A Different Kind of Present

This year, I gave my sons a different kind of Christmas present. I gave them seed money, provided they open an account at Loyal3.com and committed to buying $30 in shares (of any stock that Loyal3 trades), every month, for 30 years. That's about a dollar a day. They all seem to be fired up to give this a go! I'm a happy dad...

My sons are like most young people today. They don't like us to tell them what to do. They don't particularly want our advice, either. They want to make up their own minds. They want to be independent. They want the right to choose and even the right not to choose. They seek and accept advice from anybody who's not their parent, a teacher, or another "older" person that don't get young people or the struggles they face. 

Yield Matters

One of my selection criteria for DivGro is dividend yield. I prefer a dividend yield of at least 2.75% for regular stocks and a distribution yield of a least 6.75% for MLP stocks. This year, most of my buys in DivGro had initial yields exceeding these minimum levels. The exceptions were TRV, with an initial Yield on Cost (YoC) of 2.32%, ACE (initial YoC of 2.45%), TGT (initial YoC of 2.73%), and WAG (initial YoC of 2.22%).

Of course, there are many more solid dividend payers with yields below 2.75%. In the list of Dividend Champions (stocks with 25 consecutive years of dividend increases), you'll find stocks like Lowe's (LOW), Wal-Mart (WMT), Archer Daniels Midland (ADM), 3M (MMM), T. Rowe Price (TROW), and Colgate-Palmolive (CL). Currently, they all yield less than 2.75%. Even stocks I've managed to buy while they offered yields above 2.75%, now offer smaller yields: XOM (2.55%) and AFL (2.25%).

Goals for 2014

With less than 3 weeks to go in 2013, I want to set new goals for DivGro for 2014.

After having set some challenging goals for 2013, I've reached three of them by October 6 this year. One can argue that perhaps my goals were not quite challenging enough. Nevertheless, I'm happy that I've come this far and that, soon, I'll be celebrating the 1-year anniversary of DivGro!

For 2014, I've set 4 new goals for DivGro:

Dividend Increases, December 1-15, 2013

Regular dividend increases are important for stocks in a dividend growth portfolio. Since companies must grow their earnings sufficiently to continue to afford their growing dividend payments, monitoring dividend increases over time is one way to assess the long-term health of dividend paying companies.

Every month, I report dividend adjustments to stocks in my watch list.  I compile information from a screening feature available to subscribers at Dividend.com. In addition to monitoring changes that might influence my assessment of a stock's attractiveness, I do this to keep track of yield on cost (YoC) for stocks I own.

Recent Buy: WAG

Dec 10, 2013: Bought 44 shares of WAG at $56.72 per share.

Walgreen Company (WAG), also known as Walgreens, is headquartered in Deerfield, Illinois. The company operates drugstores in more than 8,000 locations across the U.S. In addition to selling prescription drugs, WAG also sells over-the-counter medications, household items, food and beverages, personal and beauty care products, and photofinishing services.

WAG is a Dividend Champion with an impressive 38-year streak of dividend increases. It pays quarterly dividend in March, June, September and December. Starting Yield on Cost is 2.22%.

Recent Buy: BAX

Dec 9, 2013: Bought 37 shares of BAX at $67.71 per share.

Founded in 1931 and headquartered in Deerfield, Illinois, Baxter International, Inc. (BAX) is a global, diversified healthcare company with expertise in medical devices, pharmaceuticals, and biotechnology. BAX manufactures products in 27 countries and sells them in more than 100 countries. The products are used in hospitals, kidney dialysis centers, nursing homes, rehabilitation centers, doctor's offices, clinical and medical research laboratories, and by patients at home under medical supervision.

With a modest 7-year streak of dividend increases, BAX is a Dividend Challenger. It pays quarterly dividends in the months of January, April, July and October. Starting Yield on Cost is 2.89%.

Recent Buy: TGT

Dec 4, 2013: Bought 40 shares of TGT at $62.90 per share.

Target Corporation (TGT) sells a range of general merchandise and discount food products in nearly 1,800 stores in the United States and 124 stores in Canada. TGT offers both everyday essentials and fashionable, differentiated merchandise at discount prices. TGT operates as a single business segment and has a fully integrated online business, Target.com. Although relatively small to TGT's overall size, sales at Target.com are growing much faster than in-store sales.

TGT is a Dividend Champion with an impressive 46-year streak of dividend increases. It pays quarterly dividend in March, June, September and December. Starting Yield on Cost is 2.73%.

Recent Buy: NU

Dec 4, 2013: Bought 60 shares of NU at $41.02 per share.

Northeast Utilities (NU) is the parent company of Northeast Utilities system. Incorporated in 1927, NU is engaged in delivering energy through wholly owned subsidiaries. NU serves more than 3.6 million electric and natural gas customers in Connecticut, Massachusetts, and New Hampshire.

NU is a Dividend Contender with a 15-year streak of dividend increases. It pays quarterly dividends of $0.3675 per share in March, June, September and December. Starting Yield on Cost is 3.58%.

Recent Buy: SJR

Dec 4, 2013: Bought 105 shares of SJR at $23.03 per share.

Shaw Communications Inc. (SJR) is Canada's largest broadcast service provider. The company operates in two business segments, Cable and Satellite, providing broadband television, Internet, digital phone and telecommunications services, as well as satellite direct-to-home services and entertainment programming content.

With an 11-year streak of dividend increases, SJR is a Dividend Contender. It pays monthly dividends. Starting Yield on Cost is 4.30%.

Bonus Deposit, December 2013

On Tuesday, December 3, I deposited another $10,000 cash into my DivGro portfolio. The bonus deposit is in addition to my regularly scheduled deposits of $1,000 per month. I've updated my Portfolio page, now showing available cash of $12,610. I'll be looking to buy more fair-valued dividend growth stocks in the next few weeks.

