Sunday, April 23, 2017

Monthly Review: March 2017

I'm a little late with my monthly review for March. Work continues to occupy most of my time, so I'm finding it quite challenging to update DivGro. I'm certainly not complaining about work... it is better to have too much work than not to have enough work. But it would be great to have just enough once in a while!

In March I finished the consolidation of my wife's traditional IRA's into a single account at FolioInvesting, where I'll be managing it using DivGro's strategy of dividend growth investing. I retained one of her stocks, UnitedHealth Group (UNH), which happens to be DivGro's 8th home run!

March was a record-breaking month for dividend income! I just love quarter-ending months, as most of my dividend growth stocks happen to pay dividends in those months. In March, I received dividend income of $1,754, an increase of 53% over the amount received in March 2016. Additionally, I recognized past dividend income of $111 from UNH. Projected annual dividend income (PADI) is now at $12,607, a year over year increase of 24%.

Only four of the stocks I own announced dividend increases in March. The top increases are from General Dynamics Corporation (GD) with an increase of 10.53% and Raytheon Company (RTN), with an increase of 8.87%.

I closed two of my closed-end funds, the Nuveen AMT-Free Quality Municipal Income Fund (NEA) and the Eaton Vance Tax-Managed Global Diversified Equity Income Fund (EXG). This action wiped out a substantial amount of DivGro's PADI, so I redeployed some of the cash to add to my Main Street Capital (MAIN) and AllianzGI Equity & Convertible Income Fund (NIE) positions.

Additionally, I opened a new position in General Electric Company (GE) and I closed my Kimberly-Clark Corporation (KMB) position.

March 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 March, I recorded dividend income totaling $1,865. Thirty-one different DivGro stocks paid dividends. The year over year decrease for March is 53%. Including this month's total, I've collected dividend income totaling $4,830 this year.

Projected annual dividend income is the total dividend income I expect to receive in the next 12 months. I recorded 4 buys and 3 sells. Furthermore, 4 stocks announced dividend increases. These activities removed $122 from DivGro's PADI, which now stands at $12,607.

Following is a chart showing DivGro's projected monthly dividend income (red line) against monthly dividends received:


Another way to see progress is to compare dividend income by month:


I'm very happy with March's record-breaking dividend income!

Transactions

In March, I added shares to 2 existing positions:

• AGIC Equity&Convertible Income Fund (NIE)
• Main Street Capital Corp. (MAIN)

Also, I opened the following positions in DivGro:

• General Electric Corporation (GE)
• Vanguard High Dividend Yield ETF (VYM)

As mentioned earlier, I retained one of my wife's stocks, which is a new position for DivGro:

• UnitedHealth Group (UNH)

Lastly, I closed the following positions:

• Eaton Vance Tax-Managed Global Diversified Equity Income Fund (EXG)
• Kimberly-Clark Corporation (KMB)
• Nuveen Amt-Free Quality Municipal Income Fund (NEA)

As a result of these transactions, DivGro's PADI decreased by $199.

Dividend Changes

The following stocks announced dividend increases:

• Raytheon Company (RTN) – increase 8.87%
• General Dynamics (GD) – increase of 10.53%
• Realty Income Corp. (O) – increase of 0.25%
• Intel Corporation (INTC) – increase of 4.81%

DivGro's PADI increased by $29 due to these dividend changes.

Dividends Received

I received dividends from 30 different stocks this month, for a total of $1,754 in dividend income:

• AFLAC Inc. (AFL) – income of $21.50
• Cummins Inc (CMI) – income of $45.10
• Dominion Resources, Inc (D) – income of $75.50
• Eversource Energy (ES) – income of $28.50
• Ford Motor Company (F) – income of $150.00
• Gilead Sciences Inc (GILD) – income of $52.00
• International Business Machines Corporation (IBM) – income of $42.00
• Intel Corporation (INTC) – income of $57.20
• Johnson & Johnson (JNJ) – income of $43.20
• Lockheed Martin (LMT) – income of $25.48
• Main Street Capital Corp. (MAIN) – income of $61.05
• McDonald's Corp. (MCD) – income of $25.38
• 3M Company (MMM) – income of $18.80
• Microsoft Corp. (MSFT) – income of $54.60
• Nuveen Amt-Free Quality Municipal Income Fund (NEA) – income of $22.26
• AGIC Equity&Convertible Income Fund (NIE) – income of $140.98
• Northrop Grumman Corporation (NOC) – income of $14.40
• Realty Income Corp. (O) – income of $10.53
• Pfizer Inc. (PFE) – income of $96.00
• Qualcomm Inc. (QCOM) – income of $212.00
• STAG Industrial Inc (STAG) – income of $28.00
• Stanley Black & Decker (SWK) – income of $29.00
• Target Corporation (TGT) – income of $84.00
• T. Rowe Price Group (TROW) – income of $57.00
• Travelers Companies (TRV) – income of $19.43
• United Parcel Service Inc. (UPS) – income of $20.75
• Valero Energy Corporation (VLO) – $120.40
• Vanguard High Dividend Yield ETF (VYM) – income of $84.00
• Walgreens Boots Alliance, Inc (WBA) – income of $16.50
• ExxonMobil Corporation (XOM) – income of $48.75

