Recent Buy

Some things never change. The Dow Jones Industrial Average is flirting with 14,000 points, and with my work being so crazy and unpredictable now would be a good time to take a break from buying stocks. I've talked about my plan of increasing my cash position over the first few months to counteract any potential surprises at work and so due to that my buying may be a little lighter through the first few months. Well, with the recent sale of AbbVie, Inc. (ABBV) and Abbott Laboratories (ABT) I find myself with more cash than usual and so Dividend Mantra is back to doing what he does best: buying high quality dividend growth stocks at attractive long-term prices.

As part of my Recent Buy series, I try to let my readers know of any equities I purchase soon after the transaction is completed. This is just one way I try to document my progress toward early retirement and financial independence.

Recent Sale

This is a tough article to write. I don't like to sell stocks too often. I look at each stock in my portfolio as valuable branches to my dividend growth tree, ultimately providing me bountiful dividends with which to pay my expenses. Every time I cut a branch from my tree, my tree produces less dividends. However, if it's the occasional pruning to make the tree stronger and better over the long haul, then it is a chore I must perform and ultimately will be better off for it.

I talked recently about my discomfort and disagreement regarding the recent split up of Abbott Laboratories (ABT) by spinning off its branded pharmaceutical business, now an independent company called AbbVie, Inc. (ABBV). I personally am not a fan of this move, as it negates some of the reasons I originally invested in ABT. Although I applaud management's concern of shareholder value (this move has propelled the value of the shares significantly), it comes at the cost of my desire to remain a shareholder as the fundamentals of the company have changed.

I wrote a while back of the reasons I would consider selling a dividend growth stock, and my #1 reason would be that the fundamentals have changed. And in this case, by splitting the company in two separate pieces, the fundamentals have unfortunately changed and I had to reassess my position on it. I have decided after a couple weeks of careful consideration that I must unfortunately part ways with one of my oldest and most appreciated holdings.

Dividend Growth Investing In A Bull Market

DJIA 3-month chart

DOW 14,000?

The thought of that in the throws of the recession just a few years ago would have been impossible to imagine. Yet here we are knocking on the door. The stock market has been on a tear over the last couple years. The Dow Jones Industrial Average has already more than doubled since it's March 2009 lows, and is up 9.57% over the last 6 months alone.

Where does all of this leave dividend growth investors? Well, it's made our job a bit harder. I consider myself a strong proponent of dividend growth investing. I have somewhere around 90% of my net worth tied up in dividend growth stocks, as part of my Freedom Fund. That's real money in there that I sweat through many 50+ hour workweeks to earn. If that's not "proof in the pudding", I don't know what is.

How has this bull run made our job harder? Well, as a dividend growth investor I consider valuation of stocks paramount to my long-term success. The more expensive an individual stock is, the lower the yield -which means less dividend income, and the higher the likelihood that I will receive a lower total return on my investment. Although capital gains are not a primary concern to my investing goals, a lower yield, and less dividends, means I compound my growth at a slower rate. The less dividend income I receive, the less shares in the future I can buy since I'll have less capital to (re)invest with.

Reconsidering Abbott Labs (ABT) And AbbVie (ABBV)

Abbott Laboratories: A company I loved

At the beginning of this year, Abbott Laboratories (ABT) completed the spin-off of its branded pharmaceutical business. This business is now a separate publicly traded company, calling itself AbbVie Inc. (ABBV). I have long been a fan of Abbott Laboratories as a diversified health care company with operations in medical devices, diagnostics, branded pharmaceuticals and nutrition among other businesses. It's been in business since 1888 and it's been increasing its dividends for 40 years. Think about this: Abbott has paid 352 consecutive quarterly dividend payments since 1924! Before the company split, it was attractively valued, yielding over 3% and had an attractive balance sheet. Earnings had been growing at a healthy clip for as far back as I could track. There just wasn't much to dislike here. It was one of my largest positions, and rightfully so.

It was because of my extremely favorable view on the business that I had fully anticipated keeping both sides of the business after the spin-off. I knew that Abbott Laboratories (ABT) would keep most of the highly attractive portions of the business and AbbVie (ABBV) would go off and maximize the drug and pipeline side. The company felt the different sides of the business could operate more efficiently separated and the market would reward the move through a more appropriate (higher) valuation on the separate businesses. I was inclined to agree.

I'm Dying And So Are You

If your life were a movie, would you want to watch it?

