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Posted by Martin February 29, 2016
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Put selling against dividend paying stocks strategy: sold (ESV) April puts


Taking on the damage control from trading SPX spreads. I tried hard to get into SPX trading but I wasn’t able to make any profit.

I actually lost everything I ever made selling puts against dividend stocks.

I am not saying that I will never trade SPX again. Never say never. I might go back one day, but currently I am so under-capitalized for trading this instrument, that I cannot trade it successfully anymore.

You really need at least $50,000 dollars to trade spreads against SPX successfully. If you trade smaller account, you are undertaking bigger risk than necessary and most likely lose money.

Why? Because of your emotions. I could see my emotions getting me into a huge pressure over possibly losing $100 dollars! Yes, just $100 dollars loss became a burden to me.

Then I knew, that was my end of trading this instrument until I rebuild my account (again, yes I must admit I wiped out my account).

Is it possible to recover an account and grow it from $1,500 or so back to $50,000 dollars?

I believe it is possible. It will not happen overnight, but over the course of a few years yes, it is possible.

I have enough data to show my trading career looking for the right strategy which works for me:

 
Account Value Comments
 

As you can see, at first I was a bit successful trading whatever I could. Yet I lost money and had to start again. I found, learned, studied, and adopted put selling strategy. I increased my account from about $1,900 to $21,000 account in a year. I was so full of myself and I wanted more. I started trading (selling OTM) naked puts and naked calls at the same time (short strangles).

I overdone it (traded more than I could afford in case I got assigned) and the tide started turning against me.

Then I blamed the stocks (assignment risk, earnings risk, etc.) and continued trading SPX only.

But my strategy for trading spreads against SPX was bad (actually non-existent). You can see how quickly I lost my money.

The lesson is – stay with what works for you.

This is why I am returning back to trading options against dividend paying stocks.

 

 · Here is my strategy:

 

You must trade this strategy only against stocks you are willing to own.

1) Sell puts against dividend stocks as long as you get assigned.
2) If you get assigned, keep the stock and sell calls against the stock
3) Sell calls against the stock as long as you get assigned
4) While waiting for assignment collect dividends.

 

 · Put selling against Ensco (ESV)

 

For the reasons above I am selling puts against Ensco (ESV) which pays dividends. It is a risky stock. The company is involved in offshore contract drilling services to the oil and gas industry worldwide. Thus it is tied to oil price and if the oil stays this low, who knows what can happen. Yet, I am willing to take this risk and I am willing to own this stock should I get assigned.

In my previous post I wrote about selling puts against PSEC. The difference with ESV is that the volatility of this stock is a lot higher and I could afford to sell shorter term – April and collect nice premium 0.63 or $63 dollars.

If by April the option becomes worthless, I will be able to sell another put option. If the stock gets to 0.05 before expiration I will buy it back to release money and sell a new option.

If I get assigned (either early or at expiration) I will start selling calls (covered call strategy).

 
ESV
 

I now will be trading both stocks – PSEC and ESV as long as I grow my account enough to switch into more expensive and somewhat better, less risky, dividend stocks such as ABT, CO, O, ADM, VLO, etc.

As of now I need to stay with the cheap stocks and work it up. I did it once. I am positive I can do it again.

 

 · Don’t go anywhere! Subscribe!

 

Yes, stay with me and follow my trades to see how they work and how you can make money following the same strategy.

I created a Facebook group where I post my put selling strategy. Join me and see for yourself!

 
 




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Posted by Martin February 24, 2016
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New dividend stock purchase – Valero (VLO)


I was trailing this stock down since I put it on my radar to purchase. In this post you can review the entire process of using this trailing strategy.

And on February 22nd I purchased 17 shares of Valero (VLO) stock. I like the stock and its data.

 
Valero
 

Two days ago, my price target was hit and I purchased 17 shares. It could have been a better result if the stock showed some more weakness, but I am satisfied with the purchase. I did all I could do to maximize my purchase power although it didn’t play better than I expected.

 
Valero
 

Now, I put my dividend reinvest to autopilot (DRIP) and continue reinvest dividends for the next 25 years or until all my dividend income reaches $1,000 per month. Then I will stop using DRIP and switch to selective dividend reinvestment program.
 
