Tuesday, August 8, 2017

Monthly Review: July 2017

Welcome to another monthly review of DivGro, my portfolio of dividend growth stocks! This is monthly review number 55!

In January 2013, I embraced the strategy of DGI (dividend growth investing) after being inspired by many DGI bloggers. My goal is to generate a reliable and growing dividend stream.

Over time, I've managed to grow DivGro's projected annual dividend income to $15,079. If nothing changes and the companies I've invested in continues to pay the dividends they're paying me today, I can expect to receive $1,257 in dividend income (on average) every month in perpetuity!


The dividends I collect are not distributed equally among the months of the year. Many of the stocks I own pay dividends in quarter-ending months, so those months are particularly fun to review. In fact, I often set new records for dividend income received in quarter-ending months, and last month was no exception: I collected more than $2,000 for the first time in a single month! After that "high", it's back to "reality" this month with a more modest total of $732 collected from thirteen of the stocks in my portfolio.

As for trading activity, July turned out to be a quiet month. I closed my position in Reynolds American, Inc (RAI) just prior to its merger with British American Tobacco plc (LON:BATS). I don't like owning ADRs of companies that pay dividends in foreign currency. Due to foreign exchange rate volatility, such dividends are not guaranteed to increase over time. RAI has been DivGro's most successful investment so far (my net gain was 53% annualized), so I'm a little sad to see it go.

On the other hand, I opened a new position in July, National Retail Properties, Inc (NNN), a REIT that yields nearly 4.7%. So DivGro still contains 57 positions. These trades and dividend raises from four stocks increased DivGro's projected annual dividend income (PADI) by $162 to $15,079, which is well above my 2017 goal of $14,400.

July 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.

I received dividend income of $732 from 13 DivGro stocks in July, for a year to date total of $9,336. Dividend income decreased 15% from the total received in July 2016.

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


The quarter-ending totals are quite evident! The following chart 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):


Comparing dividend income by month is another way to see progress:


Transactions

In July I opened the following new position:

• National Retail Properties, Inc (NNN) – bought 150 shares with an initial yield on cost of 4.81%.

I closed the following position:

• Reynolds American, Inc (RAI) – sold 100 shares for a net gain of 180% (53% annualized)

Dividend Changes

The following stocks announced dividend increases:

• Cummins Inc (CMI) – increase of 5.37%
• Walgreens Boots Alliance, Inc (WBA) – increase of 6.67%
• Stanley Black & Decker (SWK) – increase of 8.62%
• Omega Healthcare Investors (OHI) – increase of 1.59%

Dividends Received

I received dividends from 13 different stocks this month, for a total of $732 in dividend income:

• Chubb Limited (CB) – income of $17.04
• Cisco Systems Inc (CSCO) – income of $87.00
• Walt Disney Company (DIS) – income of $156.00
• General Electric Corporation (GE) – income of $72.00
• Hannon Armstrong Sustainable Infrastructure Capital, Inc (HASI) – income of $66.00
• Nuveen Floating Rate Income Fund (JFR) – income of $33.75
• Coca-Cola Company (KO) – income of $74.00
• Main Street Capital Corporation (MAIN) – income of $83.25
• Altria Group Inc (MO) – income of $45.75
• Nike Inc (NKE) – income of $18.00
• Realty Income Corporation (O) – income of $10.58
• Reynolds American, Inc (RAI) – income of $51.00
• Xcel Energy (XEL) – income of $18.00

Markets

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

Jun 30, 2017
DOW: 21,287.03S&P 500: 2,419.70NASDAQ: 6,144.3510-YR BOND: 2.27%
Jul 31, 2017
DOW: 21,891.12S&P 500: 2,470.30NASDAQ: 6,348.1210-YR BOND: 2.29%

In July, the DOW gained 2.84%, the S&P 500 gained 2.09%, and the NASDAQ gained 3.32%. The yield on the benchmark 10-year Treasury note rose to 2.29%.

Below are charts showing the market activity of different indices in July, courtesy of Google Finance. (Click on the charts for detail). Each chart shows a 20-period exponential moving average (in red).


Market Value

This month, DivGro's market value increased by 2.36% to $454,749. Compared with July 2016's market value of $328,891, the year over year increase is 38%.

