Monthly Review, August 2013

Last month, I decided to change how I track and report DivGro's dividend income. Rather than tracking expected dividend income for the current calendar year, I'll be tracking the expected dividend income for the next 12 months. I'll call this idea projected annual dividend income.

In August, I added two dividend growth stocks, MicroSoft Corp. (MSFT) and Caterpillar, Inc. (CAT), increasing DivGro's projected annual dividend income to $1,523. In comparison, July's projected annual dividend income was $1,374.

With a current market value of $43,482, DivGro's projected annual dividend income of $1,523 averages to a yield of 3.5%. In time, as companies increase their dividends, the average yield will increase. Ten years from today, the 14 stocks in my portfolio should yield about 12% on average. An investment earning 12% interest will double every six years.

Recent Buy: CAT

Aug 20, 2013: Bought 30 shares of CAT at $83.73 per share.

Caterpillar, Inc. (CAT) was founded in 1925 and is headquartered in Peoria, IL. CAT manufactures construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. It provides technology for construction, transportation, mining, forestry, energy, logistics, electronics, financing and electric power generation. 

CAT is a Dividend Contender with a 20-year streak of dividend increases. It pays quarterly dividends of $0.60 per share in February, May, August and November. Initial Yield on Cost is 2.87%.

Dividend Increases, Jul/Aug 2013

Every month I provide a summary of recent dividend increases for stocks in my watch list. Regular dividend increases are one of the important factors to consider when evaluating dividend growth stocks. 

When a stock's dividend payment is decreased, I'll generally remove it from my watch list. And if I happen to own shares in a stock that decreases its dividend payment, I'll consider selling my shares. As I've said before, this blog is about dividend growth stocks, not dividend shrink stocks!

Recent Buy: MSFT

Aug 5, 2013: Bought 80 shares of MSFT at $31.76 per share.

Founded in 1975 and based in Redmond, Washington, Microsoft Corp. (MSFT) develops, licenses and supports a wide range of products and services related to computing. MSFT's products include operating systems, server applications, productivity applications and business solutions, desktop and server management tools, software development tools, video games, and online advertising. The company also designs and sells hardware, including gaming consoles and PC hardware products.

With its 10-year streak of dividend increases, MSFT recently became a Dividend Contender. It pays quarterly dividends of $0.23 per share in March, June, September and December. Starting Yield on Cost is 2.9%.

Stock Analysis: NSC

Based in Norfolk, Virginia, Norfolk Southern Corporation (NSC) is a leading North American transportation provider. Its Norfolk Southern Railway Company is primarily engaged in the rail transportation of coal, automotive, and industrial products. 

NSC has a track record of 12 consecutive years of dividend increases. It pays quarterly dividends of $0.52 per share in the months of March, June, September, and December. At the current price of $75.50, NSC yields 2.75%.

Over the past 10 years, NSC has outperformed the S&P 500 handily, returning 394% compared with 74% for the S&P 500. NSC's dividend growth rate over this period was 22%. 

7 Dividend Growth Candidates for August, 2013

Every month I score stocks in my watch list based on selection criteria, assigning a star rating to each candidate out of a maximum of 7 stars. I then compile a dashboard of candidates, sorted by star rating. The basis for this analysis is Dave Fish's list of US Dividend Champions, which he publishes at the beginning of every month. I also use stock ratings from several other sources, including MorningStar,  The Motley Fool, S&P Capital IQ, Thomson Reuters, and Zacks.

The ten stocks at the top of my August list are NTT, MSFT, INTC, CHL, NSC, PRE, TRV, CB, AFL, and COP. I already own shares of the highlighted stocks in DivGro. In order to diversify my portfolio, I select 7 candidates from the list that I don't own yet, for further analysis. 

Monthly Review, July 2013

Time again for a monthly review! Despite being away for two weeks (without internet access), I've been quite active on my blog...

In July, I purchased 2 more dividend growth stocks, China Mobile Limited (CHL) and Textainer Group Holdings Ltd (TGH), bringing to 12 the number of stocks I own in DivGro. These purchases increased my expected dividend income for 2013 by $113.65.

Also this month, I finally received NTT's dividend payment, almost 3 months after it was announced. Unfortunately, the payment of $0.4093 per share is a decrease of nearly 16%, which I'm not happy about. As a semi-annual dividend payer, NTT has a pattern of paying a smaller dividend in the first half of the year, followed by a larger dividend in the second half of the year. To retain their streak of annual dividend increases, NTT's second dividend payment later this year would need to be at least $0.53 per share.