Liebster Award

Thanks to Frankly Frugal Finance I’ve been nominated for the Liebster Award.  I appreciate the recognition and look forward to passing it along.  I tried finding the rules on this and there seems be several rule variations so I’ll be following in the footsteps of FFF.

The rules (that I’m using):

1. Spread the prestige and nominate five other newer/smaller blogs. The exact definition of newer and smaller seems to vary, so go with what feels right.

2. Answer a few questions that your nominee asks during his or her nomination ceremony.

My NOMINATIONS (no particular order):

1. Dividend Mongrel

2. Starting From Zero

3. Rising Net Worth

4. Dividend Gravy

5. Passive Income Mavericks

 

5 Questions from Frankly Frugal Finance

1.) What is your favorite color?

– Blue

2.) What is your quest?

– Lead a happy life; raise good kids

3.) Do you know what the first two questions are in reference to?

– No idea but I’m guessing a video game

4.) What is your favorite blog post to date?

– The last post I wrote about finding a new job

5.) Do you have any big travel plans once reaching financial independence?

– Perhaps Norway, New Zealand, and all 50 U.S. states

 

5 Questions for my nominees

1.) Why did you start a blog?

2.) What is your favorite quote?

3.) What is your favorite book?

4.) What is your favorite food?

5.) What is your favorite hobby?

 

Thanks again to FFF and I’m honored to pass this on.

 

Pop the champagne! I was able to “Get a Job”!

History is chock full of barbarous forms of torture such as the “Brazen Bull” of Ancient Greece, the “Iron Maiden” of the Ming Dynasty, and playing Christina Aguilera’s “Dirrty” during terrorist interrogations. Somewhere on this list, history should hold a place for the torture technique known as “The Job Hunt”. However, today is not the day where I’ll relive the horrors of tediously filling out online job applications and coming up with my three greatest weaknesses for job interviews. I will save that for another day.

For now, let’s celebrate. Dear Dividend has finally found a new J-O-B. Not only did I find a new job, I took a pay cut along with it. Why would I do such a thing you may ask. Because during an interview my future employer uttered verbal gold…”work-life balance”. Once I start my new job in a few weeks I’ll have more time with my family and actually be able to see them every day. Currently, I spend months away from my family but that is also a story for another day.

Taking a cut in pay will hinder my investing progress but some things in life don’t have a price. Spending time with those you love can never be replaced or bought. Listening to my kids tell me a joke that makes me bust out in laughter is worth more to me than any stock portfolio I could ever build. I also realize that someday my kids will be adults with their own lives and I’ll have a lesser role in their life than I do now. So I need to cherish every moment before it’s gone.

Without further ado, take a few minutes to step back in time and jam to an oldie but a goodie…”Get a Job” by the Silhouettes.

2 Ways I Get Free Stock Trades and Peace of Mind

I’ve found two ways to buy stocks commission free.  I’m always looking for ways to cut costs and maximize my investments.  Here is how I do it:

 

#1.  LOYAL3

If you’ve been following my blog, you should be familiar with LOYAL3. They provide commission free trades and allow you to purchase fractional shares starting as low as $10.  For example, McDonald’s (MCD) is currently $100 per share.  With LOYAL3, you can buy as little as $10 worth of MCD which would you give 0.1 shares of MCD.  Not a bad way to go if you can’t execute large trades or don’t want to see your money go to fees.

 

#2.  Dividend-Paying Trick

Technically, this isn’t a free stock trade unless you can handle delayed gratification.  What I do is purchase enough shares of a stock so that my first dividend payment will cover the commission fee.  I use OptionsHouse because they only charge $4.75/trade which helps me recoup my money quickly.

Here’s an example:

1 share of MCD is currently $100.  Its quarterly dividend is currently $0.81.  To earn enough money from its next dividend payment to cover the commission I need at least $4.75 in dividends from MCD.  Some simple division of $4.75 by $0.81 gives 5.86.  I need to round 5.86 up to 6 to determine how many shares of MCD I need to buy.  If I buy 6 shares of MCD, my first dividend payment will be 6 x $0.81 = $4.86 which covers the commission fee of $4.75.

