The month of March is finally over, and good riddance! I’m not sure I’ve experienced a more volatile and life-changing month in my lifetime, as the breathtaking spread of COVID-19 rocked the United States, both socially and economically.

When the month started I was enjoying NCAA basketball as conference tournaments were in full swing. I was looking forward to MLB’s opening day, with my Minnesota Twins being the favorites to win the AL Central. I was able to take my kids to the grocery store, and to school for that matter.

However, COVID-19 changed everything, as it transformed from something we watched from the distance as it attacked China, to something growing out of control in our own country.

The chart below from Johns Hopkins University shows the incredible speed with which it spread in the US, as it grew from just 74 cases on February 29th, to 213,400 cases by March 31st.

This quickly changed our everyday life, replacing school with in-home learning, day trips with movies and board games, and in-person meetings with video conferencing. It also had a tremendous impact on the stock market, causing the biggest weekly drop in market history, as the Dow Jones lost 30% of its value in less than three weeks-time.

The market did recover with a double-digit rally to close out the month, but I’m not convinced yet that we’ve seen the bottom.

Not all was doom and gloom though, as social distancing had the welcome side effect of creating more quality time with the kids. We’ve been busy going on bike rides, binge watching Netflix and Disney+, and taking advantage of a surprise March snowstorm to build Mr. Snowman.

My wife and I often talk about how we wish life would slow down a little bit because the weeks and months fly by so fast. Well, March was the longest month I’ve ever experienced, so maybe all of this is a blessing in disguise that we should be grateful for. Yes, there is a global health crisis, and yes, the markets are insane, but I can’t control any of that.

I can control how we react to it all, and do my best to keep things normal for the kids. Hopefully someday they can look back at this fondly as family bonding time, rather than a scary time. We all have moments in life that mark us, I’m doing my best to make it a positive mark for them.

March Portfolio Income

That’s enough about philosophy and parenting, lets get to the good stuff!

Although March was a horrible month for stock prices, it was an excellent month for dividend income. My portfolio set a new all-time income record during the month as it passed the $300 mark for the first time ever and increased by 11% over 2019’s total.

The biggest increases came from Broadcom $AVGO, Johnson & Johnson $JNJ and UnitedHealth Group $UNH, which were two stocks that I bought more of during the past year. The largest losses in income came from Church & Dwight $CHD, Gilead Sciences $GILD, International Business Machines $IBM, and Microsoft Corp. $MSFT, which had all or some shares sold in the past year.

More interesting to me are the ones that didn’t see any trade activity, as there were many that grew income significantly year-over-year without the help of newly purchased shares. Fifteen different stocks grew income by double-digits, fueled by higher payouts and dividend reinvestment. Two that stick out to me most are Chevron $CVX and Exxon Mobil $XOM, which benefited from dividend reinvestment at depressed share prices.

Laggards include Becton Dickinson $BDX, 3M Company $MMM, and QUALCOMM $QCOM, which all grew by less than 5%.

Becton Dickinson continues to focus on repairing its balance sheet over growing the dividend, and I suspect it will be another year or two before that picks up again. 3M saw earnings dip in 2019 and is expecting negative EPS growth again in 2020, so it grew the dividend by just 2% with the recent announcement. QUALCOMM announced a 4.8% dividend increase in March, so its income growth will pick up in the year ahead.

Overall I’m quite happy with the numbers, as I met my goal for double-digit income growth in spite of the volatility of the market.

March Dividend Increase Announcements

I was expecting March to be fairly quiet for dividend announcements, and in the case of increases, that was the case. However, I had two dividend cuts that also hit the portfolio, making it a pretty rough month.

Ross Stores $ROST came through with a nice double-digit increase on March 3, but has issued multiple business updates since, and taken measures including store closures, furloughs, and salary cuts in an effort to enhance liquidity.

Fellow discount retailer TJX Companies $TJX appears to have suspended future dividend payments according to page 17 of its recently filed 10-K, where it states:

For example, as a result of the ongoing COVID-19 pandemic, we temporarily closed our stores beginning in March 2020. We also suspended our share repurchase program. In addition the Company does not intend to declare a dividend for the first quarter of fiscal 2021, and we continue to evaluate our dividend program in the near term.