 




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Posted by Martin February 18, 2016
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Going back to selling puts against dividend paying stocks strategy: sold (PSEC) Aug put

Going back to selling puts against dividend paying stocks strategy: sold (PSEC) Aug put

Correction: I collected $89 dollars and not $75 premium as mistakenly shown in this post.
 
 

I must admit that I am getting frustrated trading spreads against SPX (S&P500). It is extremely hard trading that damn index. The market is volatile and whenever I sell calls, the market follows for a few days, then reverses and goes against me hard. So I sell puts and the saga continues. So far, I wasn’t successful trading spreads against the index. It makes me mad as a hell, really mad, but I need to stop bleeding my account.

Some time ago I wrote a post about trading options against dividend paying stocks.

In that post I wrote that it was a win-win situation trading options against dividend paying stocks. The strategy is simple and it goes like this:

 

 · Selling puts against dividend stocks

 


1) You sell puts against the dividend paying stock as long as you get assigned.
2) Once you get assigned to the stock, you start selling calls as long as you get assigned.
3) In the meantime, while waiting for the call assignment you keep collecting dividends.
4) Rinse and repeat.

What can go wrong here, right?

Honestly, I do not see many wrong goings here. If the dividend stock is a good one, the worst case scenario is that you get assigned and the stock goes lower, so you end up sitting at a losing stocks. But, your cost basis is lower than if you bought outright and you keep collecting dividends. So, who cares?

I asked myself why I even stopped doing this. Then I realized, that I was trading options against stocks which I never wanted to be assigned.

And the rule #1 here is – sell puts only against stocks you are OK to own.

I didn’t want to own those stocks, or I was trading options against stocks using margin thus I could not afford to be assigned. And when the option got exercised early, I had a margin call problem.

Then the early assignment was a problem to me. Then trading options that way became dangerous. I started losing money. And I decided to abandon that strategy.

So, I decided to resurrect this strategy and trade options against dividend paying stocks. But, this time I am really OK if I get assigned. This is a big relief. You do not have to worry about the stock price or assignment. You just sell the put option and then wait. It either expires worthless, so you are free to sell it again, or you will be required to buy 100 shares (or more if you sell more contracts) of the stock and start collecting dividends.

Since I trashed my account recently, I am at the beginning of my journey again. I have to start small and work my way up again.

So here is my strategy to start with a small account. I can only dedicate $600 dollars to this strategy. Not ideal, but I have no choice. I will sell my first contract and in the meantime while waiting for its expiration/assignment I will be saving money to be able to sell more contracts. Working it slowly back up.

If I get assigned I will not be able to start selling calls right away. Only one contract on the stock such as PSEC is close to worthless and it will make no sense due to fees and commissions. So I will keep the assignment in my portfolio collecting dividends and waiting until I save more money to sell a new contract. Once I have at least 400 shares (4 call contracts) I will start selling calls as long as I get assigned and sell the shares.

 

 · Trade detail

 

I decided to start this strategy with Prospect Capital Corporation (PSEC).

It is an affordable stock for me and my strategy and I think it is an OK stock to start with. I own this stock, I have owned it for years and I am OK to add to my position should I get assigned.

I sold 1 naked put contract last Tuesday against PSEC:

 
Sell to open 1 PSEC August 19th ’16 6.00 put @ 0.75
 

 

 · What’s next?

 

I collected $75 dollars premium. I also put aside $600 dollars in case I get assigned.

Now the trade outcomes are:


1) The option gets to 0.05 price two or three weeks before expiration – I buy it back to release money.
2) The option will have value all the way until expiration (if the stock will be trading at $6.00 a share “dancing at the floor” or around, but expires worthless – I keep the premium, release cash and repeat the trade.
3) The option gets ITM (in the money) and I get assigned – I keep the stock, start collecting the dividends and continue saving money for the next trade.

 
Here is a current record of the trade I opened last Tuesday:

 
VLO
(Click to enlarge)
 




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Posted by Martin February 16, 2016
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Dividend Investor: Buying Valero (VLO) using OTO order in ROTH IRA account


UPDATE 02/19/2016
Today, the stock went up +2.68%. Our new OCO limit order price increased as is shownb in our spreadsheet calculating our entry price:
 
VLO
(Click to enlarge)
 
Since our previous limit price is lower than today’s one ($57.84 previous day limit) we will keep our previous limit in place. We will not be moving it higher as that would cause us paying more for our shares.

