ABOUT ME

Hi, I’m Hansen. I'm going to be your host in my new blog "Dividend Growth Bunny". First, I want to say Thank You for stopping by and taking the time to read a little bit about me. I want to share about my investment history and how I got started. I started investing in the stock market in the year of 2007. Well, it wasn't me that discovered about it for it was actually my older brother who first learned about the stock market. After learning its potential, he then eventually introduced me to it as well. We started with a simulator portfolio and began purchasing stocks that we thought were good to buy. We didn't know anything about fundamental analysis or value investing at that time. We were just looking at how the stock market moved upward or downward every day. Despite with our lack of experience and knowledge, we were actually making profit in our overall simulator portfolio. We then began to start purchasing stocks with real money. My brother opened a brokerage account with Scottrade, and started with a $20,000 investment. Our portfolio was doing great since the market kept moving upward during the 2007 rallies. It was in the year of 2008 when the United States got into recession, that's when we lost money. It was also the time when we got more serious about the stock market


Getting Serious
My brother started reading about investing and was inspired by one of the greatest investor, Warren Buffett. He then learned that the crash was one of the great opportunity to purchase stock since companies get cheaper valuation. As you can see, my brother and I grew up in well off family. My dad was a self-made businessman who operates a manufacturing firm in Jakarta, Indonesia. My brother somehow persuaded my dad to start investing in the stock market during the recession. My dad wanted us to learn more in this field which led him to give us a large sum of money of $380,000 to invest, making our initial investment of $400,000. Despite our lack of experience and knowledge, we were making money and losing money at the same time. It was kind off like a trial and error thing. At those times, I didn't know much about investing since I was 5 years younger than my brother. I was just following his foot steps in investing for he had more experience than me. When I was in University I decided to take Finance as my major to learn more about the investing world. I don't think the finance courses I enrolled in really benefit me much. I guess I was just taking those classes in order to meet my requirement for my Bachelor Degree. One day, when I was walking down the university hallway towards the cafeteria, I came across to these students who were promoting their organization to other students in the University. This organization was a finance club called "Financial Analysis & Management Education". This club is a turning point for me where it changed my view in investing. It was a great club with lots of opportunity. Students signed up to the organization in order for them to get better opportunities in career fields. However, I was looking at it in a different perspective. I wanted to learn more about the investing field, so I enrolled to take part in the activity of the organization called Fund Management. People with great interest of investing met there once a week where they could learn more about the stock market. I started learning more about value investing, an investment technique used by legendary investor Warren Buffet. I learned to read financial statement such as the Income Statement, Balance Sheet and Cash Flow Statement and gradually, I grew more familiar to how interpret these datas. I learned many new fundamental skills to investing that changed my whole perspective in investing in the stock market.

San Francisco State University

When deciding on which stocks to invest, I was taught to use a stock screener tool. This is an advantageous tool to filter out those companies that do not meet certain financial criteria. I focused on the instruments to see companies within my defined metrics that trade at discount-to-book value, tangible book value, high dividend yields, low price-to-earnings multiples and low price-to-book ratios. Furthermore, I accumulated experience in the ability to gather data from a range of sources and apply those information to develop financial models for companies that are listed in the market. I have constructed a financial model to project company's earnings and future cash flow. Correspondingly calculating its intrinsic price value using DCF method and other valuation metrics to derive investment conclusions.

Learning to become a Value Investor, I was taught to hold on companies for a long term horizon rather than buying and selling stock based on chart indicators. In fact when there is a bear market (falling market), I was taught to use this moment as an opportunity to seek for companies that are trading below its intrinsic value. This gives me a huge cushion of margin of safety in order to minimize my investment risk. It is essential to purchase the stock cheap and have a sound business model preferably with astounding economic moat (competitive advantage) so that it will not erode easily when going against competitors in the long run.

