All About Interest

Baby AAI Portfolio Update – 2021

August 27, 2021 by All About Interest

It’s been nearly two years since I posted an update on Baby AAI’s portfolio. This was pre-covid and lots of changes have happened.

I funded Baby AAI’s account with an initial $7500 in a taxable account and have been contributing $100/week since 02/27/17, so we’re approaching the 5-year mark soon.

The last update was the 3-year update that can be found here.

I’ve added and sold some positions. I sold out of DIS and reduced some shares in a couple I had already. I also sold out of HBI and the FOXA spinoff from DIS . I purchased new shares in BRK.B, GOOG, V, MSFT, EBAY, JNJ, XOM, MTCH, T, ABBV, BABA, NKE, MO, Z, and DISCA. I added shares in AAPL, RDS.B and VOO. My best performing stock is currently PYPL at 222% gain followed by GOOG at 122% and EBAY at 90%. My worst performer is RDS.B at negative 16.5%. I continue adding a little VOO which is an S&P 500 index fund when I have the funds.

Below is the current portfolio after more than 4 years. As you can see the top 5 positions account for nearly half the value of the account. The current Value is $45,320 including a couple hundred in cash.

I currently am letting all dividends accumulate besides VOO and add the dividends to the $100 in cash I contribute weekly. The last update valued the account at $26,898.

So let’s see how we’re doing now against the original projections, which assume 7% compounding.

I’m hoping to achieve a 7% CAGR which will put the balance just over $200,000 by the time he’s 18. That’s by doing nothing else but contributing $100/week and letting the power of compounding work its magic. I used a simplified actuarial formula assuming $7500 contributed right away and $5200 ($100/week) contributed at the end of each year.

This is a graph of what the value should be at the end of each year, of course the stock market has large swings up and down so this is in a perfect world of 7% compounding each year.

So basically, by the end of the fifth year, February 27, 2022, the portfolio should be valued at $29,903. Well we haven’t even finished the year and we’re way ahead of those number. Notice the red line is breaking apart from the projections.

I can’t wait to keeping watching this portfolio grow!

I hope everyone is having a great year!

Real Estate Update (overdue)

February 16, 2021 by All About Interest

I literally haven’t had an update on my rental properties since June of 2020. I’ve been busy with a couple of sales, several purchases and 2 more pending.

In case you are just now tuning in, my goal with these properties is to get a COC (cash-on-cash) return of at least 10%. This can be difficult to do and has a lot of factors involved but essentially that means if I spend $50,000 to purchase a property, I need to profit 10% or $5,000 annualy. I posted how to calculate it in that link above.

A few other criteria I look for are 3+ bedrooms, 2+ baths, good neighborhood (this is key, Location! Location! Location!), single story, brick home, no pool and meets the 1% rule. The 1% rule basically means that the rent should be at least 1% of the purchase price. So if I paid $100,000 for a property, I should be able to rent it for $1,000. This is a simple rule of thumb for a quick screen.

I’m currently using a spreadsheet that keeps track of most quick information I want to see. This is a shortened version for easier viewing.

So as you can see there have been some changes. I sold my last property near Austin with capital gains of $100,000 that I rolled over into a 1031 exchange. The 1031 exchange marketplace is an excellent place to invest in property and it allows capital gains taxes to be deferred which is also great. If you do decide to do the same then you may want to look into a 1031 exchange broker to see how they can help you. I should write an article about the capital gains taxes process soon. It was actually fairly easy but now I know a lot more than I did and there are certain rules you have to follow. Basically, it allows me to reinvest the money from the sale without paying capital gains taxes. One of the properties was purchased already and I currently have 2 more under contract.

Property #8 and #9 are currently under contract with numbers being estimates. Both properties are right around a 10% COC return if I achieve the estimated rents I have in my spreadsheet.

The market here in Texas has been crazy. Properties have gone up 15-20% across the board on most of my rentals and I’m not in a big city. This isn’t great if I’m not selling but luckily rents have also increased. I’ve increased rent from $1400 to $1500 easily and waiting until two tenants move out to increase rent in the last $1400 properties, #3 & #4 above. I’ve taken no longer than 1 week to find new tenants on any property I’ve released.

