Cash Flows Plus Patience Equal Investing Results

It can be tough to be an investor. Your hard-earned money is at risk every moment it's in the market, and there are absolutely no guarantees you'll wind up successful. When the market moves against you, it gets hard to focus on the long run when that hard-earned cash seems to be evaporating in a sea of red, right before your very eyes.

Still, those lousy stints are the toll the market extracts for the long-term wealth creation possible through disciplined investing over time. A great way to persevere through those tough times is by focusing on the companies behind the investments, rather than the stocks that represent them in the market. That focus allows the real-money Inflation-Protected Income Growth portfolio to weather the recent Syria-induced ruckus and continue to perform well overall, in spite some short term turmoil.

What operating discipline will get you
Indeed, since the time period covered in last week's update, that real-money portfolio increased in market value by a hair over $900. That's a substantial one-week move for a portfolio that just got started last December with $30,000. Importantly, it's a move that was only possible because the portfolio remained invested, even when the market was panicking over that most recent Mideast conflict.

It doesn't take nerves of steel or superhuman persistence to remain invested during times of strife -- all it takes is a focus on what really counts for the companies in your portfolio. Over time, what counts most of all is cash flow -- cold, hard cash to the company from its customers and to you (the investor/owner) from the company in the form of dividends.

Six companies paid their dividends to the IPIG portfolio last week, making good on their promises of cash and providing a very tangible reminder that in the end, it's that cash that counts to investors. That's cash flow paid to patient investors from the cash flows the companies themselves generated from doing what they do best. And those cash flows represent real investing results for the IPIG portfolio.

Who forked over the cash?
United Technologies (NYSE: UTX  ) handed out $0.535 per share to its owners on Tuesday, marking the company's fifth dividend at that level. If the company follows its recent trends, its next dividend will be declared in October and stands a very good chance of including an increase from current levels.

Also on Tuesday, Emerson Electric (NYSE: EMR  ) paid $0.41 per share to its shareholders, which was its fourth consecutive dividend at that level. Similar to United Technologies, if Emerson keeps to its recent patterns, its dividend is also due to be reviewed and potentially increased in the upcoming months.

Not to be left out of the Tuesday payments, Mine Safety Appliances (NYSE: MSA  ) handed each of its owners $0.30 per share. Unlike the prior two companies, that payment was only Mine Safety Appliances' second at that level, as the company increased its dividend from $0.28 earlier this year. While another increase may come from Mine Safety Appliances, it's certainly not expected for at least another couple of quarters.

The dividends kept flowing to the IPIG portfolio on Thursday, when Microsoft (NASDAQ: MSFT  ) handed over $0.23 per share to its owners. The IPIG portfolio is eagerly anticipating Microsoft's next dividend announcement, as the company's dividend has been at that level for four quarters. While Microsoft is establishing itself as a company that regularly increases its dividend about once a year, it did have an eight-quarter period during the financial meltdown where its dividend held steady.

Speaking of increased dividends, Thursday also saw Walgreen (NYSE: WAG  ) make good on its announcement that it was increasing its dividend, as it handed its owners $0.315 per share. That was a better than 14.5% increase in its payment to its owners, enabled by the company's solid operations and the cash it generates from those operations.

Rounding out the week, on Friday railroad operator CSX (NYSE: CSX  ) kept its cash train chugging along, handing its owners $0.15 per share. Similar to Mine Safety Appliances, that was CSX's second dividend since its recent increase, and another increase isn't anticipated for at least another couple of quarters.

Cash to the company -- then its investors
Each of these companies earned money and then turned around and handed some of it to its owners in the form of dividends. That's cold, hard cash flowing regardless of Syria, regardless of the market's manic-depressive spats, and regardless of anything other than their own operating strength.

That's the sort of power that cash flow brings and lets an investor hold on through the rough spots and the temper tantrums on Wall Street. And that's the sort of company that the IPIG portfolio likes to buy. Put it all together, and as of Friday the 13th of September, the IPIG portfolio looked like this:

Company Name

Purchase Date

Total Investment (Including Commissions)

Current Value

Current Yield

United Technologies 

12/10/2012

$1,464.82

$1,951.02

1.97%

Teva Pharmaceutical

12/12/2012

$1,519.40

$1,456.92

3.14%

J.M. Smucker

12/13/2012

$1,483.45

$1,833.79

2.15%

Genuine Parts

12/21/2012

$1,476.47

$1,835.40

2.69%

Mine Safety Appliances

12/21/2012

$1,504.96

$1,810.80

2.39%

Microsoft

12/26/2012

$1,499.15

$1,816.65

2.79%

Hasbro

12/28/2012

$1,520.60

$2,013.26

3.42%

NV Energy

12/31/2012

$1,504.72

$1,974.00

3.23%

UPS

1/2/2013

$1,524.00

$1,773.20

2.80%

Walgreen

1/4/2013

$1,501.80

$2,138.40

2.36%

Texas Instruments

1/7/2013

$1,515.70

$1,893.16

2.78%

Union Pacific

1/22/2013

$805.42

$928.50

2.04%

CSX

1/22/2013

$712.50

$886.04

2.30%

McDonald's

1/24/2013

$1,499.64

$1,557.60

3.16%

Becton, Dickinson

1/31/2013

$1,518.64

$1,799.82

1.98%

Aflac

2/5/2013

$1,466.35

$1,648.08

2.29%

Air Products & Chemicals

2/11/2013

$1,510.99

$1,804.55

2.68%

Raytheon

2/22/2013

$1,473.91

$2,118.96

2.80%

Emerson Electric

4/3/2013

$1,548.12

$1,793.12

2.56%

Wells Fargo

5/30/2013

$1,525.48

$1,561.03

2.84%

Kinder Morgan

6/21/2013

$1,518.37

$1,473.36

4.56%

Cash

   

$460.56

 

Total Portfolio

   

$36,528.22

 

Data from the IPIG portfolio brokerage account, as of 9/13/13.

To follow the IPIG portfolio as buy and sell decisions are made, watch Chuck's article feed by clicking here. To join The Motley Fool's free discussion board dedicated to the IPIG portfolio, simply click here.

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