Additionally, I recognized past dividend income for the following stock, now part of DivGro:

• UnitedHealth Group (UNH) – income of $110.93

Markets

It is worth looking at the markets to understand the environment we're investing in, even though I no longer compare DivGro's performance to those of the markets:

Feb 28, 2017
DOW: 20,812.24S&P 500: 2,363.64NASDAQ: 5,825.4410-YR BOND: 2.36%
Mar 31, 2017
DOW: 20,663.22S&P 500: 2,363.72NASDAQ: 5,911.7410-YR BOND: 2.40%

In March, the DOW dropped 0.72%, the S&P 500 was essentially flat, and the NASDAQ gained 1.48%. The yield on the benchmark 10-year Treasury note rose to 2.40%.

Market Value

This month, DivGro's market value increased by 5.77% to $414,850. Compared with March 2016's market value of $276,681, the year over year increase is 50%.

Market ValueCash DepositsSimple Return
Mar 31, 2016
$276,681.00$248,830.0011.19%
Feb 28, 2017
$392,219.59$309,446.0526.75%
Mar 31, 2017
$414,849.52$312,589.8432.71%

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 $414,850, my portfolio has delivered a simple return of 32.71% since inception. In comparison, DivGro's IRR (internal rate of return) is 15.16%. (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 March 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 4.11% last month to 3.98% this month.

Another interesting statistic is percentage payback, which relates dividend income to the amount of capital invested. DivGro's average percentage payback is 10.55%, up from last month's 10.18%.

Finally, DivGro's projected annual yield is at 4.03%, down from last month's value of 4.11%. I calculate projected annual yield by dividing PADI ($12,607) by the total amount invested ($312,590).

Goals Review

I've set some challenging goals for 2017:
  1. PADI: Increase projected annual dividend income to $14,400
  2. Dividends: Earn $12,960 in dividend income
  3. Dividends: 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 90 out of 365 days:


I'm ahead of schedule on my Options and Dividends goals, but I'm behind on my PADI goal and my DivNet goals.

Looking Ahead

In April I'd like to finish consolidating our IRA accounts. My goal is to manage all our IRAs using DivGro's strategy of dividend growth investing. I'm looking forward to having all this consolidation business behind me so I can focus on analyses rather than admin!

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

Thanks for reading! How did your portfolio perform last month? Please comment below.

17 comments :

  1. It is a shame about work but it really looks like it is paying off. Well done to you. Another solid month for you, another over 1000 a month. Very well done, keep that work rate up and you will reach your goals in no time. Cheers

    ReplyDelete
    Replies
    1. Work is what makes monthly contributions to DivGro possible, so I'm not complaining too much!

      I love quarter-ending months and breaking records!

      All the best to you, too!

      Delete
    2. I agree. Working is a means to an end. I too don't mind my job and it pays well so no complaints here!

      Delete
  2. Curious on your thoughts on continuing to hold Valero. Now that the US can export crude, the advantage US refiners used to hold over foreign refiners should fade over time. You think they are strong enough to continue performing well in the face of growing foreign competition?

    ReplyDelete
    Replies
    1. I'm holding on for now. The change you're anticipating will probably take a while to develop, and Valero's management will try to counterbalance it. I like the stock's yield and I don't see attractive alternatives (do you?).

      Delete
    2. Plenty of alternatives for yield but not in that market category. Good luck.

      Delete
    3. Yeah, I actually meant in the Energy Sector.

      Delete
  3. Thank you for another very interesting article. I've been reading your excellent divgro blog for years, and I love it!

    I have a question: Why did you choose Vanguard VYM instead of Vanguard VIG?