I’ve been very fortunate with repairs. I’ve found some good contractors and handymen and I’ve also done some simple repairs myself. So far my estimates for maintenance/vacancy have easily covered repairs and vacancy (which has been nearly non-existent).

So if these last two properties close as expected in March, I’ll have a net profit after all expenses of $42,750. That’s $3,562/month. That’s a nice chunk of change and covers a lot of my expenses.

In case you didn’t know you can only have 10 government-backed mortgages currently. Counting my primary residence these will put me at the 10 mark. My next plan is to find a small bank that will lend and start putting more money back into my dividend growth portfolio. I’m also looking for and interested in commercial opportunities. There was a commercial property I looked at that needed a lot of work doing to it so I’ll be getting quotes from contractors like Multi-M Contracting (multi-m-contracting.com) before I consider purchasing it. I’ve purchased a 1.5 acre lot that has been cleared and I plan to build storage units on it at some point.

My current real estate page is here: https://allaboutinterest.com/real-estate

2019 Goals – Year End Review

December 30, 2019 by All About Interest

Below are the goals I set at the beginning of the year:

Reach 600k in market value for my DG portfolio
Failed. Portfolio is around $540k. I sold part of my holdings to pay a larger than expected tax bill and also used some proceeds to fund a rental property purchase. My portfolio didn’t recover quick enough to get to 600k. I don’t plan on purchasing any rentals this year so I can put a lot more into my portfolio.
Reach $21,000 in forward 12-month dividends
Achieved 12/30/19. Forward dividends barely broke through the $21k mark. I have some calls I sold on AT&T “in the money” that expire in January which I don’t plan on rolling forward so the forward dividend will take a hit in January unless I can replace this high yielder. It will likely be after April before I can start reaching new highs in this area.
Earn $20,000 in dividend income
Failed. I hit $18,104 in dividend income for the year. However, this is 30% higher than the income from 2018 so still a win. When I sold some stocks around April it hurt my dividend income for several months and I didn’t recover in time.
Increase Net Worth to 1.1 M
Failed. Net Worth is currently at $1,069,000. I missed the goal by $31,000. I plan to really watch my expenses closer in 2020.
Buy ~~two~~ three rental properties
Achieved. Technically I did buy three properties but I sold 1 so the net was 2. I’ll call this one a win. I now have 7 rental properties.

Rental profits after maintenance & vacancy expenses are $2675/month. This is a nice chunk of change and can cover a lot of my normal expenses. My ultimate short-term goal is $6,000/mo passive income from real estate plus investment accounts.
Reach total forward passive income of $45,000
Achieved. I’m at around $53,000 in passive income. My 2020 goal is $55,000 and 2021 Goal is $65,000.

Well I hit 50% of my goals. Not great but I’m not too far off on the ones I failed at. I had set some fairly lofty goals. I’ll have to think about my 2020 goals so I can realistically hit them all this year.

I hope everyone else hit their 2019 goals for the year!

Baby AAI’s 3-year Portfolio Update

December 20, 2019 by All About Interest

I’m overdue for a post and I’d like to get an update out on Baby AAI’s portfolio to see how it’s performing.

With Baby AAI recently turning 3, It’s time to check in on his portfolio and see what’s happening.

Baby AAI still has no idea he has a portfolio and I can’t wait to teach him about stocks. There’s plenty of time for his portfolio to grow.

I funded Baby AAI’s account with an initial $7500 in a taxable account and have been contributing $100/week since 02/27/17, so we’re almost at the 3-year mark.

The last update was the 2-year update that can be found here.

I’ve added two new positions since the last update. One was AAPL and the other was VOO. I purchased 10 shares of Apple on 06/03/19 for $173.73/share and it’s currently up 62% from purchase price. I also added 26 shares of RDS.B and purchased 1 share of VOO which is an S&P 500 index fund.

Below is the current portfolio after nearly 3 years. Stocks range from a 62% gain in AAPL to a 28% loss in HBI. I’m also not dripping any more shares and just collecting dividends to add to the fresh capital. With commissions at $0 per trade I can buy a share at a time if I wish. That’s exactly what I did when I added 1 share of VOO.

