.27%
LMT	$28.18	$25.63	$2.55	9.95%
MAIN	$68.05		$68.05	100.00%	New Position
MMM	$63.79	$63.12	$0.67	1.06%
MSFT	$75.65	$67.69	$7.96	11.76%
NEWT	$0.00	$537.50	-$537.50	-100.00%	2023 Payout in Apr
NUSI	$16.46	$38.14	-$21.68	-56.84%	2022 xtra payout
NWL	$25.56	$25.56	$0.00	0.00%
O	$10.33		$10.33	100.00%	New Position
OGN	$6.43	$5.65	$0.78	13.81%
PEP	$61.96	$56.40	$5.56	9.86%
PFE	$0.00	$237.15	-$237.15	-100.00%	Sold Position
PFF	$0.00	$43.10	-$43.10	-100.00%	Sold Position
PNW	$222.66	$116.99	$105.67	90.32%
PRU	$561.85	$514.39	$47.46	9.23%
PSEC	$98.13	$155.54	-$57.41	-36.91%	Reduced Position
PSX	$32.18	$27.09	$5.09	18.79%
QCOM	$177.49	$160.93	$16.56	10.29%
R	$59.68	$54.57	$5.11	9.36%
SCHD	$498.92		$498.92	100.00%	New Position
SJM	$19.93	$17.81	$2.12	11.90%
SNA	$39.50	$25.26	$14.24	56.37%
SO	$72.22	$67.50	$4.72	6.99%
TROW	$26.39	$23.75	$2.64	11.12%
UL	$60.39	$61.97	-$1.58	-2.55%	Lower FX
UPS	$385.12	$339.60	$45.52	13.40%
VCLT	$0.00	$14.18	-$14.18	-100.00%	Sold Position
VLO	$36.72	$35.28	$1.44	4.08%
WBA	$73.51	$67.01	$6.50	9.70%
WEYS	$26.99	$25.90	$1.09	4.21%
WM	$50.53	$46.92	$3.61	7.69%
XRMI	$54.32	$52.77	$1.55	2.94%
XYLD	$147.23		$147.23	100.00%	New Position
M1 Finance	$108.69	$68.68	$40.01	58.26%
Total	$5,829.00	$5,343.37	$485.63	9.09%

Risk is the Foundation of my Investing Style

The title of this blog is an obvious give away my primary investing portfolio is dividend growth, however I also have two other portfolios that I rarely discuss or share on this blog (including holdings); a cash portfolio and a total return portfolio.

From an investing perspective I am a firm believer of a an “eyes wide open” philosophy. I enjoy studying the strength and weakness of different investing styles, what conditions they perform well in, when to utilize them and do not believe one investing style is better than another.    As such, this has led me to using different investing styles depending on my risks and timeframe need.   Being only a few years out from retirement I see 5 major risks of which I use 3 investing styles to mitigate:

1. Medical Expenses
2. Market Volatility
3. Income Replacement
4. Excessive Taxes
5. Longevity

My Method

The largest decision is determining the percentage of my wealth to assign to each portfolio and to do that I use the following method:

1. Quantify the risk.
2. Develop saving/investing goals.
3. Develop strategies.
4. Monitor progress.
5. Adjust annually.

Here is an example: 

For Income replacement I analyzed what would happen if I retired at one of the worst times in market history (1970) by using market returns and inflation rates from 1970 to 2000 and developed several investing results.  From there I choose the one I could achieve which was to start retirement with dividend income that was equal to 115% of expenses, a minimum 4% dividend growth rate, and an additional 9 months of expenses in cash to mitigate market volatility.

In this example I defined a saving/investing goal for 2 different portfolios: one for dividend growth and the second for cash.

However not all risks can be solved with saving & investing. A risk can also be avoided with lifestyle changes.

Here is an example:

To avoid the risk of excessive taxes during retirement, my strategy is to maximize my Roth IRAs and to keep my expenses and income below the long term capital gain/qualified dividend tax bracket that qualifies for a 0% tax rate. These two strategies combined could eliminate 21% to 35% of my income from federal income tax depending on when I collect social security.