If the stock moves higher on Monday, we will probably get executed and buy the stock. If it moves lower, we will continue trailing the price down with the stock.
 
 
 

UPDATE 02/18/2016
Valero sold off today quite a lot. It is now down -3.84%. If I have bought this stock the first day when I posted this article, showing my strategy of buying a stock in a down market, I would be already sitting on a significant loss.

This strategy is now helping me buying cheaper and even more shares than before! Before I could afford buying 16 shares, now I will be able to buy 17 shares of this stock!

I updated my OCO order in my TOS platform. Now it looks like this:
If the last price of VLO is equal or higher than 57.84 then buy 17 shares of VLO at 57.84 limit.

 
VLO
(Click to enlarge)
 

VLO
(Click to enlarge)
 
 
 

UPDATE 02/17/2016
The stock moved down slightly and the new buy limit could be moved lower from $59.28 tp $59.17. The new order will be:

If the last price of VLO is equal or higher than 59.17 then buy 16 shares of VLO at 59.17 limit.

 
VLO
(Click to enlarge)
 

VLO
(Click to enlarge)
 
 
 
 
 

In my last post about how to buy stocks in a falling market I described a strategy how to be buying dividend stocks and squeeze as much money as possible out of the trade and take advantage of a falling price.

Some dividend investors do not care and buy stocks right away when they can, but I like to play with it and wait for the stock price to get to the level I want.

Sometimes you buy a stock and as soon as you buy the stock starts falling. Many times it goes so low that you start questioning yourself why you didn’t wait a few days and buy the stock cheaper.

Sometimes it is greed which makes you to buy a stock too early.

For example, I was greedy to buy Archer-Daniels-Midland Company (ADM) so much that I forget my strategy and bought the stock as soon as I saved my minimum amount for purchasing the stock.

I bought ADM at $37.09 a share. Soon after the stock dropped below $30 a share.

 
ADM
(Click to enlarge)
 

You may say that it doesn’t matter. From 25 year investing horizon time we invest for it doesn’t matter if you buy the stock for $37 a share or $31 a share. In the long term it doesn’t make any difference and in 25 years this stock will be way up from today.

Well, maybe. Maybe it doesn’t matter to you, but it does matter to me. Why?

It’s because of the dividends and limited amount of money available to invest.

See, I bought 27 shares of ADM only when I was buying at $37.09 with my $1,000 saved amount money. If I wasn’t greedy and tracked the price down, I could buy 32 shares at $31 a share. That is 5 shares difference and those 5 shares could bring in $1.5 dollars more in dividends.

Instead of receiving $8.10 dollars in dividends every quarter, I could have $9.6 dollars in dividends. And that is a significant difference to me. Since I am reinvesting dividends using DRIP, I could buy more shares too. My investment could be growing faster! Do you see my point?

I am not going to make the same mistake with my new purchase – Valero (VLO).

Although this strategy is not bullet proof, it still can help you to buy the stock cheaper. Of course, you can get filled into the stock on a reversal and yet later the on the stock may reverse and continue down again. If that happens, I am still OK with this strategy knowing I have done all I could do to buy as cheap as possible.

And here is a reason why I am now going to use this strategy to buy into VLO.

 

 · How is Valero making money

 

Valero is a dividend growth company. It is refining conventional gasolines, distillates, jet fuel, asphalt, petrochemicals, lubricants, and other refined products as well as a slate of premium products including CBOB and RBOB, gasoline meeting the specifications of the California Air Resources Board (CARB), CARB diesel fuel, and low-sulfur and ultra-low-sulfur diesel fuel.

 

 · Why I like Valero

 

As I said, Valero (VLO) is a dividend growth company. It has been growing dividends for 5 consecutive years.

 
VLO
(Click to enlarge)
 
 

VLO
 

VLO
 

VLO
 

The dividend yield, growth, payout ratio, and YOC5 are great. There is only one issue that in 2010 the company seems to cut the dividend. But since then it is recovering and increasing the dividend every year. Recently VLO increased the dividend by 7%, which is impressive.

The stock is now dragged down by market panic and selloff, also oil glut has impact on the stock price as it recently sold of too along with the oil price.

