May 2018 Dividend Update

DGI For The DIY: May Dividend Update

Hello and welcome to another monthly update on the DGI For The DIY portfolio, I hope you all are having a happy spring.

Catching Sunfish
Proud of his Sunfish

Considering we had snow on the ground until late April, my family was busy in May enjoying every minute we could of the warm weather.

Bike rides, T-ball, fishing, hiking, family vacations…we pretty much tried them all.

With all that activity, investments and blogging have once again been put on the back-burner, but I’m totally fine with that.

Watching Mt. Rushmore
Checking up on Mt. Rushmore

Dividends are great and all, but they are no comparison to the reward of hearing the excitement in your son’s voice as he lands his first sunfish. And then hearing equal excitement as he lands a half-dozen more.

He thought Mt. Rushmore was pretty great too, and he got his money’s worth out of the $3 binoculars his mom found for him at Target.

Stock Market Overview

May was a good month for the stock market too, as the major indices all moved higher during the month.

Chart of market returns
Stock Market Returns – May 2018

My portfolio also did well, as several companies: Apple $AAPL, Mastercard $MA, Microsoft $MSFT, Nike $NKE, Ross Stores $ROST, and Visa $V hit new 52-week highs.

Dividend Income Report

Capital appreciation is great and all, but this is a dividend growth portfolio, so lets take a look and see how that metric performed for the month of May.

Dividend Comparison: May 2018 vs. 2017
May Dividend Comparison: 2018 vs. 2017

It was an excellent month, as dividend income increased by nearly 27% over 2017’s total.

Some of the increase was from purchases made, as Hormel Foods Corp. $HRL, Mastercard Inc. $MA, and Tanger Factory Outlet Centers Inc. $SKT were all added to the portfolio during the past year. This accounted for $15.96 of the $41.70 increase in dividend income.

Other large increases came from the likes of AbbVie Inc. $ABBV (54.8%), Kinder Morgan Inc. $KMI (64.5%), and Starbucks Corporation $SBUX (22.1%).

On the bottom end was CVS Health Corp. $CVS, which saw just a 2.7% increase due solely to reinvestment of dividends. This will likely be the case for a while, as management has guided for a flat dividend rate until the Aetna merger is completed and the balance sheets get deleveraged to more normal levels.

Portfolio Dividend Income History

Here is the dividend income for the portfolio since it was created back in early 2013:

DGI For The DIY: Dividend Income History
DGI For The DIY: Dividend Income History

The 26.9% increase for May was the highest increase for a month so far this year, putting the portfolio is well on its way to meeting my goal of 10%+ annual income growth.

Recent Dividend Increase Announcements

Following the flurry of announcements in March and April, May was a fairly quiet one for dividend increases.

Just three companies: Apple Inc. $AAPL, Cracker Barrel Old Country Store, Inc. $CBRL, and Flowers Foods, Inc. $FLO announced increases during the month.

Announce DateCompanyTickerPrevious Payout RateNew Payout RateSequential IncreaseYear Ago Payout RateYoY IncreaseDividend YieldLink
5/1/2018Apple Inc.AAPL$0.6300$0.730015.87%$0.63015.87%1.59%LINK
5/22/2018Cracker Barrel Old Country Store, Inc.CBRL$1.2000$1.25004.17%$1.2004.17%3.13%LINK
5/24/2018Flowers Foods, Inc.FLO$0.1700$0.18005.88%$0.1705.88%3.49%LINK

Apple’s 15.87% dividend increase was higher than what it’s given in recent years. The company also announced an additional $100B in share repurchase authorization, which should help drive EPS growth going forward.

Apple throws off cash like none other, so I expect plenty of dividend growth in the coming years from the company.

Cracker Barrel announced a rather small increase of just 4.17%, but also announced a special dividend of $3.75 per share, which more than makes up for it.

Cracker Barrel is in a unique situation where it can’t make share repurchases due to a major shareholder holding the max percentage of shares allowed by company bylaws. Since it can’t spend cash flows on shares, it is paying special cash dividends instead.