As I perform my monitoring / annual adjustment steps and notice I may not achieve my goal I could supplement this by adding an additional strategy of relocation to reduce property taxes and/or state income tax.

The Flaw in my Method

I do have one flaw in my method and that is if I cannot quantify the risk it doesn’t get addressed.  One example is the risk of a boomerang child for financial or health reasons.  I have yet to figure out what the financial impact would be if an adult child returns home. 

All of the research I have seen to date is strictly anecdotal.  Some stories are benign (only living rent free), others surprisingly expensive for accommodating health issues, and some are outright morally and criminally cringe worthy stories of children robbing parents as well as abuse.

Summary

I am not a licensed professional and cannot tell you if what I am doing is the right or wrong way to approach this.  However, they way I process information it seems logical to me and who knows maybe it is just a product of me working in the Engineering field for decades and my brain is just wired differently.

February Dividend Income

After 35 years of clocking in and out of work and religiously saving at least 10% annually in my 401K every year, my countdown to financial independence is in sight. Each month is a step closer and let’s look at how this past month is getting me there.

For the month of February I made $2640.74; a decrease of 12.18% versus this time last year. This decrease was expected, last year I had some Jan dividends bleed into February and AT&T (T) paid their last full dividend prior to the cut.  Officially T is behind me now so 2^nd month of a quarter should get better.

In February I received 15 dividend raises from ALE, ALL, AVA, BCE, BEP, BEPC, CPT, IBCP, MMM, O, PEP, PRU, PSX, TROW & WMT.  Together this will add an additional $350.16 to my annual income going forward. 

For the month I did my regular purchase of ETF SCHD.  I also sold my Haelon (HLN) position which I received from a GlaxoSmithKline (GSK) spinoff.  Wasn’t too thrilled with this holding.  Once they got through the Zantac lawsuit relatively unscathed and didn’t start a dividend policy, I reached my limit and dumped this low growth no dividend dead weight position.  Proceeds from the sale were quickly reinvested into something more productive (SCHD). 

Not much going on at the home front so here are the metrics we love to see.

Date	Symbol	Company	Amount
2/1/23	DIVO	AMPLIFY ETF TR CWP ENHANCED DIV	$113.44
2/1/23	GIS	GENERAL MILLS INC	$102.68
2/1/23	T	AT&T INC	$343.08
2/1/23	VZ	VERIZON COMMUNICATIONS INC	$108.71
2/13/23	APD	AIR PRODUCTS AND CHEMICALS INC	$73.67
2/15/23	ABBV	ABBVIE INC	$234.68
2/15/23	EPR	EPR PROPERTIES	$85.49
2/15/23	HAS	HASBRO INC	$60.93
2/15/23	O	REALTY INCOME CORP	$8.16
2/15/23	OHI	OMEGA HEALTHCARE INVESTORS INC	$722.72
2/15/23	PG	PROCTER AND GAMBLE CO	$122.81
2/16/23	PSEC	PROSPECT CAP CORP	$98.13
2/23/23	ARTNA	ARTESIAN RES CORP	$215.05
2/24/23	IBCP	INDEPENDENT BK CORP MICH	$53.94
2/24/23	ODC	OIL DRI CORP OF AMERICA	$37.13
2/24/23	WSM	WILLIAMS-SONOMA INC	$14.92
2/27/23	MAIN	MAIN STR CAP CORP	$37.97
2/28/23	NUSI	ETF SER SOLUTIONS NATIONWIDE NASDQ	$16.03
2/28/23	SBRA	SABRA HEALTH CARE REIT INC	$88.35
2/28/23	M1 Finance	M1 DIVIDEND GROWTH ACCOUNT	$102.85

January Dividend Income

After 35 years of clocking in and out of work and religiously saving at least 10% annually in my 401K every year, my countdown to financial independence is in sight. Each month is a step closer and let’s look at how this past month is getting me there.