Market ValueCash DepositsSimple Return
Jul 31, 2016
$328,891.03$276,284.2519.04%
Jun 30, 2017
$444,253.52$333,442.1233.23%
Jul 31, 2017
$454,748.66$334,822.5535.82%

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 $454,749, my portfolio has delivered a simple return of 35.82% since inception. In comparison, DivGro's IRR (internal rate of return) is 14.83%. (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 July 2017:


I track the yield on cost (YoC) for individual stocks, as well as an average YoC for my portfolio. DivGro's average YoC is the same as last month's at 3.78%.

Another interesting statistic is percentage payback, which relates dividend income to the amount of capital invested. DivGro's average percentage payback is 9.52%, up from last month's 9.41%.

Finally, DivGro's projected annual yield is at 4.50%, up from last month's value of 4.47%. I calculate projected annual yield by dividing PADI ($15,079) by the total amount invested ($334,823).

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 212 out of 365 days:


I'm ahead of schedule with all my goals except for DivNet, which remains stuck at 0%! I'm still hoping to find some time to write a few articles for The DivNet, but it is looking increasingly unlikely that I would achieve my goal of writing six articles in 2017.

Looking Ahead

In July I started publishing guest posts on DivGro. I'm really happy with the quality and diversity of the first submissions and I look forward to receiving more! Writers are invited to submit articles related to Dividend Growth and Value Investing, Financial Independence and Frugal Living, and Using Options to Boost Dividend Income. Please refer to my Guest Posts page for submission guidelines.

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.

13 comments :

  1. Good job over 700 in an off month is good. It wont be long till this month is pushing 1000.00 Keep it up

    ReplyDelete
    Replies
    1. Thanks for reading and commenting, Divdendsandhobbies -- yes, I'm happy to see my off-month generate more than $700. The trend remains up and I'm looking forward to seeing $1,000 of income every month.

      Delete
  2. love your monthly reviews. Keep it up.

    ReplyDelete
    Replies
    1. Thanks FiscalVoyage -- I'll try my best! Happy investing!

      Delete
  3. I had YOY 1000% growth...which the actual dollar amount was larger. 2->27. Can't complain as I have been building my emergency fund first before investing any further. I like your various charts/might adopt some on my end. Thanks for sharing.
    DFG

    ReplyDelete
    Replies
    1. 1000% YOY growth would be fantastic for larger amounts -- agreed! Feel free to adopt my charts or whatever... I've gotten many of my ideas elsewhere, and since this is such a sharing community, that's how it goes!

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  4. Wow, your dividend tracking is quite similar to what I do. I also track projected dividends for the year by taking into account expected increases. Currently 43 stocks in my div portfolio with YOC at 5.07%.

    I will be following you to see what you are buying or selling. Keep up the good work.

    All the best,
    Mr. ATM

    ReplyDelete
    Replies
    1. Thanks for visiting Mr ATM -- sounds like you have an effective dividend portfolio with a YOC of more than 5%. I visited your blog and it looks like you took early retirement. Congratulations! I own shares of INTC, the company you worked for.

      All the best and visit again soon.

      BTW, I added your blog to my blogroll.

      Delete
  5. Nice annual dividend increase. It's amazing to see how fast your dividend income is growing. Nice work Ferdi.

    ReplyDelete
    Replies
    1. The annual dividend total keeps growing, which is what we as dividend growth investors want, right? Keep that snowball rolling to have it grow larger and larger!

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  6. Ferdi,

    Great update. Love seeing your projected annual income grow since 2013. While I started investing in 2012 - I'll be honest - I was a novice with no real plan of attack just buying stocks at good valuations. I've switched to be a true Dividend Growth Investor and have mimicked your models, tracking, etc., and truly appreciate your insight. My annual projected income is growing slowly but surely and hope to get to your level soon!

    Cheers - Mike

    ReplyDelete
    Replies
    1. Hi, Mike -- good to hear from you again!

      The growth in DivGro's projected annual income is great to see. Seeing monthly updates of that chart inspires me to keep going. While the monthly Market Value Breakdown chart is nice, too, a bear market could quickly make that one look ugly.

      I'm glad that my blog is an inspiration to you -- stick with the dividend growth investment strategy and you'll benefit from the power of compounding working for you!

      Take care and happy investing!

      Delete

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