This is the fourth bonus deposit I've made. One reason I'm making these bonus deposits is to boost available cash in DivGro. I'm still expanding the number of holdings in DivGro, and, because I prefer to allocate about $2,500 to new buys, my regular deposit of $1,000 per month is not nearly enough to cover at least one new buy per month!

7 Dividend Growth Candidates for December, 2013

I've just updated my watch list of dividend growth stocks. To evaluate candidates in my watch list, I score them based on selection criteria and assign a star rating to each candidate out of a maximum of 7 stars.

This month, the top ten stocks are CHL, INTC, NTT, CVX, BBL, COP, LMT, RCI, MSFT and IBM. I already own shares in the highlighted stocks. CHL, INTC, NTT, and CVX are 7-star stocks. The others are 6-star stocks.

Because I'm still expanding the number of holdings in DivGro rather than adding to existing holdings, I look for 7 stocks that I don't own yet, for further analysis. The 7 candidates for December are:

Monthly Review, November 2013

At the end of every month, I review transactions that affected DivGro, my portfolio of dividend growth stocks. I also capture snapshots of DivGro's projected monthly income, current holdings, yield on cost, and cumulative dividends received.

In the month of November I bought shares in ACE Limited (ACE), the 19^th stock added to DivGro. Also in November, AFL announced a 5.71% dividend increase, while ETP raised its distribution by 1.26%. This share purchase and dividend adjustments increased DivGro's projected annual dividend income to $2,484, which compares with October's month-end projected annual dividend income of $2,415. With a market value of $60,712, DivGro's projected annual dividend income of $2,484 averages to a yield of 4.09%.

I received dividend payments from 5 stocks this month, boosting total dividend income for 2013 to $1,085.

Dividend Increases, November 16-30, 2013

Until recently, I've reported dividend adjustments for stocks in my watch list mid-month, every
month. I compile information for the post from a screening feature available to subscribers at Dividend.com. Unfortunately, there's no easy way to screen my entire watch list in one go, so I have to do a lot of manual work. It takes at least 2 hours to do a month's worth of announcements. To reduce the time I spend per post, I've decided to increase the frequency of my posts. In future, I'll report dividend adjustments twice monthly, mid-month and end-of-month.

Recent Buy: ACE

Nov 22, 2013: Bought 24 shares of ACE at $102.73 per share.

ACE Limited (ACE) is a holding company of the ACE Group, one of the largest multiline property and casualty insurers in the world. ACE opened its business office in Bermuda in 1985 and continues to maintain significant operations in Bermuda. ACE is now domiciled in Zurich, Switzerland. It operates in 53 countries, providing commercial and personal property and casualty insurance personal accident and supplemental health insurance, reinsurance and life insurance to a diverse group of clients.

ACE is a Dividend Contender with a 21-year streak of dividend increases. It pays quarterly dividends of $0.63 per share in January, April, July and October. Starting Yield on Cost is 2.45%.

Dividend Increases, Oct/Nov 2013

Mid-month every month I provide a summary of recent dividend adjustments for stocks in my watch list. I do this to keep track of yield on cost (YoC) for stocks I own, and to monitor changes that might influence my assessment of a stock's attractiveness. If a stock's dividend payment is decreased, I'll remove it from my watch list. If I happen to own shares in a stock that announces a dividend decrease, I'll consider selling my shares.

The main goal of DivGro is to generate a reliable and growing dividend income stream. Reliable income comes from stable companies that can be counted on to pay the same, or increasing, dividends over time. In order to do so consistently, these companies must grow their earnings sufficiently to afford their growing dividend payments.

Stock Analysis: PG

Headquartered in Cincinnati, Ohio, The Procter & Gamble Company (PG) is focused on providing branded consumer packaged goods in more than 180 countries. PG was incorporated in Ohio in 1905, having been built from a business founded in 1837 by William Procter and James Gamble. PG currently competes in 37 product categories and has five reportable segments: Beauty, Grooming, Health Care, Fabric Care and Home Care, and Baby Care and Family Care.

PG is a Dividend Champion with a long track record of 56 consecutive years of dividend increases. It pays quarterly dividends of $0.60 per share in the months of February, May, August, and November. At the current price of $82.32, PG yields 2.92%.

PG has outperformed the S&P 500 over the past 10 years, returning 117% compared with 68% for the S&P 500. PG dividend growth rate over this period was 10.8%.

7 Dividend Growth Candidates for November, 2013

Every month, I score stocks in my watch list of dividend growth stocks based on my selection criteria. I assign a star rating to each candidate out of a maximum of 7 stars and compile a dashboard of candidates, sorted by star rating.

This month, the top ten stocks are CHL, NTT, CVX, TGH, COP, RCI, INTC, MSFT, PG, and XOM. I already own shares in the highlighted stocks. CHL, NTT, and CVX are 7-star stocks. The others all earned 6 stars.

Because I'm still expanding the number of holdings in DivGro rather than adding to existing holdings, I look for 7 stocks in my dashboard that I don't own yet, for further analysis. The 7 candidates for November are:

Monthly Review, October 2013

October was my most productive month so far for DivGro. I wrote 10 posts, including a milestones post, a bonus deposit post, and a quarterly review post. I added two stocks, ExxonMobil Corp. (XOM) and China Petroleum & Chemical Corp. (SNP), and a publicly traded LLC, Vanguard Natural Resources (VNR). These acquisitions (and a dividend increase from MicroSoft Corp.) increased DivGro's projected annual dividend income to $2,415, up from $1,766 in September.

