Dividend Portfolio Update
This is my dividend portfolio update article series. I like to highlight a few facts and figures from the month. I’ll share my income, any portfolio changes, any dividend increases (or cuts) and anything interesting that I feel to talk about.
- I collected $373 in dividend income during May
- I made 4 separate purchases during the month including two new holdings
- At the end of the month I held 55 stocks, 49 of which pay dividends
- I had wrist surgery and my appendix removed during the month!
This is a snapshot of my dividend income thus far this year. You can always check my live portfolio here.
I crushed it in May this year. I was specifically buoyed by receiving Verizon dividends for the first time. To a lesser extent, the JP Morgan paying in May this year helped, along with a few dividend increases and always with the power of compounding by reinvestment.
The March, June, September, December timeframe are my powerhouse months so I am incredibly looking forward to June.
I keep track of three different cuts of dividend growth data. The first is a year over year quarterly view. The second tracks year over year monthly dividend growth. The last tracks my year over year forward looking income.
In Q1 of this year, I experienced a 61% year over year dividend growth. It’s coming off a much smaller amount, I am curious to see how next year’s number look. 2016 was still the year I was rapidly growing my portfolio so that comp was easy to beat.
Thus far this year, my monthly dividend growth year over year has been astounding as well. That should be no surprise as my quarterly growth was fantastic. In May I received more than double the dividends from last year, up 134%!
Finally, my forward looking income view. I calculate my forward looking income by taking all the dividends declared by company, multiplying them by the shares I own (I reinvest all dividends) and finally summing those values together. It’s basically my best guess without precalculating the impact of dividend reinvestment and guessing yearly raises. It’s taking the knowns and adding them together for my holdings.
That number is always on a bit of a lag, reinvested shares will generate their own dividends quarter after quarter. Secondly, a particular company may not have announced their yearly raise which of course would understate the real income.
Halfway through the year and my expected income is already about 20% higher than at the end of 2016. By the end of 2016 I was essentially fully invested so I’m curious how much higher I can take income year after year. Year over year my expected income figure is 60% higher also.
During the month I made four purchases, two existing holdings, two new holdings. My new holdings are now J.M. Smucker (SJM) and W.P. Carey (WPC). I wrote an article detailing why I bought J.M. Smucker but in general the company looks attractive at these levels with good growth opportunities.
W.P. Carey was my other new purchase, I read a very compelling article by Brad Thomas over at Seeking Alpha. The company is a triple net lease REIT, operating in a similar way to Realty Income while trading at a much more attractive valuation right now.
My initial yield is a little higher than the 5.9% listed in the above image and there is the potential for the company to buyout some of the managed non-traded REITs. That would provide a large bump in FFO and ultimately a large bump in the dividend.
I’ve been trying to add to my existing holdings rather than buying new ones and I had a couple opportunities over the month. I was able to add to my AT&T (T) and Realty Income (O) shares.
AT&T happened to dip down below it’s historical “fair” value price and subsequently jumped over 5% for the first time in about a year. For me this was time to add some additional shares.
Finally, I added to Realty Income when they dropped 5% (and the custom stock alert I received). The price blip from that day doesn’t even show up on the FAST Graph because it closed so quickly. I was able to get that 5% discount on shares though because I was aware of the drop! Shares are right around historical fair value which is good for this long time winner.
Dividend increases are one of my favorite experiences as an investor. You get a raise just for holding shares and get to share in the success of a growing business.
In May I just received one increased payment:
- Ameriprise Financial (AMP) increased their dividend by 10.7%
During the month I actually underwent two surgeries. First, I had my wrist cleaned up (cyst). I decided to actually do this once I knew my appendectomy was going to happen. Wanting to limit downtime, I set them up ten days apart. As I aluded to I had my appendix removed also. I’m at the point now of feeling pretty awesome after having both things done and am just about back to 100%.
- Current Total Balance: $216,778(up from $213,294)
- Current Cash: $1,410 (down from $10,325)
I had another solid month and made what I hope to be some good dividend growth purchases.
I am very curious to see what my sustainable growth rate can be. The three-headed monster as I like to call it:
- Purchasing new shares generates income
- Reinvested dividends generate income
- Yearly raises generate even more income
I may be able to achieve 8-10% yearly growth over the long term with this plan. I have a more detailed version of this article posted on Seeking Alpha if you wish to view it here. Let me know your thoughts in the comments section.