It’s been over two months since I’ve posted here on DGI For The DIY, so if you’ve wondered or worried about where I’ve been, everything is A-OK.
The last couple months have been quite busy at work, so between those commitments and spring fever adding to more outings with the family, my free time for writing has been pretty limited.
Of course that’s not all bad, because as much as I enjoy writing about investments, nothing compares to moments like these with the kids.
Fortunately my overtime has slowed here of late, so I’m hopeful that these updates (and other content) will be a bit more timely going forward.
Stock Market Overview
The market has been a roller-coaster over the last few months, as the market has tried a few times to retake late January highs, only to retreat back.
Once upon a time, market volatility like this was difficult to endure. I would watch my portfolio value go up and down just like the market, and I found that the down days were much more painful than the up days were enjoyable.
However, one benefit I’ve seen from the switch to dividend growth investing is the change in mind-set that goes along with it.
Now that I know my dividend income continues to grow regardless of whether the stock market is up or down, I’m not nearly as concerned about what it’s doing.
Sure, I still check in on my portfolio every day, and still enjoy seeing my portfolio go higher, but the down days aren’t nearly as worrisome as they used to be.
Dividend Income Report
Speaking of growing income, here are the numbers for March and April. My apologies for the long list, hopefully this is the only time I’ll need to show two month’s worth of payments.
It’s a busy table, as there were several moves made in the portfolio over the last year.
Portfolio sales included AmerisourceBergen Corp. $ABC, Dr Pepper Snapple Group $DPS, General Electric $GE, MDU Resources $MDU, and GameStop Corp. $GME.
As you’d expect, with those stocks no longer in the portfolio, their income went down to zero, a decrease of 100%.
Portfolio purchases included new positions in American Water Works $AWK, Johnson & Johnson $JNJ, McCormick & Company $MKC, 3M Company $MMM, Altria Group $MO, NextEra Energy $NEE, and Nike Inc. $NKE.
There was also an add-on purchase of Dominion Energy $D, which caused its income to increase by 78.72%
There were some other large increases from Amgen, Inc. $AMGN, Church & Dwight $CHD, Norfolk Southern Company $NSC, Ross Stores $ROST, Union Pacific $UNP, Visa $V, and Watsco $WSO, which all grew income by more than 15%.
So despite the noise with all the trades, the portfolio still saw an 11.03% income increase over the March/April time period. This compares with a 15.3% increase in January and an 18.7% increase in February.
Dividend Income History
Here is the dividend income for the portfolio, going back to its inception in 2013:
The portfolio is off to a great start for the year, as dividend income is up 13.8% over the first four months.
Also, with the latest dividend reinvestment hitting the account yesterday, my updated spreadsheet now shows $2,258.43 in projected annual income, which is 12.6% above 2017’s total.
With a stated goal of 10% annual income growth, I’m well on the way to meeting that mark.
Recent Dividend Increase Announcements
It’s been a great start to 2018 with dividend increases, as the lowered corporate tax rate really seems to be having an impact on capital returns to shareholders.