With a market value of $58,105, DivGro's projected annual dividend income of $2,415 averages to a yield of 4.16%. The increase from September's average of 3.85% is due to the excellent yields offered by SNP and VNR.

I've earned dividend income of $196.96 in October, for a total of $957.07 this year.

Milestones

A milestone is either a stone functioning as a milepost – which this post is not about, or a significant event or point in development – which this post is about. 

I wrote my first post on January 10, 2013, some 284 days ago. Since then, I've written 58 posts, many of them taking several hours of research and preparation time. In the process, I've learned a tremendous amount about blogging, dividend growth investing and, especially, how to value dividend stocks. 

Reporting on one's investment decisions is an interesting thing. It requires discipline and perseverance. It inspires and invigorates. It establishes a kind of accountability – demanding clarity of thought; openness; even obligation and vulnerability. 

Recent Buy: VNR

Oct 21, 2013: Bought 180 units of VNR at $28.17 per unit.

Vanguard Natural Resources (VNR) is a publicly traded limited liability company, or LLC. Formed in October 2006, VNR focuses on the acquisition and development of oil and natural gas properties in the United States. Through operating subsidiaries, VNR owns properties in the southern portion of the Appalachian Basin, in the Permian Basin, and in south Texas. VNR completed its initial public offering in October, 2007.

LLCs pay out most of their cash flow in cash distributions, just like master limited partnerships (MLPs). They also have similar tax advantages and disadvantages. Because MLPs require special treatment at tax time, I require a premium yield of at least 6.75%. In my view, the extra work involved with MLP (and LLC) ownership at tax time is only worth my effort if I can earn a great yield. With a starting Yield on Cost of 8.84%, VNR certainly qualifies!

In September 2012, VNR changed from quarterly to monthly distributions. It currently pays 20.75c per unit per month. With my purchase of 180 units, I'll be earning $37.50 every month!

Recent Buy: SNP

Oct 18, 2013: Bought 31 shares of SNP at $80.61 per share.

China Petroleum & Chemical Corp. (SNP), also known as Sinopec Corp, is headquartered in Beijing, China. It is China's largest manufacturer and supplier of petroleum and major petrochemical products.

SNP is a Dividend Challenger with a modest 5-year streak of dividend increases. It pays semi-annual dividends, usually in June and September. As is the case with several semi-annual dividend payers, SNP has a pattern of paying one larger dividend and one smaller dividend every year. The pattern of payments since 2010 looks like this:

( $1.099  $0.802 )   ( $1.367  $1.066 )   ( $2.193  $1.075 )   ( $2.222  $1.293 )

Dividend payments of $3.515 at a buy price of $80.61 represents a starting Yield on Cost of 4.36%.

Bonus Deposit, October 2013

Today, I deposited another $10,000 cash into my DivGro portfolio.

The last time I reported on a similar bonus deposit, I explained the need to slowly decrease the relative size of my aggressive investments, in favor of more conservative income and dividend growth investments. Today's deposit is another step in that direction: I'm transferring cash from an account in which I mainly traded options.

Dividend Increases, Sep/Oct 2013

Time again for my mid-month post on recent dividend increases for stocks in my watch list!

Regular dividend increases are important for a dividend growth portfolio. The main goal of DivGro is to generate a reliable and growing dividend income stream. Reliable income comes from stable companies that not only pay dividends regularly, but can be counted on to pay the same (or increasing) dividends over time. Of course, I prefer companies that increase their dividends over time. To do so, these companies must grow their earnings sufficiently to continue to afford their growing dividend payments.

Recent Buy: XOM

Oct 10, 2013: Bought 30 shares of XOM at $85.18 per share.

ExxonMobil Corp. (XOM) is the world's largest publicly traded international oil and gas company. Founded in 1882 and based in Irving, TX, XOM is engaged in oil and natural gas exploration and production, petroleum products refining and marketing, chemicals manufacture, and other energy-related businesses. Approximately 83% of Exxon's earnings come from its operations outside the United States.

XOM is a Dividend Champion with an impressive 31-year streak of dividend increases. It pays quarterly dividends of $0.63 per share in March, June, September and December. Starting Yield on Cost is 2.96%.

7 Dividend Growth Candidates for October, 2013

I keep a watch list of dividend growth stocks as candidates for DivGro. It contains tickers of companies with continuous streaks of dividend increases, the so-called CCC stocks (Champions, Contenders, and Challengers) maintained by Dave Fish, as well as a few other dividend payers that pay (but do not raise) dividends regularly.

The watch list is organized by sector and by yield. Every month, I update the watch list to reflect any additions or deletions of CCC stocks. I also adjust for changes in dividend yield, which happen when stock prices or dividend payments change.

This month, two watch list stocks were affected. I deleted DX after its recent dividend decrease, and I moved PNNT to the non-CCC list following its deletion for Dave Fish's CCC stocks. Note that I recently bought shares of PNNT for DivGro.

Every month, I score stocks in my watch list based on my selection criteria. I assign a star rating to each candidate out of a maximum of 7 stars and compile a dashboard of candidates, sorted by star rating. This month, the top ten stocks are CHL, INTC, NTT, CVX, XOM, SNP, RCI, COP, MSFT, and PG.

I already own shares in the highlighted stocks. To diversify my portfolio, I choose 7 stocks from my dashboard that I don't own yet, for further analysis. The 7 candidates for October are:

Quarterly Review, Q3-2013

The third quarter of DivGro has ended and its time again to look at the portfolio's performance.

In Q3, I contributed $3,000 in capital funds to DivGro. Dividend income for the quarter was $385.89, up from $235.34 received in Q2. This is the second consecutive quarterly increase in dividend income.

I purchased shares in five new dividend growth stocks, adding $617.38 to DivGro's projected annual dividend income, which now totals $1,766.19.

