If March was a quiet month, April was an exciting month. I started paying more attention to tax shelter options. Older, wiser people have always praised the Roth IRA, and I realized I hadn’t made any Roth IRA contributions for 2016. This was my last chance! Here’s what I came out with in April 2017.
Missed opportunity 🙁
While compiling this month’s information, I learned that I did not max out my 2016 Roth IRA contribution. I only put in $2,000 of the possible $5,500. Why was I investing in my taxable account when I had an un-maxed Roth IRA account just sitting there? This is sad, but it’s part of the reason I’m doing this blog. I want to hold myself accountable, and this is one of those moments. This was a major oversight on my part.
I may have had some excuses relating to fronting job expenses and being short on available cash in April. But to think I’ve missed out on $3,500 earning dividends tax-free is painful. I got caught up watching my taxable account grow and wasn’t fully considering every possible way I could make my money grow faster.
I have come a long way in the last few months. I will never make taxable investments as long as I have room in my Roth IRA. Great learning experience for me! It’s like a punch in the gut now!
I am writing this looking back from September 2017.
Roth IRA
7 shares of LMT (Lockheed Martin Corporation) @ $268.95/share ($1,889.65)
LMT was on my radar. When I think of companies that will still be going strong when I die, I think of Lockheed Martin. That is the kind of company I want to be heavily invested in, so I used valuable Roth IRA space to make my largest single investment yet. A 2.4% yield and 58% payout ratio (as of Sept 2017) is just what I want, and the most recent dividend increases have been in the double digits. I’m excited to own a little bit of LMT!
46 shares of JNJ (Johnson & Johnson) @ $121.80/share ($5,609.80)
I later made my 2017 Roth IRA contribution and went all in on JNJ. I will later reduce my exposure to single stocks through the use of ETFs, but I am very comfortable parking a large sum in JNJ. I already owned a small amount in my taxable account, and now I don’t feel the need to contribute more to that until I catch up on my other companies I’d like to be more invested in.
Taxable
1 shares of PFE (Pfizer Inc.) @ $34.17/share ($34.17)
Another “bookmark” share. Since Robinhood doesn’t offer drip yet, I like having a few solid companies in the low $30 share price range for when my dividends accumulate. I’m not sure if PFE gets the credit it deserves. It is a high 3.6% yielder but only has a payout ratio of 50% in Sept 2017. It has been growing its dividend at a healthy 7-8%, although has been gradually slowing the last few years. Healthcare products seem to be high-risk, high-reward. I have no expertise in that area, but I like exposure to it. I am happy to build PFE over time and let one of the industry giants do what it does best.
1 share of ORI (Old Republic) @ $19.96/share ($19.66)
My last ORI purchase before selling it two months later. It just doesn’t have the dividend growth I’d like. I’ll focus on CSCO/PFE/HRL when I have some money left over from larger purchases.
14 shares of MO (Altria Group Inc) @ $71.70/share ($1003.80)
I decided to double down (or triple down?) on my recent MO purchase. MO is one of those companies with an amazing dividend history, and I wanted
1 shares of MSFT (Microsoft Corporation) @ $65.78/share ($65.78)
I had enough left over after the MO purchase to make a small increase in my Microsoft position. Another investment which is practically a no-brainer! Seeing my initial $400-$500 positions grow bigger makes me excited for the future!
15 shares of ABBV (AbbVie Inc) @ $64.03/share ($960.45)
It was time to start a new position in one of everyone’s favorite dividend growers. I decided to go big with ABBV. Over the next few months, this would be one of my biggest returns on initial investment. Like they say, it doesn’t count until you sell. And I have no plans to sell ABBV. In Sept 2017, it has a strong 2.95% yield but only a 46% payout ratio. I’m glad I got in when I did!
18 shares of WFC (Wells Fargo & Co) @ $53.61/share ($964.98)
I still thought I lacked exposure to financials, and decided to go with Wells Fargo. It had just gone through a rough period (false accounts), but I believed it was still a leader in its industry. I’ve actually had bad personal experiences with Wells Fargo, but am going to try to remain impartial in my investments. In Sept 2017, it has a nice 3.04% yield, but only a small 38% payout ratio. It fits those metrics for me, but its growth is on the small side of what I’m looking for. I’m hoping this will be another company that will be around when I die, and I will continue to hold and collect dividends.
7 shares of TRV (Travelers Companies Inc) @ $122.24/share ($855.68)
Another expansion for my portfolio into the financial/insurance sector! I had Travelers bookmarked with a single share, and still liked it just as much as when I first came upon it. I added seven more shares to my initial single share, making it one of my core holdings.
12 shares of MGA (Magna International Inc. (USA)) @ $41.49/share ($497.88)
I am not a big fan of the automakers, but I love this auto maker supplier! MGA has a short, but strong dividend history. I have good confidence in MGA’s 2.13% yield and tiny 19% payout ratio and plan to gradually add more shares as time goes on.
9 shares of PFG (Principal Financial Group Inc) @ $65.11/share ($585.99)
Another step into the financial industry, I love the 3% yield and 36% payout ratio (as of Sept 2017). On top of that, PFG has recently been increasing its dividend every quarter. I’m interested to see how PFG shakes out for me long term and will consider adding more.