2015 is promising to be a year of change for me. After 6-years at my current employer, I have made the decision to move on. My new opportunity offers a raise all around, title, salary, bonus, and RSUs. Honestly the offer was so great I would be a fool to turn it down. This change has led to what I have naming, My Dividend Investor Dilemma. By this time next month I will roll my 401k and Roth 401k over to an IRA. I am excited to do this because the stock market will be open to me for investing. I cannot stomach 401k plans because most of them force an investor to put their money into a handful of selected funds. Many 401k funds in my opinion, are funds that no have the investor in mind. The primary goal is returns for the 401k administrator. Many 401k plans are loaded with investment options that have very high expense ratios. Do not get me wrong, I believe in maxing our a 401k and taking free employer match. I do however, believe in moving 401ks to better investment vehicles if the opportunity arises. Learn more about my investment strategy here.
My Dividend Investor Dilemma
As of 2-15-2015 I have just under $109,000 in my current employer 401k. The investment mix is $96,592.47 in my 401k and $12,178.12 in my Roth 401k.
My first dilemma – Do I convert my 401k balance to a Roth IRA and pay taxes now to avoid them in the future? I have stated many times that I like to control variables. Because of this I am a huge fan of Roth IRAs. However, in this case I am not sure if I want to pay the taxes required to rollover my 401k.
My second dilemma – I have never had the ability to make mass stock purchases. My mind is spinning with ideas. Do I – Add to my existing stock positions, open new stock positions, invest all funds now, or spread out my investing over 2015. Honestly I don’t know what I am going to do. I figured the best thing to do is to start evaluating my options now. I value the dividend investor community which is the main reason why I am writing this article. I am asking for your ideas and advice. What would you do if in my shoes?
My Current Portfolio
Before you can truly give advice, understanding the dividend earning portfolio of stocks that I already own is probably wise. I have been busy in 2015. So far this year I have sold off a few stocks and added several new stocks. I sold Digital Realty Trust (NYSE: DLR) and Realty Income Corporation (NYSE: O). I added positions with Ford Motor Company (NYSE: F), The Boeing Company (NYSE: BA), National-Oilwell Varco (NYSE: NOV), BHP Billiton plc (NYSE: BBL) and Valero Energy Corporation (NYSE: VLO). Lastly, I opened a Loyal3 account and started two small monthly $200 stock purchases with McDonald’s Corporation (NYSE: MCD) and Wal-mart Stores, Inc. (NYSE: WMT).
My Dividend Dreams Portfolio is shown in the image below. Please note this portfolio contains my Roth IRAs and investment accounts, not the 401k mentioned previously.
My Dividend Investor Dilemma Watchlist
After a few weeks of research I have identified 19 stocks that I believe warrant consideration for my influx of investing funds. To be honest there are many more stock that I removed for the list, just because I need to start reducing my selections or I will never arrive at a decision. Maybe after all of your comments I will end up with an entirely different list.
I do plan on adding to a few stocks I already own. I will buy $5,000 of AT&T (NYSE: T), $10,000 of Johnson and Johnson (NYSE: JNJ), $5,000 of Chevron (NYSE: CVX) and $5,000 of Boeing (NYSE: BA). This leaves $85,000 to invest in new stocks! My current watch list is shown in the image below.
I should note that two stocks I wanted to add but removed last-minute are IBM and DOW. I have also thought about taking a chance and buying 1,000 shares of Petrobras – (NYSE: PBR). I can hear you screaming NO! PBR is riddled with trouble, but the stock price is so low, I believe the upside potential may be worth the risk. PBR does violate my dividend investor screening process, but PBR satisfies the Las Vegas gambler in me.
You Can Help with My Dilemma
Now it’s your turn. I am seeking advice from a pool of dividend investors I respect. What would you do with $109,000 in today’s stock market? What do you think of the watchlist I created? Which stocks would you add or delete from my watchlist? Thank you in advance for your questions and advice.
Full Disclosure: Long on T, JNJ, CVX, BA, VLO, BBL, NOV, MCD, WMT. Recently closed positions with O, DLR.