|Announce Date||Company||Ticker||Previous Payout Rate||New Payout Rate||Sequential Increase||Year Ago Payout Rate||YoY Increase||Dividend Yield||Link|
|3/1/2018||Altria Group Inc||MO||$0.6600||$0.7000||6.06%||$0.610||14.75%||5.04%||LINK|
|3/1/2018||Digital Realty Trust, Inc.||DLR||$0.9300||$1.0100||8.60%||$0.930||8.60%||3.84%||LINK|
|3/6/2018||Ross Stores, Inc.||ROST||$0.1600||$0.2250||40.63%||$0.160||40.63%||1.09%||LINK|
|3/28/2018||McCormick & Company, Incorporated||MKC||$0.4700||$0.5200||10.64%||$0.470||10.64%||2.02%||LINK|
|4/12/2018||Tanger Factory Outlet Centers Inc.||SKT||$0.3425||$0.3500||2.19%||$0.343||2.19%||6.90%||LINK|
|4/18/2018||Kinder Morgan Inc||KMI||$0.1250||$0.2000||60.00%||$0.125||60.00%||4.98%||LINK|
|4/20/2018||American Water Works Company Inc||AWK||$0.4150||$0.4550||9.64%||$0.415||9.64%||2.26%||LINK|
|4/23/2018||Ameriprise Financial, Inc.||AMP||$0.8300||$0.9000||8.43%||$0.830||8.43%||2.55%||LINK|
|4/24/2018||International Business Machines Corp.||IBM||$1.5000||$1.5700||4.67%||$1.500||4.67%||4.36%||LINK|
|4/25/2018||Exxon Mobil Corporation||XOM||$0.7700||$0.8200||6.49%||$0.770||6.49%||4.03%||LINK|
|4/26/2018||Johnson & Johnson||JNJ||$0.8400||$0.9000||7.14%||$0.840||7.14%||2.90%||LINK|
Altria specifically mentioned the lower tax rate as the reason for its out-of-cycle 6.1% increase to the dividend in March, and all but said the dividend will be going ever higher later this year.
In March, we raised our dividend 6.1% to reflect final 2017 results and we expect to maintain our dividend payout ratio target of approximately 80% of adjusted diluted EPS.
Altria is expecting to earn around $4.00 per share in 2018, meaning that to maintain an 80% payout ratio, the dividend will likely be boosted yet again to around $3.20. This would be another 14.3% increase and would push the forward yield to 5.76%.
Altria typically announces dividend increases in August, so it will be interesting to see if they can come through with another large increase.
Ross Stores also mentioned a lower tax rate for its increased EPS guidance, and I’m guess that higher guidance played a part in the 40% dividend boost announcement.
Not all were big increases though, as Tanger Factory Outlet Center $SKT raised the dividend by just 2.19%, and $IBM by just 4.67%.
Both companies are struggling to grow earnings, so it seems dividend growth has stalled for each until business trends turn for the better.
With no new funds coming into this account anymore, the only time transactions will happen is if I trade in and out of positions in the portfolio.
After making a few moves in January to sell out of DPS and open new positions in Hormel and McCormick, I’m pretty much content with the holdings right now.
Sure, there are a few laggards that tempt me to sell from time to time, but nothing jumps out right now as being on the chopping block.
Seeking Alpha Articles
For those who may have missed them, I’ve had two articles published on Seeking Alpha already in May.
The first was my latest update on the utility sector:
For this article I updated the spreadsheet for my thirty stock watch list, including: EPS estimates, dividend growth forecasts, payout ratios, valuations, and projected total returns for each company.
The article is already my third most viewed ever on Seeking Alpha, and generated a lot of discussion in the comments that followed. Check it out if you are looking for dividend income ideas from the sector.
I’ve added a link to a similar spreadsheet on my Utility Watch List page if you are interested in uploading a PDF version to some studying with.
The other article was my portfolio update for the first quarter of 2018.
This comprehensive update provides details on the Dr Pepper Snapple sale and the purchase of Hormel and McCormick, and gives a more in-depth analysis of the portfolio.
I’ve included information on the portfolio value, weighting by sector, and my thoughts on some investment ideas in the market.
Other DGI Reading Material
Here’s a few other good articles I’ve run across in recent months:
David Van Knapp wrote up an extensive nineteen-part overview of dividend growth investing for beginners at Daily Trade Alert.
He goes through the basics like: What Is A Dividend, Dividend Growth, The Power Of Compounding, Yield and Yield On Cost, Valuation, and many other valuable topics on the strategy.
This is a project that I helped contribute to, and it’s been a fascinating follow over the years. It really drives home the point that you don’t need to be perfect with stock selections.
By having a diversified portfolio of quality companies, you can overcome a stinker or two and still be successful with your investments.
I hope this update finds you well, and hope you all are also seeing success with your investments.
Market volatility can be a bit disconcerting at times, but keeping focused on the constantly growing income and not the ups and downs of portfolio can do wonders for one’s psyche.