    I'm considering building a "passive" portfolio like this:

    Name: ER: Category: Weight:
    Vanguard Total Bond Market ETF (BND) 0,06 % bonds 15%
    Vanguard Total International Bond ETF (BNDX) 0,12 % bonds 5%
    Vanguard S&P 500 ETF (VOO) 0,05 % stocks 5%
    Vanguard FTSE Emerging Markets ETF (VWO) 0,14 % stocks 5%
    Vanguard FTSE Pacific ETF (VPL) 0,10 % stocks 5%
    Vanguard FTSE Europe ETF (VGK) 0,10 % stocks 5%
    Vanguard Dividend Appreciation ETF (VIG) 0,09 % divgro stocks 30%
    Vanguard International Dividend Appreciation ETF (VIGI) 0,25 % divgro stocks 10%
    Vanguard REIT ETF (VNQ) 0,12 % REIT 10%
    Vanguard Global ex-U.S. Real Estate ETF (VNQI) 0,15 % REIT 10%

    bonds 20 %
    stocks 60 %
    REIT 20 %

    ReplyDelete
    Replies
    1. Hi Anonymous -- thanks for your readership, I appreciate it a lot.

      Please see this article and particularly the table at the end of the article summarizing ratings of different dividend paying ETFs: https://seekingalpha.com/article/4031484-top-holdings-dividend-etfs

      I like VYM over VIG because it has better ratings and recent performance.

      Your passive portfolio looks really interesting, and, certainly, its much more diversified than my portfolio. I have few bond-like investments. I own a few REITs and we partly own a rental house and our own house.

      Delete
    2. Thank you for the reply.

      I looked into VIG vs. VYM, and it appears that VYM has performed better, however it seems to come with a higher level of risk.

      From

      https://www.simplysafedividends.com/best-dividend-etf/

      "During the last recession, VYM reduced its dividend payments from $1.44 per share in 2008 to a low of $1.09 in 2010, representing a decline of 24%."

      and VIG:

      "Perhaps more impressively, the fund paid out 98 cents per share of dividends during 2009, which was a decrease of less than 5% compared to its total payout in 2008."

      There was quite a big difference in by how much the dividend was cut in relative terms. But if you can accept this, then you can have VYM in your portfolio. Personally, I will keep reading and thinking about these things.

      I'm sitting on the fence regarding building a portfolio of individual stocks or of ETFs. I'm thinking I most likely can't keep myself interested in monitoring a portfolio closely for several decades, and this is why I'm considering using ETFs for it. Or I might start with a combination of the two, and then later move money from individual stocks into ETFs. I'm now slightly under 40 years old. I intend to build a reliable dividend income portfolio of at least 500,000 USD with a dividend yield of 4 to 6 % before I will retire - I believe this is a realistic goal.

      Delete
    3. Interesting viewpoint, Anonymous. I guess Simply Safe Dividends wants to be, well, "safe". Nothing wrong with that, but my emphasis is a more on "what have you done for me, lately". The last recession is almost 10 years ago. Meanwhile, VYM has clearly outperformed VIG in most, if not all aspects. Please see:

      https://www.fool.com/investing/2017/04/29/demystifying-alternative-asset-managers.aspx

      I'm not saying safety shouldn't be an important factor to consider. To the contrary. All I'm saying is there are several factors to consider, and track record is one of them.

      Thanks for your comments -- really appreciate them.

      I don't think your goal is unrealistic at all. All I can say is, by stating that goal and then working diligently (and passionately) to achieve it, you have a great chance of achieving it.

      I started later than you and I had "smaller" goals (at least initially)... this journey has surpassed my wildest expectations!

      Take care and all the best!

      Delete
  4. Gotta love quarter ending months! Another record breaking month. It will be great once the consolidation is complete and you can focus your efforts on other things. Keep up the good work.

    ReplyDelete
    Replies
    1. YES, I love quarter ending months, and particularly when also breaking a record! I'm almost done with the consolidation. One more account to integrate, and then just a final transfer to IB of our taxable account at FolioInvesting. That one will be difficult, I think.

      Delete
  5. We've been slightly down for April so far as the S&P 500 has fallen a little. I'm not really concerned though because this is probably just a temporary dip.

    ReplyDelete
    Replies
    1. You're right! Yesterday the markets hit all time highs again!

      Delete
  6. Congrats on a fine month Ferdi. Your monthly dividend income is something to be proud of. It takes a lot of time and persistence to reach a level like this.

    ReplyDelete
    Replies
    1. Thanks, Investment Hunting! Dividend growth investing is like building a money-printing machine, except it is legal!

      Delete

Contact Form

Name

Email *

Message *

Follow by Email