4th of July festivities may have ended, but I’m still celebrating after tallying up the last of the dividends received during the month of June.
It was another successful month in the portfolio, as dividend income increased by 11.5% over 2016, and by nearly 2% over Q1. This increase was driven by add-on purchases of two companies I already owned, reinvestment of dividends, and organic dividend increases to dividend payouts.
Here are the dividends collected during June, along with the comparisons to 2016 numbers.
June was quite busy, with thirty different companies making dividend payments during the month. This is typical for the portfolio, as the third month of the quarter generally produces 40-50% of my income.
The biggest income increases came from Exxon Mobil Corp $XOM and QUALCOMM, Inc. $QCOM, which were two positions that I bought more of in the last year.
Amgen Inc. $AMGN, Ross Stores, Inc. $ROST, and Visa Inc. $V were the big gainers for organic growth, as they all produced 15%+ increases in income over 2016.
Meanwhile, Chatham Lodging Trust $CLDT, GameStop Corp. $GME, and STAG Industrial Inc. $STAG saw mid single-digit income increases despite little or no increases to their payout rates due to reinvestment of dividends.
Finally, Thor Industries, Inc. $THO shifted its dividend payout from June to July, causing a 100% drop for this reporting period.
Dividend Income History
As mentioned before, my income increased by 11.5% over 2016 by about 2% over March’s total. This is a bit lower than growth seen in other months, but still more than meets my goal of a 10% income growth rate for the portfolio.
Here is how it stacks up with the other months so far in 2017.
The portfolio is off to a great start so far in 2017, with first-half income up nearly 23% over 2016. This is a bit surprising to me, as I expected growth to slow a bit following last year’s 15.6% increase.
$2K Level Reached
I’ve reached a new and exciting milestone with the portfolio, as my projected annual income recently passed the $2,000 mark, and is up to $2,016.77 as I write this update.
It is becoming more clear with each update that the compounding snowball is picking up the pace. Every dividend reinvestment that hits the account is bigger than the last, making my income grow in larger increments as time goes on.
This is absolutely my favorite part of dividend growth investing, because I can see tangible proof that progress is being made towards my retirement goals.
With total return investing an investor’s principal bounces up and down daily, and when there is a market down-turn like during ’08/’09, a portfolio’s value can be cut in half.
However, by having a large and diversified portfolio of quality stocks, the dividends will continue higher. Yes, there may be a cut or two along the way, but with each position only representing 1-3% of the portfolio, others more than make up for it.
This shift in philosophy has worked wonders for me and my views of market volatility. I no longer worry about market corrections, but rather yearn for them so I can buy more shares at a discount rate!
I am expecting dividend increases from a few of my holdings in the coming weeks, as both Cummins Inc. $CMI and Walgreens Boots $WBA have a history of announcing new dividend rates around the second week of July.
I expect at least a 5% increase from Cummins to $4.30, which would be a ~46% payout of expected 2017 EPS of $9.36. There could be upside to this target though if management sees business prospects improving.
Meanwhile, I see Walgreens boosting by 10-15% to $1.65 to $1.75, which would be a 33-35% payout ratio of 2017 earnings and within management’s guidance of a 30-35% payout ratio.
However, potential muddying of this forecast is the continued overhang of the Rite Aid Corp. $RAD dealings. With Walgreens potentially shelling out $5B+ for 2,000+ additional stores, management might choose to go conservative with the dividend increase.
It was another excellent month for the “DGI For The DIY” portfolio, as it produced yet another double-digit increase in income, and reached a new milestone in expected future dividend payouts.
The outlook ahead also looks bright, as additional dividend increase announcements are expected soon.
How did your quarter 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.