Monthly Review, September 2013

September was one of the quieter months for DivGro. I added only one stock, PennantPark Investment Corp. (PNNT), increasing DivGro's projected annual dividend income to $1,766. In comparison, August's projected annual dividend income was $1,522.

With a market value of $45,992, DivGro's projected annual dividend income of $1,766 averages to a yield of 3.85%.

TRV's dividend payment this month helped me reach my 2013 goal of earning at least $750 in dividend income with DivGro stocks! I've now earned $760.11 in dividend income.

Dividend Increases, Aug/Sep 2013

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

Recent Buy: PNNT

Sep 10, 2013: Bought 215 shares of PNNT at $11.63 per share.

PennantPark Investment Corp. (PNNT), incorporated in January 2007 in Maryland, is a business development company focused on generating current income and capital appreciation through debt and equity investments. PNNT invests primarily in middle-market companies in the United States, through senior secured loans, mezzanine debt, and equity investments. 

PNNT is a Dividend Challenger with a 6-year streak of dividend increases. It pays quarterly dividends of $0.28 per share in January, April, July and October. Initial Yield on Cost is 9.63%.

7 Dividend Growth Candidates for September, 2013

Once a month I score stocks in my watch list based on several selection criteria. I assign star ratings out of a maximum of 7 stars and compile a dashboard of the best candidates. This month, the ten stocks at the top of the list are CHL, INTC, NTT, MSFT, PNNT, SNP, DCM, COP, SXL and BHP. The first 4 earned 7 stars; the rest earned 6 stars each.

I already own shares of the highlighted stocks. In order to diversify my portfolio, I look further down the list and select 7 candidates for further analysis. The 7 candidates for September are:

Fruits of my Labor Day Labor

As a dividend growth investor, I find Dave Fish's list of Dividend Champions invaluable. The accompanying spreadsheet provides extensive financial data of companies with long track records of consecutive years of dividend increases. I use the spreadsheet as a basis for compiling a watch list of dividend growth stocks as well as when writing monthly posts identifying dividend growth stock candidates worth consideration. 

This weekend, while reviewing changes to the spreadsheet, a recent change listed in the Revisions tab of the spreadsheet caught my eye: 

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. 

Recent Buy: TGH

Jul 29, 2013: Bought 75 shares of TGH at $33.97 per share.

Textainer Group Holdings Ltd. (TGH) leases containers to approximately 400 shipping lines and other worldwide customers.

On Friday I completed a stock analysis of TGH when it was trading at $34.11 per share. I like TGH for its generous yield and impressive earnings and dividend growth history. Also, TGH is my first stock in the services sector, so it increases DivGro's diversification. 

Stock Analysis: TGH

Textainer Group Holdings Ltd. (TGH) is a holding company engaged in the purchasing, management, leasing and resale of marine cargo containers. TGH leases containers to approximately 400 shipping lines and other customers and sells containers to more than 1,000 worldwide customers. 

TGH has a track record of 7 consecutive years of dividend increases. It pays quarterly dividends of $0.46 per share in the months of February, May, August, and November. At the current price of $34.11, TGH yields 5.39%.

Over the past 5 years, TGH has outperformed the S&P 500 handily, returning 128% compared with 21% for the S&P 500. The EPS growth rate over this time period is 19%, while the 5-year dividend growth rate is an impressive 52.14%. 

Recent Buy: CHL

Jul 26, 2013: Bought 47 shares of CHL at $53.27 per share.

China Mobile Limited (CHL) is an investment holding company. The company and its subsidiaries provide mobile telecommunications services to about 700 million customers in China and Hong Kong.

Last month I completed a stock analysis of CHL when it was trading at $51.28 per share. At the time, I didn't have enough cash to purchase shares of CHL. But with a recent bonus deposit and CHL reappearing on my dashboard of top dividend growth candidates, I'm ready to invest in CHL. 

7 Dividend Growth Candidates for July, 2013

Last month I started a new series of posts in which I'm identifying candidates for DivGro. I score stocks in my watch list of dividend growth stocks based on my 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.

Due to my 2-week vacation this month, I'm rather late with this post. I analyze data in Dave Fish's list of US Dividend Champions, which he publishes at the beginning of every month. Rather than using data that are 3 weeks old, I've spent some time to update the data before doing my analysis.

Dividend Increases, Jun/Jul 2013

Once every month I update my watch list of dividend growth stocks to reflect current yields. Current yields rise when dividends increase or when prices decrease. Conversely, current yields fall when dividends fall or prices increase. 

When stocks in my watch list decrease their dividend payments, I generally remove them from my watch list. I'm not really interested in tracking stocks that decrease their dividends. This blog is about dividend growth stocks, not dividend shrink stocks!

I've removed the following stocks from my watch list due to recent dividend decreases: DCM, LINE, and MTGE. 

Quarterly Review, Q2-2013

I've been away for two weeks on a high adventure hike in New Mexico with my youngest son. We had a great time, hiking 65 miles with our backpacks and many more miles on several side hikes. After this break, its time to look at DivGro's performance for the 2^nd quarter of 2013.

The past quarter, I contributed capital funds in the amount of $23,000 to DivGro – two bonus deposits of $10,000 each and three monthly deposits of $1,000 each. I received dividend income in Q2 of $235.34, up from the $138.88 received in Q1.

I purchased shares in five new dividend growth stocks, adding expected dividend income for 2013 of $272.10. Total expected dividend income for 2013 is now $1,000.67. Forward 12-month projected dividend income is $1,146.17.

Monthly Review, June 2013

The second quarter of DivGro has ended and I'll be posting another quarterly review soon. Before doing so, I want to report on happenings in the month of June.