CVS was purchased in April and is up 40%. This year’s purchases have been great with the exception of Royal Dutch Shell. I do like the company long-term and believe the price will recover with oil prices.

I currently have a little over $1700 in cash in the account just waiting for a new purchase. The last update valued the account at $21,099. With cash added the current account value is $26, 898.00.

So let’s see how we’re doing now against the original projections, which assume 7% compounding.

I’m hoping to achieve a 7% CAGR which will put the balance right at $200,000 by the time he’s 18. That’s by doing nothing else but contributing $100/week and letting the power of compounding work its magic. I used a simplified actuarial formula assuming $7500 contributed right away and $5200 ($100/week) contributed at the end of each year.

This is a graph of what the value should be at the end of each year, of course the stock market has large swings up and down so this is in a perfect world of 7% compounding each year.

So basically, by the end of the third year, February 27, 2020, the portfolio should be valued at $25,905. It’s near the end of December 2019 and we are ahead of pace with a portfolio valued at $26,898.

I can’t wait to watch this portfolio grow! I’m still sitting on about $1700 in cash and will be watching and waiting for another opportunity.

I’d love suggestions on a next purchase for BabyAAI.

Quarterly Update – 2nd Quarter 2019

July 5, 2019 by All About Interest

Hey Guys! It’s time for an exciting quarterly update! I love writing these to see how I’ve been doing over a 3-month period.

I’ve had a lot going on! My son started pre-school so I have some extra time during the week now. Expect to see more articles coming out!

I’ve been hustling and trying to buy as many rental properties as I can before September. I’ll talk about that below.

It’s all about interest and cash flow, check it out!

If you missed it you can find my 1st quarter update below:
Quarterly Update – 1st Quarter 2019

Here are a few other articles I wrote during this past quarter including my 2-year-old son’s update on his portfolio, an article I wrote at Seeking Alpha and a Milestone post about becoming a millionaire!:

Milestone – $1 Million Net Worth
Baby AAI Recent Purchases
Baby AAI 2-year Portfolio Update
Business Plan For A Dividend Growth Investor
How To Calculate a Cash-On-Cash Return

Below is a summary of my activity for the quarter:

Purchases ($33,047):

The sells and purchases this month look a little confusing. Essentially I needed some funds for taxes and rental #6, sold shares and I have been replacing some of the sold shares fairly recently. These aren’t typical months, I hate selling more shares than buying. Once September starts I’ll be back on a normal buying schedule.

100 MO @ 49.36 – This was after the sell of 200 MO
100 MO @ 51.24 – This was after the sell of 200 MO
50 WFC @ 45.89 – I decided to add more to existing holding
50 XOM @ 71.02 – I sold 100 @ $80.38 in March and this replaced half.
200 T @ 35.00 – I had a couple options assigned
100 PM @ 78 – this was after the sell of 200 at 83.46.
50 WFC @ 46.82

Posts about some of my purchases can be found by following the “Buys” label here.

Sells ($75,821):

These were made to pay a tax bill and fund the purchase of rental #6.

200 MO @ 54.51/share
300 BAC @ 28.87/share
25 PEP @ 125.49/share
181 BBL @ 47.87
21 ALC @ 59.58
400 MO @ 52.49
200 PM @ 83.46
91 KO @ 51.97
16 FOXA @ 38.04

Dividends (2nd QTR ’19): $4519

Jan. – $1971
Feb. – $790
March – $2141
April – $2230
May – $931
June – $1358

I earned $4902 in dividends for the first quarter and dropped to $4519 for the second quarter. This is no surprise as I sold a lot of stocks for reasons I mentioned and most of these were high yielders. My goal is still to break $5k/quarter by the last quarter of this year. I now have more catching up to do.

Here’s a look at my recent quarterly dividends:

Forward 12-month Dividends:

Forward 12-month dividends are the total amount of dividends I’m expecting to received over the next 12 months.

My google docs API’s have been changed and I’m working to fix it so sorry about not updating the graph, I’ll have that fixed very soon.

