New March Purchases – T, CAT, GE, JNJ, KKR, TROW, V

There was a ton of activity today.

First, I sold 100 shares of AAPL for a total of $12,660. AAPL is still the largest portion of my portfolio by far and will continue to be that way for awhile. However, I did want to diversify into other investments. I was able to sell AAPL near its high today, and while I was planning on doing this regardless of market movements, thanks to the sell off today I was able to pick up some companies on my watchlist at a greater bargain than I was expecting.

Prior to selling AAPL, my forward 12-month dividends stood at $3820.90. This dropped to $3632.90 after the sale, a decrease of $188.

My first purchase, which actually was not using money from the AAPL sale, but rather transferred in from my checking account, is the final $1500 to max out my Roth IRA contributions for 2015. (Satisfying Goal #1 for 2015!)

With that final contribution I decided to purchase T. Rowe Price Group (TROW). TROW was recently written about both by Passive Income Pursuit (Why T. Rowe Price Group, Inc. Is At The Top Of My Watch List) and Dividend Growth Investor (T. Rowe Price Group (TROW) Dividend Stock Analysis). Dividend Mantra also just recently covered it as well. It looks like I am in good company.

Rather than commenting on it too much here, please read the excellent analyses on their sites. I purchased this stock because it sort of combines the best of both worlds: a decent dividend with excellent growth.

I picked up 18 shares of TROW at 81.78, adding $37.44 to my annual dividends.

Next, using proceeds from the sale of AAPL, I bought $1616 of Visa (V), $1610 of Caterpillar (CAT), $1915 of General Electric (GE), and $1508 of Johnson & Johnson (JNJ). I have capital gains in all of them except for Caterpillar, in which I am down a little over $1000 (about 20%). I’m very happy to pick up more shares of this strong cyclic company now to reduce my cost basis. Since I’m holding this for the long term and get paid a nice 3.5% dividend to wait, the reinvested dividends will have a little more kick to them, purchasing more shares at this discounted price.

I also added two new additions to my portfolio: AT&T and KKR & Co.

AT&T needs no introduction. As one of the two major US telecommunication companies, it pays a very generous 5.7% dividend, while only providing dividend growth recently on the order of 2% a year. However, I feel that they are positioning themselves very well with recent spectrum purchases as well as the acquisition of DirecTV, which will add a growth component back into the mix. I pay AT&T for Internet and cellular service so it will be nice to get a small portion of that given back to me!

Kohlberg Kravis Roberts (KKR) is a private equity firm that might not be as familiar with many people. According to their website, KKR is “a leading global investment firm that manages investments across multiple asset classes including private equity, energy, infrastructure, real estate, capital markets, credit strategies, and hedge funds.”

Seeking Alpha had some recent articles on them too:
1) KKR: A High-Yield Dividend Stock With Reasonable Growth Potential
2) KKR: Don’t Judge A Book By Its Cover, This 7% Yielder Is A Great Value For Long-Term Income Investors

KKR doesn’t actually pay a dividend per se. Since it is an LP, it has distributions rather than dividends. And, instead of receiving a 1099-DIV at tax time, you receive a K-1. I have no experience filing taxes with a K-1, but since I use tax software for my preparation, I can’t imagine it being too hard.

KKR is very diversified and is a way to participate in emerging markets and other high growth but more risky businesses that I wouldn’t otherwise be able to. Yahoo Finance recently published a thorough article on it here: The $100 billion alternative asset manager

They also pay a very attractive dividend. (I’m going to keep using that term rather than distribution.) If you look on Yahoo Finance, you will see an annual dividend of 1.40, giving a yield of 5.9%. However, if you look on Schwab, it gives an annual dividend of 1.90 for a yield of 8.3%. What gives?

