Back in early 2020, the stock markets were making new highs and after a chaotic 2020, January 2021 started making new highs again.
Yet, there are still many industries struggling and the markets are going up and up. What is an investor to do?
I know there are theories out there around the market and I can’t predict the markets but overall, it’s hard to see there is growth everywhere.
I would expect to see the market going sideways and would accept it but has the pandemic given so much free time to bring in so many new investors propping up the markets?
Between income investors looking for income due to low-interest rates and new investors, the markets have a mind of their own.
With that said, there are still good investments to make. Just be diligent in your research.
Stock Trades
Very little has happened in January for my portfolio. A reader was asking me about IBM and I realized it was time to let it go.
IBM was entering the cloud market after the purchase of Red Hat but the transformation isn’t materializing and my money was going sideways. With the cloud competition from Amazon, Microsoft and Google, IBM has a steep hill to climb.
I sold my small position in IBM and bought some extra Costco. A note to investors, some companies pay a special dividend that isn’t a regular dividend but in Costco’s case, it’s happening annually and it brings the dividend yield up by a fair amount.
Portfolio Management
Not much happening on my portfolio. I feel the holdings I have are good to provide me with a good return and I just need to stay put.
| wdt_ID | Dividend | No Growth | < 6% Growth | > 6% Growth | > 10% Growth |
|---|---|---|---|---|---|
| 2 | None | 7.10 | 0.00 | 0.00 | 0.00 |
| 3 | Yield < 2% | 3.28 | 0.00 | 12.06 | 36.75 |
| 4 | Yield > 2% | 0.00 | 0.00 | 3.70 | 5.43 |
| 5 | Yield > 4% | 0.00 | 0.00 | 26.45 | 0.00 |
| 7 | Yield > 6% | 0.00 | 0.00 | 4.93 | 0.00 |
Dividend Income
My January 2021 dividend income is now following the routine payment and is one of the lowest payment months.
I am going to repeat that balancing the income per month is not important. When you retire, you SHOULD NOT be living month to month from the income. That’s just plain bad personal finance. You SHOULD be having at least 1 year of cash to pay for the monthly bills.
The total amount is $1,237. End-of-month dividend payments are weird as it depends if it lends on a weekend or not. I can tell you that February is going to be close to $4,000 as the January end-of-month was deposited in February.
One more reason to not live month to month with dividends, it’s just bad budgetting. It’s not responsible money management. Think of it this way, would you like it if your employer said “I can’t pay you this pay period because our invoices are delayed by a few weeks”? No you would not like it!!!
It’s the same thing with your personal finance; your dividends are the invoices getting paid and should bne building up your bank account and you need enough cash to make payroll (ie monthly bills) for many months ahead in case there is a disruption in payments (in our case a market crash for example).
My yield for the entire portfolio is at 2.19%. It’s perfectly acceptable with a long-term dividend growth portfolio. While it generates about $30,000 annually in dividends, if I were to switch it to a dividend income and double the yield for simple math, I could generate $60,000 in annual dividends.
My magic number is $80,000 or a portfolio value of $1,777,777. Getting closer to financial independence. The closer I get, the more free I feel.