Saturday, June 8, 2013
Weekend Reading - June 8, 2013
Wow! How time flies by. I started this blog as a modest little spot on the world wide web just over two years ago as a way to document my journey to early retirement/financial independence on a middle class income. It's grown far beyond my wildest dreams and the greatest benefit of running the blog has been the relationships I've developed with fellow bloggers and you readers. Without this blog I would have never met Kraig over at Young Cheap Living and I wouldn't have such a wonderful resource here in Dividend Mantra with which to learn from so many fantastic investors. I'm here to learn as much as I am to share, so thank you all for supporting my journey and sharing your ideas and success. It makes us all better investors and people.
I'm now nearing 1 million pageviews. Quite amazing. I never would have thought that this site would be what it is today. Obviously being featured in national media like The Today Show certain helped, but in the end it's you regular readers that make this blog what it really is.
I hope you all are having a wonderful weekend! I'm taking my girlfriend and her son out to Chili's tonight for a little 2 eat for $20 for us and an entree for him. We'll go out and have a little fun while eating on the cheap. We may even squeeze in a margarita or two!
Here are some excellent articles from fellow dividend growth investors, frugalists and personal finance bloggers from the past week.
Coca Cola: Fairly Valued in Low $40's for 2013
Dividend Monk analyzed The Coca-Cola Company (KO) and as I had predicted he determined that it's trading for a fair value at the current price in the $41 range. This is one of the highest quality companies in the world and many times it's worth paying up for quality. I'd much rather pay fair value, or even slightly above, for a high quality company than pay a cheap price for a low quality company.
PepsiCo (PEP) - A great dividend stock for long-term investors
Dividend Growth Investor analyzed the "other" beverage giant in PepsiCo, Inc. (PEP) and concluded that it's fully valued. Again, a very high quality company trading for pretty close to its intrinsic value. I'd much rather pay 20 times earnings for KO or PEP than pay 6x earnings for a company that has unsure prospects going forward. I'm a long-term investor and I want to know that my investment is going to be solvent (and worth much, much more) 10 years from now than having to stay up all night wondering what's going to happen. I sleep very well at night with my Freedom Fund constructed in a manner to allow such.
The Glory Of Investing In Utility Stocks
Tim discussed why utility stocks are so attractive for income investors. It's not like people are all of the sudden going to no longer need electricity or water tomorrow, and the stable business model allows these companies to pay out dividends to investors for many decades on end. While he doesn't view many utilities as attractive investments right now due to valuation concerns (a concern and view I share), he thinks that at the right price a few utility holdings are a fantastic way to boost the income and stability of a quality dividend growth portfolio.
Get Rich With: "the ChaCHING!" Instinct
Mr. Money Mustache discussed the benefits of delayed gratification and how this concept can build wealth over the long haul. Delayed gratification is at the heart of what I'm really doing here. I'm delaying the purchase of goods now so that I can have even more purchasing power later. Of course, I'm going to be using that purchasing power to buy the most expensive commodity of all: time!
Monthly Review: May 2013
Dividend Growth Machine reviews how the month of May went for him, and it looks like it went very, very well. He received a hefty tally of dividends and saved almost 40% of his net income (even while putting a deposit down on a new apartment). Fantastic stuff.
May 2013 Dividend Income Update
Exponential Dividends published the dividends he received during the month of May. He's only 23 years old and already has a fantastic portfolio of high quality dividends. He's starting way earlier than I did, and it's likely he'll be far ahead of where I'm at when he's my age. People always say "I only wish I would have started earlier" when talking about investing. Well, he actually is starting earlier.
Twice as Much Money Won't Make Us Twice as Happy
Go Curry Cracker wrote about diminishing marginal utility and how it applies to money and your life. He also showed how lucky we all are to live in an age where in most countries electricity is common, running hot water can typically be had relatively easily , air conditioning is common and the internet age is here. Compare these modern amenities that many Americans consider a base standard of living to the amenities of the kings, presidents and pharaohs of yesteryear. They lived at the height of the standard of living of their time and yet they lived like paupers compared to how most of us live today. Try not to lose that perspective! We live in an age of abundance. It's a modern first world luxury to actually have money left over at the end of the month to invest.
Own These World's Leading Brands And Never Fear A Recession Again
Chuck Carnevale, one of my favorite authors over at Seeking Alpha, discussed why it's so important for a long-term investor to focus on high quality companies that have world leading brands. These brands insulate many of these companies from economic cycles and the inevitable downturn. Even during the recent Great Recession people still drank Coke (KO), took Tylenol (JNJ) and shopped at Wal-Mart (WMT). I enjoy owning a small part of all three of these high quality companies.
Why your house is a terrible investment
Jim Collins wrote up a fantastic post on why your house is a terrible investment. One of the most complete lists I've ever seen. It summarized my thoughts on the matter in an excellent, concise manner. While I view home ownership as wonderful for most people as a lifestyle choice (raising a family, close to schools, good neighborhood), they are typically horrible long-term investments compared to equities. Renting a cheaper place and investing the difference into high quality businesses will very likely lead to much greater returns over time, which is why I'm so bullish on equities.
Dividend Income Progress Update - May 2013
D4L updated us on his dividend income, which is some otherworldly stuff. He's on pace to earn over $23,000 in dividends over the next 12 months. By the time I'm earning dividend income like that I'll be financially independent and living life on my own terms. Really inspiring stuff!!
So Long and Thanks for All the Fish!
Finally, we have the sad news that Avrom over at Dividend Ninja is taking a break from blogging, perhaps permanently. He's looking forward to new ventures in life and I really wish Avrom the best. He provided immense support for my fledgling blog the early days and really inspired me to keep going. We all hope you find the next great thing in life, Avrom!
Full Disclosure: Long KO, PEP, JNJ, WMT
Thanks for reading.
Photo Credit: Benoit Mahe