In June, I purchased my 10th dividend growth stock, completing one of my 2013 goals. As for my other 2013 goals, I'm on track to earn at least $750 in dividend income and to average one blog post per week. However, it is too early to tell if DivGro will exceed the performance of the S&P 500 index in total returns.

Bonus Deposit, June 2013

On Friday, June 28, I deposited $10,000 cash into my DivGro portfolio. This bonus deposit is in addition to my regularly scheduled deposits of $1,000 per month. I decided to transfer this money from one of my other portfolios, where I've had some cash available for a while. In this post, I'll try to explain my thinking.

In addition to DivGro, my dividend growth portfolio, I manage three other portfolios in which I use different strategies: an income portfolio, an aggressive growth portfolio, and an options trading portfolio.

Dividend Increases, May/Jun 2013

Since May 15, the market has cooled down a bit with the S&P 500 decreasing 1.93% and the Dow Jones Industrial Average decreasing 1.35%. While updating my watch list of dividend growth stocks to reflect current yields, I noticed that several stocks moved into higher yield ranges. Current yield rises when a stock's dividend increases or when the stock's price decreases (or both).

In this month's update, I've removed several stocks from my watch list. Some stocks are not dividend growth stocks (although they are dividend payers), while a others have recently decreased their dividend payments. And one company, H.J. Heinz Company (HNZ), has been acquired by Berkshire Hathaway and 3G Capital and so is no longer traded on the stock exchange. 

Stock Analysis: CHL

China Mobile Limited (CHL) is an investment holding company. The company and its subsidiaries provide mobile telecommunications services to more than 700 million customers in Mainland China and Hong Kong. These services include voice, data, applications, and information services.

CHL has a streak of 7 consecutive years of dividend increases. It pays dividends semi-annually in the months of May and September. CHL's annual dividend is listed at $2.18, which represents a dividend yield of 4.25% with CHL priced at $51.28 per share.

Over the past 10 years, CHL has outperformed the S&P 500 handily, returning about 469% compared to about 63% for the S&P 500 and 65% for the Dow Jones. Performance for the past 5 years is not so impressive. CHL actually lost about 17% over this period, though EPS growth topped 8% and dividend growth topped 14%.

Recent Buy: BBL

Jun 3, 2013: Bought 43 shares of BBL at $58.39 per share.

BHP Billiton is a diversified natural resources company and one of the world's largest producers of major commodities, including aluminium, coal, copper, iron ore, manganese, nickel, silver and uranium. BHP Billiton is a dual listed company comprising of BHP Billiton Limited (BHP) and BHP Billiton Plc (BBL). I've acquired shares in BBL, an American Depository Receipt (ADR) listing of BHP Billiton Plc available on the NYSE.

Yesterday I shared the seven DivGro candidates that are at the top of my June dashboard. BBL is one of my favorites: it trades at a deep discount and has been growing its dividends aggressively. I also like BBL because it increases my sector diversification. So, today I decided to buy BBL, the 10^th stock to be added to DivGro!

7 Dividend Growth Candidates for June, 2013

One of the most useful resources for dividend growth investors is Dave Fish's list of US Dividend Champions, which provides financial data of companies with 25 or more straight years of dividend increases in spreadsheet form. Also provided are data of companies that have increased their dividends for 10-24 straight years (Contenders) and companies that have increased their dividends for 5-9 straight years (Challengers).

I use Dave Fish's spreadsheet and my watch list of dividend growth stocks to identify candidates for DivGro. I use my selection criteria to score each candidate and to assign an overall star rating for each candidate, out of a maximum of 7 stars. I then compile a dashboard of all the candidates, sorted by star rating.

Monthly Review, May 2013

In May, I purchased shares in three new dividend growth stocks. These purchases bring the total number of stocks in DivGro to nine, just one short from my goal of ten different dividend growth stocks by year's end. I purchased shares in PartnerRe Ltd (PRE), The Travelers Companies, Inc (TRV), and ConocoPhillips (COP), adding $227.44 in annual dividend income or $170.58 for the 2013 calendar year.

At the end of May, DivGro had a market value of $29,683.39, for an overall gain of $1,683.39 or 6.01% since January.

Recent Buy: COP

May 21, 2013: Bought 38 shares of COP at $64.74 per share.

ConocoPhillips (COP) is an American multinational energy corporation with headquarters in Houston. Created in 2002 through a merger of Conoco Inc and Phillips Petrolium Company, COP became the 5^th largest integrated oil company in the world. In 2012, COP spun off its downstream assets to Phillips 66 (PSX), with the intent of maximizing shareholder value.

Last month I completed a stock analysis of COP when it was trading below $58 a share. I hesitated to buy COP at that time because it was not discounted by at least 5% to my fair value estimate. A reader of my post pointed out that COP has not increased its dividend in the two years he's owned it (although the spin-off to PSX could be considered a type of dividend payment). So, the question is, why would I buy COP today when it is trading at a premium to my fair value estimate and without evidence that it would be increasing its dividend?

Recent Buy: TRV

May 20, 2013: Bought 29 shares of TRV at $86.31 per share.

The Travelers Companies, Inc. (TRV) was founded in 1853 and is based in New York, New York. Through its subsidiaries, TRV provides various commercial and personal property and casualty insurance products and services to businesses, government units, associations, and individuals primarily in the United States.  

TRV is a Dividend Challenger with an 9-year streak of dividend increases. It pays dividends in March, June, September and December. At $86.31 per share, TRV has a dividend yield of 2.32%.

Dividend Increases, Apr/May 2013

It is mid-month and time again to update my watch list of dividend growth stocks to reflect current yields. With the market steaming higher, current yields are compressing. Since April 15, the market increased 4.40% (as measured by the S&P 500) and by 2.76% (as measured by the Dow Jones Industrial Average).

