We’ve now passed the midway point of 2021, and it’s been an eventful year for both the portfolio and for myself. January saw us add a new puppy to the family, and in March my wife gave birth to our fourth child. These two events have given me a renewed appreciation for a good night’s sleep, something I’ve rarely experienced in recent months.
The Fourth of July has come and gone, and the baseball season for our two older boys has ended. It was another fun summer watching them play and learn, but I won’t miss traveling across town four nights a week for games. I still have a full schedule at work, gardening, and other to-do lists around the house, so staying busy won’t be a problem.
My family is doing great despite all the craziness, but it has meant fewer posts on the website. I’ve started, stopped, written, and re-written this update multiple times over the last several months, as good intentions of finishing keep giving way to other more important endeavors.
One of those is me enjoying the snuggles and milestones with our new little man. At the age of 42, I wasn’t sure if I’d ever get the chance to experience those special moments again, so I’ve been trying my best to cherish every moment. We feel so blessed to have our little Noah in our lives!
Our daughter loves being a big sister and helping to hold her baby brother. It’s been a bit of an adjustment for her no longer being the youngest in the family, but she’s embracing the role of mother’s helper in taking care of the baby. She’s always ready and willing to fetch a pacifier or make silly faces to keep her brother happy.
Like my family, the portfolio is also growing in 2021. Dividend income grew by 6.3% through the first six months, while portfolio value increased by 12.9%. Income growth is currently behind pace to meet my double-digit goal, but I am happy with the double-digit portfolio growth as a nice consolation prize.
Portfolio Dividend Income Progress
This is the first portfolio update since March, so there is four months’ worth of income numbers to report. These year-over-year comparisons are going up against the start of the pandemic, making them a difficult comparison.
Seven sales were made in the portfolio between March and May of last year. Three of which were made to counter dividend cuts or suspensions from Occidental Petroleum, Cracker Barrel, and Ross Stores. The others were sales/trims of Digital Realty Trust, Thor Industries, Abbott Labs, and IBM to balance the portfolio and boost income.
March Dividend Income Report
March was the weakest month for income growth of the three, with just a 7.8% income increase over 2020’s numbers. Income growth was helped by add-on purchases of Broadcom, Chevron, Flowers Foods, 3M Company, and Exxon Mobil. A shift in the dividend payout by Starbucks also positively impacted income growth for the month.
Negative impacts to income came from my sale of shares in IBM, Ross Stores, and Wells Fargo, a trim and dividend cut from Dominion Energy, and trimming of Digital Realty Trust and Microsoft shares.
Looking at companies that weren’t traded, Amgen, American Water Works, Home Depot, Lockheed Martin, UnitedHealth Group, put up nice growth numbers. All six posted double-digit growth, with $UNH leading the way at 17.6%.
April Dividend Income Report
April put me back on the double-digit growth path, as income increased by 11.5% over 2020’s monthly total. April is a slower month for payments, with just fourteen payments compared with thirty-one in March.
Add-on buys of Altria Group and Philip Morris provided a nice income boost, as did the new purchases of Dollar General and Sempra Energy.
Double-digit growth was provided by EOG Resources and Watsco, while Stag Industrial, Realty Income, and ADP lagged in growth.
May Dividend Income Growth
May was another excellent month for dividend income, as payouts increased by 18.5% over 2020’s total.
Apple and Abbott position sizes were trimmed, while additional shares of Bristol-Myers and Kinder Morgan boosted income. I also had some nice growth from AbbVie, Ameriprise Financial, Lowe’s, Mastercard, and Starbucks, which all grew income at a double-digit rate.
The laggards were CVS Health, Realty Income, and Stag Industrial, who all grew income by less than 5%.
June Dividend Income Growth
The last month of the quarter is always my biggest month for dividend payments, with over half of my holdings making payments during that month. June was a volatile month for payouts, as trims, sales, and shifting payouts made for a 5.6% drop in income compared with 2020’s numbers.
Sales of IBM and Wells Fargo reduced income by $35, and the dividend cut and trim of shares in Dominion Energy cut income by another $14. Add in another $7.70 loss by the shift in pay date by Norfolk Southern and the hole was a bit too much to overcome.
However, it wasn’t all bad as eight positions, Amgen, Broadcom, American Water Works, Home Depot, Lockheed Martin, NextEra Energy, UnitedHealth Group, and Union Pacific, all produced double-digit income growth.
Recent Dividend Increase Announcements
With the pandemic-induced recession now largely in the rearview, companies are getting back to their normal schedules of dividend increases.