The issue is that KKR pays irregular quarterly amounts. Yahoo Finance takes the most recently announced quarterly dividend of 0.35 while Schwab uses a TTM (trailing twelve month dividend) method. While KKR’s quarterly payments are up and down, the annual trend over the last 5 years has been up. The dividend grew 209% in 2010-2011, 18% in 2011-2012, 93% in 2012-2013, and 25% in 2013-2014. Their 5 year and 3 year growth rates are 88.4% and 36.9%, respectively.

For growth like that I can stomach some uneven payouts. As each dividend is declared, I’ll just update my portfolio appropriately. My hunch is that 5.9% will be on the lower end of what I can expect.

Did I at least make up for the lost dividends from the sale of AAPL? You bet I did.

These seven purchases add $569.16 in annual dividends. My forward 12-month dividends are now up to $4,202.06 ($350.17/month). This is already $102 more than my goal for 2015. I guess I didn’t expect that I would sell some AAPL and invest that cash in higher dividend paying stocks. At the half year mark I’ll have to taken another look at those goals and make some revisions.

I am now invested in 30 companies. My online portfolio has been updated to reflect these changes.

Company Symbol Shares Price Yield Expected Annual Dividend
AT&T T 100 32.914 5.74% $188
Caterpillar CAT 20 80.0599 3.5% $56
General Electric GE 75 25.419 3.6% $69
Johnson & Johnson JNJ 15 99.93 2.8% $42
KKR & Co LP KKR 118 22.795 6.1% $165.20
T. Rowe Price TROW 18 81.78 2.56% $37.44
Visa V 6 267.77 0.72% $11.52

Forward 12-Month Dividends: $4,202.06 ($350.17/month).

Full disclosure: Long all the above stocks

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20 Responses

  1. FerdiS says:

    Congratulations on all those transactions — and ending up with a nice gain in your forward dividends. These seem like great companies to add…

    Dealing with K-1’s is not so straightforward as you might think. Each K-1 is unique, seemingly with more exceptions than rules. The other problem I have with K-1’s is that they usually arrive late(r) — towards the end of February or even into March. And sometimes they send corrected K-1’s, which means you have to redo stuff. (I own a few MLPs in DivGro).

    • scott says:

      Thanks for the head’s up on the K-1’s. I’ve even heard some people say that their K-1 didn’t arrive until a few days prior to April 15th. That’s cutting it way too close. I like having my taxes complete by at least mid-March, so that might be the biggest challenge. At least I knew enough to not buy KKR (or other LP’s) in an IRA! Haha.

  2. DaveX says:

    Thanks for sharing your purchases and congratulations! I’ve just started to read your blog during the past month and have picked up a few things. One was Loyal3. I purchased WMT and BRK.B with reoccurring monthly purchases. Do you only purchase companies that yield a dividend? (i.e. BRK.B does not)

    • scott says:

      Hi DaveX,

      Thanks for commenting and reading the blog. Great to have new readers here. I’m glad you could take away a few tips! Make sure to check out my blogroll too; there are a lot of great dividend focused investors on there.

      Loyal3 has been a great way to passively pick up partial shares of companies each month. Excellent choices of WMT and BRK.B.

      Most of my companies do pay at least a small dividend (Visa being the lowest at an initial yield of 0.72%, which is already up to 0.9% YOC thanks to dividend growth). I feel that BRK.B is well-positioned for future price growth and to implement a dividend at some point down the line. I think of it kind of like AAPL in that they say they won’t pay a dividend but then eventually do.

      I’m still young and not as concerned about generating dividends now versus being able to in the future. When more passive income is needed, I’ll just sell off portions of the appreciated growth stock to buy higher yielding companies.

      I guess a similar analogy is the usual recommendation to move more into bonds as you get older. Less growth potential but supposedly “safer.” However, over a long period, dividends have been a major contributor to stock market growth, hence the heavy weighting in my portfolio. Plus, it is fun to see that “free money” coming in higher each quarter…ah, the power of compounding!