Dividend increases tend to counterbalance the influence of a rising market on current yields. When a company increases its dividend payment, its current yield increases. How much the yield changes depends on the size of the dividend increase and on the market's reaction to the increase. If the market response is positive, the stock's price would increase and so limit the increase in current yield. 

Recent Buy: PRE

May 13, 2013: Bought 27 shares of PRE at $91.80 per share.

Founded in 1993, PartnerRe Ltd. (PRE) provides reinsurance services to clients in 150 countries around the world. It provides these services through wholly owned subsidiaries, as well as through brokers and direct relationships with insurance companies. The risks PRE reinsures include agriculture, aviation, casualty, catastrophe, contamination, credit, disability, energy, engineering, health, longevity, marine, mortality, motor, pollution, property, space, and war. PRE's headquarters are in Pembroke, Bermuda.

PRE is a Dividend Contender with an 20-year streak of dividend increases. It pays dividends in March, June, September and December. At $91.80 per share, PRE has a dividend yield of 2.79%.

Monthly Review, April 2013

It has been a rather busy month for me. Early in April, I travelled to South Africa, spending precious time with family and friends. The least fun part of my short vacation was the return flight of 16 hours (non-stop!) from Johannesburg to Atlanta. I didn't realize that airplanes can fly so far, especially lifting off in Johannesburg at altitude! I don't sleep in airplanes, so that was a bit of an ordeal. Then there was tax day. Due to jet lag, I did just enough of my taxes to apply for an extension. So I'm still not done with my taxes… And, to top things off, back at work things have been crazy busy!

Given all of the above, I'm very happy with my DivGro activities in April. I wrote six posts, including my first quarterly review. Also, I transferred some funds into DivGro after one of my CD's reached maturity. This bonus deposit provided some welcome cash for more dividend growth stock buys. To that end, I evaluated Aflac Incorporated (AFL) and ConocoPhillips (COP), deciding to go with AFL because of its superior fair value discount.

COP remains interesting because it pays a dividend of $2.64 per share. This represents an attractive yield of about 4.4% (at the current price of $60). I think COP would be a good buy at $56, so for now I'll just wait.

Quarterly Review, Q1-2013

The first quarter of DivGro has come to an end and its time to look at the portfolio's performance.

As stated elsewhere on this blog, the goals of DivGro are to generate reliable and growing dividend income and to generate acceptable total returns exceeding the performance of the S&P 500 index. My strategy is to buy stocks of companies that consistently pay and increase their dividends. By reinvesting those dividends, I'll benefit from compounding and, over time, generate a return that handily beats inflation.

During this quarter, I contributed capital funds in the amount of $16,000 to DivGro (an opening deposit of $12,000 and 4 additional deposits of $1,000 each) and purchased a total of 5 dividend growth stocks. These stocks represent expected dividend income for 2013 of $721.09. At the end of March, DivGro had a market value of $16,736.95. Included in the overall gain of $736.95 is dividend income of $138.88.

Recent Buy: AFL

Apr 16, 2013: Bought 50 shares of AFL at $50.06 per share.

In my recent stock analysis of Aflac Incorporated (AFL), I identified AFL as a 7-star (strong buy) candidate. AFL is in the Financial sector and increases DivGro's diversification. With this purchase, I'm locking in an initial yield on cost of 2.80%.

Stock Analysis: COP

ConocoPhillips (COP) is an American multinational energy corporation with headquarters in Houston. Created in 2002 through a merger of Conoco Inc and Phillips Petrolium Company, COP became the 5^th largest integrated oil company in the world. In 2012, COP spun off its downstream assets to Phillips 66 (PSX), with the intent of maximizing shareholder value.

COP has a track record of 12 consecutive years of dividend increases. It pays quarterly dividends of $0.66 per share in the months of February, May, July, and October. At the current price of $57.44, COP's dividend yield is 4.6%.

Over the past 10 years, COP has outperformed the S&P500 handily, returning about 130% compared to about 90% for the S&P500. The EPS growth rate over this time period is 6%, while the 10-year dividend growth rate is 13.9%. 

Stock Analysis: AFL

Aflac Incorporated (AFL) is a supplemental health and life insurance company and a member of the Fortune 500. AFL mainly operates in Japan and the US. Sales in Japan target health and life insurance, as well as annuity products, and account for approximately 77% of Aflac’s total revenue. In the US, Aflac sells health and disability insurance, mainly as part of employer sponsored group insurance plans.

AFL is a Dividend Champion, with a track record of 30 consecutive years of dividend increases. It pays quarterly dividends of $0.35 per share in the months of February, May, August, and November. At the current price of $50.11, AFL's dividend yield is 2.79%.

Over the past decade, AFL's annual dividend payment has increased by about 20% per year, though the rate of increase has slowed over the last five years. The 20% growth in distributions translates into a dividend payment that doubles in about 3.5 years.

Dividend Increases, Mar/Apr 2013

Around the 15^th of each month,  I'll be updating my watch list of dividend growth stocks to reflect current yields. These change over time due to changes in the stock price and changes in dividend payments. 

Since March 15, the market increased by another 1.64% (as measured by the S&P 500) and by 2.24% (as measured by the Dow Jones Industrial Average). The current yield of dividend paying stocks will decrease when stock prices increase.

When a company increases its dividend payment, the current yield also should increase. The size of the  increase not only depends on the size of the dividend increase, but also on the market's reaction to the increase. Often, a dividend increase stimulates interest in the stock and results in a corresponding increase in the stock price, which in turn would limit the increase in current yield.