This marks the fourth year in a row with a special dividend, during which it has grown from $3.00 to $3.25 to $3.50 to now $3.75.

The last announcement came from Flowers Foods, which announced a raise of 5.88%. This was a bit lower than the company’s 5YR dividend growth rate of 10%, but when coupled with a yield of about 3.5%, still makes for over 9% income growth with dividends reinvested.

Portfolio Transactions

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.

I traded Dr Pepper Snapple Group out for Hormel and McCormick back in January, but have not made any other moves in the portfolio this year.

Other Work

My writing has been slow of late, but I was able to get one article published recently when I posted my update on the Top Water Utility Stocks a couple of weeks ago.

Stocks in the sector generally remain expensive, but a couple of ones are worth a look for long-term investors.

In addition to that article, I also updated my Water Stocks Watch List on this site. There you will find an updated spreadsheet with info on all nine water utilities, along with a downloadable PDF to help with further research.

Other Dividend Growth Articles

There’s been some good articles on Seeking Alpha of late; here are a few that I found especially interesting.

Mike Nadel, creator of the Dividend Growth 50, wrote a three-part series that asked thirteen investors for their best stock ideas in the market.

I was honored that Mike asked me to take part on the panel, here are the articles if you are interested in the picks:

The No. 1 Stock In The World (Redux) – Part I

The No. 1 Stock In The World (Redux) – Part 2

The No. 1 Stock In The World (Redux) – Part 3

Another of my favorites on Seeking Alpha, David Crosetti, announced a new project and the beginning of a weekly blog that will share his insights on dividend growth investing.

Here’s An Open Invitation To My Investment Club. Are You In?

Part I: Life Is All About Choices, So Choose Wisely, My Friend

David was one of the guys who got me interested in dividend paying stocks, so I’m ecstatic that he is starting this project and will be writing more often.

For anyone who is just starting out and is new to stock market, he is a great follow and does an excellent job of putting common sense into investing!

Conclusion

May was an excellent month for the portfolio, and with just a few days now left in June, I can safely say that it will be a good one as well.

The portfolio continues to grow my income stream, and the dividend snowball is picking up steam as the numbers get larger and larger.

Happy Investing!

9 thoughts on “DGI For The DIY: May Dividend Update”

  1. If you click on the image it should now open up with a clearer picture. Please let me know if this is better, so I can make sure to do that with all posts in the future.

    Thanks,

    Eric

  2. Great work buddy! The 3 purchases were very nice, especially $SKT as we know REITs offer great value at the moment.

    Looking at dividend increase of 16% from AAPL does hurt a little inside since I sold the majority of my DGI investments for the high-yield route.

    May I suggest you provide a link underneath your Portfolio Dividend History image, so it enlarges it for readers. Only way I can view it is by squinting with my eyes or zooming in on my browser 😉

    Hurry up and get June’s dividends posted!

    Nick

    1. Nick,

      Thanks for stopping by and sharing your thoughts.

      I’m optimistic that the REITs will rebound. I still think SKT is a high-quality operator, and hope that their outlet mall approach will stand up to the changing landscape of online retailing.

      I’ve been going the opposite route with much of my buys lately, as I’ve shied away a bit from the higher yielding stocks to go for more growth. With 25+ years until retirement I’m trying to get as much growth as I can in the portfolio while still staying in the DGI realm.

      Thanks for the suggestion on the image, I’ll have to play around with settings and see what I can do to make it more readable.

      Best,

      Eric

  3. Great job Eric on updating us on your portfolio. Been adding shares of HRL, T, D, and LNT to increase the dividend stream. Regarding CVS, are you concerned about Amazon?

    1. Joseph,

      Thanks for the comment, glad to hear you enjoyed the update. I’m long HRL, T, and D as well. LNT is a good one too, but I went with WEC instead for a utility in that region.

      As to CVS, I’m still long and still like its long term potential. I think its merger with Aetna will be a positive, and while Amazon does pose a threat, I think the market’s reaction to today’s news is a bit overblown.

      Best,

      Eric

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