My expected forward 12-month dividends at the end of March 2019 were just over $19,000 which is up from $18,039 last September. Currently my forward dividend income is right at $17,000. My new goal of $21,000 in forward dividend income by the end of the year is going to be extremely hard to reach.

I keep a forward dividend projection on my Dividends tab.

Dividend Increases:

I’ve had 11 companies raise their dividends since the beginning of the year. Two companies I own have frozen their dividend since last year so I don’t expect an increase from CVS or HBI. Both companies recently issued debt to purchase another business and I’ll be watching these companies to see if they are paying it down fast enough. Also MO had 2 increases last year due to the tax cuts so I just expect 1 this year.

Some of these increases can be found on my Dividend Increases label. All of the increases are marked on my Dividends tab.

2019 Goals (in progress):

Reach 600k in market value for my DG portfolio
Reach $21,000 in forward 12-month dividends
Earn $20,000 in dividend income
Increase Net Worth to 1.1 M
Buy ~~two~~ three rental properties
Reach total forward passive income of $45,000
Improve golf game to a 10 handicap average
Write at least 1 article a week.

All goals can be found on the Goals tab.

Rental Real Estate:

Welcome Rental Property # 6

June 16, 2019 by All About Interest

As you guys know, I invest by buying cheap properties, fixing them up by hiring Cincinnati roof repair companies, decorators, etc., and renting them out for a profit. If you missed it, I purchased rental #5 back last December. It’s currently rented and had my quickest rental experience ever; the property was rented the day after closing, I had deposit and first months rent in hand and lease signed. You can find that posting here.

Now let’s welcome rental property #6 and my largest ever Cash-On-Cash return of over 30%! Yes, 30%, I’ll show you how.

One of my goals for 2019 is to purchase two rentals. I just closed on this rental about a month ago and it’s already rented. I had planned on asking $1400/mo rent and I had an insurance company call and offer me $2000/month rent for a 3+ month lease because a tree fell on their client’s house. I decided to take the deal. So it’s an amazing return but it’s short-lived. However, I still have great cash flow at my normal rent.

Basically what my goal with these properties is to get a COC (cash-on-cash) return of at least 10%. This can be difficult to do and has a lot of factors involved but essentially that means if I spend $50,000 to purchase a property, I need to profit 10% or $5,000 on it that year. I posted how to calculate it in that link above.

A few other criteria I look for are 3+ bedrooms, 2+ baths, good neighborhood (this is key, Location! Location! Location!), single story, brick home, and meets the 1% rule. The 1% rule basically means that the rent should be at least 1% of the purchase price. So if I paid $100,000 for a property, I should be able to rent it for $1,000. This is a simple rule of thumb for a quick screen.

Without further ado:

The House: 3/2, 1400 sq ft.

Purchase Price: $135,100

Down Payment (25%) – $33,775
Closing Costs – $5,600
Repairs/Maintenance ($0):

Total Cash Costs – $39,375

Rent/month – $1400
Expenses/month – $989.48

Cash on Cash return (before m/v) – 18.91%
Cash on Cash Return – 12.51% (current return at $2000 rent is 30.8%)

Here are the numbers:

Appraised Value: $135,000
Principal Balance: $101,325
————————————————————
Total Equity: $33,675.00

Monthly Liabilities:
Hazard Insurance: 68.42
P&I (4.875%): 536.22
Property Taxes: 174.83
————————————-
Expenses – $779.47
Estimated Vacancy & Maintenance (15%): $210
———————————————————————–
Total Expenses – $989.47
Current Rent: $2000 (Leased until 09/03/19)
=================================
Monthly Profit – $1010.53

I rented the property the first two days I had it on the market. It was already in great condition and for once I didn’t have to do a single update save a loose gate that I fixed myself. Even after this short-term lease, I plan to get $1400/mo and will have well over a 12% COC return.

All properties but 1 are fully rented. It’s the only property I usually have trouble with, it’s in a small town and the rent is high for the average income there. I’m hoping to have it rented shortly. After bad luck with the previous tenants I’m having everyone fill out a full online application. I’ve also got another offer on a house in a great location, wish me luck.