Bonus Deposit, April 2013

On April 2, I deposited an additional $10,000 cash into my DivGro portfolio. This bonus deposit is in addition to my regularly scheduled deposits and follows from having closed a certificate of deposit (CD) account after the CD had matured.

A CD is a promissary note issued by a bank for a deposit made for a specified term. The holder is restricted from withdrawing funds on demand, at least without incurring a penalty. In return, the bank offers an interest rate that is slightly better than those for savings and checking accounts. Deposits are FDIC insured, which makes these type of investments safer than investing in stocks. Unfortunately, interest rates offered on CDs are below the inflation rate (currently 2%), which means your investment actually is losing value (buying power) over time.

Monthly Review, March 2013

The first quarter of DivGro has come to an end!  I'd like to post a quarterly review, but I'll need some time to develop a reasonable format before doing so, as this would be my first quarterly review. It will most likely be several weeks before I post it, especially since we're in tax season and I have yet to complete my taxes!

Including this post, I've written only four posts in March. It was a rather busy month for me at work, and without cash on hand in DivGro I had little incentive to research new candidates. Besides, the market is at an all time high, so finding great value is much more challenging! I did start a new series in which I'll be tracking dividend increases for stocks in my watch list.

In March, I purchased General Dynamics Corporation (GD). The purchase increased my diversification into the Capital Goods sector and gives me dividend income in the months of January, April, July and October.

Dividend Increases, Feb/Mar 2013

I keep a watch list of dividend growth stocks, with tickers organized by yield, by sector, and by the calendar month of dividend payments. Of these, the organization by yield is expected to  change over time due to changes in the stock price and increases (or decreases) in dividend payments. Every month, I'll update my watch list to reflect these changes. 

Since February 15, the market has increased by 2.44% (as measured by the S&P 500) and by 3.78% (as measured by the Dow Jones Industrial Average). For a dividend paying stock, yield would trend lower when the stock price trends higher. This follows from the definition of yield.

Of course, when a company increases its dividend payment, the yield also should increase. How much the yield increases would depend on the size of the dividend increase and the market's reaction to the increase.

Monthly Review, February 2013

This month I received my first dividend income in DivGro! It is exciting to start the journey of generating a dividend income stream, and I can't wait to see how it grows over time.

I wrote five posts in February, including one about my selection criteria and one about the future of DivGro. I also reworked my watch list page, listing candidates for DivGro by yield, by payment month, and by sector. Hopefully this reorganization will help with portfolio diversification.

In February, I purchased Nippon Telegraph & Telephone Corp (NTT). It is a foreign telecommunications company that trades on the NYSE as an American Depositary Receipt (ADR). Generally, I like telecom stocks because of their reputation for dependable dividend payments. As an international stock, NTT is an added bonus because it diversifies my portfolio geographically as well as by industry.

Recent Buy: GD

Mar 1, 2013: Bought 35 shares of GD at $67.61 per share.

Yesterday I published a stock analysis of General Dynamics Corporation (GD) in which I indicated that I'm considering buying 35 shares. Today, GD opened about 1% down from yesterday's closing price. It gave me a good entry point and secured an initial dividend yield of 3.02%.

Stock Analysis: GD

General Dynamics Corporation (GD) is an aerospace and defense company offering products and services in business aviation; land and expeditionary combat systems, armaments and munitions; shipbuilding and marine systems; and information systems and technologies. Formed in 1952, GD has grown steadily through the acquisition of more than 60 businesses, and now it employs about 95,000 people worldwide. GD is headquartered in Falls Church, Virginia.

GD is on my watch list. I'm interested in adding GD to DivGro because it would increase my diversification in several ways. GD is in the Capital Goods sector and pays quarterly dividends in January, April, July and October. The yield hovers around 3%.

Gazing into the Future

The main goal of DivGro is to generate a reliable and growing dividend income stream. I hope to achieve a 12% yield on cost (YoC) within ten years of inception. And I hope to generate acceptable total returns exceeding the performance of the S&P 500 index.

In this post I'd like to gaze into the future, to ten years from now. If I'm disciplined and lucky, and I follow my plans and strategies carefully, what could DivGro be worth? And what can I hope to receive in dividend income?

Starting with an initial investment of $12,000 and adding $1,000 per month for ten years, I'll have a total of $132,000 invested. Of course, ending with a portfolio value of "only" $132,000 after ten years of investing would be rather disappointing. Hopefully the value of the stock market would gradually increase over time and the value of my portfolio would increase also.

Recent Buy: NTT

Feb 13, 2013: Bought 110 shares of NTT at $22.43 per share.

Nippon Telegraph & Telephone Corp (NTT) is a provider of fixed and mobile voice related services, IP/packet communications services, sales of telecommunications equipment, system integration and other telecommunications related services in Japan. Shares of NTT are represented by an American depository receipt (ADR) at the New York Stock Exchange (NYSE).

NTT is a Dividend Contender with an 11-year streak of dividend increases. It pays dividends semi-annually, in March and September. At $22.43 per share, the last dividend payment of $0.4853 per share represents a yield of 4.33%.

Selection Criteria

I've designed selection criteria for dividend paying stocks to help me identify appropriate candidates for DivGro. My main goal is to generate a reliable and growing dividend income stream. Reliable income comes from companies that not only pay dividends regularly, but can be counted on to pay the same (or increasing) dividends regularly. Of course, I prefer dividend payers that increase their dividends over time. Such companies generate enough cash to pay dividends and they grow earnings over time to afford dividend increases.

The often cited disclaimer that "past performance is no guarantee for future results" has a counterpart for dividends: "there is no guarantee that dividend paying companies will continue to pay or increase their dividends". Several companies with long histories of paying dividends broke those streaks during the recent financial crisis. For example, in 2009, both General Electric (GE) and Pfizer (PFE) cut their dividends for the first time in decades, and many companies eliminated their dividend payments altogether.

