Fall is in the air. Little league baseball is over and football, soccer, and cross country for the kids are just beginning. We took our final family camping trip of the summer this past weekend, and the kids started school this week. Yard work, gardening, work, and chasing an ever more able toddler keep me as busy as ever. But it’s been over a year since I last posted, so it was time to bear down and finally get something written again.

The market continues to be a roller-coaster, as war, inflation, interest rate hikes, politics, and recession fears all take their turn impacting investor sentiment. Thanks to a heavy weighting in energy, the DGI for the DIY portfolio has been outpacing the market in 2022. I’ve not only been beating the market returns but also have done quite well on the income front, with dividend income growing by 16.2% through the first seven months of the year.

I’m still thinking that we are headed to an economic recession later this year (if we aren’t already in one), as higher energy and food costs, higher interest rates, and geopolitical events will continue to pressure the consumer. That said, I have no plans to make any major changes to my portfolio. I’ll continue to collect and redeploy my dividends as they come in and let the chips fall where they may. Any drop in the market is welcome, as it just provides better buying opportunities for long-term investments.

Portfolio Dividend Income Growth

The first half of the year went extremely well for income growth, with income rising by 16.6% YoY in Q1 and by 19.4% in Q2. This was driven by big increases in payouts by the likes of EOG Resources $EOG, Lowe’s Companies $LOW, Target $TGT, and railroad companies Norfolk Southern $NSC and Union Pacific $UNP.

With the portfolio on track to exceed my double-digit income growth target, I am planning to switch focus a bit in the second half of the year for my targeted dividend reinvestments. Since income won’t be as big a priority, it should give me a good chance to add to my lower yield, higher growth names without putting my annual income growth goal in jeopardy.

2022 Dividend Increase Announcements

With 27 announcements made so far, it’s been another stellar year for dividend increase announcements in the portfolio. The pace of announcements slows considerably during the summer months but should start picking up again in September as many companies end their fiscal years.

The average annual increase was over 11%, led by big increases from railroad and consumer discretionary companies. The biggest increases came from Norfolk Southern, Dollar General $DG, Union Pacific, Lowe’s, and Target, with each of them growing payouts by 20%+.

Dividend Growth Laggards

The most disappointing announcement for me was Apple $AAPL, which announced just a 4.55% increase despite growing earnings by 71% in 2021. This is the fourth year in a row with single-digit dividend growth for Apple, which makes it pretty clear that buybacks are a bigger priority for management than dividends for shareholder returns.

3M Company $MMM was also disappointing, as it raised by just 0.68%. This is the second year that the dividend was boosted by a single penny, which shows that the elevated payout ratio and stagnant earnings growth are concerns for management.

STAG Industrial $STAG also announced a small increase, its seventh year in a row with dividend growth below 2%. This has allowed the company to drop the payout ratio from nearly 90% of AFFO in FY15 to just over 76% today. My hope is that we are now getting close to a point where dividend growth more closely matches AFFO growth going forward.

Dividend Stock Buy List

As part of my portfolio tracking, I maintain a valuation spreadsheet of all 53 companies I own, plus another 40 that I am interested in potentially owning. This is a great way to keep tabs on things as the market rises and falls and gives me a quick way to find stocks to buy when my pool of dividends gets deep enough to finance a purchase.

I typically update the dividend payouts as new announcements are made and also update analyst earnings estimates every weekend.

In addition to those posts, I also share market information I come across during the day. I most closely follow the happenings in the oil & gas industry, but also have an interest in charting analysis and share stories from DGI as well.

Please follow my Twitter account if you are interested.

Closing Thoughts

Between war, a pandemic, high inflation, and rising interest rates, we are certainly living in interesting times when it comes to the stock market and economy. It seems the consensus is that we are headed to an inevitable recession, but I’ve been around long enough to know that there are many more recessions predicted than what actually occurs.

Perhaps the low unemployment rate and a seemingly strong economy can withstand these forces, but “don’t fight the Fed” has been a good mantra to follow over the years.

Recession or not, my strategy won’t be changing. I’ll continue to stick with high-quality companies that keep paying me to hold them. This allows me to buy even more shares and keep the dividend snowball rolling. This strategy has worked well for the ten years I’ve followed the DGI way, and I expect it will continue in the years to come.

Best wishes, and happy investing!