TOTAL Monthly Net Profits on all rentals:

#1 – 302.81 (leased through 06/30/19)
#2 – -600 (tenant evicted June 2019 and vacant)
#3 – 510.13 (leased A through 04/3021 & leased B through 02/29/20)
#4 – 238.91 (leased through 05/31/19)
#5 – 348.69 (leased through 12/31/19)
#6 – 1010.53 (leased through 09/03/19)
==============================
$1,811.07/month

I keep track of my rental property cash flows on my real estate page here: https://allaboutinterest.com/real-estate

Baby AAI Recent Purchase

June 15, 2019 by All About Interest

Tomorrow is father’s day and I’d like to say happy Father’s Day to all the fathers out there. What better to post this weekend than something about my son’s portfolio.

Baby AAI has been busy and so has his portfolio! He may not know he made this latest purchase but he’s already familiar with their products. He uses them every day.

I funded Baby AAI’s account with an initial $7500 in a taxable account and have been contributing $100/week since 02/27/17, so we’re a little past the two year mark.

I recently posted a 2-year update of his portfolio a couple months ago if you want to catch up. The previous update was the 1-year update that can be found here.

The last update doubled the number of positions from 4 to 8. At the one year update, he held CRI, HBI, DIS, RDS.B. At the two year update he added shares of CVS, FOXA, PEP and PYPL.

He recently added a new position in AAPL. AAPL needs no introduction and was only fitting to be put in his portfolio. I mean he’s already using the IPAD like a pro!

10 shares were purchased on 06/03/19 for $173.22/shares. I’m late to post and the share price is already up over 10%. This is just gravy because I don’t really plan on selling any shares in his account but letting them grow for 18 years.

Here’s the current porfolio:

The portfolio is currently valued at $22.380.88.

I’m hoping to achieve a 7% CAGR which will put the balance right at $200,000 by the time he’s 18. That’s by doing nothing else but contributing $100/mo and letting the power of compounding work its magic. I used a simplified actuarial formula assuming $7500 contributed right away and $5200 ($100/month) contributed at the end of each year.

Above is a graph of what the value should be at the end of each year, of course the stock market has large swings up and down so this is in a perfect world of 7% compounding each year.

So basically, by the end of the second year, February 27, 2018, the portfolio should have been valued at $19,350.75. At the end of February the portfolio was approximately $20,500.00 and is still currently on schedule with a portfolio valued at $22,380.88.

I can’t wait to watch this portfolio grow! I’m sitting on about $500 in cash now and will likely wait at least 3 months before I make another purchase.

I’d love suggestions on a next purchase for BabyAAI.

How to Calculate a Cash-On-Cash Return

April 22, 2019 by All About Interest

Guys, I’ve been buying real estate rental properties now for almost 10 years. I’m going to teach you a few things I look for when purchasing a property.

1% Rule

The 1% rule is the quickest metric you can look at and in fact I still screen properties by this rule today. What it means is that you will be able to rent a property out for 1% of the purchase price. This assures you are getting a decent cash-on-cash return.

Example: You see a house priced at 200,000. You will need to look at other rentals in the neighborhood and decide if you will be able to rent that house for 1% of the purchase price, or 2,000 a month.

Cash-on-Cash Return

After passing my quick 1% rule screen I then go into a deeper look at the property and determine what the cash-on-cash return will be. I look for a 10% cash-on-cash return. In higher growth areas I realize this isn’t possible. Since there’s not much growth here I’m getting good cash flow. It’s a tradeoff.

I have a spreadsheet that I made to enter these numbers in to calculate quickly for me. If anyone is interested I can add a link to it.

Cash-on-cash return = profit / cash costs

Here’s an example of a property I just looked at:

Cash Costs –These are the out-of-pocket cash expenses you will incur. These costs include closing costs, down payment, and any out-of-pocket repairs you need to make before renting. Depending on what state you live in, whether that be Houston, Texas, or Orlando, Florida, there will be different ways that closing costs will be calculated depending on a myriad of factors, so be aware. In this regard, it is wise to find out ahead of time what fees and charges you will need to pay at closing in order to plan your finances adequately. If you are purchasing a house in Arizona or a nearby area, for instance, you may be required to pay an underwriting fee, credit report fee, appraisal fee, and title insurance, among other expenses. Your real estate agent may, however, be able to negotiate some of the closing costs with the seller for you. In addition, there are several online resources like https://tubac.com/tubac-az-closing-costs/ that can help you learn more about how you can reduce your out-of-pocket costs.

