Mulzar.com

Hello everyone!

2010 won’t be a disappointing year for income investors. Atleast not for me.

Here is my current dividend portfolio:

Berkshire Hathaway Inc B             0.77309
Coca Cola                                    16.23005
Kraft Foods Inc                             26.70562
McDonalds                                   12.24261
Nestle N                                        2.89255
PepsiCo                                        14.78645
Procter&Gamble                            2.26402
Lloyds Bank                                  1 034.84909

Coca Cola raised its dividend 7.3% to 44 cents per share. So I will receive 0.44*16.23005 = $7.141222 from coca cola. Nestle raised its dividend 14.30% to $1.477 ( with the current USD/CHF exchange rate ) per share. I am surprised by the big raise in dividend from Nestle. I didn’t think it would be above 10% in dividend increase. My stake in nestle is ridiculously small so I am not so excited by the dividend raise.

This was a nice beginning on my income investing strategy, hopefully coca cola & nestle willl continue raising their dividends for years to come.

I’ve been thinking about adding Tesco to my DRIP portfolio. It’s nice to hear that Buffett has a stake in Tesco, it makes my choice easier.  This is my DRIP portfolio at the moment:

Berkshire Hathaway Inc B              0.4225
Coca Cola                                     14.30654
Kraft Foods Inc                             23.16033
McDonalds                                    10.63966
Nestle N                                        2.89255
PepsiCo                                        13.17289
Procter&Gamble                        2.25718
Lloyds Bank                                  964.57166

Current Portfolio value: $4012

My DRIP portfolio as you can notice is a mixture of income stocks and risk. Lloyds bank is a risky move and the other stocks except Berkshire are income stocks. It feels nice having a income portfolio with growth. Going to sleep is alot easier, believe me!

I know that my DRIP portfolio is ridiculously small, I’m waiting for better opportunities to buy more shares. I’m looking intensely at the share prices of Coca Cola and Pepsico. Coca cola and pepsico are obvious choices for the income investor. I think the majority of dividend investors have pepsico and coca cola in their drip portfolio. But it’s important to get them at fair prices.

I’m looking to buy more shares at:

KO < $50

PEP < $55

Good luck fellow dividend investors! 

The company has strong brands and was punished for the cadbury-nonsense. Steady growth and reliable dividends makes this company a good DRIP. I like the fact the stock was lowered because of disappointment with the managment. But the facts remain that Kraft Foods is a strong company with growth and relatively low P/E of 16.75. Income investors should consider adding Kraft Foods to their portfolio.

Kraft foods hasn’t performed well since it’s IPO:

This is one disappointing graph for investors. The stock price is even lower today then it was since its IPO.

But the profit and the dividend of kraft foods has been on a steady rise during this period. The reason why Kraft Foods hasn’t performed well is because the P/E ratio when it first went public was relatively high, the profit growth was already priced in the stock.  Looking at historial performance for Kraft Foods can be a very misleading indicator on how the future will be. I think that Kraft Foods will perform way better than the past 10 years. I’m saying this because now it’s trading at a lower P/E than before and Kraft’s profit is still growing. With a divided yield of 4.10% and a yearly dividend growth between 7-10% makes Kraft Foods a good high dividend paying stock with growth potential. My estimate is that Kraft will outperform dow jones and S&P500 for the next ten years.

I have bought Kraft Foods shares for my DRIP portfolio. My plan is to regurarly buy more KFT shares every month, I believe it will be great DRIP stock.

Pepsi one of my most important DRIP stocks I have in my portfolio. One of the reasons I choose PepsiCo is because if its strong brand and yearly dividend raise. I assume there will be a dividend raise this year also, something in the $0.47-$0.50 range.

Good luck fellow DRIP investors :=) !

I finally got started with drip investing. My plan is to put away roughly $100 per month in:

Coca Cola

Kraft Foods

PepsiCo

Mcdonalds

Nestle N

Procter&Gamble

That’s $100 each so I’m putting away a total of $600 in to drip stocks. And Ofcourse all dividends are automatically reinvested.

I’ve already started my portfolio:

Conservative portfolio except lloyds bank. I think Lloyds Bank will be a good investment in the long run and I can afford one risky investment in my portfolio considering how safe the other companies are. Also note that reason it’s approximately 900 shares is because I bought the Lloyd shares on the london exchange where the price differ quite alot.  My first minor goal besides the obvious million dollar goal is to receive $100 in dividends every quarter. I will probably achieve that goal fast. My DRIP portfolio is worth $3200 at the moment.

Status:

Net Worth: $51000

Holdings,

Cash:

$12800 - I will invest it soon.

Stocks/Funds:

$4200 in emerging markets funds.

$3200 in DRIP stocks.

Real estate:

One apartment, market price = $105000

Loans:

$71583 real estate loan.

$800 cash loan.

Why do people keep posting beautiful graphs of performance when you reinvest dividend stocks versus no reinvestments and then point out the huge difference in return. People almost never mention the fact that when you get dividend and don’t it reinvest in the same stock you still actually have the money you received. Yes, it doesn’t disappear did you know that?

For example, if you have a stock A that pays 5% dividend and you chose to get the dividend in cash and invest the money in another stock. Than you have to calculate the return on the other stock you invested in to get the total return. Keep that in mind the next you read about dividend reinvesting. Getting dividend in cash and waiting for a market correction is not a bad idea either if you think there is a high chance that the market is heading south.

