Hello and welcome to another monthly update on the DGI For The DIY portfolio, I hope you all are having a happy spring.
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.
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.
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.
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:
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 Date||Company||Ticker||Previous Payout Rate||New Payout Rate||Sequential Increase||Year Ago Payout Rate||YoY Increase||Dividend Yield||Link|
|5/22/2018||Cracker Barrel Old Country Store, Inc.||CBRL||$1.2000||$1.2500||4.17%||$1.200||4.17%||3.13%||LINK|
|5/24/2018||Flowers Foods, Inc.||FLO||$0.1700||$0.1800||5.88%||$0.170||5.88%||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.
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.
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.
I was honored that Mike asked me to take part on the panel, here are the articles if you are interested in the picks:
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.
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!
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.