Purchase Price – 170,000

Repairs – 500.00
Closing Costs – 5,100
Down Payment (25%) – 42,500
————————————————
Total Cash Costs = $48,100

Financed Amount (25% down payment) – 127,500

Monthly Expenses – This one is self-explanatory , total monthly expenses

Interest Rate – 5.75% for this example

Monthly Taxes – 334.58
P&I Monthly – 744.06
Property Ins./mo. – 107.25
HOA Dues – n/a
—————————————–
Total Monthly Expenses w/o Maintenance – $1,185.89

Maintenance/Vacancy Costs – This one can be a little tricky. A lot of people like to estimate 20% here to be safe. Depending on the age of the property and location I make a determination here. I used 15% for this property. That means I allocate 15% of the monthly rent into an account to cover any future maintenance or vacancy expenses.

Maintenance/Vacancy (15%) – 270.00
===================================
Total Expenses after maintenance/vacancy costs = $1455.89

Expected Rent – 1800

====================================

Monthly Profit = $1800 – $1455.89 = $344.11 or $4129.32 yearly

To get your Cash-On-Cash return just take the $4,129.32 and divide by your total cash costs of $48,100.

Cash-on-Cash return – 8.58%

As you can see, this property passed the 1% rule of estimated rent above 1% of purchase price. However, the cash-on-cash return is just 8.58%. This was a property I looked at back near the end of last year when interest rates were higher.

At an interest rate of 5% instead of 5.75% , the Cash-on-Cash return boosts to 10.07%!

So basically I’m also watching interest rates to meet my criteria. If I can get this same property at a 5% rate then it meets my criteria of a 10% cash-on-cash return.

If this is helpful let me know, or if there is anything else I can explain let me know as well. So far this simple process has served me well.

April 2019 Dividend Challenger CCC Rankings

April 20, 2019 by All About Interest

This is one of my favorite screen to do! I’m sorry I haven’t had time to do one of these in a while. I know many of you thought it was useful so I’m going to try to start these again. Instead of combining the Champions, Contenders and Challengers, I plan to break it up into 3 articles.

What I Did

I decided to take the CCC spreadsheet and rank the stocks based on their 10-year YOC. If you are unfamiliar with what Yield-On-Cost is (YOC) then refer to my get started tab or see below for an example. If you don’t know about David Fish’s Champion, Challenger and Contender (CCC) spreadsheet then you are doing yourself a disservice, the link is also on my “get started” tab. The CCC list is now managed by Seeking Alpha author Justin Law.

Let’s say you purchased a stock at $10/share in 2013 that paid a 4% dividend or $0.40/share. In order to achieve a 10-year YOC of 10% that stock would need to pay out at least $1.00/share by 2023.

You may wonder why I care about a 10-year YOC instead of just the 1,3,5 and 10-year CAGR’s. The main factor that the CAGR leaves out is the starting dividend yield. The starting dividend in combination with the dividend growth rate will greatly influence your returns.

There’s a variation of this screen used alot by members of the Seeking Alpha community and it’s coined the “Chowder Rule”. This can also be found now on the CCC sheets. The rule basically adds the starting yield with the dividend growth rate (5-year CAGR) and looks for it to be higher than a certain number. While this can be a useful screen, there is still a discrepancy between dividend payers that have different growth rates but still arrive at the same number. For instance, a 3% yielder with 5% growth would get the same grade (an 8) as a 5% yielder with 3% growth. To me this is like adding apples to oranges. Holding a lower yielding stock with a higher growth rate will at some point provide higher returns assuming the growth rates don’t change. My 10-year YOC ranking would give this 3% and 5% yielder a 4.9 and 6.7 respectively.

Why I Did It

The purpose of this screening process will be to identify companies that have a high expected dividend growth rate combined with a starting yield that would produce greater returns. These companies may be good candidates for further research.