As usually, the stock is going down with oil because of lame investors misunderstanding the stock and its business. Valero is a refinery company and it benefits from low oil prices and per Carl Larry, head of oil and gas for Frost & Sullivan LP in Houston, it is a best bet to be in refinery stocks these days. “They have the luxury of low crude feedstock prices and high demand for their products,” he added.

The longer the prices of oil stay at the lows, the more the refinery companies will benefit from it.

 
VLO
 

There is one more thing I like about Valero: its P/E and PEG. The P/E today is at 7.25 which compared to 8.80 P/E of the industry indicates a good growth potential.

The PEG is at 0.19 which is excellent (0.88 industry PEG).

 

 · Conditional OTO buy order

 

If you read my previous post about OTO order you know that I created a spreadsheet which helps me to calculate the entry price for the stock and then trace the pride down with the stock.

Here is my initial calculation:

 
VLO
(Click to enlarge)
 

Note the order wording at the bottom of the picture above (If the stock price is at or above $59.28 then buy 16 shares of VLO at 59.28 limit price).

And here is how that order looks like when entered in TOS:

 
VLO
 

VLO
(Click to enlarge)
 

Let’s see what happens tomorrow. If the stock continues lower tomorrow and in the following days, I will be tracking my buy order lower and lower as long as the price reverses, the price hits my buy limits and I buy the stock.

I will be updating this post with the new orders until the stock is purchased. Once the stock is purchased, I will use DRIP to reinvest dividends.
 




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Posted by Martin February 11, 2016
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Markets still flashing a recession


CNBC has it sometimes right, be it Rick Santelli or Carter Worth. Although many technical analysts saw this way before Carter, it holds water. Watch and judge for yourself:

 

 




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Posted by Martin February 09, 2016
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Is Yellen going to sway the markets tomorrow? Probably not.


But some of those FED addicts may hope for it.

All of us others let’s be prepared for any outcome and make our trades accordingly.

Those who hope for Yellen saving the trend will be probably disappointed tomorrow and even if the market shows us some push, I believe, we are way beyond any trend repair. It would take an enormous push or a constant growth to reverse this trend.

And unfortunately, there is no catalyst out there for a push or a constant growth. So even if we jump higher, such bounce will be sold off. And I will do the same if that happens.

Here is a reason for my bearish stance:

SPX trend

This is a chart from the beginning of the month (February). The magenta lines indicate a regression channel. The small dashed lines are my own projections. At the beginning of each month I align them with the magenta regression channel lines. This was January alignment.

As you can see, over the January course, the regression channel sloped further down, away from my dashed lines clearly indicating that the bear market is deepening. To repair this market, we would have to rally above 2050 and stay there for a prolonged time to start reversing the channel into upward sloping one.

But there is no strength in the market to do that. As of now, our best shot would be a relief rally to 1940 before we sell off again.




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Posted by Martin February 05, 2016
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January 2016 trading, investing, and dividends results


January 2016 is over and it is time to report my trading and investing results. We are in a bear market and it may offer a great investing and trading opportunity although it may look scary at first.

Many will make the bear market look and speak of it as if it was the end of the world and end of stocks, stock market, and capitalism. No, it is not and it will not be. Even though it may feel gut wrenching you stay the course no matter what is happening around you.

You need to review and always have on mind your goal and strategy. As an investor I continue investing into dividend growth stocks, reinvesting dividends and building the wealth. I will do so even if the stock market tumbles, people panic, pundits saying the sky is falling, or all tumble is released. Why?

Because I invest into dividend growth stocks for the next 20 years. And a time horizon like this no crisis is big enough and no crisis lasts long enough to hurt me or my portfolio. In 2020 no one will remember a bear market in 2008 or 2016 no more than just a historical fact that it happened. Same as in 1929.

As a trader I still continue learning trading option spreads successfully to create a consistent income equal to dividends. I am not yet there and I am still losing money. But I take it as a tuition.


 

 
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 · January 2016 trading results

My January trading didn’t start well. Once again I found myself overinvested and opened a few trades which turned against me and I had to close them for a loss. I made new rules at the beginning of the year. One rule was to no longer roll the trades but rather take a small loss than later take a large one.

Last year, I had trades where I could close a trade for $100 or $200 dollars loss. Yet rolling it I created a loss of $3,000 dollars. So no rolling of spreads anymore.

And again I didn’t keep my trades small and risked more than I could afford to lose. Greed is a good servant, but it is a bad master.