For the month of January I made $4369.93; an increase of 18.13% versus this time last year. A very nice way to start the year off.

In January I received 6 dividend raises from APD, CVX, FAST, KMB, UPS & VLO.  Together this will add an additional $151.49 to my annual income going forward.  However, AQN cut their dividend by 40% essentially negating the gain.

For the month I did my regular purchase of ETF SCHD.  I also sold my GATX position as the stock was getting too rich, with a div yield of just 1.92%, P/E of 26 and a mid-single digit dividend growth rate.   I thought my money could be put to better use by funneling all the proceeds into SCHD which has a higher yield and dividend growth rate (technically a distribution growth rate). 

Another change to portfolio was Newtek (NEWT) officially changing from a business development company to a bank holding company changing the classification of my holding from BDC to an equity dividend growth.  Since this left a gap in my portfolio for a BDC allocation of 5% I initiated positions in Main Street Capital (MAIN) and Capital Southwest Corp (CSWC). These two buys did not bring the portfolio up to my 5% allocation (almost 1% short) but my intention is to DRIP the dividends over time until I hit the desired allocation.

On the home front there is a lot to unpack.  We started the year coming off the relaxing holidays by packing up all the decorations for another year.  We closed on my father-in-law’s house and paid all his outstanding medical bills from the proceeds.  All that is left to do is get through probate even though there is little value left to the estate.  It has been hard to watch this event unfold as a lifetime of building a life is liquidated in a matter of months.  Makes your efforts for carving out a life feel insignificant knowing it can all disappear in a New York minute.  The experience has left my wife and I questioning our own situation to start cleaning up our possessions and ask why we are holding on to this or that.

In mid-January another family crisis emerged as my oldest sister, who is 68 and alone, fell and broke her leg.  For now her care has fallen into my hands and I also had to assume taking over her financials, bill paying, and finding her a place to live once she finishes rehabilitation.  This has been a challenge as she is low income and physically unable to work.  We have a plan to get her to a better place financially, but it is something that will take years to improve upon.  In the meantime, I feel confident our plan will get her a place to live with some level of dignity.

As I was dealing with the latest family crisis my daughter let us know she is finally being let go at the end of March as the company she works for is closing its doors.  Such is the life of working for biotech startups which usually have a lifespan of 5 to 7 years.  She was lucky enough to have stayed until the very end and impressed many of the board members. She believes a few of the board members may offer her a job at another of their start-ups.  Thankfully she was still living with us with the intent of saving for a home so financially the impact is lower.

Finally, just when I thought I was going to leave the month of January unscathed I came down with a case of shingles.  This is my own fault as I had been lazy about getting the vaccine.  Kept telling my wife I should get it but never got around to doing it.  Now I get to have a couple weeks of living in pain thanks to my laziness.

Enough of me droning on, here are the metrics we love to see.