Like I said, technically this isn’t free but I look at it as a rebate that I have to wait for in order to be repaid for my trade costs.

 

Using these two methods, I can trade with peace of mind and not have to worry about getting raked over the coals by fees.

3 Reasons Why I Bought Stock in Kraft Foods (KRFT)

Well, I finally opened and funded my OptionsHouse account.  I’ll write more about my OH experience later.  But for now, I’d like to talk about my first purchase using my new OH account.  I decided to go with KRFT for the following 3 reasons:

 

#1. Product Line

I follow the Buffett school of thought where an investor should understand a business and should also find companies with “moats” around them.  I feel that KRFT fits into both of these categories.

Some quick facts on Kraft Foods:

– 98% of North American households have Kraft products in their pantry or refrigerator

– $18 billion in annual sales

– 10 Kraft brands bring in more than $500 million net revenues

– Kraft has well-known brands such as Planters, Philadelphia, Kool-Aid, Oscar Mayer, Cracker Barrel, Maxwell House, Jell-O, Kraft Macaroni & Cheese and more

 

#2. Low P/E Ratio

Per Morningstar, the current P/E ratio is 13 versus the industry average of 20 and S&P average of 18.  This might be a bargain in a market where P/E ratios keep pushing higher.

 

#3. Nice Dividend Yield

KRFT currently has a yield of about 3.5% which comes out to $0.525 per quarter.

 

While KRFT probably has its own flaws, I feel comfortable in this latest buy.  I hope that KRFT will be a reliable, steady, dividend-paying stock for years to come.

Ten Spot Friday – 3 Reasons for Wal-Mart (WMT)

After writing about how I wimped out during a recent opportunity to be frugal, I decided to set a small, achievable goal this week.  I cut out spending on energy drinks, convenience store snacks, and iced coffees this week.  To reward myself, I’ll drop a Ten $pot at Loyal3 today.  I have 3 stocks on my radar: K, MCD, and WMT.  I’ve recently added some K and MCD so I’ve decided to give WMT a $10 boost.  Here’s 3 reasons why:

 

#1.  Buffett’s Advice: Understand the company and find an economic moat

I understand Wal-Mart because I’ve dropped uncountable sums of $$$ there over my lifetime.  Wal-Mart also has a huge “moat”.

Here’s a quick snippet from Wal-Mart’s website to back it up:

“Each week, more than 245 million customers and members visit our nearly 11,000 stores under 71 banners in 27 countries and e-commerce websites in 10 countries. With fiscal year 2014 sales of approximately $473 billion, Walmart employs 2.2 million associates worldwide.”

Wal-Mart was also ranked #1 on the 2014 Fortune 500 list.  I suppose I could go on about Wal-Mart and Sam Walton’s success but I won’t.

 

#2.  Dividend Aristocrat

WMT is a Dividend Aristocrat that has increased its dividend payout for 39 years!  The current yield is about 2.5%.

 

#3.  It’s a deal?

Determining if a stock is a good deal seems to be a little bit like black magic with some stats behind it.  I’m trying to learn how to evaluate stocks but I’m not a professional so take this with a grain of salt.

– Current P/E is 15.7 versus a 5-year average of 14.3.  This is higher than I’d like to see but WMT’s P/E is still below the industry average of 17.3 and S&P’s 18.6. (Stats taken from Morningstar)

– Its current payout ratio is between 30-50% depending on where you look.  Still a good range for me.

– WMT’s stock price is almost 6% below its 52-week high.  Not necessarily a clearance price, but still decent given that many stocks are at or near high points right now.

 

So there you have it.  3 reasons I dropped $10 on WMT using my Loyal3 account.  Have a wonderful 4th of July for those of you in the U.S.