 

 
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I consider myself a novice in trading options and I have a lot to learn. Still I want to post my trades for others to see. I hope, one day it will help others to learn trading options as I believe it is a great tool to make money. I created a Facebook closed group. You can join and follow my trades in real time. I post the trades at the time of opening them.

I am trading SPX put or call spreads or Iron Condor. I trade 5 dollar spreads as of now with maximum risk of $500. Due to losses I had to reduce my trading even more to preserve my capital. I will also try to sell rallies. When the market rallies up and then the rally stops and the market reverses, I will sell call spreads.

The same will be if the market falls and the selloff ends and the market reverses, I will be selling put spreads.

If the market moves in a range, I will be selling Iron Condors.

This is actually market timing. You probably have heard that timing of the market is impossible and futile. Well, sort of. I do not expect myself to be right and always catch the bottom or top. All I want to improve the probability of success. When selling call spreads, I want to sell when the market is as high as possible so it will be unlikely for it to go higher, but rather reverses and go down.

Same goes with puts. I want to be selling puts when the market is as low as possible so it will be unlikely for it to go lower and if it does go lower, it will not endanger my positions.

Trading options against SPX, is a hard work, frustration, and tears. One trader once said: “Trading options is the hardest way to make easy money.”
 
He was right.

Statistics say, 90% of new options traders get broke the first year. I hope I will be one of those who survive, learn this art, and become consistent winners.
 

Here is my trading result for the month:

 

January 2016 options trading income: -$1,040.00 (-40.95%)
2016 portfolio Net-Liq: $1,596.26 (-37.15%)
2016 portfolio Cash Value: $1,791.26 (-32.14%)
2016 overall trading account result: -8.63%

 

Here are the results of my options trading:

Options Income
(Click to enlarge)

 
Here are the results of my new options strategy:

Options Income
(Click to enlarge)

 
Here is the entire account value from the beginning of tracking it up to today:

TD Account Value
 

 

 

 
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 · January 2016 dividend investing results

My dividend investing continues slow pacing towards the goal. I created my tracking spreadsheet which finally reflects and tracks what I wanted to see in my portfolio. I can track the dividend yield and the growth of the entire portfolio.
 

Options Income
(Click to enlarge)
 

Dividend stocks added or removed from portfolio:

 

January 2016 dividend stock buys: none
January 2016 dividend stock sells: none

 

Here is my Motif Investing account you can review:
 
 

 

 
 

I continue reinvesting my dividends using DRIP program. I love how my holdings grow when reinvesting the dividends and when the stock prices are going lower. As I believe we are heading into a recession I will be able buying more shares for a lot cheaper.

 

Dividend stocks DRIP:

 

January 2016 DRIP: American Capital Agency Corp. (AGNC)
Realty Income Corporation (O)
PPL Corporation (PPL)
Prospect Capital Corporation (PSEC)
Reynolds American Inc. (RAI)
Vanguard Natural Resources, LLC (VNR)

 

Here are my ROTH IRA trading/investing results:

 

January 2016 dividend income: $81.80
January 2016 options income: $0.00
2016 portfolio value: $15,321.76 (1.20%)
2016 overall dividend account result: 1.20%

 

My dividend income dropped in January due to dividend cuts of KMI and LGCY distribution suspension. Unfortunate but I am ready to deal with it. I wrote about my KMI decision as well as LGCY to keep those stocks. Selling them now would create a loss I am not willing to take.

Here my dividend income:

ROTH IRA account value
 

Here is the entire account value from the beginning of tracking it up to today:

ROTH IRA account value

 

 

 
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Below is my dividend income review for the entire year:

Dividend Income
My ROTH IRA dividend income breakdown per month and per company.
 
 

 · All accounts

Besides trading and dividend accounts I also have 401k account, emergency savings account, etc., which I do not report in detail. You can review those accounts in my “All Accounts Value” table at the bottom of My Trades & Income page.

My accounts dropped from previous month and are losing -1.88% (down from previous month) for the year. This is however caused by the overall markets selloff and if a recession comes I expect those accounts going even lower. A temporary drawdown. No big deal.

Remember, if you like trading options and want to have trade ideas for free, join my Facebook closed group and follow my SPX trades in real time, comment, ask questions, and interact with other members.

 
 

 
 

What do you think?