Date	Symbol	Company	Amount
1/3/23	ALL	ALLSTATE CORP	$5.18
1/3/23	BBY	BEST BUY CO INC	$21.67
1/3/23	DIVO	AMPLIFY ETF TR CWP ENHANCED DIV	$113.33
1/3/23	GATX	GATX CORP	$55.27
1/3/23	WEYS	WEYCO GROUP INC	$26.71
1/3/23	WMT	WALMART INC	$14.75
1/4/23	GRMN	GARMIN LTD	$78.93
1/4/23	KMB	KIMBERLY-CLARK CORP	$17.54
1/5/23	AGR	AVANGRID	$24.57
1/5/23	IRM	IRON MTN INC	$500.07
1/5/23	TU	TELUS CORPORATION	$58.84
1/6/23	PEP	PEPSICO INC	$61.56
1/9/23	MRK	MERCK &CO.	$162.29
1/9/23	XRMI	GLOBAL X FDS S&P 500 RISK	$52.92
1/9/23	XYLD	GLOBAL X FDS S&P 500 COVERED	$141.73
1/12/23	GSK	GSK PLC	$92.07
1/12/23	MPW	MEDICAL PROPERTIES TRUST INC	$217.82
1/13/23	AQN	ALGONQUIN PWR UTILS CORP	$344.36
1/13/23	KBAL	KIMBALL INTERNATIONAL INC	$2.54
1/13/23	LEG	LEGGETT &PLATT INC	$307.57
1/13/23	O	REALTY INCOME CORP	$3.34
1/13/23	PKG	PACKAGING CORP OF AMERICA	$20.37
1/13/23	WPC	WP CAREY INC	$587.14
1/17/23	CPT	CAMDEN PROPERTY TRUST	$14.42
1/17/23	EPR	EPR PROPERTIES	$85.49
1/18/23	ACRE	ARES COMMERCIAL REAL ESTATE CORP	$252.35
1/19/23	BCE	BCE INC	$403.52
1/19/23	PSEC	PROSPECT CAP CORP	$98.13
1/23/23	AMNF	ARMANINO FOODS DISTINCTION INC	$44.10
1/27/23	OGE	OGE ENERGY CORP	$148.72
1/30/23	NUSI	ETF SER SOLUTIONS NATIONWIDE NASDQ	$15.89
1/31/23	BNS	BANK OF NOVA SCOTIA	$39.24
1/31/23	CM	CANADIAN IMP BK COMM	$309.85
1/31/23	M1 Finance	M1 DIVIDEND GROWTH ACCOUNT	$47.65

December Dividend Income

After 35 years of clocking in and out of work and religiously saving at least 10% annually in my 401K every year, my countdown to financial independence is in sight. Each month is a step closer and let’s look at how this past month is getting me there.

For the month of December I made $5753.31; an increase of 7.51% versus this time last year and since this is December I can also report my annual dividend income overall increased 10.2%.

In December I received 4 dividend raises from AMGN, AVGO, PFE & WM.  Together this will add an additional $52.48 to my annual income going forward.  However, the PFE raise of 2.5% was too low for my liking and I sold the entire position and reinvested it into SCHD (note PFE is a component of SCHD) which added an additional $102.98 to my forward dividend income.

Speaking of SCHD this is a good lead into my weekly buy and sell reports.  Some regular readers may have noticed I stopped reporting my weekly activity and its for a simple reason.  Back in June I recognized that dividend ETFs, specifically SCHD, became too cheap to ignore and I started a position.  By September I realized an ETF was the most practical method for me to buy into a down market.  Since that time, most of my buys have been and still are SCHD. As such my weekly reporting became repetitive (bought SCHD, bought SCHD, and so on).  Until I stop buying SCHD I saw no use in the same boring posts every week that I bought SCHD.

On the home front my wife & I had been so focused on resolving family issues we lost track of time and Christmas seemed to appear out of nowhere.  We were so distracted neither of us felt in the holiday spirit.  This all changed however once family started to arrive at our house to celebrate.  Even though it was bitterly cold that Christmas morning (14F / -10C) all the issues and problems just melted away as we exchanged stories and laughed all the while enjoying the warmth a woodburning stove, good food and drink.  We even hit a point where my children and nieces found a stash of old pictures and when we investigated what they were laughing about there was some pics of me from the 80’s.  The running joke of the night was that I was an extra in the Netflix series Stranger Things.

Here is one of the pics they had and that is me on the left with my younger brother. I still remember the day that photo was taken.  I gave my brother an old pair of my hockey skates and he was trying them out on the ice.

Enough of me droning on, here are the metrics we love to see.

