New addition to the Pocket Change Portfolio.

Well, it’s sad that the Pocket Change Portfolio is pretty fugged. With ALD completely screwed and the other holdings tanking, I’m pretty much back at square one. Losses are still on paper though, so there’s still hope. If ALD can get its act together and stay afloat there’ll still be hope for the portfolio 🙂

This is the problem with such a small portfolio, with trading commission costs such a high percentage of value, it makes buying and selling difficult.

As I mentioned in Follow the oracle? I was contemplating US Bancorp (NYSE: USB). I finally decided to pull the trigger this week, and while USB was not at it’s low of $22-something, I was able to snag a couple shares (almost) at around $25.

So sad…

ALD continues its downward spiral of smoke. Sell, hold, buy more?? I’m not sure what to do.

Follow the oracle?

I’ve been pondering adding a bank stock to the pocket change portfolio for a quite a while now, why? The reason being is financial companies usually provide a nice dividend, and that’s what my portfolio is all about. But with many of the financial stocks not doing so well, is it the wrong move? I think not. With a long term outlook, buying good companies in a slump is the best thing to do.

I think I’ll follow in the foot steps of Warren Buffett. With the weakened financials, he’s been adding to his holdings of US Bancorp and Wells Fargo. USB, is sporting an annual yield of over 5%, while Wells Fargo is distributing around 4.6%. Not too shabby.

Almost time for a new purchase

After a few minutes rolling quarters and a trip to the coinstar machine, I have $48 ready to invest. Sadly, the last time added new funds was last November. Being able to grow the account without a steady influx of new money is exactly why I choose dividend producing stocks.

Pocket Change Portfolio Valuation

One thing that I have been neglecting in my portfolio is comparing the returns to a major index like the S&P 500. After all, if I’m not beating the S&P 500, what’s the point of owning individual stocks. It looks like I’ve got my work cut out for me.

Through 2008 to date I’ve invested $860.00 of pocket change over 5 years, paid $24 in commissions, and earned $249.52 in dividends. A simple calculation leads me to a 38% return since day one. Of course, to find the true return, I’m gong to have to dig deeper.

Pocket Change Portfolio – Part III

To round out the portfolio, I decided to eat my own dog food. In April of 2006, gas was on the rise (although a lot cheaper than now), Exxon had posted its largest profits ever, and I was ready to buy a new stock. A gas stock. There were several companies I was considering: Exxon (NYSE: XOM), BP (NYSE: BP), Royal Dutch Shell (NYSE: RDS.A), and Chevron (NYSE: CVX).

Both BP and Royal Dutch Shell produced a nice dividend, however because they are foreign companies there is a tax on the dividend that would cut into my reinvestment earnings so I ended up passing on those two. In comparison of Exxon and Chevron, Exxon was in the news quite a bit and I felt that the positive news had driven up the stock price quite a bit. Chevron on the other hand, produced a decent dividend a little less than 3% and its stock price had not risen a whole lot. But more than that, it’s the only gasoline I put in my car. That sealed the deal.

In April 2006 I made a small purchase of $73, and a second purchase in November 2007 of $114. The prices of the stock back then were $60.84 and $88.02, respectively. Yesterday, Chevron closed at $100.73 falling back after getting upwards of $103 per share earlier in the week. Nice gains for the Pocket Change Portfolio.

Disclaimer: I am not a professional investor or anything of the sort, please do your due diligence and research your own stock purchases before deciding if any company I mention is right for your portfolio.

Pocket Change Portfolio – Part II

My next purchase for the Pocket Change Portfolio occurred near the end of 2004. Although a much different entity today, the company I chose had a long but controversial history, distributed a nice 4% dividend, and at the time was quite speculative. In November and December, I made two purchases of $132 and $77 of Altria (NYSE: MO).

Generally not recommended, my purchase of this company was very personal. Anyone who knows me well, knows that I absolutely hate smoking. So why would a cigarette hater purchase a company most known for its tobacco product? The answer is simple. I realized that tobacco is not going away, no matter how many lawsuits are made. If I have to be around smoking and smokers, I wanted to be making money off of their activity, buying MO was the logical choice for me.

Since my first purchase and several subsequent purchases, Altria is not the same company. Over 2007 and 2008 it has split up into Altria, Kraft Foods, and Philip Morris International. I have not sold any of the spin-offs yet, but may as soon as I come across another worthwhile investment. Strangely, I feel the best company to keep would be PM International, however it does not meet my dividend qualification yet, sad. To date, MO has been my one of my greatest investments, had I started with a “real” amount of money I’d be sitting on a nice chunk of change. But, since this is the pocket change account… my total cash gains have been small.

Disclaimer: As always, please do your own research before deciding whether any stock I mention is right for your portfolio.

Pocket Change Portfolio – Part I

I started my Pocket Change Portfolio 2002, with only $150 of saved up pocket change. At that time, I was working as a server in a restaurant, so I’d end up with change from tips every night. It was a better opportunity than my current situation of having to spend money to get pocket change.

In 2003, I made my first stock purchase after a couple more deposits totaling $385. There were a couple factors I used to make my decision. First, the companies I would purchase needed to be big and stable. Since I would not be trading regularly, as commissions would kill my little stash of money, I needed a company that I could just let sit around without having to worry about its daily ups and downs (Now, several years later I don’t think that’s possible anymore). Second, the company had to pay a good dividend. The bigger the yield the better, because it was the only way to provide regular growth using free dividend reinvestment, in combination with whatever capital I could scrounge together through pocket change.

After a lot of research, my first purchase was Allied Capital Corporation (NYSE Ticker: ALD). ALD first came on my radar after reading several websites and also in Beating the Street by Peter Lynch. Since the company was founded in the 60’s it has provided a steady annual yield of around 10%. It fulfilled my two requirements, and has done well for the portfolio over the past 5 years.

Disclaimer: I am not a professional investor or anything of the sort, please do your due diligence and research your own stock purchases before deciding if any company I mention is right for your portfolio.

Score!

A co-worker who was leaving yesterday, left me with a huge pile of pennies! He said, “You can have the pennies, I just want the silver.” Who would turn down free money? It’s probably less than 50 cents or so, but still, free pocket change is like gold to me.

Vessels of change

At the end of the day, I usually find some change in my pockets. The first thing I do when I come home is to separate the quarters from the rest.

After several months, these glasses become full of loose change and it’s time for the next step. The pennies, nickels, and dimes go to the CoinStar machine (if your bank processes change, that’s even better). I pay 9 cents/dollar to process at the CoinStar machine. I don’t like it, but I find it better than rolling all that change. Since the quarters are where the real accumulation occurs I’ll take the time to roll the quarters myself.

This time I was just under $30. It’ll be a little while before I go to the bank, but for now I’ll just keep collecting and rolling those quarters. With the stock market doing poorly, it’ll mean that I’ll be able to buy more when the time comes to invest my next round of funding.