My apologies for the delayed update, it’s been a crazy month at both work and home, limiting my free time to do much writing of late. I also needed to get my Q3 portfolio update finished up before we got too far into Q4, and that was published on Seeking Alpha last Friday.
With that article out-of-the-way, I figured I’d get an update on the September income put together before October closes out.
September was another successful month for the portfolio, as dividend income rose by 10% over 2016 levels. This increase came through a combination of organic dividend growth, dividend reinvestment, and new cash contributions to the account.
September 2017 Income Report
Here is a breakdown of the dividend income by positions held:
Income was negatively affected by the sale of GameStop Corp. $GME, which was sold in August to raise funds for my purchase of Altria Group Inc. $MO. This resulted in a loss of $7.34 in dividend income.
That loss was offset by add-on purchases of QUALCOMM, Inc. $QCOM and Dominion Energy Inc. $D, which, along with higher dividend rates, caused income from those stocks to rise by 112% and 74% respectively.
Double-digit income growth was also produced by Amgen $AMGN, Becton Dickinson & Co. $BDX, Flowers Foods $FLO, Gilead Sciences $GILD, International Business Machines $IBM, Lockheed Martin $LMT, Microsoft $MSFT, Ross Stores $ROST, Union Pacific $UNP, and Visa.
Weaker growth was seen by Chevron $CVX, Norfolk Southern $NSC, and Wells Fargo $WFC.
All-in-all another good month for the portfolio; I’m certainly not going to complain about 10% income growth!
Dividend Income History
Here is the updated history of the portfolio’s dividend income after September’s numbers are added in.
Q3 income was up 22.2% over 2016’s numbers, and total income received year to date is now up 22.5%.
I expected income growth to slow this year after it dipped to 15.6% last year, but it’s looking like that won’t be the case after all. Unless something drastic happens in Q4, I should be able to hit 20% income growth for the year.
Equally exciting is the fact I will break the $2,000 milestone in dividend income. I’ve noticed that the income milestones are coming more quickly as the portfolio grows.
I like to use the analogy of a snowball with my portfolio as I think it is an excellent comparison. A snowball starts very small with a few flakes of snow, but as it grows and rolls down a hill it gets bigger and bigger.
The same is true of compounding interest (or dividends). 10% growth on $100 is just $10, but 10% on $1,000 is $100, and 10% on $100,000 is $10,000. As the portfolio grows, the income grows at a faster and faster rate.
As my portfolio has grown from $25,000 to now nearly $68,000, the quickening pace of income growth is becoming quite clear as well!
Recent Dividend Raises
At the beginning of October I published my dividend growth predictions for 5 companies in the portfolio: AbbVie $ABBV, Starbucks $SBUX, STAG Industrial $STAG, Thor Industries $THO, and Visa $V.
Three of those companies have announced increases, and Starbucks should be doing so later this week.
|Announce Date||Company||Ticker||Previous Payout Rate||New Payout Rate||Sequential Increase||Year Ago Payout Rate||YoY Increase||Dividend Yield||Link|
|10/11/2017||Thor Industries, Inc.||THO||$0.3300||$0.3700||12.12%||$0.3300||12.12%||1.10%||LINK|
The announced dividends have all come in below my predictions, and in hindsight I was probably a bit too aggressive with my guesses.
I think Thor and Visa could have been a bit more generous, as their payout ratios remain low, but I’ll never complain about getting a double-digit income increase.
I fully expect that Starbucks will do the same this week. Doing so would push the forward yield over 2%, a level that I’m not sure has ever been reached for the stock.
November Dividend Increases
November is quickly approaching, and that is traditionally another big month for dividend growth announcements.
Taking a quick glance at my spreadsheet shows AmerisourceBergen, Union Pacific, MDU Resources, and Becton Dickinson as some potential increases.
Looks like I’ll be getting some early Christmas presents for the portfolio!