Date	Symbol	Company	Amount
12/1/22	ALE	ALLETE INC	$171.21
12/1/22	CMI	CUMMINS INC	$45.07
12/1/22	DIVO	AMPLIFY ETF TR CWP ENHANCED DIV	$114.78
12/1/22	PNW	PINNACLE WEST CAPITAL CORP	$220.15
12/1/22	PSX	PHILLIPS 66	$29.46
12/1/22	SJM	SMUCKER J M CO	$19.80
12/1/22	UPS	UNITED PARCEL SERVICE INC	$358.39
12/5/22	ENB	ENBRIDGE INC	$246.48
12/5/22	PFE	PFIZER INC	$243.02
12/6/22	JNJ	JOHNSON &JOHNSON	$201.66
12/6/22	SO	SOUTHERN CO	$71.50
12/8/22	AMGN	AMGEN INC	$11.94
12/8/22	DFS	DISCOVER FINANCIAL SERVICES	$15.79
12/8/22	MSFT	MICROSOFT CORP	$75.44
12/8/22	VLO	VALERO ENERGY CORP	$35.28
12/9/22	SNA	SNAP-ON INC	$39.24
12/12/22	CVX	CHEVRON CORP	$23.96
12/12/22	IBM	INTERNATIONAL BUS MACH CORP	$158.87
12/12/22	MMM	3M CO	$63.12
12/12/22	SCHD	SCHWAB US DIVIDEND EQUITY ETF	$129.63
12/12/22	WBA	WALGREENS BOOTS ALLIANCE INC	$72.65
12/13/22	UL	UNILEVER PLC SPON ADR	$55.21
12/15/22	AVA	AVISTA CORP	$150.98
12/15/22	EPR	EPR PROPERTIES	$85.49
12/15/22	FAF	FIRST AMERICAN FINANCIAL CORP	$169.77
12/15/22	GM	GENERAL MTRS CO	$13.55
12/15/22	NWL	NEWELL BRANDS INC	$25.56
12/15/22	O	REALTY INCOME CORP	$1.46
12/15/22	OGN	ORGANON &CO	$6.37
12/15/22	PRU	PRUDENTIAL FINANCIAL INC	$533.20
12/15/22	QCOM	QUALCOMM INC	$177.49
12/16/22	BHB	BAR HARBOR BANKSHARES	$56.25
12/16/22	BP	BP PLC SPONSORED ADR	$9.45
12/16/22	DUK	DUKE ENERGY CORP	$70.07
12/16/22	R	RYDER SYSTEM INC	$59.25
12/16/22	WM	WASTE MANAGEMENT INC	$46.92
12/20/22	CMP	COMPASS MINERALS INTERNATIONAL INC	$28.65
12/20/22	PSEC	PROSPECT CAP	$98.13
12/29/22	ARCC	ARES CAPITAL CORP	$625.16
12/29/22	NUSI	ETF SER SOLUTIONS NATIONWIDE NASDQ	$15.53
12/29/22	TROW	PRICE T ROWE GROUPS	$25.68
12/30/22	AVGO	BROADCOM INC COM	$9.61
12/30/22	BEP	BROOKFIELD RENEWABLE PARTNERS	$280.59
12/30/22	BEPC	BROOKFIELD RENEWABLE CORP	$70.08
12/30/22	CTO	CTO RLTY GROWTH INC	$88.27
12/30/22	KHC	KRAFT HEINZ CO	$9.92
12/30/22	LMT	LOCKHEED MARTIN CORP	$28.01
12/30/22	NEWT	NEWTEK BUSINESS SVCS CORP	$578.85
12/30/22	M1 Finance	M1 DIVIDEND GROWTH ACCOUNT	$86.37

November Dividend Income

After 35 years of clocking in and out of work and religiously saving at least 10% annually in my 401K every year, my countdown to financial independence is in sight. Each month is a step closer and let’s look at how this past month is getting me there.

For the month of November I made $3055.39; a decrease of 5.56% versus this time last year. With the shortfall primarily from the AT&T dividend cut earlier in the year.

In November I received 3 dividend raises from ARTNA, MRK & SNA.  Together this will add an additional $77.50 to my annual income going forward. 

