Monthly Review of DivGro: 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: 21,287.03 S&P 500: 2,419.70 NASDAQ: 6,144.35 10-YR BOND: 2.27%
Jul 31, 2017	DOW: 21,891.12 S&P 500: 2,470.30 NASDAQ: 6,348.12 10-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 Value Cash Deposits Simple Return
Jul 31, 2016	$328,891.03 $276,284.25 19.04%
Jun 30, 2017	$444,253.52 $333,442.12 33.23%
Jul 31, 2017	$454,748.66 $334,822.55 35.82%

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.