How about your investing or trading results?
 
 




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Posted by Martin February 03, 2016
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Shocking: The USA economy in a disastrous death spiral


FED
(Source: Hedgeye)
 

The FEDs and the government want you to believe that the US economy is in great shape and better than ever.

But you can ask yourself a simple question: Are you better off than 8 years ago?

If you answered yes, then why are we receiving horrible numbers from all corners of the US economic machine?

How come people are not spending? If they were inflation would skyrocket, but all we see is deflation.

Today, we just hit a record and it is not anything we should be proud of. This is a result of a Keynesian economy and teaching of getting ourselves into prosperity by spending a horrendous money via debt.

Yes, today, our national debt reached a staggering $19,005,034,217,418 dollars under Obama’s administration. That’s a bit over 19 trillion of debt. Our socialist government is the only one (and its followers) which believes that more debt solve the old debt.

I remember once when I was in Britain traveling in a public transportation I saw and advertisement providing a new loan to consolidate the old one. It even offered to borrow more, to pay the old debt and use the rest of the money for shopping. You could eliminate your old debt and even go and buy yourself some goodies!

WarningWell, never don’t try this at home! As goes the famous disclaimer. If you do try you will end up broke and maybe even in prison for fraud.

The national debt translates into $58,849.00 dollars per citizen and that includes babies, elderly, and welfare recipients. That’s more than real household annual income!

In 2007 the real median household income in the United States was $57,357.00 dollars. Today (or actually at the end of 2014 as we do not have 2015 data yet), it is $53,657. An average American household owes more that it can ever make!

 
FRED
 

The main reason for increased debt is growing federal spending mostly Social Security, Medicare, Medicaid, and Obamacare (Source: Daily Signal).

Unfortunately, it seems that we are not going to get any better soon. Let’s take a look at some other numbers:

US workforce (participation) in 2000: 154,575,324
US workforce (participation) today: 150,167,590

Manufacturing jobs in 2000: 19,629,554
Manufacturing jobs today: 12,349,931

The Congressional Budget Office (CBO) predicts that our debt will reach $26.3 trillion dollars by the end of 2020.

With raising interest rates it will be difficult for the FED and the US government to maintain such debt and it will lead to a financial meltdown never seen before.




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Posted by Martin February 02, 2016
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Bull is dead, long live the bear!


FED
(Source: Hedgeye.com)
 
Last Friday trading and rally was impressive. I hoped it would last longer than this. Today, the market gave up almost all gains from Friday. It really didn’t take long.

First, the Friday’s rally was based on a Bank of Japan’s decision to lower the interest rates below zero (negative rates), which itself makes no sense. If the zero interest rates didn’t help the economy, why they think negative rates would do the job?

Second, if you look at the magnitude of the rally, you would think “This is it, that’s the reversal and bottom”. Well the lack of any follow through on Monday or today clearly indicates that this market is weak.

In my few previous posts I mentioned that now we should sell any strength, any rally. Today’s price action reiterates that idea. Even if we bounce tomorrow, which I do not expect at all, sell into it.
Unfortunately since my account is small I cannot take more trades on as I would violate cash management rules otherwise I would have been adding more bear call spreads.

Do not hesitate or be too shy to be aggressively bearish. We are in a bear market and unless FED comes up with negative rates or QE4 we are heading down. Of course, there will be bounces, some even violent and strong on the way down. It is typical for a bear market. These will offer great opportunity to short the market!

Economy is heading into recession. It may burst this year or next one. We may already be in a recession although there is still plenty of people who refuse to accept that fact. Until this changes or until we undergo the self-healing process of the economy without unhealthy interventions of the FED or the US government, we will go down. If FED comes up with any of their sick solution, the problem will only be extended into the distant future.

But one day, we will enter a point when none of the FED’s medicine will have any healing effect and we will crash hard.

My conclusion? Sell any strength of this market.




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Posted by Martin January 26, 2016
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Dividend Investor: How to track a dividend growth portfolio


ROTH IRA
 

Finally, I was able to finish my DGI (dividend growth investment) portfolio tracker in Google spreadsheet.

There are many other fellow investors out there who use Excel or Google Spreadsheet to track their portfolios and when I browsed the internet to find inspiration and knowledge on how to automate my portfolio tracker so I can analyze my portfolio without having it updating manually I came across many great web sites and blogs.