On the home front we had a little excitement as I stopped someone from stealing my son’s car.  While I prevented the theft the damage was already done.  He smashed the rear passenger window and dismantled the steering wheel column to hotwire the car.  Looking back, it was stupid of me to engage as there were two others waiting in a nearby car which was also stolen.   I could have been shot or severely beaten but adrenaline took over and guess I was not thinking clearly.  Police eventually tracked down the would-be robbers as well as the other stolen car thanks to my description.  At least no one was hurt and we have insurance.

Hopefully your month was not as exciting unless the excitement was over getting dividends.

Date	Symbol	Company	Amount
11/1/22	CM	CANADIAN IMP BK COMM	$291.76
11/1/22	DIVO	AMPLIFY ETF TR CWP ENHANCED DIV	$108.62
11/1/22	GIS	GENERAL MILLS INC	$102.68
11/1/22	T	AT&T INC	$338.00
11/1/22	VZ	VERIZON COMMUNICATIONS INC	$106.86
11/1/22	XRMI	GLOBAL X FDS S&P 500 RISK	$53.42
11/1/22	XYLD	GLOBAL X FDS S&P 500 COVERED	$141.30
11/14/22	APD	AIR PRODUCTS AND CHEMICALS INC	$73.25
11/14/22	IBCP	INDEPENDENT BK CORP MICH	$51.13
11/15/22	ABBV	ABBVIE INC	$221.47
11/15/22	EPR	EPR PROPERTIES	$85.49
11/15/22	HAS	HASBRO INC	$60.25
11/15/22	OHI	OMEGA HEALTHCARE INVESTORS INC	$722.72
11/15/22	PG	PROCTER AND GAMBLE CO	$122.01
11/17/22	PSEC	PROSPECT CAP CORP	$98.13
11/23/22	ARTNA	ARTESIAN RES CORP	$213.99
11/23/22	FAST	FASTENAL COM	$13.29
11/25/22	ODC	OIL DRI CORP OF AMERICA	$36.81
11/25/22	WSM	WILLIAMS-SONOMA INC	$14.92
11/29/22	NUSI	ETF SER SOLUTIONS NATIONWIDE NASDQ	$15.69
11/30/22	SBRA	SABRA HEALTH CARE REIT INC	$87.91
11/30/22	M1 Finance	M1 DIVIDEND GROWTH ACCOUNT	$95.69

I Might Build a Bridge

The closer I get to my retirement goal the more I focus on risk analysis.  Up to this point of my journey I have viewed risk from a macro or big event perspective.  The process for mitigating the risk was fairly straight forward, I would calculate the total financial value of the risk, plan a cash position to mitigate, and call it a day. 

However, recently I decided to take a more micro view by year to see how much of my planned income was being exposed to market risk and it changed my view on how much emergency cash I was allocating foe sequence of return risk.

Under our current plan I will retire at 59 and my wife will retire at 65 while I ride on her health insurance until we both switch to Medicare and file for Social Security at age 67.  Financially we could both retire at 59 but my wife has only recently entered back into the workforce and loves her job working with special needs children. 

As long as my wife finds it rewarding, I will not push her to retire early but will take advantage of it for the healthcare and income.  Until she hits 65, the gap in income will be backfilled from our dividend checks that keep rolling in.  Considering her earned income from age 59 to 64, 69% of our annual income will be exposed to market risk.

After my wife retires, we have a 2-year gap from age 65 to 66 with no earned income and no social security.  Our entire annual income will come from our dividends which equates to 100% of income that will be exposed to market risk.  After that we both collect at 67 and our income exposed to market risk drops down to 41%. 

I was comfortable with risk exposure from 59 to 66 however my wife was not.  We have always had an agreement that since our finances are combined, we have to be on the same page. To get us on the same page I had roll up my sleeves and come up with a different solution we would both be comfortable with.

My search landed on the concept of using a social security bridge.  In short, the bridge concept is using retirement funds for income needs until you are eligible for the maximum social security payout at age 70.  This is not a new concept and it does have drawbacks with the two largest being; longevity (lack thereof) and needing income now (i.e., little to no retirement savings).  The only added twist for us was the funds had to have no exposure to market risk and we would not reduce our existing dividend portfolios. 

