Sunday, March 12, 2017

Monthly Review: February 2017


February was one of those really busy months. With looming deadlines at work, I found it quite challenging to keep DivGro up to date. I have several articles in the works and I'll try to get them posted as soon as possible. Despite the "busyness", I managed to get a lot of DivGro business done!

First, I transferred my wife's traditional and Roth IRA's to FolioInvesting, where I'll be managing our IRA's using DivGro's strategy of dividend growth investing. The account transfers were easier than expected, though I had to spend some time to assess the account holdings. In the end, I retained only four positions and I'll be reporting on those in due course.

In February I received dividend income of $736, an increase of 57% over the amount received in February 2016. Additionally, I recognized past dividend income of $733 from my wife's traditional IRA, which I'm now managing as part of DivGro. Projected annual dividend income (PADI) increased to $12,728, a year over year increase of 47%.

No fewer than 12 of the stocks I own announced dividend increases in February! That's from a quarter of my portfolio! The top increases are from Cisco Systems (CSCO) with an increase of 11.54%, Gilead Sciences (GILD), with an increase of 10.64%, and General Dynamics (GD) with an increase of 10.53%.

February Highlights

Generating a growing dividend income stream is the main goal of DivGro. I review my dividend income regularly and consider factors that could affect future dividend payments.

In the month of February, I recorded dividend income totaling $1,469. Fourteen different DivGro stocks paid dividends totaling $736 and I recognized past dividend income of $733.

In February, I recorded five buys and two sells, so DivGro now contains 48 different positions. As a result of these transactions and also the announced dividend increases, DivGro's PADI increased to $12,728.

Here is DivGro's projected monthly dividend income (red line) plotted against monthly dividends:


Lining up dividend income by month is informative and shows year over year progress nicely:


Transactions

In February, I added shares to three existing positions:

• AT&T Inc (T)
• Qualcomm Inc (QCOM)
• T. Rowe Price Group, Inc (TROW)

Also, I opened the following positions in DivGro:

• Stanley Black & Decker (SWK)
• Verizon Communications (VZ)
• Xcel Energy (XEL)

This month, I sold shares and reduced my position in the following stock:

• Reynolds American, Inc (RAI)

Lastly, I closed the following position:

• PennantPark Investment (PNNT)

The RAI sell was due to an option assignment, which I reported in my latest options update.

Dividend Changes

The following stocks announced dividend increases:

• 3M Company (MMM) – 5.86%
• United Parcel Service, Inc. (UPS) – 6.41%
• Realty Income Corp. (O) – 3.95%
• Eversource Energy (ES) – 6.74%
• Wal-Mart Stores, Inc (WMT) – 2.00%
• Gilead Sciences, Inc (GILD) – 10.53%
• T. Rowe Price Group, Inc (TROW) – 5.56%
• AT&T Inc (T) – 2.08%
• The Coca-Cola Company (KO) – 5.71%
• STAG Industrial Inc (STAG) – 0.71%
• Omega Healthcare Investors (OHI) – 1.64%
• Cisco Systems, Inc (CSCO) – 11.54%

Dividends Received

I received or recorded dividends from 14 different stocks this month, for a total of $1,469 in dividend income:

• Apple Inc (AAPL) – $57.00
• AbbVie Inc. (ABBV) – $128.00
• Eaton Vance Tax-Managed Global Diversified Equity Income Fund (EXG) – $58.86
• General Dynamics Corporation (GD) – $26.60
• Main Street Capital Corp. (MAIN) – $61.06
• Nuveen AMT-Free Quality Municipal Income Fund (NEA) – $22.25
• Realty Income Corp. (O) – $10.53
• Omega Healthcare Investors (OHI) – $186.00
• The Procter & Gamble Company (PG) – $66.95
• Raytheon Company (RTN) – $17.58
• STAG Industrial Inc (STAG) – $28.00
• AT&T Inc (T) – $329.55
• Verizon Communications (VZ) – $250.32
• Xcel Energy (XEL) – $225.93

The amounts for T, VZ, and XEL are larger than normal because they include past dividends. I'm now managing these stocks (which are held in my wife's IRA) as part of DivGro.