Despite the above mentioned disclaimer, a long streak of dividend increases is a great indicator of financial security and continued dividend growth. If a company has a long track record op paying increasing dividends, chances are it has the ability to continue doing so. And if a company has a long track record of increasing dividend payments, it would have a strong aversion to decreasing or eliminating dividend payments.

Monthly Review, January 2013

The first month of DivGro has been rather busy. I've set up the portfolio at www.folioinvesting.com, deposited my initial investment capital, and arranged for a recurring deposit to add additional investment capital every month. I've also set up this blog, populating it with a variety of pages to track goals, transactions, dividend payments, and portfolio performance, and more. I've written six posts, three of which are Recent Buy's that will accompany all stock purchases for DivGro. Meanwhile, I've done a lot of research on dividend growth investing, using the wealth of information available on the internet and referencing similar dividend growth investment blogs as inspiration. I have much more to learn, a prospect I find exhilarating!

With this series of Monthly Review posts, I'll reflect on DivGro-related activities of the previous month and I'll provide a snapshot of portfolio performance. Here is a review of what happened in January:

Recent Buy: ETP

Jan 18, 2013: Bought 100 shares of ETP at $47.42 per share.

Energy Transfer Partners LP (ETP) is a master limited partnership that owns and operates natural gas and NGL pipelines, natural gas storage and distributions terminals, and natural gas processing facilities. With recent acquisitions, ETP is also becoming a major presence in the oil pipeline business.

ETP pays a quarterly distribution of $0.89375 in the months of February, May, August, and November. This distribution represents a solid yield of 7.56%.

MLP Selection Criteria

The main goal of DivGro is to generate a reliable and growing dividend income stream. In striving for reliability, I look for high quality, fairly valued businesses with long histories of strong, rising dividends. Taking on unnecessary risk for short-term gains or unsustainable yields will not deliver a reliable income stream in the long run.

I've designed my selection criteria to help me identify appropriate candidates for DivGro. As stated, the selection criteria target dividend paying companies that report their financial results regularly, and for which metrics like price to earnings ratio, dividend payout rate, and earnings growth rate are readily available.

There is another class of businesses that produce dividend-like income worth considering: Master Limited Partnerships (MLPs). For MLPs, I use a different set of selection criteria, because they operate with special rules and offer certain tax advantages.

Goals for 2013

I believe in setting challenging yet attainable goals.

It is not advisable to entertain goals that are impossible, or even nearly so. No matter how hard I try, I will never run 100 meters in under 10 seconds. That feat is only possible for a select few, presently male-only, athletes, with the talent and training to make them world-class sprinters. On the other hand, if I wanted to, I could set a goal to become a good guitar player and with hard work and dedication, I could attain that goal in a few year's time.

Setting goals that are simply attainable will not require special effort, nor will I feel a great sense of personal satisfaction in accomplishing them. Challenging goals demand extra focus and commitment. They require me to raise the bar, to exert extra effort, to put in the time. And when I attain these goals, I know I'll experience a great sense of achievement.

Recent Buy: INTC

Jan 8, 2013: Bought 120 shares of INTC at $21.21 per share.

Intel Corporation (INTC) is an American multinational semiconductor chip maker corporation with headquarters in Santa Clara, California. Intel makes motherboard chipsets, network interface controllers and integrated circuits, flash memory, graphic chips, embedded processors and other devices related to communications and computing. It is the world's largest and highest valued semiconductor chip maker, based on revenue.

With its streak of 9 consecutive years of dividend increases, INTC is a Dividend Challenger, though it could become a Dividend Contender if the dividend is increased again this year. INTC currently pays quarterly dividends of $0.225 per share.

Recent Buy: CVX

Jan 8, 2013: Bought 25 shares of CVX at $109.68 per share.

My first purchase for DivGro is Chevron Corporation (CVX), a multinational energy corporation with headquarters in San Ramon, California. Founded in 1984, Chevron is involved in all aspects of the oil and gas industries, including exploration and production; refining, marketing and transport; chemicals manufacturing and sales; and power generation. Chevron is ranked as the third largest American corporation in the Fortune 500, after only Exxon Mobil and Wal-Mart Stores.

Chevron is a Dividend Champion, with a track record of 25 consecutive years of dividend increases. It currently pays quarterly dividends of $0.90 per share. Dividends payed out in 2012 increased by 13.6% over dividend payments in 2011.

Hello, World!

Welcome to yet another dividend growth investing blog! I've been inspired by several similar blogs to create my own dividend growth portfolio and to share my thoughts while managing it.

My main goal with this portfolio is to generate a reliable and growing dividend income stream. By publicly keeping track of this portfolio and interacting with like-minded investors, I hope to become a better dividend growth investor and to provide useful information to others in the process.

I've been dabbling in the stock market for more than 10 years, as a hobbyist, using somewhat aggressive strategies. While I've been quite successful so far, I need to start counterbalancing that approach with a more conservative, income-generating approach.

Currently, the blog is organized as follows:

• Home: Posts about portfolio updates and monthly reviews. 
• Portfolio: Content and market value of portfolio, updated monthly. 
• Dividends: A calendar-like table to track dividend income. 
• Charts: One-year price charts of stocks in portfolio. 
• Performance: Regular reviews of portfolio performance. 
• Goals: Overall and annual goals for portfolio. 
• Watch List: Presents a list of candidate dividend growth stocks. 
• About: Summary statement of portfolio constitution and investment strategy. 
• Disclaimer: I'm not an investment professional... 

Over time, I'll likely add pages and reorganize the layout as needed.