Category Archives: investment

Dividend Stocks, My 1st Quarter Results

Progress of Dividend Stocks

 In February, I wrote Choosing Dividend Stocks to explore parameters that you can use to select dividend-paying stock investments.  I started with the S&P 500 Dividend Aristocrats, a list of publicly-traded companies that have consistently increased their dividends over the last 25 consecutive years. An updated list, as of March 18, can be found here.

Based on the parameters I referenced in that post, I chose to invest in Avery Dennison Corp. (AVY) – maker of beverage labels, retail tags and vehicle graphics- and Bemis Co. Inc. (BMS) – maker of flexible packing and pressure sensitive material for labels, decoration and signage.

At the time of my initial purchase of these companies, Avery Dennison was $28.03/share. It offers a dividend yield of 5.70% and will pay an annual dividend this year of $1.64 per share.  Bemis was $22.85/share.  The dividend yield is 3.80% and annual dividend is $0.90 per share.

So far, my 2009 investment has appreciated 5.9% and I have made $15.77 in dividend payments on top.  My gain is not realized yet because I still own the stock, but I expect continued growth of these stocks into the second quarter.  I have also purchased them with a long-term outlook so, unless I get wind of distress at one or both of these companies, I plan to hold on to them.    

In addition, my dividend payment was based on my original investment in these stocks. I purchased additional shares after the dividend payment.  Thus, my next quarterly dividend payment will be based on a higher number of shares.  This is in addition to other investments I have in stocks, but the other investments were made prior to January 1 and have mixed results.  I may report on that later, but I don’t find it worth it to hash out here now. 

Here is a snapshot of my progress with these companies:








Annual Dividend



My Total Divs.

1st Qtr





1st Buy Price (1.22)



2nd Buy Price




Value a/o Fri. (4.24)



My % Gain



Have you done any dividend stock investing this year?  What parameters have you used to choose dividend stocks?  What is your experience with dividend stocks in this market?  Please share your comments in the comment section below.    

MAKE MONEY MONDAYS is a forum to discuss ways in which you can create additional sources of income.  I try to focus on particular ideas and steps you can take to create alternative income and passive income sources. If you like what you see here, please use the orange icon at the top right to
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Filed under Alternative Income Sources, investment, Make Money Mondays, Passive and Alternative Income

Rental Property Conversion Series: Refinance Settlement, Power of Attorney and Escrow

Last week, I went to settlement on our mortgage refinance. Refinancing was our first step toward converting our residential property to a rental.

Our new interest rate is 5%, which is 0.75% lower than our previous rate and ended up lowering our mortgage payment by $350/mo.

A lower mortgage payment will allow us to set a more competitive monthly rate when we put the property on the market for rent while also netting a profit on the rent after management and maintenance fees.

For the most part, our refinance was a pretty smooth ride for the nearly 90 days it took to complete all of the paperwork and underwriting for the loan. But, there were a few things I needed to set in place and one hurdle that I had to jump in order to complete the transaction.

Loan Restriction

Many finance loans for primary residence properties require the owner to occupy the home for a certain period of time following a refinance transaction such as ours. Our loan documents indicated a 60-day period following this transaction during which we are required to occupy the property as a primary residence.  This is consistent with our planning since I intend to occupy the premise until the move to Mississippi in July. 

If you are refinancing with intent on converting the property to a rental, therefore, please ensure that you plan to occupy the home in accordance with your loan’s occupancy requirements.

Power of Attorney for Absent Party

Whenever there are two or more persons on the title of a piece of real estate, all parties may be required to participate in such things as the transfer or finance of the property. For all intents and purposes, refinancing a property is like transferring the property back to yourself under different finance terms. In my case, since I was adding my husband to the title of the home, it was like transferring the property back to myself and also to my husband.

Since he was going to be on the title and since his financial credibility, including income and credit health, would be considered for the loan, he would also be responsible for cosigning all of the paperwork at settlement. But he would be away at deployment on the settlement date, so I needed to have him sign a Power of Attorney giving me the power to sign on his behalf.

Through a Power of Attorney, one party can appoint another party to handle the affairs of the first party in that party’s absence. Powers of Attorney can be general or specific, but are meant to give the appointee the right to sign documents and make decisions on the absent party’s behalf.

The title company had instructed me to produce a Power of Attorney that was specific to this transaction. The form can look something like this. It must be signed by the appointer and sometimes by the appointee agent. A notary public for the state must also notarize the document.

As an attorney, I felt comfortable doing a simple search on Google for a Power of Attorney document specific to real estate transactions. Although you don’t have to be an attorney to execute and produce a Power of Attorney, please bear in mind that different states may have different requirements for the Power of Attorney and it may be advisable for you to speak with an attorney about conforming any Power of Attorney to your state’s requirements. Any person appointing another to be an attorney-in-fact through this document should also keep in mind that your appointment gives that person the power to make potentially important decisions on your behalf and possibly about assets belonging to you.