      After a few months of passively investing with Loyal3, you probably have seen how you don’t really even notice the money gone from your account each month. I’m that way now with the three companies I invest into, BRK.B, DIS, and UL. Might just be time to up those monthly purchases.

      Thanks again for reading!

      • DaveX says:

        thanks for the detailed reply Scott! Yes, I am in my upper 40’s so I am looking at a 15 to 20 year time horizon to ramp up and grow my portfolio. I don’t think the yield on bonds are going to get me there. I am looking to, at a minimum, double my portfolio every 5 years (15%). So my strategy has been to buy and sell great businesses as their prices rise and fall using stock charts and looking for trends. It hasn’t gone so well because I haven’t been focused enough to time my transactions properly. It’s bad to be an emotional trader.

        So the buy and hold, dividend yielding route seems to be a very good play and takes the stress away. I believe that I still have the time to employ this strategy before retirement. I am just wearying of a huge market correction in the next couple of years, so I am on the lookout for that. This has preventing me from the buy and hold strategy.

        I am now looking for great businesses that are at or near their 52-week low with high yielding dividends to buy, hold, and earn dividends. I currently hold SO and COP in my IRA now (energy sectors). I play TCX as it has been up and down during the past few months. I’ve been thinking about adding DIS to my Loyal3 account as well. I might be forever waiting for market corrections, so buying little chucks of a business at a time may serve me well.

        Thanks again, and I look forward to your future posts.


        • scott says:

          Hi DaveX,

          As you are in your 40s, you still have plenty of time to allow the dividend growth strategy to work. As long as you can stomach potential unrealized losses while continuing to collect rising dividends, I think you’ll be fine. You almost have to be of the mindset to actually like the days that the market is in red so you can pick up stocks at bargain pricing.

          I haven’t read too much about technical analysis, but the concept of how it relates to supply and demand is interesting. Over the last few years the market in general as gone up so much that you really couldn’t have made many poor picks if you just bought and hold.

          Maybe combining a buy and hold/monitor strategy with a technical and trend analysis to help determine what might be a good entry point would be the way to go?

          I too have been adding on to many of my energy investments. DIS should be a solid investment as well. I just read that Frozen 2 as well as three Star Wars movies are in the works!


  3. Well, just the purchase of T made up for the loss of income from AAPL. I like most of these buys, with T, CAT, TROW, and JNJ being my favorites. Nice job boosting your overall dividend income with this move.

    The K-1 issue isn’t necessarily too big of a deal, but DivGro highlighted some of the challenges. The biggest thing to remember is that there are special rules regarding publicly traded partnerships, and those are something to be cognizant of (passive loss limitations being the big one).
    writing2reality recently posted…Passive Income Made Perfect – February 2015 PIMP UpdateMy Profile

    • scott says:


      Thanks. The dividend from T is very nice. Hopefully they’ll get some growth from DirecTV and be able to increase the dividend more than they recently have been. Either way, it is one of those classic buy-and-hold style stocks. I felt fortunate yesterday that everything I wanted to buy was selling at a discount from what I would have gladly paid a few days.

      Thanks too for the info about those K-1’s. This is my first LP or MLP so haven’t had to deal with those yet. Hopefully it won’t be too much of a pain come tax season next year!

      PS, update on Lending Club coming shortly!

  4. Congrats on the purchases and putting all that cash to work! Ive never heard of KKR, so thanks for the introduction. The other companies mentioned are all great dividend payers and growers…and they will do great for your portfolio!

    Keep up the great work!
    Roadmap2Retire recently posted…Realty Income Dividend IncreaseMy Profile

    • scott says:

      Thanks, R2R. Another alternate investment manager to consider is Blackstone (BX). Market Realist, which wrote a good article on KKR linked to on Yahoo Finance above, did the same thing recently with Blackstone.

