DIVIDENDS. THE ONLY GAME IN TOWN

A Decent Return On Your Investment Portfolio Involves Some Risk. I have met with several retirees who have lost 70% or more of their capital. What used to be the lynchpin of American industry, General Motors endured a bankruptcy and the stock holders saw virtually all their capital wiped out. If you had any of that in your portfolio at all, you suffered a major loss. Dividend paying stocks weren't exactly safe since several companies with 50+ years of ever-increasing dividends found it necessary to drastically reduce, or totally eliminate all payouts. Despite these dire circumstances, you either have to forgo any return on your investment (the after tax return on one year CDs is virtually zero or negative) or take some risk. Since I do not have enough capital to sustain my lifestyle without some return on my capital, I chose to take some risk in the market.



Cash Flow Is My Choice. If a stock does not provide some interim cash flow while I am holding and hoping the value goes up, I am not interested. Last December, I put together a sample portfolio of dividend paying stocks to provide some income with what i consider to be acceptable risk. The cost of the portfolio was $199,755 and the anticipated income was $11,950 or 5.98%. The main purpose of this post is to let you know how that portfolio has done since the mid December purchase date. An update of the individual components is as follows.



1. Ameron Corporation, AEE. This is a utility company with an original purchase of 600 shares at $17,130 and a dividend of 1.54 per year. The current value is $17,406 and the annual dividend has increased to 1.56 per share. So far we have colleccted $684 in dividends since the original purchase date.

2. Bristol Myers/Squibb, BMY. This a pharmaceutical company with an original purchase of 700 shares at $18,380 and a dividend of $1.28 per share. Current value is $21,784 and the dividend has increased to $1.32 per share. So far we have collected $693 in dividends.


3. Duke Energy, DUK. This is a utility company that we purchased 1100 shares at $19,300 with a dividend of .98 per share. Current value is $22,143 and the dividend has increased to 1.00 per share. So far we have collected $825 in dividends.


4. Lockheed/Martin Company, LMT. This is an aircraft company that we purchased 300 shares at $20,460 with a dividend of .98 per share. Current value is $21,747 and the dividend has increased to $1.00 per share. So far we have collected $900 in dividends.


5. Medical Properties Trust, MPW. This is a real estate company that owns medical properties. We purchased 2000 shares at $20,240 with a dividend of .80 per share. The dividend is still .80 per share and the current value is $18,520. Dividends have been $1,200.


6. AT&T, T. Most of us know and do business with this company. We purchased 600 shares at $17,526 with a dividend of $1.68. Current value is $21,264 and the dividend has increased to $1.92 per share. Dividends YTD have been $774


7. Health Care Properties, HCP. This is a company that invests in a wide variety of health care related properties. We bought 600 shares for $19512 with a dividend of 1.86, Current value is $21,264 and the dividend is $1.92. So far we have collected $864 in dividends.


8. Kinder Morgan Energy Partners, KMP. This is a company that owns pipelines for petroleum products. We bought 300 shares at $20.775 with a dividend of 4.44. Current value is $22,137 and the dividend has increased to 4.60. This year we have collected $1035 in dividends.


9. Fidelity National Financial, FNF. This is an insurance company that specializes in title insurance. Tha annual dividend was .72 per share. Current value is $21,658 and the dividend has decreased to .48 per share. YTD dividends have been $504.

10. Windstream Corporation, WIN. This is a wireless communication company for which we paid $26,800 and bought 1900 shares. Annual dividend was, and still is $1,900. We have collected 1, 425 so far.

Summary. The total value of this portfolio is now $206,478 or $6,000+ more than our purchase price. Total dividends at the current payout are $11,896 compared to our rate at purchase of $11,950. Seven of ten companies are worth more than the purchase price while
three are down. Seven of 10 companies have raised their dividends while one is lower and two are unchanged. I have not monitored these carefully during the interim which I would recommend any investor do. Chances are I might change one or two of these however, the main reason I have included these is that I believe it should be relatively stable in a highly volatile market. Total dividends paid out by this approximately $200,000 investment year to date have been $8,904. Considerably more than the average 1 year CD. I tend to ignore the approximately $6,000 gain since it could be up or down depending on a number of factors. That small gain could disappear or increase depending on investor sentiment.