Regarding longevity, if it was just myself this would be a no-go but my wife’s side of the family tend to have long lives into their early 90s and as such this concept had merit for consideration. As far as a funding source it left us with one choice, my current 401K plan (wife’s employer does not offer a 401K). 

The next piece was selecting a source that did not have exposure to market risk.  The options available are cash, CDs, government bonds, or an annuity.  Cash is a no-go for me as it would earn near 0 for 10 years.  Building a CD ladder might be viable using brokered CDs but I run the risk of lower interest rates in the last 5 years.  For bonds, an ETF or mutual fund would not work because you would be exposed to bond market risks so it would have to be laddered individual government bonds held to maturity. The simplest approach would be to use an annuity.

In the past I have expressed buying a lifetime annuity would not be a good fit for me as I already have a lifetime annuity with a built-in COLA via social security and we are willing to take on risk for bigger portfolio gains/growing dividends. 

A 10 year annuity on the other hand fits in perfectly for this scenario.  I would consider this as a viable option as from a return perspective it sits neatly between CDs and bonds with the returns being +/- 0.5% of those options after annuity fees are factored in (slightly better than a CD and slightly below individual bonds).  For this analysis we chose to use the annuity and would fund it with 10% of our portfolio coming from my 401K and the payout would be the same as claiming social security at age 62.

Implementing the annuity and moving our social security claim out to age 70 changed our exposure to market risk with every age bracket improving except the 67-69 range which increased from 41% to 72%.  The largest impact is in the 70+ range as we are looking at a potential 20 year period with just 28% of income exposed to market risk.

Advantages & Disadvantages

The long-term reduction in risk reduces my sequence of returns risk which in turn reduces my emergency cash position by 44%.  This money can now be funneled back into the stock portfolio. Disadvantage is the portfolio value at time of death (circa age 90) would be 5.1% lower.  

From a tax perspective we also get a slight improvement as our projected effective tax rate after age 70 would drop from 8.7% to 7.89% but the downside is our effective tax rate from age 67 to 69 goes up from 8.7% to 15.3%.  Stretching this out over the full 30 years we will only pay a projected $4,000 less in lifetime taxes which is a negligible amount and hardly a benefit.  However, the important piece is the increase in income and discount in taxes comes when we need income the most at the end of life.  Expenses in retirement are not a linear straight line going up.  It’s more of a rollercoaster where expenses gradually go down but start steadily rising in later years as medical costs and assistance needs become greater. 

Other Considerations

Raising the monthly bridge payout equal to what we would have received at age 67 and 70 were considered. When I ran these two scenarios my wife loved it but I just could not warm up to it. In both scenarios we would not have enough funds from my current 401K and as such we would have to pull funds from our other portfolios. Getting a larger payout on the front-end at the sacrifice of growing dividends on the back-end when we need the most income for health care or long term care just did not sit well with me.

Declining cognitive ability is something we have both considered and highly probable based on my wife’s family medical history.  Not an enjoyable conversation to have for sure but a reality we need to address. A larger social security payout diminishes some of that concern as it removes some decision-making regarding investments.

Lastly, we considered that current state of the Social Security program.  Will benefits remain the same, get cut or eliminated completely?  We both agreed for now its nothing more than political banter.  The voting block for both Boomer and Gen X is too large and any politician looking to cut or eliminate social security would be committing political suicide.

Conclusion

The beautiful part of marriage is the ability to compromise. While I initially approached this with skepticism and my wife with optimism we met part way. We both liked the use of 10% of our portfolio as a bridge as it brings her satisfaction of less risk but still leaves enough on the table for significant future returns. Those future returns should be enough to fund any long term care my wife may need and still have the ability to leave our children with a decent inheritance.

When I started this process I thought there was no need for a bridge, but after running through different scenarios I have changed my tune. This may be the most affordable route to buying longevity insurance via social security.

