February was a whirlwind of a month with several projects keeping me busy at work, kid’s schoolwork and activities busy at home, and then potty and sleep training a new puppy on top of it all. This post was actually started several weeks ago, but I wasn’t able to get it finished in time for a February update. Instead, you’ll get a double-dose dividend digest for March (which is now half over itself).
First comes the obligatory picture of my son and our new puppy. It seems that getting a puppy is the cool thing to do while social distancing during the pandemic. So after several years of putting it off, we finally gave in and got a Schnoodle for our first family pet.
The kids are loving their new pet, and while it’s been a lot of extra work for my wife and me, we are growing quite attached to our little Ruby. She’s got a great personality that loves everyone she meets and has plenty of energy to keep up with our busy kids.
Market Overview
The first two months of 2021 were interesting, to say the least. The overall market had a few strong runs before falling back to slight gains, while the energy sector is on an absolute tear, gaining over 27%.
The hot energy sector has given a nice boost to my portfolio, as what was some big losses has now turned into positive gains from the likes of EOG Resources and Exxon Mobil. My portfolio has more than double the energy sector exposure than the S&P, so I’m happy to see it finally turning around.
Portfolio Dividend Income
January Income Growth
It’s great to see capital gains, but the focus of this portfolio is dividend income growth, and it’s been a good start to the year on that front as well.
January dividend income grew by 13.4%, led by add-on buys of EOG Resources, Altria Group, Philip Morris, and Watsco and new purchases of Dollar General and Sempra Energy. This was offset by sales of Thor Industries and Occidental Petroleum and trimming of shares in Digital Realty Trust.
Of the stocks that were held throughout, Comcast had the best performance, with produced income growing by 12.1% year over year.
February Income Growth
The portfolio saw positive income growth in February as well, with 3.4% growth over 2020’s total.
The growth number was hurt by Starbucks, which decided to shift its dividend payment from February to March in 2021. This cut the income growth for the month in half for February but will help boost March’s total.
Trims to Apple and Abbott Labs and the sale of Cracker Barrel also hurt the numbers, while add-on purchases of Bristol-Myers and Kinder Morgan helped make up the difference.
Of the companies held throughout, AbbVie, Lowe’s, and Mastercard all produced double-digit income growth, while Ameriprise Financial was close behind at 9.9% growth.
January & February Dividend Increases
Income growth continues in the new year, as ten companies announced increased payouts in January and February.
| Announce Date | Company | Ticker | Previous Payout Rate | New Payout Rate | Sequential Increase | Year Ago Payout Rate | YoY Increase | Dividend Yield | Link |
| 01/11/21 | Stag Industrial | $STAG | $0.120 | $0.1208 | 0.69% | $0.1200 | 0.69% | 4.33% | LINK |
| 01/27/21 | Norfolk Southern | $NSC | $0.940 | $0.9900 | 5.32% | $0.9400 | 5.32% | 1.51% | LINK |
| 01/28/21 | Comcast Corporation | $CMCSA | $0.230 | $0.2500 | 8.70% | $0.2300 | 8.70% | 1.75% | LINK |
| 02/11/21 | Watsco | $WSO | $1.775 | $1.9500 | 9.86% | $1.7750 | 9.86% | 3.14% | LINK |
| 02/12/21 | NextEra Energy | $NEE | $0.350 | $0.3850 | 10.00% | $0.3500 | 10.00% | 2.04% | LINK |
| 02/17/21 | Xcel Energy | $XEL | $0.430 | $0.4575 | 6.40% | $0.4300 | 6.40% | 2.95% | LINK |
| 02/23/21 | Home Depot Inc | $HD | $1.500 | $1.6500 | 10.00% | $1.5000 | 10.00% | 2.42% | LINK |
| 02/25/21 | EOG Resources Inc | $EOG | $0.375 | $0.4125 | 10.00% | $0.3750 | 10.00% | 2.20% | LINK |
| 02/25/21 | Sempra Energy | $SRE | $1.045 | $1.1000 | 5.26% | $1.0450 | 5.26% | 3.42% | LINK |
| 02/26/21 | Digital Realty Trust | $DLR | $1.120 | $1.1600 | 3.57% | $1.1200 | 3.57% | 3.46% | LINK |
| Average: | 6.98% | 6.98% | 2.72% |
The average increase was 7%, but the numbers were dragged down by a sub-1% boost from STAG Industrial and a 3.6% increase from Digital Realty Trust.