Markets

Even though I'm no longer comparing DivGro's performance to market indices, its useful to understand the environment we're investing in:

Jan 31, 2017
DOW: 19,864.09S&P 500: 2,278.87NASDAQ: 5,614.7910-YR BOND: 2.45%
Feb 28, 2017
DOW: 20,812.24S&P 500: 2,363.64NASDAQ: 5,825.4410-YR BOND: 2.36%

In February, the DOW gained 4.77%, the S&P 500 gained 3.72%, and the NASDAQ gained 3.75%. The yield on the benchmark 10-year Treasury note fell to 2.36%.

Below are charts showing the market activity of these indices in February, courtesy of Google Finance. (Click on the charts to see detail). Each chart shows a 20-period exponential moving average (in red) and a 50-period exponential moving average (in green). I've also included a 10-period relative strength index below the main chart.


Market Value

In February 2017, DivGro's market value increased by 8.59% to $392,220. Year over year, DivGro's market value increased by 77%.

Market ValueCash DepositsSimple Return
Feb 29, 2016
$221,346.00$215,388.802.77%
Jan 31, 2017
$361,176.60$293,694.9222.98%
Feb 28, 2017
$392,219.59$309,446.0526.75%

Here's a chart showing DivGro's market value breakdown. Dividends are plotted at the base of the chart so we can see them grow over time.


Given the current market value of $392,220, my portfolio has delivered a simple return of 26.75% since inception. In comparison, DivGro's IRR (internal rate of return) is 13.11%. (IRR takes into account the timing and size of deposits since inception, so it is a better measure of portfolio performance).

Portfolio



Here is a snapshot of DivGro's state on the last day of February 2017:


I track the yield on cost (YoC) for individual stocks, as well as an average YoC for my portfolio. DivGro's average YoC decreased from 4.24% last month to 4.11% this month.

Another interesting statistic is percentage payback, which relates dividend income to the amount of capital invested. DivGro's average percentage payback is 10.18%, down from last month's 10.28%.

Finally, DivGro's projected annual yield is at 4.11%, down from last month's value of 4.22%. I calculate projected annual yield by dividing PADI ($12,728) by the total amount invested ($309,446).

Goals Review

I've set some challenging goals this year:
  1. PADI: Increase projected annual dividend income to $14,400
  2. Dividends: Earn $12,960 in dividend income
  3. Options: Earn $8,400 in options income
  4. Seeking: Write 64 premium articles for Seeking Alpha
  5. DivNet: Write 6 articles for The DIVNet
Here is a set of gauges representing the progress I've made towards achieving these goals. The last gauge is a reference – it indicates where the other gauges should be after 59 out of 365 days:


I'm continuing to make good progress towards my Options goal and I'm also ahead of schedule with my Dividends goal, thanks to recognizing some past dividend income from IRA accounts I'm bringing into the DivGro fold. I need to start working on my DivNet goal, though!

Looking Ahead

In March I'll continue to consolidate our investment accounts. My goal is to manage all our accounts using DivGro's strategy of dividend growth investing. When completed, DivGro will be distributed over five different accounts, one trust account at Interactive Brokers and four IRA's (a traditional and a Roth IRA for me, and a traditional and Roth IRA for my wife) at FolioInvesting. I'm hoping to complete the retirement account consolidation in March, but finalizing the trust account at Interactive Brokers will take a while longer.

On a personal note, I'm happy to say that Piper won the Academy Award for Best Animated Short Film! As the visual effects supervisor, I had the privilege to attend the awards ceremony. What a wonderful, and somewhat surreal, experience!

Please see my Performance page for various visuals summarizing DivGro's performance.

Thanks for reading and take care everybody!

6 comments :

  1. That is a monthly review that i love to read, looks like your income year over year is increasing dramatically. In many years time this income will be amazing. Well done to you. looks like February has been a great month for you.

    ReplyDelete
    Replies
    1. Thanks for your kind words. Every time I compare my monthly income to the year-ago month, I'm surprise by the amount of the increase. It's almost like I don't believe this could be happening and that it would continue to happen... but that's what the dividend growth snowball is all about!

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  2. Replies
    1. Thanks, Amber Tree -- trending up is always a great thing for us DGI investors!

      Delete
  3. Nicely done, sir!

    I always like seeing another blogger take up the options gauntlet.

    ReplyDelete
    Replies
    1. Thanks for reading and commenting, Financial Velociraptor! Options trading has added a new dimension to DivGro, and it is quite exciting, I must say...

      Delete

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