How I Did It The first step was to sort all stocks by their current dividend yield and eliminate any stocks not paying at least a 1% yield.

Next I sorted all columns by TTM P/E and eliminated every stock with a TTM P/E over 30. I do realize this eliminates a lot of REIT’s, MLP’s, and telecom stocks. I’m ok with this since I’m not really targeting these stocks right now. We are also late in the bull cycle and I want to focus a little more on value.

Then I decided to eliminate any Contenders with a 5-Year CAGR < 10%. This screen eliminates a lot of slow growing companies like utilities.

I’ve added a new screen, PEG, that is PE/Growth. I didn’t apply this to Champions but on my Contenders and Challengers list I eliminated any Dividend Contenders with a PEG ratio greater than 2 and any Challengers with a PEG ratio greater than 1.5.

Next I took the latest CCC sheet and added some new columns to calculate a 10-year YOC using each stock’s 1,3, 5 and 10-year compound annual growth rate (CAGR). I will call these new metrics 10YOC1, 10YOC3, 10YOC5, and 10YOC10 for simplicity. After sorting, I looked for any companies that had a 10YOC1, 10YOC3, 10YOC5 or 10YOC10 of 10% or higher.

Next, I wanted to look to see if the DGR was increasing or decreasing. I highlighted in red the 10-year YOC’s of companies that were both reducing their rate of increases and still under 10%.

This is a previous example of how it looked:

Companies got credit for increasing their dividends at faster rates. For example: The 10YOC5 for AWR in the example above was 4.97 and did not get highlighted in red because its 10YOC5 was higher than its 10YOC10 of 4.09.
Next, I decided to remove any company that had a 10YOC1 in the red for Champions and a 10YOC1 or 10YOC3 in red for Contenders and Challengers.
For the Example Champions list above this removed LEG, MDT, NUE and WMT. This new round of elimination dropped the list sizes for the Champions, Contenders and Challengers to 2(-6), 13(-6) and 48(-37) respectively.

My Results

Challengers

I’m currently in the market for an industrial to add to my list. There’s a few here I don’t know much about. Air Lease Corp. (AL) has an amazing 7 years streak with dividend raises averaging no less than 30%. At this rate, you’d have a YOC in 10 years approaching 30%.

I’ll also look at Valero energy. I didn’t realize the large dividend increases they are having plus they start with a juicy 4.2% yield.

According to the numbers, Citizens Financial Group (CFG), had a 53% increase to its dividend yielding nearly 4% now. Their EPS payout ratio is only 37%. I’ll definitely be looking at these guys, there are some branches in my area so I’m slightly familiar with them.

Guys, these are the future Contenders and Champions here. If you pick the right ones you could see amazing returns. The more years to retirement, the more of these faster growing companies you should be looking at.

All of these companies have a 5+ year dividend increase streak which can be seen on the “Yrs” column.

I’ve sorted the list with highest yield at the top so you see some energy companies at the top.

Are any of these companies on your buy list?

April 2019 Dividend Contender CCC Rankings

April 19, 2019 by All About Interest

What I Did

Let’s say you purchased a stock at $10/share in 2013 that paid a 4% dividend or $0.40/share. In order to achieve a 10-year YOC of 10% that stock would need to pay out at least $1.00/share by 2023.

Why I Did It

How I Did It The first step was to sort all stocks by their current dividend yield and eliminate any stocks not paying at least a 1% yield.

Then I decided to eliminate any Contenders with a 5-Year CAGR < 10%. This screen eliminates a lot of slow growing companies like utilities.

Next, I wanted to look to see if the DGR was increasing or decreasing. I highlighted in red the 10-year YOC’s of companies that were both reducing their rate of increases and still under 10%.

This is a previous example of how it looked:

My Results

Contenders

There’s a lot of great companies on this list. Most people are familiar with Home Depot (HD) and some of the defense contractors like Northrop Grumman (NGC).

All of these companies have a 10+ year dividend increase streak which can be seen on the “Yrs” column.

I’ve sorted the list with highest yield at the top so you see some energy companies at the top.

Are any of these companies on your buy list?

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