Investments

Realty Income Corporation does not really fill the primary criteria I have for passive income stock but there’s another factor that has slight impact on the applied strategy. Due to tax reasons I’ve been forced to maximize the short term dividend income instead of focusing solely on the long term potential to raise the dividend. Therefore I decided to add on the position I opened last month and bough 20 shares for 43,73 USD per share.

I also opened a new position on Aflac Inc. which seems to be one of the few reasonably priced stocks out there. It also allows me to open a position on insurance sector  and provides exposure to the Japanese market. Dividend aristocrat, P/E below 10, low payout ratio and current value well below the 52 week average are properties that do fill the primary criteria I’ve set for a passive income stock. Bought 30 stocks for 61.50 USD per share. This is position I plan to add on in the coming months.

Links:

Tax reasons (only in Finnish): http://www.nordnetblogi.fi/tulo-ulkomailta-syo-verovahennyksen/03/04/2013/

Realty Income Corporation: https://finance.yahoo.com/q?s=O

Aflac Incorporated: https://finance.yahoo.com/q?s=AFL

There are few holes in my current portfolio. I didn’t have any direct exposure to realty, banking/insurance or technology but in the current market situation it’s really hard to to find any strong candidates to fill such holes. After  some consideration I decided to open a very modest position on Realty Income Corporation (O). I still have a bit mixed feeling of the company but it has some positive attributes but the most obvious one is the monthly dividend of 0.18USD per share.

Summary: bought 20 shares of Realty Income Corp. for 41,90 USD per share. Current dividend being 0.18 USD per share per month, this will increase my quarterly dividends by 10,95 USD before taxes.

Links: http://www.nasdaq.com/symbol/o/dividend-history, http://www.realtyincome.com

Valuations in general are very challenging so it wasn’t that easy to pick the stock for this month’s purchase. However after some consideration I decided to add on an existing position on AT&T (T) which seems like a reasonably safe bet. Dividend aristocrat with P/E below 10 and dividend yield close to 6% (with acceptable payout ratio) seems like a no brainer. On the downside I don’t expect to see significant increases in dividends even in the distant future. What I do expect is 0.01 USD increases annually which is fine considering the current dividend. This purchase maximizes the short term development of the quarterly dividends which eventually will be invested in companies with greater dividend increase potential.

Summary: bought 30 shares of AT&T for 33,90 USD per share. Current dividend being 0.46 USD per share, this will increase my quarterly dividends by 13,80 USD before taxes.

Links:  http://www.att.com/gen/investor-relations?pid=5675, http://finance.yahoo.com/q?s=T