Buys and Sells for the Week 11/4

Markets recovered off of October lows and stalled. Guessing we won’t see significant movement until post elections. Here are my trades for the week:

1. Schwab U.S. Dividend Equity ETF  – increased position – With a P/E ratio of 13.48 I view this as the best way to buy into the market right now. Grabbed 6.86 shares @ $72.86 and a 3.4% yield.
2. CTO Realty Growth (CTO)  – increased position – SCHD does not include REITs. Grabbed 10.8 shares @ $20.18 and a 7.53% yield
3. United Parcel Service (UPS)  – increased position – Big brown is my largest position but at this price it doesn’t hurt to add a little more. Grabbed 1 share @ $163.15 and a 3.73% yield.

October Dividend Income

After 35 years of clocking in and out of work and religiously saving at least 10% annually in my 401K every year, my countdown to financial independence is in sight. Each month is a step closer and let’s look at how this past month is getting me there.

For the month of October I made $3672.03; an increase of 10.93% versus this time last year. This is below my 12.5% goal but still acceptable as most of my new and reinvested funds have been buying stocks that payout in the last month of a quarter.

In October I received 3 dividend raises from ABBV, ARCC & PNW.  Together this will add an additional $309.73 to my annual income going forward.  The bulk of that comes from ARCC with their large 11.6% raise.  Looking at next month AT&T will be the big question mark if they are returning to their traditional November timeframe for announcing a dividend raise.

On the home front I spent my time getting the house ready for winter. Only things I have left to do is change the oil in my snow blower and clean my chimney before I startup the woodstove and wait for that first snowfall.  

At work it is time to renew my benefits. Out-of-pocket costs increased 9.16% with a breakdown of each benefit as follows, Medical Insurance +10.45%, Life Insurance +6.1% and Disability Insurance +4.04%. 

One last cool thing I love about this month is it changes my retirement calculator. In my new image at the top of the post the years column went from 5 to 4, it is getting real baby!

Date	Symbol	Company	Amount
10/3/22	AGR	AVANGRID	$24.34
10/3/22	ALL	ALLSTATE CORP	$5.14
10/3/22	DIVO	AMPLIFY ETF TR CWP ENHANCED DIV	$100.86
10/4/22	GRMN	GARMIN LTD	$77.51
10/4/22	IRM	IRON MTN INC	$500.07
10/4/22	KMB	KIMBERLY-CLARK CORP	$17.37
10/6/22	GSK	GSK PLC	$101.60
10/6/22	TU	TELUS CORPORATION	$56.13
10/7/22	MRK	MERCK &CO. INC	$152.21
10/11/22	BBY	BEST BUY CO INC	$21.38
10/13/22	MPW	MEDICAL PROPERTIES TRUST INC	$208.12
10/14/22	AQN	ALGONQUIN PWR UTILS CORP	$338.60
10/14/22	KBAL	KIMBALL INTERNATIONAL INC	$2.51
10/14/22	LEG	LEGGETT &PLATT INC	$303.42
10/14/22	WPC	WP CAREY INC	$583.13
10/17/22	CPT	CAMDEN PROPERTY TRUST	$14.42
10/17/22	EPR	EPR PROPERTIES	$85.49
10/17/22	PKG	PACKAGING CORP OF AMERICA	$20.15
10/19/22	BCE	BCE INC	$388.63
10/20/22	PSEC	PROSPECT CAP CORP	$98.13
10/28/22	OGE	OGE ENERGY CORP	$147.03
10/31/22	AMNF	ARMANINO FOODS DISTINCTION INC	$44.10
10/31/22	BGS	B&G FOODS INC	$283.29
10/31/22	BNS	BANK OF NOVA SCOTIA	$37.97
10/31/22	NUSI	ETF SER SOLUTIONS NATIONWIDE NASDQ	$15.71
10/31/22	M1 Finance	M1 DIVIDEND GROWTH ACCOUNT	$44.72