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!
Looking Ahead
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.
Conclusion
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.
Happy Investing!
View Comments (12)
Hey Eric,
Finally getting around to posting my portfolio performance results. Since I'm still pretty young (35 in a couple weeks) and early/mid career I'm more focused on aggressive capital growth than dividend income. Here are my results for my Rollover IRA account, which I took over last fall after I got laid off:
2017 Q1: 18.77% gain
2017 Q2: 33.35% gain
2017 YTD: 131.13% gain (as of 7/27/2017)
I have not added any funds to this account since I rolled over my work 401k, so this is all due to capital gains.
My interest in the stock market began when my dad talked to me about his 401K as a teenager. But I really started to dig in about 2007. I was in high dividend paying stocks (PFE, BAC, MO, and a couple others). I sold after about a 10% loss before everything cratered in the financial crisis. Then I started digging deeper and read about every book I could find and taught myself about the stock market. Although it hasn't been without challenges, I still made every mistake in the book - overtrading, over leveraging, revenge trading, etc. At one point I took my account from $60k to $150K in 4 months, only to blow up and lose $100K within 2 weeks of a very volatile market. I took a couple years off and kept studying, which has prepared me for when I started trading again last fall. My cash account is up even more than my retirement account being able to use margin and more advanced strategies. I believe the stock market is the greatest path to wealth and there is more than enough to go around.
Hopefully we can meet up for a beer sometime back in our hometown and talk about our trades. Best of luck!
Brian C.
Brian,
Thanks for sharing your story, sounds like we've gone through similar "lessons" over the years.
I started investing in about 2005 when I joined an investment club that some of my friends were starting up. I opened up a personal account as well and invested mostly in growth stocks.
Had some good luck with NTRI, HANS, TIE, BEXP, BIDU while losing plenty of money on other risky bets like BRLC, CMED, BBC, CHK.
Came across Seeking Alpha and some of the long-time dividend growth investors and thought that fit my personality better.
I'm more of a slow and steady investor now and like being able to watch my income grow without worrying about ups and downs. I still buy the occasional growth stock, but am 90%+ in DGI now.
It sounds like you've been doing quite well this year. Best of luck in the second half!
Would be great to sit down and chat over a beer some time. I have a hard time finding people as passionate about stocks as myself.
Best,
Eric
Goog job some good companies paying you. good YOY growth. keep it up.
Thanks Doug!
A bit smaller increase than I had hoped for, apparently they want to stay near low end of payout ratio guidance with big expense of Rite Aid acquisitions on the horizon. I'll take it though, still better than raises from work!
Walgreens Boots (NASDAQ:WBA) declares $0.40/share quarterly dividend, 6.7% increase from prior dividend of $0.375.
Forward yield 2.06%
Payable Sept. 12; for shareholders of record Aug. 18; ex-div Aug. 16.
love your site, eric! it's really such a wealth of detail, I can't wait to delve in more.
i have one formatting question/suggestion. on your portfolio page, is it possible to freeze the left column and top row? when scrolling down and across, the headings and ticker symbols disappear...so it's easy to lose track which set of numbers tracks with which stock.
kolpin,
Thanks!
I will look into formatting it, but I don't think I am able to do so with the imbed doc plugin that I use. It is frozen in the actual Google doc spreadsheet, but that doesn't seem to transfer over to the website.
I'll see if I can get a PDF link or something that makes it more presentable.
Thanks for taking the time to comment, have a great day!
Eric
Awesome checking off the 2k mark this year! You have a ton of great companies paying you and up 23% is a great start for the year. Keep it up!
Thanks Duncan, it feels great to hit that mark, I've been eyeing it for a while now. Today's announced increase from CMI pushes me a bit higher to $2,018.69...another snowflake added to the snowball!
Best,
Eric
Cummins just announced a 5.4% increase in the dividend to $1.08 per quarter, a half cent higher than my expectations. I'll take it!
https://seekingalpha.com/news/3277985-cummins-declares-1_08-dividend
Woohoo! Great update and congrats on crushing your investments!
Lance,
Thanks, glad to hear you enjoyed the update. I hadn't seen your site before, I'll be sure to check it out this evening.
Have a great day!
Eric