The better numbers came from Watsco, NextEra Energy, Home Depot, and EOG Resources, who all raised dividends by 10%. EOG’s increase was especially encouraging considering it operates in the oil and gas exploration sector, which struggled mightily last year when crude prices crashed with the pandemic-led recession.
STAG’s Lackluster Growth
STAG’s small increase wasn’t unexpected, as the company continues to work in lowering its payout ratio. The problem is that the company isn’t growing earnings very fast, as its AFFO of $1.69 in 2020 was just $0.03 higher than the $1.66 it earned in 2017.
Analysts are predicting 3.5% growth going forward, but that’s been the same story for the last several years. Analysts say growth is coming, but it just doesn’t seem to materialize.
This is a company that I’ve been patient with, but my patience is starting to wear thin. Another year of low growth and I may start looking for a replacement.
Recent Dividend Growth Articles
I’ve gotten just one article published so far this year, which was my 2020 Dividend Portfolio Review.
This article highlighted the 9.9% returns and 10% income growth in the portfolio driven by strong performances from my technology and consumer discretionary holdings.
I also discussed a big change to the portfolio, as I’ve transitioned it from automatic dividend reinvestment to a pooled dividend with directed purchases. I’m excited about this change, as it will allow me to be more active in buying stocks, and let me take advantage of dips to buy what is “on-sale” in the current market.
Other good reading I’ve come across was from FerdiS, who is one of my favorite current authors on Seeking Alpha.
He recently starting posting regular updates on upcoming ex-div dates for companies in the US Dividend Champions list. He also provides weekly posts about recent dividend increases, and shares his rankings for the Dividend Aristocrats.
He’s definitely worth a follow for anyone looking for current ideas on dividend stocks to buy.
Closing Thoughts
It’s now less than two weeks to go until my wife and I welcome our new little one to the family. This means that my already busy schedule is about to rev up just a bit more. I’m going to do my best to keep up with monthly updates, but reality is that my posting will continue to be sporadic in the coming months.
If you don’t already, you’re welcome to follow me on Twitter or Facebook, where I post more regular thoughts on the market, and whatever else interests me. Feel free to drop me a line there with any comments or questions.
Hope you are all doing well as we quickly approach spring. Best wishes, and Happy Investing!
Very good blog you have here but I was curious about if you knew of any discussion boards that cover the same topics talked about
here? I’d really like to be a part of community where I can get feed-back from other knowledgeable individuals that share the same
interest. If you have any recommendations, please let me know.
Thanks a lot!
Thanks, glad you enjoyed it.
dividendgrowthforum.com is a small community where people share thoughts and ideas about dividend growth investing.
Also, there is a good discussion thread on Seeking Alpha here: https://seekingalpha.com/instablog/48196727-cemanuel/5208606-dgi-chit-chat-successor
Hope that helps!
Howdy! Someone in my Facebook group shared this website with us so I came to check it out.
I’m definitely loving the information. I’m bookmarking
and will be tweeting this to my followers! Superb blog and terrific style and design.
Hi Eric,
it is the first time I landed on your page here. Wanted to see if you have made updates to your DIY DGI-Portfolio on SA. Unfortunately, nothing new there. Maybe you have time to make an update in winter time?
I know, having a little child is time intense. So I can imagine, that you don’t have time for anything but that. Nevertheless, I am looking forward to read something new from you.
CU
Hanno
Hanno,
I’ve started a Q3 update for SA, but just haven’t found the time to focus on it much.
I appreciate you taking the time to ask about it though, as that gives me some extra motivation to get at it again.
Best,
Eric
Thanks Eric! Year in and year out, always wishing you the highest in dividend increases! Hopefully your family falls into the federal Family Leave Act category.
Thanks for the well wishes Joe.
I can use sick leave and PTO and plan to take a couple of weeks. I also have the option to work from home when needed, so I’ll probably take advantage of that from time to time.
Unfortunately, this is a busy time of year for me with engineering, and with increasing responsibilities, it’s difficult for me to get away for much longer than that.
Best,
Eric