Friday, May 19, 2017

Monthly Review: April 2017

Welcome to another monthly review of DivGro, my portfolio of dividend growth stocks. I founded DivGro in January 2013 to generate a reliable and growing dividend stream, and this is monthly review number 52!

After last month's record-breaking dividend income total, April's total was quite disappointing. As a matter of fact, the last time I earned less than $415 in a single month was way back in October 2015.

So why the big drop?

The main reason is that I closed my PennantPark Investment (PNNT) position in February and so gave up a fairly large dividend. Specifically, in April 2016, I collected $531 just from PNNT... and dividend income totaling $651. This month, without the boost from PNNT, I collected only $414.

Nevertheless, April's trades and dividend increases had a positive net effect on DivGro's projected annual dividend income (PADI), which increased by $844 to $13,405. In April, I opened two new positions and added shares to two existing positions, while one position was trimmed due to an option assignment. Furthermore, eight stocks in my DivGro portfolio announced dividend increases.

April 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.

This month, twelve stocks in my portfolio paid dividends. I received a total of $414, a decrease of 73% over the amount received in April 2016. So far this year, I've collected dividends totaling $5,244.

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


One can clearly see the peaks associated with quarter-ending months when many companies pay dividends.

Below is a new chart that I'll be including in future monthly reviews. It presents a rolling 12-month average of dividends received (the orange bars) plotted against a rolling 12-month average of DivGro's projected monthly dividend income, or PMDI (the blue staggered line):


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


Transactions

In April, I added shares to 2 existing positions:

• Ford Motor Company (F) – I doubled my position to reduce my cost basis and to sell covered calls 
• Gilead Sciences (GILD) – I doubled my position to reduce my cost basis and to sell covered calls 

Also, I opened the following positions in DivGro:

• CVS Health Corporation (CVS) – for details, see I'm Adding CVS Health To My DivGro Portfolio
• Hormel Foods Corporation (HRL) – see I'm Looking To Buy Dividend Champion Hormel Foods

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

• Cisco Systems, Inc (CSCO) – due to an option assignment, as discussed in my latest options update

As a result of these transactions, DivGro's PADI increased by $724.

Dividend Changes

The following stocks announced dividend increases:

• Qualcomm Inc. (QCOM) – increase of 7.55%
• The Travelers Companies, Inc (TRV) – increase of 7.46%
• International Business Machines Corporation (IBM) – increase of 7.14%
• Xcel Energy Inc (XEL) – increase of 5.88%
• Johnson & Johnson (JNJ) – increase of 5.00%
• The Procter & Gamble Company (PG) – increase of 3.00%
• Exxon Mobil Corporation (XOM) – increase of 2.67%
• Omega Healthcare Investors, Inc (OHI) – increase of 1.61%

DivGro's PADI increased by $120 due to these dividend changes.

Dividends Received

I received dividends from 12 different stocks this month, for a total of $414 in dividend income:

• Chubb Limited (CB) – income of $16.56
• Cisco Systems, Inc. (CSCO) – income of $29.00
• The Coca-Cola Company (KO) – income of $74.00
• Main Street Capital (MAIN) – income of $61.05
• Altria Group, Inc. (MO) – income of $45.75
• Nuveen AMT-Free Quality Municipal Income Fund (NEA) – income of $22.26
• Nike Inc (NKE) – income of $18.00
• Realty Income Corporation (O) – income of $10.55
• Reynolds American, Inc (RAI) – income of $51.00
• STAG Industrial, Inc (STAG) – income of $28.00
• Wal-Mart Stores Inc. (WMT) – income of $39.78
• Xcel Energy Inc (XEL) – income of $18.00

Markets

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

Mar 31, 2017
DOW: 20,663.22S&P 500: 2,363.72NASDAQ: 5,911.7410-YR BOND: 2.396%
Apr 30, 2017
DOW: 20,940.51S&P 500: 2,384.20NASDAQ: 6,040.7110-YR BOND: 2.282%

In April, the DOW gained 1.34%, the S&P 500 gained 0.87%, and the NASDAQ gained 2.18%. The yield on the benchmark 10-year Treasury note fell to 2.282%.

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


Market Value

This month, DivGro's market value increased by 1.86% to $422,559. Compared with April 2016's market value of $301,721, the year over year increase is 40%.

Market ValueCash DepositsSimple Return
Apr 30, 2016
$301,721.00$268,745.0012.27%
Mar 31, 2017
$414,849.52$312,589.8432.71%
Apr 30, 2017
$422,558.85$316,292.8133.60%

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 $422,559, my portfolio has delivered a simple return of 33.60% since inception. In comparison, DivGro's IRR (internal rate of return) is 14.93%. (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 April 2017:


I track the yield on cost (YoC) for individual stocks, as well as an average YoC for my portfolio. DivGro's average YoC increased from 3.98% last month to 4.01% this month.

Another interesting statistic is percentage payback, which relates dividend income to the amount of capital invested. DivGro's average percentage payback is 10.09%, down from last month's 10.55%.

Finally, DivGro's projected annual yield is at 4.25%, up from last month's value of 4.03%. I calculate projected annual yield by dividing PADI ($13,450) by the total amount invested ($316,293).

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 120 out of 365 days:


I'm ahead of schedule with all my goals except for DivNet, which remains stuck at 0%! I'm hoping to get around to writing a few articles for The DivNet soon.

Looking Ahead

I did not have time in to finish consolidating our IRA accounts, so I'd like to do so in May. Soon I'll be managing all our IRAs using DivGro's strategy of dividend growth investing.

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

Thanks for reading! How did your portfolio perform last month?

2 comments :

  1. I really like the double down on Gilead to sell options. Premiums have been low for GILD the past few months, but usually this stock offers fantastic premiums. I've been thinking of doing the same thing with GILD; buying 100 more shares to sell covered calls.

    ReplyDelete
    Replies
    1. Premiums have been low all around! Volatility dipped quite low until this week's political bombshells stirred things up again. But it is still quite low. Doubling down on GILD also helps to push down my cost basis, allowing me more flexibility in selling calls with lower strike prices in future.

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