| Announce Date | Company | Ticker | Previous Payout Rate | New Payout Rate | Sequential Increase | Year Ago Payout Rate | YoY Increase | Dividend Yield | Link |
| 03/10/21 | QUALCOMM, Inc. | QCOM | $0.6500 | $0.6800 | 4.62% | $0.6500 | 4.62% | 1.91% | LINK |
| 03/16/21 | Realty Income Corp | O | $0.2345 | $0.2350 | 0.21% | $0.2330 | 0.86% | 4.03% | LINK |
| 03/18/21 | Dollar General Corp. | DG | $0.3600 | $0.4200 | 16.67% | $0.3600 | 16.67% | 0.74% | LINK |
| 04/20/21 | Johnson & Johnson | JNJ | $1.0100 | $1.0600 | 4.95% | $1.0100 | 4.95% | 2.49% | LINK |
| 04/21/21 | Kinder Morgan Inc | KMI | $0.2625 | $0.2700 | 2.86% | $0.2625 | 2.86% | 6.18% | LINK |
| 04/26/21 | Ameriprise Financial, Inc. | AMP | $1.0400 | $1.1300 | 8.65% | $1.0400 | 8.65% | 1.83% | LINK |
| 04/28/21 | American Water Works Company Inc | AWK | $0.5500 | $0.6025 | 9.55% | $0.5500 | 9.55% | 1.47% | LINK |
| 04/28/21 | Apple Inc | AAPL | $0.2050 | $0.2200 | 7.32% | $0.2050 | 7.32% | 0.60% | LINK |
| 04/28/21 | Chevron Corporation | CVX | $1.2900 | $1.3400 | 3.88% | $1.2900 | 3.88% | 5.42% | LINK |
| 05/13/21 | Union Pacific Corporation | UNP | $0.9700 | $1.0700 | 10.31% | $0.9700 | 10.31% | 1.95% | LINK |
| 05/27/21 | Flowers Foods, Inc. | FLO | $0.2000 | $0.2100 | 5.00% | $0.2000 | 5.00% | 3.57% | LINK |
| 05/27/21 | Lowe`s Companies Inc | LOW | $0.6000 | $0.8000 | 33.33% | $0.6000 | 33.33% | 1.63% | LINK |
| 06/09/21 | Target Corporation | TGT | $0.6800 | $0.9000 | 32.35% | $0.6800 | 32.35% | 1.40% | LINK |
| 06/09/21 | UnitedHealth Group Inc | UNH | $1.2500 | $1.4500 | 16.00% | $1.2500 | 16.00% | 1.40% | LINK |
| 06/16/21 | Realty Income Corp | O | $0.2350 | $0.2355 | 0.21% | $0.2335 | 0.86% | 4.04% | LINK |
| Average: | 10.39% | 10.48% | 2.58% |
There were fifteen dividend increases announced over the last three months, with an average increase of over 10%.
The biggest came from Lowe’s and Target, who both raised their payouts by one-third. Double-digit growth was also provided by Dollar General, Union Pacific, and UnitedHealth Group.
Smaller increases were seen by Qualcomm, Realty Income, Johnson & Johnson, Kinder Morgan, and Chevron, which all announced raises of less than 5%.
Overall it was a solid three months of growth, and with crude prices on the rebound, I’m hopeful that Kinder Morgan and Chevron will see bigger increases in the coming year.
Realty Income Makes An Acquisition
Realty Income hasn’t shown much growth in recent years but that might soon be changing, as it announced a merger with VEREIT, Inc. $VER in April. This deal is expected to be over 10% accretive to Realty Income’s AFFO per share in year one, meaning there could be a nice dividend boost coming next year.
The combined company also plans to spin off the office properties into a new publicly traded REIT, which should also provide another source of dividends for the portfolio.
What I’ve Been Reading
Here are some articles that I’ve found interesting in recent months that are worth checking out.
“Play Your Own Game” and “Getting the Goalpost to Stop Moving” from CollaborativeFund.com were two blog posts that I thought offered excellent advice to investors.
Play Your Own Game is a good reminder to set goals and guidelines that are tailored to your own situation and to ignore the noise coming from outside sources. Not everyone is playing for the same outcome, so don’t assume their methods apply to you.
The Goalpost article was a nice perspective on setting realistic goals and being content with reaching them. It also gave a backstory on the “Golden Age” of the middle class. We so often hear about how bad the world is now, but we are actually blessed to live in the most prosperous time in world history.
Stories from a Holocaust survivor and quotes from Stephen Hawking and Warren Buffett give even more perspective on how lucky we are to be alive today.
Two other articles came from one of my new favorite writers, Lyn Alden.
“Why Gold and Bitcoin Are Popular” goes through the history of physical assets and how they compare with Bitcoin today. It talks about the pitfalls of fiat currency and how inflation reduces its value over time, how interest rates impact inflation, and the pros and cons of cryptocurrency.
It is the most comprehensive work I’ve seen about bitcoin, gold, and the monetary system, and helped reinforce why I hold a small amount of crypto in my overall portfolio.
“The Case for a Longer-Term Oil and Gas Bull Market” discusses why this run in the oil and gas market may just be beginning. The article offers a broad overview of the commodity markets and the boom/bust cycles that they trade in.
It then covers the history of crude oil production, and why the current underinvestment in oil exploration could lead to lower supply, while continued economic expansion in China and India will lead to growing demand.
Among other things, it discusses the energy density and reliability of fossil fuels and how those traits make them so difficult to replace with “green energy” alternatives.
Overall, just another comprehensive and thought-provoking article that reinforces my thoughts on the energy market and why I continue to hold energy stocks in my portfolio.
Closing Thoughts
2021 continues to be another successful year for the stock market, and it’s been a memorable and life-changing year for me and my family. If the earnings results of companies that have reported so far are any indication, the second half of the year looks positive for stocks as well.
With our youngest now four months old, things are getting more settled and we are getting into a good routine again around here. Hopefully, I can get back in the saddle with writing and it won’t be so long until the next update.
Hope you all are doing well. Happy investing!
Congratulations on the newest addition to your family. That was a great pic of you with your new son and your daughter. I fully agree with you about Lynn Alden being a great financial writer. I view her as one of the most informative writers on SA. Don’t worry about writing less often so that you can spend more time enjoying your family…..you have your priorities right.
Thanks, Rick!
We are enjoying the summer with the kids.
Got in another camping trip last weekend, took them out in a canoe for the first time!
Best,
Eric