  5. Ryan says:

    Nice work, Scott. I think downsizing Apple was a fantastic move for the overall portfolio. These are some fine looking businesses you put that cash into and I’m glad to share a lot of them with you. I really like TROW and want to own them eventually. Thanks for keeping us updated!
    Ryan recently posted…Dividend Update: February 2015My Profile

    • scott says:

      Thanks! It was a toss up between TROW and BEN, like you own. I am still hoping to own BEN eventually. The usual issue is too many choices and not enough capital! As always, thanks for commenting, Ryan.

  6. DivHut says:

    I have been seeing a lot of TROW being mentioned in recent times among the dividend bloggers. It certainly looks good from many dividend perspectives. It certainly has a nice history. Like the GE, CAT and JNJ buys too. Nice job selling APPL to diversify a bit. Thanks for sharing.
    DivHut recently posted…There’s A New DivHut In TownMy Profile

    • scott says:

      I think it is kind of interesting how these purchases go in trends with a lot of us purchasing companies within similar sectors, if not the exact same company. I wonder if this has more to do with finding where the value currently is, duplicating another blogger we trust, or, more likely, a combination of the two. Anyway, the sharing of investing ideas is why this community is so much fun. Thanks for commenting!

  7. Fab says:

    Great purchases Scott! Keep it up!

    With the price dip of yesterday, I also bought some more CAT.
    Most likely my next automatic investment will have some more JNJ, Cheers.
    Fab recently posted…New Purchases: CAT, PMMy Profile

    • scott says:

      Always great to hear from you! Glad to count you as a fellow shareholder. If CAT’s stock price stays depressed, I might continue to add more. I thought it was a good price at $100, but I guess what do I know!

      You can’t go wrong with JNJ. The smaller biotechs are selling at a premium now, but I would like to purchase some of those as well for the higher potential stock growth. Many of them may get picked up by some of the major players as well. Just a little too pricey for me now and they don’t have a dividend, but that’s not the end of the world.

      Thanks again for commenting,


  8. Apple sure has surely been a nice stock to have had in the past few years. It is always good to take a profit. Best part is that you utilized the proceeds to buy stocks that will lead to higher dividends and your overall dividend payments are higher. Good for you.

    • scott says:


      Thanks. It is just unfortunate that so much of the capital gains will be taken away due to taxes. Oh well. I guess you only pay taxes when you make money!

  9. All I can say is Wow, what a great set of purchases! You really took advantage of the recent market conditions and added some strong, growing dividend income to your portfolio. I think it was very smart to reduce your Apple stake and use the funds to invest in the strong companies that you did. I am a long term shareholder of T and love the company while Lanny recently purchased shares in CAT as well.

    TROW recently popped on my radar during my monthly dividend increase article. I was blown away by not only the regular scheduled increase but the announced special dividend as well. You picked a great time to invest in the company (which I am sure was planned and is not a coincidence) to capture both dividends. I am not too familar with KKR, so I will have to look into them more and perform some research. Thanks for the head start! And don’t worry, it really isn’t that difficult to file a K-1. You don’t have to prepare it, so the hard work is the company’s problem!

    Again, great, great set of purchases and way to add a large amount of forward income. Keep up the great work and keep the dividend snowball growing!

    Bert, One of the Dividend Diplomats.
    Dividend Diplomats recently posted…Lanny’s February Income and Expense SummaryMy Profile

    • scott says:

      Thanks for the long comment, Bert! It is nice that despite the market being up so much recently, there are still values to be had out there. Thanks too for the reassurance on the K-1 form. I don’t mind doing taxes too much (actually think it is kind of fun) so hopefully it won’t be that difficult, like you said.

      KKR was definitely the most risky of the investments so far this March. I’ve read a lot about them and think it should be a solid growth investment that also pays an excellent dividend on the side. I don’t recall the episode, but Frank Curzio talked about KKR recently and really liked what he saw. If you aren’t already, you should check out his two podcasts ( I’ve been listening to him for almost two years…one of the best podcasts I’ve ever listened to.

      It sure is fun to watch the dividend snowball grow. March will be huge for both of us this year!

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