During the 90 day rate lock-in period, I submitted the requested documents to the title company, including the Power of Attorney. The documents were approved by the title company, and our loan had gone through underwriting successfully. We were ready for closing. They assigned the date and we were ready to go. Once you make it all the way to closing day, you assume that the mortgage lender and the title company have done their due diligence and that everything should be smooth for the taking. Wrong.

On the day of closing, Wells Fargo told us that a state tax lien had appeared on my husband’s credit report and had been there since November 2008. I’m thinking, “if I requested this loan at the beginning of this year, why have they only found this now???” Anyway, they were requiring me to pay the amount of the lien and they would hold it in escrow.

What is escrow? Escrow is an account for holding funds until the consummation or termination of a transaction or until some condition is met.

The lien assessed against my husband was assessed in error. It was actually something that we thought had been taken care of as the state tax lien office acknowledged the error, but it had not been released. Although I was able to have the state lien office fax a letter to our mortgage lender indicating that the lien was in error and would be released, since the lien had not already been released, they insisted I pay the amount of the lien and they would hold it in escrow until the lien is released. The state tax office indicated it would take approximately 5-7 days to release the lien. At that time, I expect the money to be returned to me. At any rate, I made the title company give me something in writing indicating that fact.

Due Diligence

If my husband and I had done our own due diligence, we might have discovered the lien on his credit report beforehand and could have resolved it before I applied for the loan. What puzzles me is that this didn’t hurt us at all when getting the terms for the loan and, although it had been there since November 2008, the mortgage lender only found it on closing day. One possibility is that there are three credit reporting agencies and things don’t always hit each one at the same time. So, it may not have been on the credit report reviewed by the mortgage lender when we first requested the loan. I would imagine that if it were on there, they would not have accepted our application.

Fortunately for us, the lien was erroneous. But, these types of blemishes on your credit report can really hurt your credit worthiness. It will be up to my husband now, once the lien is released, to ensure that it has also been removed from all of his credit reports. We now have learned that one should never assume something has been resolved. Always do a follow-up.

Have you refinanced a mortgage? Did you have any hiccups in the process?

MAKE MONEY MONDAYS is a forum to discuss ways in which you can create additional sources of income. I try to focus on particular ideas and steps you can take to create alternative income and passive income sources. I have also begun a series of posts called “Rental Property Conversion.” This series follows my husband and I as we turn our property into a rental property. I will also research and post other useful information in this category. If you like what you see here, please use the orange icon at the top right to receive my content updates by email or RSS reader.


Filed under Alternative Income Sources, business, investment, Make Money Mondays, Passive and Alternative Income, Real Estate

Monthly Dividend Stocks as Steady Passive Income Sources


Stock Market Crises Over by Wagner T. Cassimiro

Stock Market Crises Over by Wagner T. Cassimiro

I found this photo of a New York Daily 1929 issue declaring the stock market crises over because the number of trades had crushed a previous peak by 4 million.  Wouldn’t it be great to see this in print again this year?  Or, maybe not, because we all know that the stock crisis rebounded in 1932, three years later, to worst ever lows.  I don’t pretend to know when the current stock market crisis will end, but I don’t propose behaving as if it will crash again in the next three years.  While I am aware of the risks lurking in the stock market now, I tend to believe that, with good leveraging behavior, there is still some money to be made there, such as with dividend-paying stocks.  Some of the risk of market depreciation can be offset by the income paid by these companies.   

I first introduced the topic of dividend investing in this post about choosing dividend stocks.  I discussed ways to screen dividend stocks for further consideration as presented by Mr. Harry Domash in an article he published on   In that post, I looked at quarterly dividend stocks for investment at this stage in the stock market.  But, what about stocks that pay dividends on a monthly basis?   Do the same parameters apply?  How reliable a passive income source are such stocks? 


What are monthly dividend stocks?

Monthly dividend stocks are stocks that pay out a fixed amount of cash per share of the stock on a monthly basis, as opposed to the more traditional quarterly, semi-annual or annual dividend payment schedules of most companies.  A dividend is the total annual amount paid out by a publicly-traded company based on that company’s earnings.  A company that pays out monthly dividends pays out a twelfth of its annual total dividend amount each month.  Christian M. Archer wrote a great article about the characteristics of monthly dividend stocks.  His explanation is very comprehensive and easy to follow.   It also makes sense that one could apply Mr. Domash’s parameters for screening dividend stocks to monthly dividend stocks.  His parameters look at the fundamentals of a company, which wouldn’t change based on its dividend schedule. 