It appears that Ross Stores is doing all it can to avoid the same fate, but with the current retail environment it wouldn’t surprise me if they too end up suspending the dividend temporarily.

The cut from Occidental Petroleum $OXY was not a surprise, as the company had zero cushion after taking on additional debt for the purchase of Anadarko Petroleum. It was already having a difficult time funding the dividend at $50 crude, so when prices fell to $20 last week, it didn’t have much choice other than cutting the payout.

Cracker Barrel’s $CBRL cut was a bit less expected, but wasn’t a surprise seeing the impact that COVID-19 is having on the restaurant industry. However, to go from a seventeen year streak of dividend growth (and annual special dividends on top) to completely suspending the dividend goes to show the depth of the decline for its business.

One piece of good news came from QUALCOMM $QCOM, which increased the dividend for the first time since March of 2018.  It was a fairly pedestrian increase of just 4.8%, but it’s still a trend in the right direction, and when coupled with a yield of 3.66%, moves the income growth up to the high single-digits again.

Upcoming Dividend Increases

We are now a month into the market turmoil from the pandemic, and that makes possible dividend increases even more of a question. At this point, I’m happy with companies simply maintaining their payouts, anything above that is icing on the cake. However, there are several companies “on schedule” for increases in April, it will be interesting to see if they come through with some raises.

Here are the names and my predictions:

• American Water Works Company $AWK – My prediction is a 10% increase to $0.55/share on April 15th.
• Kinder Morgan Inc. $KMI – My prediction is Kinder Morgan keeps its promise of a 25% increase and raises the dividend from $0.25 to $0.3125 on April 15th.
• Exxon Mobil Corp. $XOM – My prediction is a penny raise to $0.88, an increase of 1.15%, on April 22nd.
• Ameriprise Financial, Inc. $AMP – My prediction is an 8.2% increase from $0.97 to $1.05 on April 22nd.
• Johnson & Johnson $JNJ – My prediction is a 5.3% increase from $0.95 to $1.00 on April 23rd.
• IBM – My prediction is a 1.9% increase from $1.62 to $1.65 on April 24th.

There’s an interesting mix of energy technology, financials, and healthcare. Kinder Morgan and Exxon are both question marks, as sub-$30 crude prices make long-term sustaining of the dividend difficult. I wouldn’t be surprised if either kept dividends flat. IBM too is a bit questionable, as it digests the Red Hat acquisition and continues to struggle growing earnings.

American Water Works and Johnson & Johnson are fairly solid locks, as I don’t see COVID-19 as having significant impacts to either’s earnings. I’m also fairly confident with Ameriprise, as it’s currently expected to grow earnings at a double-digit rate in 2020.

Recent Articles

With social distancing in full effect, I did manage to get a few articles written in March. The first being my long worked-on update of stocks in the utility sector.

With stock prices moving by 10%+ in a daily basis, doing a list article with 28 stocks turned into a tremendous challenge, as the rankings changed constantly. I finally finished it up on March 19th, which was near the lows of the downturn.

Top Ten Utility Stocks For Dividend Growth And Income

The picks have performed well so far, with an average gain of 13.97% through April 7th, compared to a 6.06% return from $XLU. The top pick, CenterPoint Energy, Inc. $CNP is up a remarkable 26.5% in less than three weeks time.

In addition to the article, I’ve also updated the spreadsheet on my utility watch list page, which includes a download link for the list in PDF form.

The other article was How I’m Staying Calm During The Market Storm, which discussed my focus on dividends during the sudden bear market, and how two dividend cuts still haven’t derailed my goals for 10% annual income growth.

In other reading, Mike Nadel made an update to the Dividend Growth 50 project as he discussed the “Pandemic Pain” being seen in his portfolios.

Closing Thoughts

March is over, but if the first week of April is any indication, market volatility is not. We had a huge 7%+ day yesterday followed by a near 1000-point swing in the DOW on April 7th.

The volatility is stunning, and the huge swings in portfolio value are a sight to see. However, whether the market is up or down, the portfolio remains on pace to meet my income growth target.

I hope this update finds you well.

Stay safe, have a Happy Easter, and of course, Happy Investing!