With the skills that I acquired from the finance club and my brother's knowledge in investing, we are able to turn the $400,000 portfolio into $700,000 portfolio in June 2015. That's a compound annual growth rate of 7.25% from year 2007 to 2015. The result was still a lost to the average annualized return of the S&P 500, however we were pretty satisfied with our result considering the facts of the trial and errors we went through. It was no doubt a great learning experience.

Financial Model on Johnson & Johnson

What Makes Me Start a Dividend Growth Portfolio?
I was always inspired by passive income assets after reading “Rich dad, Poor dad” by Robert Kiyosaki. The book teaches us how we should focus more in building the asset column so that there will be enough passive income coming in to pay off all of our expenses. The book didn’t put focus on stocks that payout dividends rather it focus more on rental properties that can generate income. I knew that purchasing rental properties was impossible for me since I don't have that kind of money. It was until June of 2015 that I came across dividend growth investing blog called “Dividend Mantra” by Jason Fieber. I read his “about me” page in his blog, and it really inspired me to create a dividend growth portfolio. I like the fact that I can use his strategy to create a portfolio that generates me passive income similar to how rental properties assets. I find that dividend growth investing was more practical than rental properties since I don't have to actually rent the properties out which can be time consuming sometime. After doing more research on dividend growth investing, I decided it was time to open my own brokerage account with E-Trade Financial. My brother and I decided to split the $700,000 portfolio, since he understood that I wanted to try out this new method of investing. I guess it was also the time to actually manage my own portfolio and be independent.

My goal is to make this portfolio somewhat similar to Berkshire Hathaway, a holding company that is owned by Warren E. Buffet. Of course it's not going to be as big as Berkshire Hathaway, but I will be content if it can at least become a mini version of it. My strategy is to combine value investing strategy with the dividend growth investing style together. Some of you might ask "Wait a minute, how is dividend growth investing has anything to do with Berkshire Hathaway?" Well, it is true that Warren Buffett does not invest exclusively in dividend growth stocks, and he is known more for being a value and growth investor. However, if you did more research you'll notice that he is actually a dividend growth investor. His company top 6 stocks position that makes up 70% of his portfolio actually payout dividends. Those holdings have been increasing their dividends year-after-year. His top 6 holdings are listed below along with the percentage each makes of his total portfolio:
  • Wells Fargo (WFC): 24% of portfolio 
  • Coca-Cola (KO): 15% of portfolio 
  • IBM (IBM): 12% of portfolio 
  • American Express (AXP): 11% of portfolio 
  • Wal-Mart (WMT): 4% of portfolio 
  • Procter & Gamble Co (PG): 4% of portfolio
Wal-Mart and Coca-Cola have the longest dividend streaks of his top 5 holdings. Coca-Cola has increased its dividend payments for 53 consecutive years, while Wal-Mart has increased its dividend payments for 42 consecutive years. Warren Buffett’s portfolio proves that he is a dividend growth investor more than any other style of investing. What I want from this portfolio is to generate a reliable and growing dividend income stream. My aim is to achieve a 12% yield on cost within 10 years of inception. In addition to that, I want this portfolio to generate acceptable total returns exceeding the performance of the S&P 500 index.

Warren E. Buffett & Berkshire Hathaway

So Why I Start This Blog?
I decided to create this blog to document this journey, share my learnings and cross check whether my formula could survive the test of times. I hope it will help to keep me passionate about investing and saving, and I'm looking forward to learning all I can. I have placed my real time portfolio with the transaction history page in this blog in order for you readers to see when I purchase or sell stocks and also to view incoming dividends payout. Furthermore, it will also show my monthly and annually dividends performance that are going to be displayed in bar graphs. When the time comes, we'll figure out whether my investment strategy would pay for my life expenses or whether I will still be needing a 9 to 5 job. Stay Tuned!

2 comments:

  1. Looking out for our parents are great!! I'm all for it! It's truely making a different having money invested rather than just have it sitting around and get eaten up by inflation.

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    Replies
    1. Haha ya. I just want to make them proud!

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