I finally decided to open a drip account. My goal is to put away some money in to Kraft Foods, Coca Cola, Pepsi and Mcdonalds every month and reinvest all dividends. I chose those 4 dividend stocks because I can’t really think of any other companies that I can trust for the next 50 years. I am going to hold these sweet dividend stocks for a very very long time.  Long term investing in reliable dividend stocks is a safe way to become millionaire, it’s slow way to become a millionaire though.

I’ve managed to save up an extra $15000 to invest in stocks. I am going to place some of that extra money in the DRIP stocks I mentioned. It will be a lot more fun updating my million dollar goal when I see dividends come in every third month!

I am also updating the market value on my apartment because prices here has rebounded a bit according to the media. The apartment is valued 5% higher than what I bought it for. I was a bit lucky that I was able to buy when the real estate market hit its lowest point here.

My net worth has increased dramitically since I started my million dollar goal. It feels good because I was actually going downhill in the beginning of my million dollar goal.

Status:

Net Worth: $51000

Holdings,

Cash:

$15000 - I will invest it soon.

Stocks/Funds:

$4200 in emerging markets funds.

Real estate:

One apartment, market price = $105000

Loans:

$71583 real estate loan.

$800 cash loan.

I am happy with how things have went so far. Sure, I could have alot more money by now but that’s life. I’ve been reviewing my strategy for accumulating wealth. If I am ever going to achieve $1 million dollar in net worth, I have to dedicate more of my time. My strategy has so far been investing in stocks, funds and real estate and saving money regularly. The reason why I choose stocks and real estate is because they have been proven to be the best wealth builders over the long term. I still haven’t DRIP invested. I have plans on opening a DRIP with Pepsi or Coca Cola or maybe both. The reason why DRIP look tempting to me is because I like the idea of passive income with growth. Dividend reinvesting is a low stress approach to the stock market and that makes it even more appealing.

Should I also consider my website’s value when I am calculating my net worth? Maybe I should, considering that I calculate all things of value when I announce my net worth. Real estate, precious metals, stocks, savings etc. I never thought that this website would be worth anything because blogging was more like a hobby and I didn’t intend to make money on my blog. But as time went ad money started to come in. 

For now I won’t take my website’s value into consideration because the money I make isn’t worth mentioning so the value of http://mulzar.com is probably not worth calculating YET!

So to sum things up: I have been saving money on regular basis and investing it in stocks and funds. I used to amortize my mortgage loan but I stopped doing that as I mentioned earlier since saving money in the stock market will probably make me more money than amortizing. I have future plans on opening a DRIP account at Pepsi or Coca Cola. Or some other good DRIP stocks. I have few stocks on my mind that would be suitable for DRIP.

Status:

Net Worth: $32400

Holdings,

Stocks/Funds:

$4200 in emerging markets funds. I will give details about which funds/countries  next update!

Real estate:

One apartment, market price = $100800

Loans:

$71583 real estate loan.

$900 cash loan.

 I’ve achieved $32400 in net worth so far, not so bad. I started my million dollar  about 1.5 year ago with $14000. It might seem like I have done some good value investments but the fact is most of the rise in my net worth have been through saving not the rise of my stock holdings or real estate. I would have been a good amount richer if I didn’t sell my RBY shares, but hey what can you do…. “if” changes alot when you trade stocks. It’s easy to be smart in hindsight.

Is tehran real estate a paradoxal market, how can city located in a third world country have square meter prices up to $3000 in middle class neighbourhoods?

It’s actually not that surprising that prices are so high when you think about the key factors that have driven up the real estate prices in tehran so much. Tehran real estate prices has grown very rapidly, especially during 2003 to 2007. 

It not wize for the foreign investor to come to tehran and invest in real estate. Some economists strongly believe there is a real estate bubble going on in tehran. It was clever to invest 10 years ago before the real estae prices in tehran skyrocketed. But now is too late to the party. Tehran real estate prices are far from a bargain.

Whenever you apply for a mortgage loan, your lender calculates your debt-to-income ratio in order to check your affordability to repay. Debt-to-income ratio is the percentage of your monthly gross income that you pay towards your debts. It is also referred as debt income ratio or simply DTI.

How to calculate DTI

Debt income calculation is very easy and you can do it yourself. You need to divide your total monthly debt by the total gross income you earn every month.

Types of DTI calculation

You can calculate debt-to-income ratio in 2 ways, which are described below.

1. Front end ratio ? The percent of your income that you utilize in paying your housing costs. It comprises of loan principal, private mortgage insurance, mortgage interest rates, property taxes, hazard insurance, etc.

2. Back end ratio ? The percentage of your monthly income that goes towards paying your recurring debts (such as, credit card payments, car loan payments, etc.). It also includes your monthly housing expenses.

Meaning of 28/36 debt income ratio

There is a 28/36 rule with the help of which, the lenders assess your affordability to pay off a mortgage. The numbers 28 and 36 are considered to be the ideal front end ratio and back end ratio respectively. If your front end ratio is less than 28% and your back end ratio is less than 36%, then it?ll be easier for you to take out a home loan.

How debt income ratio influences mortgage payments

You can take out mortgage loan with low interest rates if your debt income ratio is low. On the other hand, taking out home loans will be difficult for you if your debt-to-income ratio is high.

Do not worry if your debt income ratio is high. You can lower your debt-to-income ratio by preparing a budget and cutting down your monthly expenses.