I'm dying. No I don't have cancer and I'm not starving to death. But life, inevitably, is mortal. Every day that passes by is one less day that I have left on this earth. And the same is true for you. What are you going to do about that?

I live a bit of a "Groundhog Day" every weekday. On Monday morning I get up before the sun does and work until it's almost dark out. I repeat this on Tuesday, Wednesday, Thursday and Friday. By the time Friday night rolls around I'm tired and worn out from the previous 50+ hours of my diminishing time spent at work. So the weekend usually becomes a time to recover my energy level back to some type of equilibrium. I know I'm not alone here. Almost everyone who visits this blog is in a very similar situation. If you were completely free to choose how to spend your time, is this how you would allocate it?

My Goals For 2013

I'm a big fan of having goals. Goals give you something to shoot for; they're a target so that you can track your progress. Putting goals down on paper, and then showing them to the world does a couple things. First, by actually typing these goals up I realize them in a physical form. If the goals only exist in my head they're easy to forget. Second, by showing them to the world I obviously want to save face and do my best to reach the goals as my pride is on the line.

My goals for 2013 are not going to be as aggressive as I had planned to make them just a few weeks ago. Over the last couple of weeks some events have transpired at work that has me questioning the viability of my future employment with this particular employer. Due to this uncertainty I am going to be a bit conservative with some of the goals I'm laying out below. I hope things clear up quickly and continue to hum along, in which case I'll be able to continue skyrocketing towards financial independence.

I'm listing the goals below in order of personal importance, and in which order my focus is going to concentrate.

2012 Goals Reviewed

2013 is well on its way already, but it's not too late for me to look back on 2012 with fond memories. It was a fantastic year for me overall, and one that I'd love to repeat again in 2013 if I could. But, of course, it's always prudent to shoot for even bigger successes as time inevitably marches forward. Below, I'm going to review my 2012 goals and how I did with each one of them. I didn't do as well as I had intended, but I try to keep perspective on life. Relatively speaking, I live in the most prosperous society has ever known and I'm living fairly well within even those boundaries. So I'm keenly aware of how fortunate I am. I may not have nailed every goal, but I'm living phenomenally well by historical standards all the while saving tons of money. I'm a very happy man!

Let's take a look at the four goals I laid out for myself at the beginning of 2012, and how I fared:

Income/Expenses For December 2012

Each month I will post my income/expenses for the previous month. I track every dollar in and out, so what you see is exactly what I earned and spent (rounded to the nearest dollar).

Dividend Income Update - December 2012

Another month has passed by, and it's time for me to post an article on my favorite subject: dividend income. The reason why I love to post articles on dividend income is because it's pure numbers. It's hard to argue the success of long-term dividend growth investing when you can slowly and surely see dividend income rise over time and get closer to covering one's expenses.

What you're going to see below is my highest monthly dividend tally ever! Of course, this was helped a bit by the fact that some of my holdings (including The Coca-Cola Company (KO) and Wal-Mart Stores Inc. (WMT) among others) decided to move up their dividend payout dates and pay out in December of 2012 instead of January of 2013. This was a move to help investors avoid potential negative tax consequences affecting dividend payouts. While I appreciate these companies looking out for investors, as it shows what kind of culture they have, I would have preferred they just continue paying out like normal. Of course, I'm receiving peanuts compared to major shareholders who likely applauded, and voted for, the moves. I also received a special dividend from Southside Bancshares, as they paid out two special dividends totaling $0.33 per share over and above the usual $0.20 per share.

I hope these monthly dividend income reports provide inspiration for any investors out there that are just starting out. It's easy to see these payments rising month after month and it shows that it's possible to one day pay for monthly expenses with dividends, which would provide an investor opportunities and freedom to pursue other interests than full-time work. Without further ado:

Freedom Fund Update - January 2013

Well, the time has come to update the Freedom Fund once again as we start another month. The Freedom Fund is my portfolio, and I think it's aptly named. My portfolio is my way to freedom; freedom from working at a job I don't enjoy to purchase goods I don't need to impress neighbors I don't care about.

I feel extremely fortunate and thankful that I'm able to post these updates every single month which shows the power of monthly contributions to investments because of the high savings rate I maintain. It shows how a relatively large sum of money can be built through the power of time, patience and perseverance.

It's important to keep in mind that while updating the overall value of my portfolio is important for historical reference and for purposes of keeping track of total return, my main focus is on the rising dividend income stream the Fund provides.