Building a Steady Passive Income Stream

In his article, Mr. Christian Archer tells us that monthly dividend stocks are a reliable income source because of payment schedules enforced by SEC regulation.  He also tells us that the dividends paid by these stocks can be liquidated to cash or can be reinvested to our stock portfolio for purchasing shares of these or other stocks.  If dividends are reinvested to acquire additional dividend paying stocks, over time, our passive dividend income will also increase. 

While there is inherent risk in investing in publicly-traded companies on the stock market, a well-diversified portfolio – one containing different types of companies from different industries – should operate to provide leverage against significant market depreciation or decreasing dividends.  The dividends themselves also provide some leverage against depreciation.

A great starting point for researching top monthly dividend stocks is at the Wall Street News Network.  There, you can download the list of approximately 300+ monthly dividend stocks having a yield range from around 0.4% to around 48.9%.  The list apparently updates pretty frequently so this information is based on the March 1, 2009 list. 

I plan to keep an eye on monthly dividend stocks, as it is my intention to boost the number of income-producing companies in my portfolio over the next year.  Even still, I take all market information with a grain of salt these days as market conditions stabilize. 

What is your experience with monthly dividend stocks?  Do you think this is a good investment at this time in the stock market? 

MAKE MONEY MONDAYS is a forum to discuss ways in which you can create additional sources of income.  I try to focus on particular ideas and steps you can take to create alternative income and passive income sources.  

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Choosing Dividend Stocks

Its Make Money Monday and I’d like to share some information that I found helpful in seeking out and choosing dividend-paying stocks for investment.  

The tide of the markets will be changing soon. Maybe it is already changing.  I feel that now is the time for me to invest in the stock market for the longer term.  In keeping with my goal of creating passive and alternative forms of income, I have decided to begin using a longer-term strategy for investing in the stock market than I have previously used.  I will begin investing in high-performing companies that pay dividends.

 I went looking for information about investing in companies that pay dividends and ran across this article by Harry Domash on MSN Money’s website.  It had some very useful information about screening dividend-paying stocks for investment.  Mr. Domash’s formula seems to be a good tool for finding promising, low volatility stocks that will pay good dividend income for some time to come.   

Mr. Domash talks about the parameters he uses to find promising dividend-paying stocks.   I’d like to share his parameters with you and tell you which companies I concluded were worth further investigation.  I started with the S&P’s dividend aristocrats list.  This is a list of companies that have increased their dividends steadily over the last 25 consecutive years.  After all, investing in a company that has increased its dividend steadily over the last 25 years, even through this economic downturn, definitely sounds like a good place to start.

While any of these aristocrat companies may make a good investment, Mr. Domash’s parameters offer an additional level of scrutiny to apply in choosing companies for investment.  The parameters were easy to follow and made good sense to someone like me who is an elementary-level investor.  I was able to find this information about the stocks on the aristocrat list by simply researching the companies on Google Finance and Yahoo Finance.  Mr. Domash’s list of parameters consists of:

1.            Current Dividend Yield is between 2.25% and 5%

A stock’s dividend yield is the amount of its dividend for the next twelve-month period divided by its share price. 

2.            Five Year Average Dividend Growth is >5%

3.            Return on Equity (ROE) is > Industry Average ROE

A stock’s return on equity is a company’s net income divided by its shareholder’s equity.  Mr. Domash recommends gauging the company’s profitability based on whether the company’s return on equity is greater than or equal to the average of the company’s overall industry.  

4.            Leverage Ratio < 10

Mr. Domash recommends using the leverage ratio to filter out the strongest dividend-paying banks.  The leverage ratio is a measurement of debt by calculating the total assets of a company divided by the amount of its shareholder’s equity.

5.            Earnings Per Share (EPS) Five Year Growth > 10%

A company’s earnings per share are generally equal to the company’s total annual earnings divided by its outstanding shares. 

6.            Mean Analyst Recommendation = Buy or Hold

7.            Institutional Ownership > 40%

Mr. Domash’s discussion of these parameters can be found here.

Using the list of dividend aristocrats and applying Domash’s parameters, with the exception of # 4 because I am not ready to get back into banks, I chose Avery Dennison (AVY) and Bemis Co. Inc. (BMS).   This begins my journey into dividend-paying stocks.  

I read recently that BMS will be making its twenty-sixth consecutive annual increase in dividends this year.  As for AVY, with Q4 profits falling 46% and a workforce cut of 10%, the maker of pressure-sensitive materials and office consumer products has gotten off to a rocky start this year.  But, my longer-term investment strategy requires me to stay through these occurrences so far at the beginning of this year and look forward to the payment of dividend income over the next twelve months.  I will do periodic follow ups throughout this year to monitor the health of these companies. 

Are you ready to get back into the stock market?  Would you consider investing in dividend-paying stocks?



Filed under investment, Make Money Mondays, Passive and Alternative Income