Child Fishing From Dock

July Income Update: Fishing For Dividend Growth

It’s been a crazy busy summer in the household, so my apologies for the limited number of posts on the site of late. Between T-ball, swimming lessons, high school reunions, family vacations,  and everything else, the weeks have really been flying by.

It seems like I just finished up the June portfolio update, and here we sit a week and a half into August already and I’m just getting the July report put together.

However, despite the lack of free time to manage my portfolio, it continues to chug along just fine on its own. Dividend income in the portfolio grew by 16.7% over 2016, and the July totals put me over $1,100 in dividends collected so far in 2017.

Fishing With Son
Thankfully I caught bigger dividends than fish in July!

The increase in dividends came from a mix of organic dividend growth, the compounding action of dividend reinvestment, and new purchases made in the portfolio.

Here is a table of all the dividends collected during July along with the comparative numbers from 2016:

Table showing dividend income increases for July, 2017
July 2017 Dividend Income Report

The first month of the quarter is my smallest one for dividend income, so there aren’t as many payouts compared to the 30 received in June.

Looking at the numbers, a few names jump out with their double-digit increases.

First is Cracker Barrel $CBRL, which provided the largest payout during the month. This is due to a $3.50/share special dividend that was on top of the regular $1.20/share dividend due in August. This is the second special dividend paid out by Cracker Barrel, as they also had a $3.25/share payout last July.

This could end up being an annual occurrence, as Cracker Barrel is unable to spend cash on buybacks due to a shareholder rights plan that imposes a 20% max threshold for investors. With Sardar Biglari holding 19.9% of shares, any further buybacks would put his ownership over that threshold.

As a result, any excess cash beyond cap-ex and the regular dividend is now available for the special dividends.

Watsco Inc. $WSO is another one to highlight, as it provided 51.4% more income than in 2016. This was due to two big increases, including a 23.5% increase announced in October, and another 19% increase announced in July.

Realty Income $O also provided double-digit income growth, which was due to dividend reinvestment and roughly 6% organic growth to the payout.

The other changes were the addition of Nike Inc. $NKE to the portfolio, and the shifting of the payout by Thor Industries, Inc. $THO from June to July.

Add it all up and you can see how dividend income rose by 16.7% over 2016. Even more impressively, income was up 32% over April’s totals. However, much of that increase was due to the special dividend payout made by Cracker Barrel.

Dividend Income History

With July’s payouts now in the books, here is an overall view of the dividend progress made in the portfolio to date.

Table Of Dividend History For The DGI For The DIY Portfolio
DGI For The DIY: Portfolio Dividend History

The portfolio remains on a good trajectory for reaching the $2,000 level in dividends collected for 2017. This would mean at least 20% growth in income over 2016, which far outpaces my goal of 10%+ annual increases.

Looking Ahead

August is typically a pretty slow month for dividend increase announcements. The only dividend raise I am expecting this month is from Altria Group $MO, which generally declares the new dividend around the 24th of the month.

I am expecting an 8.2% dividend boost from Altria, from $0.61 to $0.66 per share. This would produce an 80.7% payout ratio on expected 2017 EPS of $3.27, which falls pretty much in line with guidance from management to return 80% of the EPS to the shareholders through the dividend.

Dividend announcements should then pick up in September, with Microsoft Corp. $MSFT, Philip Morris International $PM, Lockheed Martin Corp. $LMT, Realty Income Corp. $O, and McDonald’s Corp. $MCD all on the docket for raises.

Conclusion

It was another successful quarter for my dividend growth portfolio, as it continues its trend of producing double-digit income growth.

The outlook also looks bright, as additional dividend increase announcements are expected soon, keeping me above pace for my $2,000 target for the year.

How did your month stack up? I love to hear how others are doing with their portfolios, feel free to comment below and share links to your own monthly updates.

Happy Investing!

4 thoughts on “July Income Update: Fishing For Dividend Growth”

  1. Pretty steady progress – Congrats, Eric.

    Despite the uncertainty we’re facing with regards to geopolitical issues – it’s wonderful to be able to keep “cashing” these dividend checks, so to speak.

    I’ve been adding to MO, VZ, MSFT, D, among others. Got a nice buyout of AVA and took the proceeds to open up a DUK position as well as a new PFE position.

    Good luck!

    1. It’s amazing how having the focus on income rather than capital gains changes your perspective on market volatility.

      I’ve been hoping for a 5-10% correction for a long time now. Hoping it opens up an opportunity to buy NEE, AWK, MMM and a few others at fair price when it happens.

      Unfortunately I didn’t have any AVA, so I missed out on that buyout. I like your replacement picks, some nice yields right now with those stocks.

      Best wishes,

      Eric

    1. Thanks, hoping it lives up to my expectations. It was a recent addition to my portfolio, so it’s nice getting a raise before my first payout from it.

      I bought at $65, so if Altria boosts the payout to $0.66, I essentially bought at a 4.06% yield.

      Best of luck you, hope your rental properties close soon!

      Eric

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