Thursday, November 9, 2017

Monthly Review: October 2017

Welcome to the October review of DivGro, my portfolio of dividend growth stocks! The goal of these monthly reviews is to share updates to my portfolio and to provide a summary of dividends collected. I also consider the impact on DivGro's projected annual dividend income.

In October I executed no buy or sell transactions, choosing instead to build my cash reserves.

Four of the stocks in my portfolio announced dividend increases in October. These increases translate to $82 in extra dividends every year.

As for dividend income, in October I received dividends totaling $775 from twelve stocks in my portfolio, a year over year decrease of 6%. So far in 2017, I've collected $13,278 in dividends or about 102% of my 2017 goal of $12,960.

DivGro's PADI now stands at $16,737, which means I can expect to receive $1,395 in dividend income per month, on average, in perpetuity, assuming the status quo is maintained. Of course, I expect the companies I've invested in not only to continue to pay dividends but to increase them over time! Also, until I retire, I hope to continue to reinvesting dividends, so DivGro's PADI should continue to grow through dividend growth and through compounding.

Dividend Income


I received dividends from twelve different stocks, for a monthly total of $775 in dividend income:
Here is a list of the dividends I received in October:
  • Blackstone Mortgage Trust (BXMT)income of $186.00
  • Chubb (CB)income of $17.04
  • Cisco Systems (CSCO)income of $145.00
  • General Electric (GE)income of $72.00
  • Hannon Armstrong Sustainable Infrastructure Capital (HASI)income of $66.00
  • Nuveen Floating Rate Income Fund (JFR)income of $33.75
  • Coca-Cola (KO)income of $74.00
  • Main Street Capital (MAIN)income of $85.50
  • Altria (MO)income of $49.50
  • NIKE (NKE)income of $18.00
  • Realty Income (O)income of $10.60
  • Xcel Energy (XEL)income of $18.00
Following is a chart showing DivGro's monthly dividends plotted against PMDI. Quarter-ending months are huge outliers:
This is one reason that I now create a rolling 12-month average of dividends received (the orange bars) plotted against a rolling 12-month average of PMDI (the blue, staggered line):
While it would be nicer if dividends are distributed more evenly, it is not something that would drive my investment decisions.

Dividend Changes


In October, the following stocks announced dividend increases:
  • AbbVie (ABBV)increase of 10.94%
  • Aflac (AFL)increase of 4.65%
  • Dominion Energy (D)increase of 1.99%
  • Omega Healthcare Investors (OHI)increase of 1.56%
As a result of these changes, DivGro's PADI will increase by $82.

I like seeing dividend increases above 7%, so I'm very happy with ABBV's increase.

Fortunately, D and OHI have increased their dividends more than once in the past year, so their year over year increases are 10% and 6.56%, respectively.

AFL's increase is disappointing further evidence that the company's dividend growth is slowing down. In fact, dividing the stock's 5-year DGR by its 10-year DGR confirms that AFL's dividend growth is slowing down: 6.2%/11.7% = 0.67. David Fish, who compiles the CCC list, calls this indicator the stock's dividend acceleration/deceleration factor.

Nevertheless, AFL is performing quite well for DivGro, with its annualized total return of 18%.

Transactions


I had no buys or sells in October.

With little cash on hand, I'm building my cash reserves for later deployment.

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:

DOWS&P 500NASDAQ10-YR BOND
Sep 30, 201721,891.122,470.306,348.122.292%
Oct 31, 201721,948.102,471.656,428.662.121%

In October, the DOW gained 0.26%, the S&P 500 gained 0.05%, and the NASDAQ gained 1.27%. The yield on the benchmark 10-year Treasury note fell to 2.121%.

Portfolio Statistics


Based on the total capital invested and the portfolio's current market value, DivGro has delivered a simple return of about 43% since inception. In comparison, DivGro's IRR (internal rate of return) is 16.1%. (IRR takes into account the timing and size of deposits since inception, so it is a better measure of portfolio performance).

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 3.88% last month to 3.90% this month.

Another interesting statistic is percentage payback, which relates dividend income to the amount of capital invested. DivGro's average percentage payback is 9.77%, up from last month's 9.58%.

Finally, DivGro's projected annual yield is at 4.76%, unchanged from last month. I calculate projected annual yield by dividing PADI ($16,737) by the total amount invested.

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:

Goals Review


Here's a recap of my goals for 2017:
  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
The gauges below represent the progress I've made towards achieving my goals. The last gauge is a reference – it indicates where the other gauges should be after 304 of 365 days:
I'm ahead of schedule with all my goals except for DivNet, which I've abandoned for 2017.

Looking Ahead


We're in the final stretch of 2017 and soon I'll be celebrating DivGro's 5-year anniversary! What a journey it has been! When I started DivGro in January 2013, I speculated what DivGro could be worth in ten year's time. Under conservative assumptions, I estimated that DivGro could grow to about $235,000 and yield more than $20,000 annually.

Today, DivGro's market value is well beyond my initial estimate and the portfolio is yielding nearly $17,000 in dividend income per year! It would be fascinating to see what the next five years will bring!

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

Thanks for reading and take care, everybody!

6 comments :

  1. Just crushing your goals Ferdi. Incredible stuff and progress. I'm always impressed with the PADI and dividend received totals for the year. Your dividend snowball is picking up speed, that's for sure.

    Keep it up.

    Bert

    ReplyDelete
    Replies
    1. Hi, Bert -- thanks for visiting and commenting! When I set goals, I try to be "realistic" by making some assumptions and quick calculations... Then I push things a little in the direction of "audacious" to be a little more challenging. From what happened this year, I think I should "push" a little harder next time!

      Take care and happy investing!

      Delete
  2. Fantastic work, seeing those graphs go in the right direction surely has to be rewarding for all the hard work you do. Keep up the excellent work!

    ReplyDelete
    Replies
    1. You're right, Buy, Hold Long -- I enjoy seeing the steady rise in projected dividend income. It motivates me to stay the course and to make sure that I don't do something silly...

      Delete
  3. Replies
    1. Thanks, Passive Income Dude! Take care and happy investing!

      Delete

Contact Form

Name

Email *

Message *

Follow by Email