I consider myself a spreadsheet geek who loves to create a plenty of spreadsheet to gain all sorts of possible point of views to see the portfolio from different angles. Of course, in the past I overdone that and since many of my tracking spreadsheets required manual update soon it became tedious and boring work.

So I scratched it all and decided to start over.

I found a great inspiration out there in the blogosphere. A great source of all sorts of spreadsheets to track and analyze your dividend portfolio comes from Scott and his Two Investing blog. He says that he got an inspiration from my calendar page but for sure, he uplifted those spreadsheets into perfection. Definitely, you must check his spreadsheets out.

I also found a good inspiration at No More Waffles and his spreadsheets, I liked the currency tracker since the investor is from Belgium and thus invest in different currencies. I liked his sector charts as they ended up really better indicating what sector goes over the roof in your portfolio and which sectors are underinvested. If you use a pie, you end up with a nice colored circle, but that won’t help much in my opinion.

And of course a good resource to creating my spreadsheet was The Dividend Meter with a pretty cool way of visualizing your dividend progress.

But what inspired me the most was a discussion with a dividend investing blogger about his model portfolio and how the stocks in that portfolio would do in the future. The discussion went on about to see what the entire portfolio would do.

And because I am an old man and I forget everything I now do not remember who that blogger was and what actually we were talking about in details. But one thing inspired me, and it was an idea of creating metrics so you can evaluate the entire portfolio and based on that you can predict the future size of that portfolio and what dividends you would probably receive.

So I created my spreadsheet as shown above this post.

What’s exciting here is that all data which are in yellowish cells are automatically updated. Only the blue cells are those I have to insert manually and I am fine with that. It is only the number of line (also showing how many individual stocks I hold), stock symbol, quantity and trade price. These numbers need to be uploaded from my broker’s account manually and I am OK with that as of now. Everything else uses formulas from either Google finance or Yahoo.

 
You can see the entire document with live data here.
 

What I consider great with this spreadsheet is that now I can see what my entire portfolio does as far as dividend income and dividend growth!

As you can see, my entire portfolio yield on cost (YOC) is 7.23% and my entire portfolio dividend growth is 7.73%.

Of course, all this will change since for example my KMI dividend yield hasn’t been updated yet to the new cut dividend, same goes with LGCY distribution suspension, but that is OK as I have enough data to calculate my portfolio future.

I can now use the existing data and once the new data come in (once Yahoo updates them) I will be able to recalculate the new portfolio future.

And what is my portfolio future?

Here is my future YOC and Income if I reinvest dividends (with no further contributions):

 

Year Income Yield on Cost Holdings Value
1 $1,271.93 7.23% $18,864.31
2 $1,469.32 8.35% $20,333.63
3 $1,706.19 9.70% $22,039.81
4 $1,992.31 11.32% $24,032.12
5 $2,340.33 13.30% $26,372.45
6 $2,766.76 15.73% $29,139.21
7 $3,293.34 18.72% $32,432.55
8 $3,948.90 22.45% $36,381.45
9 $4,772.12 27.13% $41,153.57
10 $5,815.35 33.06% $46,968.92
11 $7,150.16 40.64% $54,119.08
12 $8,875.48 50.45% $62,994.56
13 $11,129.64 63.26% $74,124.20
14 $14,108.31 80.20% $88,232.51
15 $18,091.73 102.84% $106,324.24
16 $23,486.62 133.50% $129,810.86
17 $30,891.28 175.59% $160,702.13
18 $41,198.67 234.18% $201,900.80
19 $55,761.73 316.97% $257,662.53
20 $76,663.05 435.77% $334,325.58

As you can see, if you start investing as early as you can, even small money, your account will grow into a big money making machine and you will be literally able to retire in 20 years.

It is not the value of your portfolio but income it can generate. My portfolio, unless something disastrous happens, will be able to grow my yield to the original cost to a whopping 435.77% in 20 years!

Today, I started with $17,592.38 portfolio and I will end up with $334,325.58 for a total gain of a whopping 1,800.40%. Over 20 years of my portfolio life that will make my average annual gain 90.02%.

Of course, this doesn’t take into account any future contributions which will increase all numbers faster. Let’s see how this portfolio will do over time. At least, today I have created a baseline to my portfolio.
 
 




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