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Sunday, August 31, 2014

Best Dividend Investing Articles for August 2014

For your weekend reading enjoyment, I have highlighted a few interesting articles from the archives, which I find to be relevant today. The first five articles have been written and posted on this site, while the last four have been selected from other authors. I tend to post anywhere between three to four articles to my site every week. I usually try to write at least one or two articles that contain timeless information concerning dividend investing. This could include information about my strategy, or other pieces of information, which could be useful to dividend investors.
Below, I have highlighted a few articles posted on this site, which many readers have found interesting:

1) 14 Dividend Growth Stocks I Bought On the Dip Last Week

As some companies started declining in price at the beginning of August, I was able to initiate or add to positions in those securities. As I continuously screen a group of companies I am interested in based on price, it is very helpful when those get into the value territory. Overall, August was a busy month for purchases and sales of puts. Unfortunately, I won't be able to allocate more cash to stocks until some time in October. Of course, January's Roth and SEP contributions are just a few months away from there, followed by tax day. Hence, a little bit of cash accumulation might be helpful.

2) Dividend Investing for Financial Independence

I plan on living off dividends in retirement. In this article I discuss numerically, how to reach target monthly dividend income levels. For example if an investor puts $1000/month companies yielding 4% today and achieving a 6% annual dividend growth,and reinvests dividends, their portfolio will generate over $7,900 in annual dividend income in ten years. However, if our investor put away $2000/month in income stocks with the same characteristics as above, they would be achieving $7,900 in annual dividend income only after 72 months.

3) Kinder Morgan to Merge Partnerships into One Company

Kinder Morgan is simplifying its structure, by merging all limited partner interests into the parent company Kinder Morgan Inc (KMI). This move will create an energy powerhouse, which will be able to enjoy benefits of scale, unique geographic position, simplified structure, lower cost of capital and a ready currency for further acquisitions. The combined company is forecasting an increase in the annual dividend to $2/share by 2015 and then a 10% annual dividend growth through 2020. As a shareholder of KMI, I am happy. As a shareholder of KMR, I am happy as well. The unitholders of KMP and EPB will face some immediate tax hits, once the transaction closes. However, I believe that for those who buy and hold, they will do pretty well for themselves if they do not do anything for at least a decade. Now all shareholders and former partners will have the same interests as Richard Kinder, who I believe to be the Warren Buffett of Energy.

4) How to Invest Like Warren Buffett

Buffett has become a billionaire by continuously keeping an open mind for opportunities which will keep paying him for decades to come. All he has done is look for those situations where he can find a quality business, which will earn more in 15 - 20 years, has a low risk of change that will impact profitability, is managed by quality management team and is available at a good price. Of course, Buffett has also been helped immensely by the insurance float generated for Berkshire Hathaway, as well the hedge fund fees he earned in his days of the Buffett Partnership in the 1950s and 1960s. However, as an ordinary investor, I keep most of my energy focused on how I can select companies that generate a lot of cashflows to me, that I can use to then buy more stock in companies that generate more dividends for me.

5) Why Warren Buffett likes Investing in Bank Stocks

I wrote another article on Warren Buffett and why he likes investing in bank stocks. I believe that he likes their deposit float, which is essentially a very low cost of capital, which is pretty stable over time, and could be deployed by able and honest managers into lucrative projects such as mortgage or business loans. Of course, management quality is of utmost importance, which is why he has been adding to shares of Wells Fargo (WFC) in the past couple of decades.

I read a lot about companies, and also read a lot of interesting articles from all over the web. A few that I really enjoyed over the past months include:

1) Warren Buffett's $50 Billion Decision

I often get asked why do I want to "retire" early, given the fact that my "idol" Warren Buffett is 84, and is not even thinking about "retirement". The truth of the matter is that Buffett has been "retired" since 1956. This article from Forbes describes the decision that the Oracle of Omaha did for himself when he was 26 years old. Surprisingly, his retirement gave him the time to pursue his passion of learning and investing. The billions he made as a result of Buffett Partnerships and Berkshire Hathaway were a pretty nice side-gig. Retirement is about being in control of your time, and doing what you love, not about watching soap operas.

2) Weekend Reading – August 29, 2014

Dividend Mantra has compiled several interesting articles on dividend investing, in his weekly review. In addition, his "retirement" seems to be going really well, as he is making thousands of dollars writing about dividends, and he has recently been interviewed by Mint.

3) Weekly Links: August 31, 2014

My friend Dividends4Life has also compiled a list of pretty good articles on dividend investing on his website. I am surprised that not a lot of other readers know about him, given that he has written about dividend investing for over 7 - 8 years and has tracked his dividend numbers for the same period of time. He is a baby boomer who is dilligently working his way towards retirement.

4) Weekly Roundup - August 31, 2014

The Passive Income Earner also has a list of several articles on Dividend Investing. This is another site I read regularly, given that the writer is someone who has been saving and investing huge amounts to kick-start his dividend machine. I also have used his site to find other sites related to dividend investing.

Thank you for reading Dividend Growth Investor site. I am also on Twitter, if you are interested in following me on another platform, where I post about recent trades I have made.

Full Disclosure: Long KMI, KMR, WFC, BRK.B